Hallani v Hallani

Judgment - ex tempore 1These proceedings have moved towards final orders in two stages. 2The first stage culminated in the publication of reasons for judgment on 14 February 2013, reported as Hallani v Hallani [2013] NSWSC 91 ("the first judgment"). 3The second stage, culminating in today's judgment, concerns the question whether the defendant should, in whole or part, be granted relief under s 85 of the Trustee Act 1925 NSW against the liability for $127,834.92 that he was found in the first judgment, prima facie, to have to the plaintiff. 4The marker between the first and second stages of the proceedings is an order made (under the Uniform Civil Procedure Rules 2005 NSW, r 28.2) for the separate determination of the question whether the defendant should have s 85 relief. That order is referred to in para [5] of the first judgment. The terms of s 85 are set out in para [3] of that judgment. 5Since publication of the first judgment, the proceedings have been adjourned from time to time for the purpose of ascertaining whether the estate moneys found to have been misapplied by the defendant, by transfer to Lebanon between 12 and 14 July 2010 or thereabouts, can be recovered or, at least, accounted for to the satisfaction of the plaintiff. 6Had the defendant been able to mediate between the plaintiff and his (the defendant's) parents with a view to re-establishing contact between the plaintiff and her sons, with a view to them being restored to her care, that might, arguably, have had a bearing on the availability of s 85 relief to the defendant. 7I do not say that that would necessarily have been the case, only that it might have been a factor bearing upon an assessment of whether the defendant had acted honestly, reasonably and in a manner supporting a finding that he ought to be excused from the consequences of his failure to account. 8As it happens, although Dr Hallani (the defendant) has expressed a personal view that the boys should be restored to the care of their mother, nothing that has occurred since publication of the first judgment appears to have left any hope for an immediate reconciliation of family members here or in Lebanon. 9In para [44] of the first judgment I recorded a finding that the plaintiff appeared to have been met by a stone wall in her attempts to secure the return of her children or any accounting to her for the funds sent to Lebanon in July 2010. Nothing of substance appears to me to have occurred since publication of the first judgment to justify a different view of the facts. 10The defendant has today tendered as evidence documents which, he submits, demonstrate that somebody (presumably his parents) in Lebanon has purchased land in the names of the plaintiff and her children. He has also tendered documents which, he says, demonstrate that somebody (presumably his parents) has expended money on education expenses referable to the boys. This evidence appears to have been tendered without any, or any substantial, notice to the plaintiff. It has been tendered in circumstances in which its factual foundation cannot be tested, verified, investigated. 11Even if there has been an expenditure of funds by a third party for the benefit of the plaintiff or her children that cannot, absent her acquiescence, constitute fulfilment by the defendant of his obligation to account to the plaintiff for the funds misapplied by him as a trustee. 12In any event, the documentation tendered by the defendant does not permit the Court, with any degree of confidence, to attribute to it the evidentiary effect for which the defendant contends. 13The plaintiff, for her part, has been rebuffed in her attempts to obtain documentation, or information, from: first, the defendant's former solicitor (and cousin), Mr Ali Hallani, a resident of Bankstown; and, secondly the Blom Bank in Lebanon, to whom the misapplied funds were transmitted in July 2010. 14The solicitor asserts that he has provided to the plaintiff all documentation he is able to provide and, pleading ill-health, he asks not to be disturbed any further by the plaintiff's entreaties. Not unreasonably, the plaintiff accepts the practical reality that she is unlikely, in these proceedings, to achieve anything by pressing him further than she has done. 15The Blom Bank asserts that, under Lebanese law, to which it claims to be subject, it is precluded from making any disclosure of information to the plaintiff about what happened to, or the present whereabouts of, the money received by it on 14 July 2010. Not unreasonably, the plaintiff has decided that she cannot, in these proceedings, achieve much by pressing the bank further. 16The defendant has given evidence of personal contact between himself on the one hand, and, on the other, his father, his father's lawyer and his mother in the period since publication of the first judgment. 17He says that his father has, effectively, declined to speak to him at all, hanging up the phone whenever initial contact has been made. He says that his father's lawyer has been no more helpful. 18He appears to have had greater contact with his mother; but he claims that the extent of his contact with her has been limited very much by the ill-health from which she suffers. 19All in all, the effect of this evidence is that the defendant, he says, has had little substantive contact with either his parents or the lawyer. 20How, if at all, evidence of the purchase of property in Lebanon in the names of the plaintiff and her sons could sit with earlier explanations of events of 2010 need not be resolved. I note, in passing, that such evidence might be thought to sit uncomfortably, but not necessarily inconsistently, with earlier evidence of the defendant that urgency attached to transmission of the misapplied funds to Lebanon in July 2010 because of a need to fund medical expenses of the plaintiff 's younger son: see first judgment, para [61]. For present purposes, I am prepared to assume that there is no material inconsistency between the two levels of explanation about what was done with the funds. 21In the light of the findings made in paras [33]-[34] of the first judgment, and on the whole of the evidence adduced in the proceedings, I cannot be satisfied, that any of the elements required to be established for a grant of relief under s 85 have been established. Even if it is accepted that the defendant transferred the disputed funds to Lebanon in July 2010 in a state of mind which can be characterised as subjectively "honest", according to his lights, an objective characterisation of it as "honest" is not so easy to embrace. 22In transferring the money to Lebanon the defendant acted, as I have found, in a manner that was deliberate, and without notice to the plaintiff, with the intention of placing funds within the practical control of his father and to the exclusion of the plaintiff. Even if it be accepted that the defendant subjectively believed in the honesty of his purpose, it cannot be said that he had reasonable grounds for such a belief. 23Even if his conduct is characterised as "honest", there is no basis upon which it can be characterised as "reasonable". 24Nor is there any basis upon which, when judged as at the time it occurred or by reference to subsequent events, the conduct of the defendant can be characterised as supporting a finding that he "ought fairly to be excused" for his breach of trust. 25The defendant's belated change of heart, whereby he expressed support for a return of the plaintiff's sons to her care, appears to have been motivated, at least in part, by a desire to minimise the risk of personal responsibility for the course upon which he deliberately embarked in July 2010. In any event, his change of heart has done nothing concrete to rectify his breach of trust. 26In these circumstances, I decline to grant any relief to the defendant under s 85. 27I propose at the end of these reasons to make an order requiring the defendant to pay to the plaintiff the sum of $127,834.92 plus interest. 28Although I have given consideration to the possibility (mentioned in para [85] of the first judgment) that an award of interest might be made on a compound basis, I have come to the view that, on the facts of the particular case, an award of interest under the more usual rates appertaining to pre-judgment interest (by reference to s 100 of the Civil Procedure Act 2005 NSW) is sufficient. 29Whether the defendant has any recourse against his former solicitor (a possibility noted in para [62] of the first judgment) or against the recipients of the funds transferred to Lebanon in July 2005 (a possibility noted in para [115] of the first judgment) is for the defendant to explore, if he is inclined to pursue such possibilities, independently. 30The defendant must pay the costs of the proceedings. That is because, as it seems to me, the costs should be dealt with in accordance with the usual rule; namely, that costs follow the event. 31Applying the rates of interest ordinarily applied by reference to CPA section 100, the interest that has accrued on the sum of $127,834.92 between 14 July 2010 and today totals $20,841.44. 32The amount the subject of today's judgment comprising the principal sum of $127,834.92 and interest of $20,841.44 totals $148,676.36. 33Accordingly, I make the following orders: (1) Order that the defendant pay to the plaintiff the sum of $148,676.36. (2) Order that the defendant pay the plaintiff's costs of the proceedings. (3) Order, in accordance with the usual form of order for the return of exhibits, that exhibits and subpoenaed material may be returned forthwith. Any exhibits returned must be retained in tact by the person or party that produced the material until the expiry of the time to file an appeal or until any appeal has been determined.