Talacko v Talacko & Ors

[2021] HCATrans 39

[2021] HCATrans 039

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M111 of 2020

B e t w e e n -

JUDITH GAIL TALACKO

Appellant

and

JAN TALACKO (AS EXECUTOR OF THE ESTATE OF HELENA MARIE TALACKO)

First Respondent

ALEXANDRA ANN BENNETT

Second Respondent

MARTIN THORBURN TALACKO

Third Respondent

ROWENA KIRSTEN EVE TALACKO

Fourth Respondent

ALEXANDRA ANN BENNETT AND DAVID ADAMS (AS EXECUTORS OF THE ESTATE OF MARGARET HELEN TALACKO)

Fifth Respondent

ESTATE OF JAN EMIL TALACKO (DECEASED) (FORMERLY AN UNDISCHARGED BANKRUPT)

Sixth Respondent

DAVID TALACKO

Seventh Respondent

PAUL ANTHONY TALACKO

Eighth Respondent

PETER ANDREW NOEL TALACKO

Ninth Respondent

AMANDA MAREE FISCHER

Tenth Respondent

STATE TRUSTEES LTD (ACN 064 593 148)

Eleventh Respondent

KIEFEL CJ
GAGELER J
KEANE J
GORDON J
EDELMAN J
STEWARD J
GLEESON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 10 MARCH 2021, AT 10.03 AM

Copyright in the High Court of Australia

MR B.W. WALKER, SC:   May it please your Honours, I appear with my learned friend, MR J.B. MASTERS, for the appellant.  (instructed by Strongman & Crouch Solicitors)

MS W.A. HARRIS, QC:   Your Honours, if it please the Court, I appear with MR K.A. LOXLEY, for the first respondent.  (instructed by Patrick & Associates)

MR D.B. O’SULLIVAN, QC:   If your Honours please, I appear with MR B.R. KREMER and MR O.M. CIOLEK for the second to fifth respondents.  (instructed by Brand Partners)

KIEFEL CJ:   Yes, Mr Walker.

MR WALKER:   Your Honours, the main point and indeed all the points in this case arise out of a scheme by one side of an unfortunate family against another side of the same family to avoid meeting adjudicated obligations of one Jan Emil Talacko.  The scheme lends itself to various descriptions, but that word “fraud” is one that I have to accept at the outset.  I will come to the sequence of events, which somewhat are interwoven, as your Honours have seen from the chronology, in a moment. 

By way of illustrating the last comment I made, could I remind your Honours that, though the case is now entirely about the position engendered with respect to foreign property, principally in the Czech Republic, there was also property in Melbourne, the half interest in what I will call “the family residence”.  My client is the widow of Jan Emil and he had transferred his half‑interest in the residence to our client.

There were proceedings brought in Victoria to set aside that transaction as a transaction to defeat creditors ‑ fraudulently, if you will ‑ which were not contested, and orders duly made, and the proceeds of the sale of that property applied towards meeting the adjudicated obligation of Jan Emil.

This is a case about what has been called, in the English translation that is found in the record, the “donation” pursuant to an arrangement conspiratorial as held, being the donation agreement, between Jan Emil, our client, not as a party to the property transaction but as a found party to the conspiracy, and their two sons David and Paul, absent but joined parties to this proceeding.

The nub of the grievance in which our friend’s clients have so far been successful in advancing their case, and against which we contend in this Court, is that the result of the donation, to which I will lend more explanation in a moment, brought about the suffering of a loss in the eyes of the common law so as to complete the cause of action for the tort of conspiracy to cause harm by unlawful means, to which my client was held to be a liable party.

As your Honours will recall from the forensic history, at first instance after making findings adverse to our client in relation to involvement in the conspiracy – the intention to cause harm, the unlawful means – the learned trial judge held that nonetheless there was still a prospect yet to be realised one way or the other, or a chance still to be played or an opportunity not yet exhausted in relation to obtaining recourse to what I will in summary call the Czech properties in order that the plaintiffs might satisfy in their favour the judgment against Jan Emil, to which I will be coming. 

That was overturned in the Court of Appeal, that is, the finding of no loss, and the matter upon return to the trial judge for adjudication resulted in the award of damages by reference to a comparison which can be explained simply in arithmetic terms.  His Honour proceeded in accordance with his Honour’s, with respect, correct understanding of how the Court of Appeal had determined the matter should be approached, by assessing damages on the basis of a formula which regarded the chance before the wrong, that is, the conspiracy of realising the proceeds of the Czech properties by way of recovery of the judgment moneys as 75 per cent and after the wrong and by reason of the wrong as 20 per cent, hence the 55 per cent that your Honours will have seen in the reasons.

The case, as your Honours have seen from the exchange of written submissions and the three pages, may involve, not in our argument, consideration of whether equity, properly so called, plays any independent or perhaps parallel role in relation to the vindication of the plaintiff’s economic interest in having the judgment against Jan Emil satisfied, recovering moneys, enforcing the judgment, obtaining satisfaction of that obligation. 

I simply flag in opening that for our part it is no part of our attack on the Court of Appeal’s reasoning because it did not turn on matters of so‑called equity standing independently from the common law.  We submit, with respect, the common law is entirely adequate to meet such a case of fraudulent conveyance, as it is sometimes called, or transactions to defeat creditors, with or without the assistance, as was displayed in the Melbourne proceedings, of the latest iterations of ancient statutes to set aside such transactions. 

We will come, fairly soon, to the variation of that near‑universal theme in legal systems that the Czech Republic currently displays.  It suffices to say that is at the foundation of what has been called in the jargon of this case, the “donation proceedings”, which is not quite so simple as that simple label might indicate, in the Czech Republic.  I will come to that.

We respectfully submit that there is no call for equity to be invoked – that is a substantive answer, not simply a Coulton v Holcombe argument.  I do stress, lest there be any misunderstanding, there is no Suttor v Gundowda point concerning that argument.

Can I then, in order to give for my address, the relevant factual background, without rehearsing matters of detail that, for our part, are sufficiently covered in the exchanged written submissions and in the portions of the trial and appellate judgments there cited.

Can I emphasise the following matters of sequence, particularly with a view to teasing out threads of what I might call causation.  And by causation, I particularly mean causation of loss in the eyes of the law by reason of the wrongdoing of which my client has been held liable, namely the conspiracy, because there were anterior wrongdoings, both alleged, agreed and adjudicated, to which I now come.

As your Honours were aware, this is a case that comes out of a phenomenon not merely post‑war but post‑communism, in Eastern European former members of the Warsaw Pact.  So that there was the fleeing of the then Czechoslovakia by the Talacko parents, Alois and Anna, in 1948; and the arrival in Australia of the three children, one of whom is Jan Emil.  Helena and Peter, the siblings, are, as it were, represented per stirpes by our learned friends.

There was a considerable property portfolio.  Those properties, which were then both in Czechoslovakia and East Germany, were seized by the then Communist authorities.  That expropriation, historically, was, as your Honours are aware from the findings in this case – the details do not matter – the reason, ostensibly and no doubt truly, for the later restitution regime from which Jan Emil benefitted – that is, making good either in kind or by compensation seizings of property which the later post‑Communist regime obviously accepted politically was wrong and as a mark of the fresh start of liberal democracy reversing.

The prospect of that happy reversal of their fortunes, as a matter of allegation – and I do not mean to be canvassing their correctness – produced a controversy between the siblings and those lining up behind them by descent, and marital connection in our client’s case, as to how the fruits or success of restitution dealings by Jan Emil or any of them should be shared among them.

The details do not matter.  It suffices to say that there were a series of restitutions, mostly in favour of Jan Emil.  The exception does not matter for the purposes of this case.  That was in the early 1990s.  However, by 1998, family relations had broken down so severely in relation to Jan Emil’s success and apparent determination to enjoy it alone for his part of the family, that proceedings were commenced which, in the jargon of the present case, can be called “the 1998 proceedings” in the Supreme Court of Victoria asserting various equities and contractual rights with respect to the fruits of that restitution, but that hearing settled, though in a way which arrested rather than disposed of it.

It settled in 2001 by an exchange of promises which on Jan Emil’s side called for the transfer of properties within a particular time to particular transferees, which in brief he did not comply with.             Presumably, that was not a complete surprise because there were default provisions in the settlement agreement which, upon that very event, carried with it his promised admission of and agreement to entry of judgment for the essence, as it were, of the allegations that had been made against him in the 1998 proceedings.

KIEFEL CJ:   Before taking advantage of the default proceedings, were the then plaintiffs, the respondents here, in a position to have required – sought the assistance of the court to order, in effect, specific performance against Jan Emil and require him to execute the documents?

MR WALKER:   Yes, in our submission.  I think that has not been explored.

KIEFEL CJ:   No, but it might be important in relation to what could have occurred in your causation argument, and when the right arose.

MR WALKER:   Yes, is the short answer, your Honour.

KIEFEL CJ:   That would have short‑circuited things.  He might have been required to execute transfers and if he did not someone else could have executed transfers, but ‑ ‑ ‑ 

MR WALKER:   I am bound to draw to attention that he does not exhibit any actual history of compliance and that ‑ ‑ ‑ 

KIEFEL CJ:   Yes, but he had not been sent to prison at that point.

MR WALKER:   No, and it is a question as to – and I do not wish to speculate, but ‑ ‑ ‑ 

KIEFEL CJ:   I suppose the question, really, Mr Walker, is if this does form part of the narrative and the chronology, if it does have relevance, whether courts should assume that persons would not comply with an order.

MR WALKER:   Your Honour, that is a matter that looms large, but we have no authority or principle which could possibly justify a causation argument where we, as it were, blandly point to, hypothesise, to continue illegalities.  So, our argument does not depend upon positing continued illegality so as to frustrate the plaintiffs.  That would be contrary to principle, and we have not argued it.

EDELMAN J:   But the value of the default contractual provision was essentially an alternative to specific performance, was it not?

MR WALKER:   Yes.  Your Honour, what I was about to say, and there are no findings about this, I think that no doubt there was a choice as, by the way, there always is as a matter of general law.  Specific performance is not the only remedy for breach of a promise to convey property of a kind where specific performance would be available.  Whether the terms of settlement…..terms would ever have been construed rather drastically so as to exclude the possibility of specific performance has not been explored.  There was a choice made by the plaintiffs to pursue the money remedy in the form of an entered judgment, as opposed to pursing the specific performance of obligations to convey foreign property, which, of course, is no answer to specific performance.

It is not explored in the case as to whether an appreciation of what might be regarded as difficulties by reference to the foreign situs of the land, or the property, or whether their status as property subject to an historical restitution regime would have any effect upon specific relief.  That is not explored in the record which is why, in our submission, it cannot have, one way or the other, much, if any, dispositive role.  It certainly has a part of the narrative, but not a dispositive role in relation to a causal analysis.

The default orders called for entry of judgment, as I say, for the financial or monetary alternative to specific performance, namely the equitable compensation, as it has been called.  Nothing we think, ultimately, turns on the fact that the parties, by their nomenclature, chose one of the doctrinally available characterisations, which is equitable compensation as opposed to common law damages, or Lord Cairns’ Act damages, for that part.

That, in turn, called for the quantification – there not having to that day been any quantification – of the compensation necessary to remedy the loss suffered by the failure or refusal of Jan Emil to comply with the primary obligations imposed for the conveyance of foreign properties by the settlement agreement.

Now, as your Honours know, it was not until November 2007 that what I have just sketched was accomplished, namely the adjudication of breach and the entry of judgment for the assessment of equitable compensation for breach of the settlement agreement.

GORDON J:   Was it 2007 or 2009?

MR WALKER:   I am sorry, the hearing started, it proceeded to trial in 2007 – that is where I was up to in the narrative as it were.  Breach was found in April 2008 ‑ ‑ ‑

GORDON J:   That was the decision of Justice Osborn.

MR WALKER:   That is right.  And if I can just jump over the main event at the moment, the quantum was determined by a hearing conducted in October 2009, with reasons in November 2009, and a monetary order on 11 December 2009.

KIEFEL CJ:   This is Justice Kyrou’s order.

MR WALKER:   That is Justice Kyrou.

KIEFEL CJ:   What was his Honour quantifying?  What was the loss his Honour was quantifying?

MR WALKER:   He was quantifying the equitable compensation due from Jan Emil for breach of his obligation to transfer the clause 1 properties, which by the default provision, produced a reference to the clause 6 properties in the settlement agreement.

It was the loss suffered by Jan Emil’s breach of contract, which itself called into fault as one of the possible remedies for entry for judgment for what I will call the anterior equitable compensation claim which had been settled.

KIEFEL CJ:   Although framed as an order for equitable compensation, does it nonetheless – the quantification, is it a quantification of a loss suffered?  What is the loss suffered for which they were compensated?

MR WALKER:   Failing to obtain ‑ ‑ ‑

KIEFEL CJ:   That is not a loss.  That is the cause of the loss.

MR WALKER:   I am sorry, the loss suffered was being left without the clause 1 properties.

KIEFEL CJ:   So, it is a loss of property right.

MR WALKER:   Yes, it is not getting the property which by contract, that is, the terms of settlement, they ‑ ‑ ‑

KIEFEL CJ:   The properties are withdrawn by the donation agreement ‑ ‑ ‑

MR WALKER:   Only some of them but I am coming to that, yes, your Honour.

KIEFEL CJ:   ‑ ‑ ‑ debt.

MR WALKER:   Yes.

KIEFEL CJ:   Putting the exceptions aside, the effect of the donation agreement is to remove from the respondents to this matter?

MR WALKER:   Your Honours, I may be about to anticipate, a trifle nervously, but may I at this point observe that the narrative to this point is concerning loss suffered not by the conspiracy of which my client was held jointly liable, but the loss that I was referring to in answer to the Chief Justice’s question is the loss suffered by the 1998 plaintiffs by reason of the breach in 2001 of the terms of settlement, the contract of compromise by which the 1998 proceedings were, as I say, dealt with.  That loss was a fully crystallised loss in the same way as any breach of contract to convey property will, subject to a comparison between the purchase price and the value of the property to convey, crystallise a loss for which damages can be assessed. 

It is clear here that once one had chosen not to seek specific performance for the conveyance of the clause 1 properties, as they were called in the terms of settlement – the foreign properties – then there had been a loss there and then suffered by the breach of that promise by Jan Emil.  It is nothing to do with the conspiracy.  That comes later.

KIEFEL CJ:   Could you help me with the timing issue, because both the donation agreement and Justice Kyrou’s orders were made in 2009, I think.

MR WALKER:   Yes.

KIEFEL CJ:   But does Justice Kyrou’s order predate the donation agreement?

MR WALKER:   No.  The donation agreement is May 2009 ‑ ‑ ‑

KIEFEL CJ:   Thank you.

MR WALKER:   ‑ ‑ ‑ and Justice Kyrou’s judgment stemmed from a hearing in October 2009, reasons in November 2009 and final orders in December 2009.  Now, we are bound, hence my opening of this appeal, to that which follows inexorably from the findings against us that are not in question in this Court, namely that the donation agreements, themselves the object of the conspiracy sued on in Victoria later, were designed ‑ and I have to accept the appropriateness of the adverb “fraudulently” – to obviate the satisfaction from the donated properties of the obligation that was known to exist and was about to be quantified owed by Jan Emil, the owner in the Czech Republic of those donated properties, those properties to be donated.

STEWARD J:   Mr Walker, did the chose in action to recover equitable compensation arise and spring upon Justice Osborn’s judgment being delivered or upon Justice Kyrou’s final orders?

MR WALKER:   In truth, the chose in action for equitable compensation came into existence upon the occurrence of the events and the dealings between parties that were sued on in 1998.  So, a chose in action exists before it is vindicated by litigation, otherwise there can be no vindication ordinarily.

EDELMAN J:   But it is transformed into a different right, when the order is given by Justice Osborn.

MR WALKER:   Quite so.  So, by the time of the combination of Justice Osborn’s final judgment on liability for breaching the terms of settlement and Justice Kyrou’s quantification of what the terms of settlement called for, which was an assessment of the equitable compensation due from the admitted ‑ the terms of settlement involved an admission ‑ the admitted wrongs alleged in the 1998 proceedings, by that combination the chose in action, sued on in the 1998 proceedings, had been wholly transformed by the intended processes of law which make choses in action valuable into a monied judgment.

EDELMAN J:   But at the time of the donation agreement, it had still been transformed, but it was transformed into an unliquidated right or unliquidated chose in action to recover.

MR WALKER:   Yes.  It was halfway out of the chrysalis because by then there had been a finding of the breach of the terms of settlement.  That was no longer a matter of allegation and denial; it was now found.  That brought in its train, not as a matter of general law but by reason of the default provisions, a right to have the equitable compensation assessed, being the equitable compensation that had been one of the remedies claimed in the 1998 proceedings – a familiar form of terms of settlement.  If you do not perform a compromise, then you will, by default, have entered against you by your agreement without you being able to prevent it, the full measure of the claim against you, which has been compromised.

GORDON J:   But to make the point that Justice Edelman ‑ or to clarify that point, it is apparent, is it not, from Justice Osborn’s judgment that there was a chose in action, unliquidated, right to equitable compensation, as at April, at least by April 2008?

MR WALKER:   Yes, but – and it is a large but – of course that chose in action preceded his Honour’s vindication of it.  The chose in action existed because of the facts and dealings between the parties which had been sued on in 1998.

GORDON J:   It is the transformation of it, when we are looking to see what is the right that might have been lost, which is the important question.

MR WALKER:   Quite so, and let me make it clear that a very important stage – I hope I have emphasised it sufficiently – was the making of the agreement of compromise where the terms of settlement required Jan Emil to admit and make admissions as to wrongdoing leading to equitable compensation – there is your chose in action – admitted to have existed not by reason of the terms of settlement but anteriorly.  But, in any event, the terms of settlement required the admission.  Jan Emil, as I say, did not have a track record of cooperation and so there was a contested hearing as to breach of the terms of settlement. 

In terms of choses in action, a chose in action can properly be said to have arisen upon the terms of settlement being breached.  Now, that is of course before they are held to have been breached.  The chose in action arises because they have been breached.  Its existence and worth was apparently contested.

In any event, it was vindicated by Justice Osborn.  “You have breached”, he said to Jan Emil, “you have breached the terms of settlement”, and the remedy for that breach of terms of settlement goes back to the proceedings which had been compromised by them – as it happened by choice of the parties to the compromise agreement.

EDELMAN J:   Why then, if there are rights that arise from Justice Osborn’s judgment, and those rights can be characterised as an unliquidated chose in action, however you might characterise it, why did not the donation agreement either destroy the value of those rights or at the very least substantially reduce the value of those rights?

MR WALKER:   The answers are different for those two alternatives.  Destruction is, as it were, forever.  The reason, in short – I am jumping ahead, but it is convenient to do so.  The reason, in short, why there was not destruction by the performance of the donation agreement is that it does not follow from the accomplished donation that those properties will not be available to meet the obligations imposed on Jan Emil by the judgment.

As to reducing in value, the value of a chose in action is, of its nature, a fluctuating measure as simple consideration of the paradigm chose in action of a debt arising from a loan with a promise to repay will demonstrate.  The actual position and the perceived position of the debtor to repay in full and on time obviously can lead to a waxing and waning of, in the event of a debt that can be assigned, the value of that chose in action in a relative market.

GLEESON J:   Mr Walker, can I just clarify, the reason that there was no destruction in the value of the chose in action was because the properties could have been recovered by the trustee in bankruptcy?

MR WALKER:   That is one of the ways, I am going to come to that.  At first instance, simply to give the reference at the moment, that follows from the found sequence of events, against which we have no complaint, that your Honours will recall, pages 149 and 150 of the appeal papers, in paragraph 54 of the trial judge’s reasons.  So yes, in answer to Justice Gleeson, one of the ways in which it is clear that the prospect of recovering the assessed equitable compensation by recourse, amongst other things, to the donated properties, one of the ways that was made clear is that there was action of an administrative kind, no doubt with judicial assistance, if necessary, under the bankruptcy of Jan Emil that could have been taken to get those properties in.

KIEFEL CJ:   Mr Walker, do I take it that if one describes the right that the respondents here had immediately prior to the donation agreement as a right of recovery against Jan Emil’s property, the effect of the donation agreement, on your argument, I take it, is that rather than there being nothing to recover as a result of that agreement, one is left with the position that it would be difficult to recover.

MR WALKER:   There is no point in me not accepting some ugly words about the effect of the conspiracy.  The intent of the conspiracy is plain and ugly, that is why I drew to attention what happened with the rather more straightforward municipal exercise in Melbourne about the house.

KEANE J:   Mr Walker, why was it not an irreversible effect of giving effect to the conspiracy via the donation agreements that a remedy that might have been available to the plaintiffs, whereby orders in personam might have been made against Jan Emil either perhaps by way of attachment or, if attachment did not work, by orders that someone authorised by the court would sign transfers ‑ ‑ ‑

MR WALKER:   That probably would not work for Prague‑ ‑

KEANE J:   No, no, do not worry about what Prague would do - whatever Prague might want, while the properties were in Jan Emil’s name, orders, either for his attachment until he signed whatever was necessary to satisfy Prague, orders for his attachment until he signed whatever was necessary by way of any formal requirements anywhere, which could have been achieved in personam while he was amenable to orders of the court, why was that remedy not lost forever once the properties were out of his name?

MR WALKER:   Whether that was lost forever, as your Honour has pointed out in that hypothesis, will depend upon, as it were, where he was from time to time – that is the first thing.  Where he was from time to time is not a result of the conspiracy.

KEANE J:   No, no, but while he is in Australia, amenable to – while he is in Victoria, amenable to the court orders – amenable to Australian courts, why is it not accurate to say that there has been lost forever the prospect – the remedy exercisable against him personally in respect of the properties that were in his name?

MR WALKER:   There are several answers to it.  I need to tease out a few strands.  I repeat, and I apologise for it, that at the outset there are no findings, and on the evidence there could not have been findings, that the conspiracy had as part of the found unlawful means arrangements to which my client was party to the movements, physically, of Jan Emil in and out of jurisdictions in which he might have been amenable to what I will call specific relief, attachment ne exeat regno, et cetera.  That is the first point.  So that Jan Emil’s slipperiness is not part of the conspiratorial liability against which I am contending, for our client, that is the first thing.

The second thing is, of course, that the amenability of Jan Emil and perhaps separately, or discretely, his property, to enforcement or recovery – the words tend to be used interchangeably in the reasons below – is of course dominated by questions of Czech law and what would have happened in the Czech Republic – what could happen, is happening, might happen yet, and what might have happened but for the wrong.

There is, in our submission, a set of findings integral to, inherent in, the assessment I have noted of the reduction from 75 per cent to 20 per cent that those were still matters than can happen.  In other words, it is not destroyed against Jan Emil – I am leaving his death in 2014 out of it for the time being – I am leaving his bankruptcy at the instance of the plaintiffs out of it for the time being – but in answer to Justice Keane’s question, it is not destroyed because it can still happen. 

Now, that is why, in answer to the Chief Justice, of course I have to accept the very purpose of the conspiracy was to impede – one can only suppose - it cannot be a part, a sensible part of my argument to resist the characterisation that was not intended to impede ineffectively – it was intended to impede if possible permanently.  I have to accept that.  It comes with the findings.  As I say, hence no doubt the concession in relation to the Victorian proceedings to set aside the transfer of the half share in the residence as a transaction to defeat or defraud creditors.

But it turns out– and it is facts not intention – it is the realisation not the ambition that will be among the criteria by which one will see whether there has been loss suffered.  That is why in the courts below there was concentration – I do not say solely, but there was concentration on an analysis in principle turning upon chance - we say the only way in which a chance – here a property and financial chance – of obvious significance to the economic interests of the plaintiffs – the only way in which that can be understood is the chance one way or the other - I am going to have to come back to elaborate that – the chance one way or the other of recovering from Jan Emil or, as it turns out from his estate, either sequestered while he was alive or deceased estate after his death – but obviously of course by recourse to what I am going to call “his property” – a phrase I will also have to come back to – of moneys adequate to meet 100 cents in the dollar of the equitable compensation judgement entered as a result of his adjudicated breach of the terms of settlement arising from and in relation to the 1998 proceedings.

Now, there can be no doubt that the plaintiffs have on foot proceedings in the Czech Republic and there has been, as it were, an historical program of work by them of a kind which cannot be described as all down to the conspiracy, that is, the donation agreement having occurred.  Let me explain.

In order to have recourse to Jan Emil’s property in the Czech Republic, and without his bankruptcy, proceedings of some kind, administrative or judicial, would be necessary - administrative in order to carry through transfer of title, if transfer of title was an admissible form of meeting a money judgment, and it probably would not be, or, as we know, so‑called enforcement proceedings being brought which involve something in the nature of recognition for the purposes of Czech processes of what might be certified from an Australian court as being a final and enforceable judgment, that being the cameo today, the cameo point, about which the previous proceedings in this Court were wholly concerned, namely whether there could be issued under the combination of the Foreign Judgments Act and the Bankruptcy Act a certificate to that effect, according to Australian law – the answer being, no, there could not be. 

That, of course, turned upon a matter to which I will now introduce into my answer, in particular to the Chief Justice and Justice Keane, but by way of advancing my overall argument and that is that one can see, of course, that the bankruptcy has had an effect which is not caused by the conspiracy.  The bankruptcy is obviously a response to the failure by Jan Emil to perform the obligations imposed upon him by, ultimately, the order of Justice Kyrou.

The bankruptcy is obviously a state of affairs whereby, in resorting to one of the ways in which a money judgment may be recovered, or in the looser sense of the word, enforced, a choice is made by the judgment creditor, the plaintiffs, to give up the possibility of execution, which is what happens with bankruptcy, to give up, in other words, the immediate and direct force of enforcement by execution of a judgment and instead to seek the sequestration of all the properties so as to meet all of the debts, obviously in this case, with the justified hope that if enough property could be got in, particularly the donated property, there would be 100 cents in the dollar – that was the obvious intent.  It is no criticism on our part of our learned friend’s client’s conduct and decisions that they chose to bankrupt Jan Emil – it is a routine step in such an approach.

KIEFEL CJ:   But, Mr Walker, has not their loss occurred before the bankruptcy?

MR WALKER:   Their loss by his failure to meet his obligations under the judgment ultimately quantified in December 2009 was already suffered.  They had already lost because he had failed to perform the terms of settlement and they were kept in a losing position, that is, they were kept out of their money while soever nothing was recovered against that judgment.

KEANE J:   But they had meaningful remedies.

MR WALKER:   As is found at first instance, they had the resort to section 77 of the Bankruptcy Act when the trustee accepted, I think somewhat to his surprise, that that did exist, and that would have produced the dealing in relation to which I told the Chief Justice in the Court that we obviously cannot call in aid - in answer to these analyses we cannot call in aid the fact that Jan Emil would have been recalcitrant, delinquent and acted unlawfully.

KIEFEL CJ:   But the rights they held under the terms of settlement which were identified by the order made by Justice Osborn, the point is those rights had some value, did they not, prior to the donation agreement?

MR WALKER:   They still had value after the donation agreement, but it was, on the findings, reduced in the sense that further impediments of a kind concertedly and deliberately created by the conspiracy had been erected, but they were not effective or ‑ ‑ ‑

KIEFEL CJ:   Mr Walker, is this to confuse though the question of loss or damage with the difficulty of execution to obtain the value?

MR WALKER:   I hope not.

KIEFEL CJ:   That is the area I am in at the moment.

MR WALKER:   Yes.

KIEFEL CJ:   Because I cannot quite see that a difficulty in making good in recovering what is valued is the same thing as the value of the loss which has occurred.

MR WALKER:   I think in one sense we enthusiastically embrace that, but only in one sense.  Your Honours have seen our attempt to put the matter neatly, namely the loss of a chance – and I return to the way in which it was principally argued and decided below – the loss of a chance is not a reduction in its prospects.

EDELMAN J:   No, but that might be different from the reduction in the value of a right.

MR WALKER:   That is why I say that is for the – when the discourse was all about chance, the way in which we sought to criticise the Court of Appeal’s approach was to say on authority and in principle if a chance remains available to be played through - and the fact of the continuing proceedings in the Czech Republic is a concrete manifestation of that in this case – if a chance remains to be played through then the person who has that chance may yet enjoy its full realisation, in this case, in a manner to which I will turn briefly – soon – in this case, that is recourse to the property deliberately in order, that is avowedly for the purpose of meeting the equitable compensation judgment against Jan Emil.

GLEESON J:   So, if the respondents wanted to sell the chose in action ‑ ‑ ‑ 

MR WALKER:   Your Honour anticipates me.  The notion, however, of a market in such choses in action, or rights, or economic interests, is not explored in the evidence and is, with respect, artificial.

EDELMAN J:   There does not need to be, and in Chaplin v Hicks, which is one of the classics in this area, the Court of Appeal says, well, there was no possible market ‑ ‑ ‑ 

MR WALKER:   No, quite.

EDELMAN J:   ‑ ‑ ‑ for the rights in this case, yet the loss of the value of those rights is compensable damage.

MR WALKER:   I accept that, I accept that, the notion that somebody like myself could buy a competitor’s rights to enter a beauty contest for any sensible purpose is a good enough demonstration of that.  But, your Honours, the first part of my answer to Justice Gleeson is, first, we do not have, as we would have in what I will call a case where there can be factoring evidence, we do not have here anything palpable which say, at a quantification level, may have been able to lend this case to what I will call a reduction in value approach.  What we have, always and only, was a reduction in chances, that is, the converse of our intended creation of impediment.

KIEFEL CJ:   The chance that you speak of is the chance of recovery upon execution, is it not?

MR WALKER:   Execution is too ‑ ‑ ‑ 

KIEFEL CJ:   Well, that is recovery.

MR WALKER:   I do not say, but execution, in the strict sense, had already been abandoned via the choice to bankrupt Jan Emil.  It is the chance of recovery by the various means available, traditionally, and in orthodox fashion, to judgment creditors.

KIEFEL CJ:   But I suppose the ‑ ‑ ‑ 

MR WALKER:   Yes, execution is one of them, and that is what they did, ultimately, your Honour, with relation to the Melbourne residents.

KIEFEL CJ:   But I suppose what this discourse is throwing up is whether or not the chance of recovery is the same as the loss actually suffered.

MR WALKER:   That is right.

KIEFEL CJ:   Or whether the chance of recovery is something more positive, which relates to the Prague proceedings, and is that which may be brought into account against the loss otherwise quantified.  I am perhaps getting a little ahead of the argument.

MR WALKER:   I cannot, as it were, compendiously say yes to that, but there are elements – let me start again.  It is not as if this Court has a choice, either to discharge loss of chance analysis, or to say this should only ever have been value or chose in action analysis, in our submission.  And that is, there is no error in the way in which it was argued below, and initially decided, at first instance below, in saying this is a claim that the chances of obtaining full value for the equitable compensation judgment against Jan Emil have been, I will use a neutral expression, affected by the donation agreement entered pursuant to the conspiracy.

EDELMAN J:   But they are not necessarily separate universes where there actually is a right, the value of which has been diminished.  So, there is a separate world where you are talking about a seller’s type, pure opportunity, there is no right involved at all, it is just the loss of a pure chance.

MR WALKER:   Quite.

EDELMAN J:   We are not in that world.  We are in the world where there was a right, the value of that right has been diminished.  And the loss of a chance‑type analysis is just a way of trying to put the value onto the right that has been lost or diminished.

MR WALKER:   Yes.  When one does not have something neat like an established factor in market, yes, of course that is right, with respect, and that is why ‑ ‑ ‑

EDELMAN J:   Why is that not a loss then?

MR WALKER:   It is not a loss in the same way that what appears to be a bad debt is not a loss for the purposes of the common law until it is practically certain it will not be recovered.  In other words, you do not have per diem in diem crystallising of loss against a person, say, negligent in giving a credit reference for someone depending upon the fluctuating market evaluation of that debtor’s capacity to pay.

It cannot be said that on Monday I have a cause of action because the market does not think he is good for the money, it is two cents in the dollar, but he discovers iron ore on Tuesday and on Wednesday the market says he is worth 100 cents in the dollar.  It cannot be that the cause of action disappears and that is because, in our submission, as this Court has held without as it were qualifications, this case would require to be worked out for.

This Court has held that where the economic interest, the interest infringed by the wrong constituting a tort where loss is the gist of the action, does not exist, to use the metaphor does not crystallise, until enough of the contingencies upon which it depends have played out.

GORDON J:   What are those contingencies here, Mr Walker?  Here you have, as I understand you have accepted, a right, the right is in existence by no later than, on any view, Justice Osborn’s judgment.  You have accepted it is diminished in value in the sense that it is worth something less because it is more difficult.  What else do you need to make good that what we are concerned with are the elements of conspiracy?

MR WALKER:   Because like the fluctuating credit worthiness of a debtor, the availability of the donated properties, while it may have appeared darkest at dawn may, by noon of the Czech proceedings, turned out to be 100 cents in the dollar.  Indeed, that is the whole point.  That is the whole point, with respect, that the findings, which are not disturbed and the cross‑appeal ‑ the challenge has been withdrawn ‑ the findings that there remains a 20 per cent chance, a one in five chance that the Czech proceedings – now, this was as at the judgment below – which are called in the jargon of this case “the donation proceedings”, to which I am about to come, that they enjoy a 20 per cent chance of succeeding in this sense, that, as the Czech law, in the somewhat stilted English translation that your Honours have, contemplates that one of the very purposes, indeed the purpose of the donation proceedings is to open the door to a second stage of statutory disturbance of title so as to make available the donated proceedings to meet the enforceable judgments against the donor.

GORDON J:   Is that right? 

MR WALKER:   Yes.

GORDON J:   Those proceedings are proceedings not at all in relation to the right which we have been discussing this morning, and that is they are not proceedings which are concerned with the right of the cause of action against Jan Emil?

MR WALKER:   They are.  Can I explain.  With great respect, I understand why your Honour says that, because of the way in which the Czech law is expressed, but can I try to answer that once and for all now.

In the respondent’s further materials book, at the very last page which is 197, one has from the Czech Civil Code an English translation of section 42a of Act No 40 of 1964.  At the foot of page 197 you see under the heading “Contest” – and I would respectfully but tentatively offer that the context that follows rather suggests that that is cognate a bit with our notion of seeking to avoid something. 

Anyhow, it is subclause (1) which describes that which, at the time of the judgment in this case, was on foot in Prague.  So:

(1)      A creditor –

that is, the plaintiffs:

may demand that the court –

in Prague:

decide that the debtors’s –

that is, Jan Emil:

legal acts occur curtailing satisfaction of its –

that is the creditor’s:

enforceable claim –

“Curtailing” is the word chosen to translate that element common to most, if not all, civilised legal systems, namely an attempt to prevent stultification of the processes of justice, say when a debt has been adjudicated.  So:

curtailing satisfaction of its enforceable claim –

and we note that important word “enforceable”:

are ineffective vis-à-vis him.

Now, again, we have only the translation.  But it seems – and on the evidence, and the findings in this case – that means that the transfer away from the so‑called debtor by his legal acts, of property, the effect of which would be but for the remedy under this provision, to curtail satisfaction of an enforceable claim against the debtor, those legal acts will be “ineffective vis‑à‑vis him”, and that must be as between creditor and debtor.  And the evidence and findings, it is not controversial in this case, shows that according to the expert evidence, that means that without the need to change the title of the property which was transferred by the impugned debtor’s legal acts, that transfer, that change of ownership will be ineffective.  And one sees that ‑ ‑ ‑

EDELMAN J:   This is ineffective, relevantly against Jan Emil?

MR WALKER:   Yes, ineffective ‑ ‑ ‑

EDELMAN J:   Is he a party to the Prague proceedings?

MR WALKER:   No.  Jan Emil’s death in particular has been a procedural difficulty, to put it neutrally, in the proceedings.  That is right, it is a proceeding against David and Paul.  And that is why – once one gets a subsection (1) decision – your Honour sees:

A creditor may demand that the court decide –

And then that is the first stage, and that is the one that was on foot at the time of the judgment below.  That is the one which, coupled with the next step ‑ and I stress coupled with the next step ‑ led to the assessment of a 20 per cent prospect.

That is, a 20 per cent prospect of obtaining full satisfaction, 100 cents in the dollar, of the equitable compensation judgment against Jan Emil, now dead, having been in the interim, bankrupted, with the effects notoriously that that has upon judgments.  It is clause (4) which is the second stage, not commenced and depending upon success in the first stage but considered in the expert evidence and the findings below concerning the position under Czech law. 

These are the facts, and these are the matters that, in our submission, mean that the prospect, or if you like “right”, or if you like “chose in action”, to obtain by whatever means the law makes available from time to time, and depending upon the circumstances, including the death or bankruptcy of a judgment debtor, that those are not exhausted, they are still to play out – and that they have not been, therefore, destroyed.

GLEESON J:   But if you were trying to sell the chose in action after the donation agreement, how would you persuade a buyer to take into account this?  It seems to be a separate chose in action.

MR WALKER:   With a more golden tongue than I can imagine, your Honour.  It would be a hard sell.  But it has been determined that there is a 20 per cent chance of this resulting in payment of the judgment; not 20 per cent of the judgment – 20 per cent chance of getting payment of the judgment. 

One response to Justice Gleeson’s, with great respect, entirely commercial approach, properly commercial approach, is that the same commerce that would, as I say, adorn ‑ see very dark prospects for recovery against the donated properties ‑ may after further consideration but more to the point success in proceedings being persisted in in Prague, turn around entirely, and there is a 20 per cent chance of that happening.  Now, that does not mean that it is only worth 20 per cent of its return, ever.  A 20 per cent chance that it will be evaluated by the market according to the Spencer’s Case participants in the market.  It does not necessarily ever result in a rational decision that a price higher than 20 per cent of the face value is too high a price.

The second stage not yet embarked upon but taken into account in that 20 per cent assessment is clause 4, so a legal act here, the donation of the properties pursuant to the donation agreement, itself pursuant to the unlawful means conspiracy for which my client is liable.  So the donation:

successfully contested by the creditor –

That is the plaintiffs, the judgment creditors:

shall be ineffective vis‑á‑vis him –

Then there is explanation of that:

in the manner that the creditor –

That is, the plaintiffs:

may demand satisfaction of his –

That is, their judgment, their claim to have the judgment met:

from what passed from the debtor’s property ‑

So it is a statutory tracing.  Then one sees, as one might expect in a civilised legal system, that there are qualifications to this.  One sees that there has to be taken into account whether there is a real possibility – I do not quite know what “well possible” means.  That might mean a substantial possibility or a very substantial possibility that:

the creditor shall have a right to a compensation against the person who benefited from this act.

So it means that there can be according to Czech law an ignoring of the change of title from Jan Emil or from what might then be his estate if ‑ Czech law deal with that, and that is all taken into account in his Honour’s assessment, not to be disturbed in this Court, that there remains a 20 per cent chance of all of that yielding full recovery.

EDELMAN J:   When you say “full recovery”, do you mean full recovery in a looser sense of saying that by recovering against the seventh and eighth respondents the overall position against the seventh and eighth respondents and the claims against Jan Emil will as a net be met.

MR WALKER:   Be met, yes.

EDELMAN J:   Or do you mean that somehow the claims in the Prague proceedings could, or were found to, have ameliorated the loss of value of the rights that ‑ ‑ ‑

MR WALKER:   No, it will be the realisation of the right.

EDELMAN J:   But the right could ‑ ‑ ‑ 

MR WALKER:   The right to be paid will be met ‑ ‑ ‑ 

EDELMAN J:   But the right in Justice Osborn’s judgment was only a right against Jan Emil.

MR WALKER:   Yes, that one, yes.  Hence the significance of the donation by Jan Emil.

EDELMAN J:   Do you mean then the realisation of the right against Jan Emil by reference to claims against Jan Emil, or somehow by reference to claims against other people?

MR WALKER:   No, no, they all go back to the 1998 claims against Jan Emil because that was what the parties who settled those proceedings, the 1998 proceedings, the way they settled it was to say if you do not do what we have agreed by way of compromise you will consent to judgment for an amount to be quantified for the equitable compensation for which we sued you.  That was finally worked out, with the last step being Justice Kyrou’s quantification. 

So it is Jan Emil’s obligation as judgment debtor that we are talking about.  That was the right, or the economic interest, the difference does not matter for present purposes, that was then affected by a sensible, with great respect, choice on the part of the judgment creditors, amongst other things, to invoke bankruptcy.

I say “amongst other things” because they also sought to set aside, as a transaction to defeat creditors, the transfer in Melbourne, and were both unopposed and successful in doing so.  So there is more way than one of enforcing such a judgment.  It might be that at law school one saw the primary method, whatever “primary” might mean, is to get a writ of execution and send the bailiffs in ‑ send the sheriff in.  It is a very uncommon practice, of course, not least because with incorporated entities there is a different squeeze in relation to threats to wind up. 

But, in our submission, none of that shows that the prospect and the economic interest, the single aim of the exercise, ever alters.  It is just that circumstances and choices, including choices of the creditors, the holder of the rights, will no doubt adapt to circumstances as they change.  The death of a debtor not bankrupted, obviously, is another example.  That did not happen in this case, because the death came after discharge from bankruptcy, which would have altered the way in which one sets about enforcing still the same right or economic interest, that is, to get full value for it.  Our point is that ‑ ‑ ‑ 

STEWARD J:   Can I ask a very basic question, following on from that?  Do you say that the rights that were held against Jan Emil prior to the donation agreement, are they still extant - the rights against Jan Emil?

MR WALKER:   Yes.  Sorry, let me be clear.  We know from the evidence that there has been a startling shortage of people to step into the shoes of the deceased, Jan Emil, by way of being a representative of his estate in Czech proceedings.  So, as in our system, that no doubt presents, if only procedural, a very formidable obstacle to steps against the estate of Jan Emil, and I am making assumptions that do not need to be explored about similarities between our system and the Czech system with respect to the continuation of the indebtedness of a deceased person.

STEWARD J:   Were there findings of facts made about the administration of his estate?

MR WALKER:   No, it would be too grand to say “administration of estate”.  I think it goes no further than the fact that upon his death there has arisen questions of a party to represent what we would call his estate in Czech proceedings.

STEWARD J:   Does that mean that your answer is that it may or may not be still extant, depending on Czech law?

MR WALKER:   No, I think my answer is that the common evidence of the experts called by the plaintiffs is that the claim against Jan Emil can be enforced through 42a by setting aside – not setting aside, by contesting the donation as a legal act curtailing satisfaction of the enforceable claim being the equitable compensation judgment, and that that continues to be the case, notwithstanding his bankruptcy, of which the Czech system apparently takes a different view from ours, but more to the point notwithstanding his death.

Their evidence is that 42a is a viable and proper and reasonable course to follow in order to obtain recovery by way of what I am calling loosely “enforcement” – what their Honours in the Court of Appeal called “enforcement” – of the equitable compensation judgment.  From that evidence, it must follow – and it was accepted – it must follow that his death does not bring an end to the possibility of the judgment against him being met by payment of money.

STEWARD J:   Are there proceedings against Jan Emil pursuant to clause 42a(1) still on foot?

MR WALKER:   No, they are proceedings against his sons, the donees. 

STEWARD J:   So, this is a case where the rights that existed before the donation agreement you would say are not being pursued?

MR WALKER:   No, they are being pursued, they are the enforceable claim, which is the object – that is the protection, vindication or realisation of which is the object of 42a(1).

STEWARD J:   They are against the sons, are they not?

MR WALKER:   They are against the sons in the sense that their title is at risk, but they are the means by which ‑ it is a tracing exercise – they are the means by which the claim against Jan Emil continues to be advanced, and that is what 42a(4) makes clear.  Now, can I make a – and your Honours will have noticed ‑ ‑ ‑

EDELMAN J:   If the analogy is with a tracing exercise, then the sons are really in the position of joint tortfeasors or contributories ‑ ‑ ‑

MR WALKER:   Or even perhaps Barnes v Addy.

EDELMAN J:   ‑ ‑ ‑ because a claim against a first recipient would not be lost just because there are subsequent tracing claims against subsequent recipients.

MR WALKER:   That might be right.  In a comparative law sense, but in a very desultory way, one might be reminded of Barnes v Addy in some aspects of what you spelled out as prerequisites of the decision under 42a(1), which you see in 42a(2), which is expressed in English as follows:

The creditor –

that is the plaintiffs here:

may contest the debtor’s –

that is Jan Emil – so that is what you are contesting, you are contesting Jan Emil’s legal acts:

done during the last three years on purpose of curtailing his creditors if the other party –

now that is David and Paul, his sons, the donees:

must have known of this purpose ‑

There is the conspiracy and that is why the experts no doubt considered 42a viable.  They must have known of this purpose as well as the debtor’s legal acts curtailing his creditors and the findings adverse to my client and to Jan Emil and his two sons, who are before this Court, as judgment debtors for conspiracy obviously feed very directly into, one would have thought, prospects of success by the plaintiffs in Czech 42a proceedings of making good that prerequisite.  You see that some care is taken not to punish the innocent transferee by the phrase at the end of 42a(2), namely:

except if the other party was not able to learn the debtor’s intention to curtail the creditors at [that] time even with a due care –

a phrase clumsy in its English, but clear in its intent not to include co‑conspirators in an attempt to defraud creditors, which is the question here or the position here.

KIEFEL CJ:   That might be a convenient time.

MR WALKER:   Thank you, your Honour.

AT 11.22 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.36 AM:

KIEFEL CJ:   Yes, Mr Walker.

MR WALKER:   Your Honours, could I just complete what I wanted to say about the nature of the Czech proceedings, the currency and prospects of which we say show that there is still held in vindication in the future of the economic interests at question, chances and rights – I use those words interchangeably – which may result in full satisfaction of the equitable compensation obligation of Jan Emil.

Under 42a, which, when the judgment under appeal was delivered was in train in Prague, one sees that following the prerequisites in clause (2), you will see in clause (3) the means by which the sons David and Paul are joined in those proceedings:

The contest can be exercised against the person to whose benefit the legal act was done or who benefited from the debtor’s contestible legal act.

So the donee of the properties.  And one sees that it is all in aid of the enforceable claim referred to in clause (1) by the words to which I have drawn attention in clause (4), namely:

the creditor may demand satisfaction of his claim –

that is his enforceable claim:

from what passed from the debtor’s property ‑

So the identity, not coincidental, not peripheral but central under the Czech combination of what we might regard as transactions to defraud creditors and what should be done about that and Barnes v Addy liability and what should be done about that, this codified set of possibilities centrally is concerned with satisfaction of the enforceable claim, that which in this case is Jan Emil’s equitable compensation judgment against him.

EDELMAN J:   Was that finding of or was that construction of section 42a the subjective of a finding?

MR WALKER:   Yes.  That is the effect of the expert evidence to which I have given general reference.  In paragraph 55 at page 151, his Honour at first instance turns, after setting out the hypothetical in paragraph 54 to the actual in 55.  One sees that the last couple of sentences:

Even if the plaintiffs are successful in setting aside the Donation Agreement –

and “setting aside”, for the reasons I think I have explained, may not be the happiest phrase:

this will not result in the second and third defendants’ interests in the Properties vesting in the estate of the first defendant.  If the plaintiffs succeed in setting aside the Donation Agreement, the second and third defendants will retain title . . . However, the plaintiffs would have standing to seek to enforce the equitable compensation judgment directly against the second and third defendants.

That last is a paraphrase of evidence concerning the effect of clause (4), to which I have drawn attention.  You can demand satisfaction from what passed – that is, the donated properties.  Unless that is really possible, you have a right to a compensation against the donees, who took, knowing of the reprehensible motivation.

So to use the language of the discourse below, those are the chances or the opportunities yet to be played out that may still yield complete satisfaction of the equitable compensation judgment, which, as your Honours appreciate, lies at the heart of our proposition that the plaintiffs come asking for money on account of a reduction in their chance, the attempted spoiling by us held not to be fatally effective – that is, not to have resulted in destruction but to have reduced the prospects from 75 per cent to 20 per cent – and they will have, if they retain the judgment against which we appeal, not only that judgment but they will also have the fruits, if they persist in realising what is available to them, in Prague.

GAGELER J:   But then equity would step in to prevent double recovery.

MR WALKER:   You may not need equity, depending upon what I will call parties.  In our submission it is not straightforward to understand who of the conspiracy co‑judgment debtors could raise an equity, not among themselves, it is not a highwayman’s contribution case, who could raise an equity against the plaintiffs.  After all, there would have been a judgment at law saying that they are entitled, not only to have whatever benefit they can get from the proceedings in Prague, but also a payment, not on account, but simply a payment, finally, by the adjudicated damages, being the 55 per cent.  So one can see that the possibility of the 75 per cent being exceeded is not at all fantastic.  They have got 55 per cent.

Things have transformed since then but, in our submission, obviously not only and always by reason of the conspiracy.  That is why, in our submission, matters that might be seen as being this is the current remedy – there was a remedy in bankruptcy, now there is a remedy in donation proceeding, it needs to be played through in order to see whether there will be produced any loss.

Your Honours, there was a question concerning whether – from Justice Gleeson with respect to the 75 per cent.  Could I simply add by way of note that the trial judge at paragraph 56 in referring to matters yet to occur is, we think with great respect, a shorthand to capture the matters which were described a little more informatively in paragraph 14 – I do not need to take you to it – if you put them together, that would appear to be playing out the donation proceedings, we think.

A similar explanation of references in reasons, a different topic, paragraph 111, to which numerous references have been made in the Court of Appeal’s reasons, does of course require a look back to paragraph 87 – that is at the appeal papers 286, particularly the passage at about line 20.

There was argument against us, we understand directed against our assertion of the proper standards to ascertain loss, as opposed to the chance of a future loss, which was couched in terms of the policy of the law ensuring that the risk, one might add the trouble, of the donation proceedings was an example of something that ought not to be visited on plaintiffs, but rather on defendants.

I call in aid what I said earlier about mitigation and the two senses it may arise.  One that may play against us, that is the costs of mitigation, and two, which was never involved in this case, namely a failure to mitigate.  Leaving aside those senses, in our submission, harsh as it may seem, it is with respect axiomatic that the risk or trouble of enforcing or recovering the judgment that had been entered against Jan Emil was, alas, always on the plaintiffs.

Judgment creditors are always functionally in the position of having to do whatever needs to be done in order to turn words on paper into money at bank.  And so, nothing is added by saying that our arguments somehow allocate a risk, wrongly, on a plaintiff.  The risk of, and trouble of, and expense of, enforcing, is something which nature imposes on a plaintiff.  That will not, in our submission, assist the analysis of whether a loss has been incurred when there are still chances to be played out which will produce enough money at bank to show that the plaintiffs are not in a worse position than they would have been in but for the tortious conspiracy.

Your Honours, some references were made in relation to Tabet v Gett, and it is, with respect, obviously appropriate for us to recognise that the considerations in the case of living, personally injured plaintiffs, with wrongs that have been committed against them with respect to their medical diagnosis or treatment is, in the nature of things, not likely to provide obvious and complete analogies in every respect with financial losses such as are in question in this case, but it remains the case that this Court, particularly in the reasons of your Honour the Chief Justice, does call in aid principles which can be derived from authorities in relation to financial loss and principles which, in our submission, do cross over those otherwise, I accept, distinct subject areas.

In particular, for example, the notion of chance not playing out cannot possibly be seen in Justice Kiefel’s paragraph 131 at page 584 of 240 CLR 537 – cannot possibly be seen as a concept which applies only with respect to medical misadventure. Those are matters which that paragraph graphically demonstrates, where statistics alter as you survive longer, that such matters may fluctuate, just as they may in commerce.

It is, in our submission, important to note that the reasons in Tabet v Gett¸ paragraphs 136, 137 at page 585, include and call in aid matters which are not confined only to personal injuries matters, and also include a reference via Sellars to the invocation of Malec v Hutton which, as I drew to attention in‑chief, had itself been extended beyond any confined application to personal injuries, to financial or commercial losses.

In paragraph 137, to add to the colocation of words such as “loss”, “impossible” or unable “to be pursued”, there is also the phrase:

which is no longer available to be pursued –

And that, in our submission, is a conceptual demonstration of the difference between the state of affairs where one can know that quantification is now the only step left in the case, because loss has been demonstrated, and where one does not know that loss will be incurred, because the matter is still a chance to be played out.

Justice Edelman asked about the trial judge’s paragraphs 60 and 65, it had been suggested by my friend that there may be some difference.  The proper reconciliation and reading of them by reference to the expert evidence and the findings about it, will, as straightforwardly be taken from the translated words 42a(4).

It is not true that by reason of the conspiracy producing the donation – leading to the donation proceedings – that there was forever lost the possibility of the property of Jan Emil being available to meet the judgment against Jan Emil; that is the very point about the first of the two possibilities contemplated in 42a(4), and there is the explicit connection in those provisions between the debt, in this case, the judgment against Jan Emil, and the effect of the contestable legal act to curtail rights, which is after all what is complained about with respect to the donation agreement, and to the remedy the Czech law provides, namely, to render that ineffective vis à vis both the transferor and transferee as soon as the prerequisites in subclause (2) are made out, of which, there is held to be some prospect here.

So, there is no destruction of rights against property.  It is a mutation, just as there is a mutation when a judgment debtor – not creditor – a judgment debtor is bankrupted.  The word “inevitable” was used against us as describing the effect of the donation agreement upon the capacity to obtain satisfaction, recovery or enforcement of the judgment against Jan Emil by resort to his assets, including the donated property.  For the reasons I have just put, the word “inevitable” is quite inapt.  We were unsuccessful in locking the property up so far as the expert evidence showed before the courts below, namely, that 42a had a prospect of succeeding in unlocking what we had tried wrongly to lock up.

That is why, with respect, the emphatic statement that there was a zero per cent chance of recovery from properties butts up against the finding, which is not the subject of cross‑appeal – the finding that there is a 20 per cent chance of recovery.  By the way, that means 20 per cent chance of full recovery and leaving aside notional or actual markets, and leaving aside, with respect, the ingenious expedient of contemplating the terms of litigation funders, presumably before they are regulated more, the fact remains that the chance in question- and it does not matter whether it is 99 – it does matter if it is one – but it does not matter if it is 99 or 20 – the chance in question is still a chance of full recovery.

It is for those reasons, in our submission, that to talk about zero per cent chance of recovery, is completely in the teeth of the findings which are not under challenge in this Court.  The final point is this ‑ ‑ ‑

KIEFEL CJ:   How much longer will you be, Mr Walker?

MR WALKER:   I think, one minute.  The final point is this – what are called in‑chief fluctuations in value was treated in the argument against us as being demonstrations from time to time of the reduction in value of property, the chose in action or a right and, thus, so the argument we understand against us runs, sufficient to produce loss notwithstanding that the fluctuations may continue so that by the time of quantification, happy days – there is no need to award any damages. 

In our submission, that flies in the face of the principle that ought to be understood as informing this which is the difference between the detriment, which obviously may be temporary, and loss in the idea - in the eyes of the law.  Your Honours are of course familiar with the famous passage in Wardley 175 CLR 514 at 527, about halfway down the page, the paragraph commencing, “When a plaintiff” – I will not read it.

The distinction there, in our submission, which includes both the limitations question to which reference has been made – that is the invidiousness or injustice, as their Honours put it, of requiring institution of proceedings upon a first manifestation of reduced – a temporary reduction in value, there is also the increase – undesirable according to their Honours – in the prospect of the risk of under‑compensation or over‑compensation – the former being the greater, say their Honours. 

Now, in our submission, that approach which declines to see the first suffering of disadvantage or detriment is one which is entirely on all‑fours with what we urge about the need for a permanent reduction or loss.  Let me explain that.  A permanent reduction in a chose of action by which there will never be a chance of getting as much as you had before the wrong is, of course, a loss in the eyes of the law which is there and then compensable.

A temporary reduction simply means that the chance of you getting 100 cents in the dollar has been reduced temporarily but remains – you still have the chance.  That is what happens here, in our submission.  The chances of recovering 100 cents in the dollar may fluctuate grossly depending upon the nature of the chose in action and the nature of the case and the health of witnesses, et cetera, et cetera.  None of that is, in the eyes of the law, a loss while ever your chance continues. 

We urge that it is permanence not temporary that lifts the – as I have to accept – intended impediment to the recovery in full of the judgment against Jan Emil into being a loss so as to complete a cause of action as opposed to what it remained at the time of judgment here – namely, a matter which was still to be played out.

That, in our submission, is a reconciliation of the basal principles that one sees about contingencies in Wardley and the important principles concerning loss of chance that one sees in Amann, Sellars, and in Hunt & Hunt – which of course is about the convergence of loss of chance and value of the chose in action because the value of the chose in action is naturally going to be subject to an assessment of the chances of it being fully recovered.  May it please your Honours. 

KIEFEL CJ:   The Court reserves its decision in this matter and adjourns to 9.30 am tomorrow for pronouncement of orders and otherwise to 9.45 am.

AT 4.53 PM THE MATTER WAS ADJOURNED