Luigi Iacullo v Remly Pty Limited and Dominic Iacullo and Lillian Iacullo

Pty Ltd v AGT (Qld) Pty Ltd [1988] 2 Qd R1 - Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101 - GM and AM Pearce & Co Pty Ltd v Australian Tallow Producers [2005] VSCA 113 - Harris v Digital Pulse Pty Ltd [2003] NSWCA 10; (2003) 56 NSWLR 298 - Harrison v Schipp [2001] NSWCA 13 - Ho v Powell [2001] NSWCA 168; (2001) 51 NSWLR 572 - Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 - Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810 - Hungry Jack's Pty Ltd v Burger King Corporation [1999] NSWSC 1029 - Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR [11,110] - John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; (2910) 241 CLR 1 - Keech v Sandford (1726) Sel Cas T King 61; 25 ER 223 - Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 276 ALR 375 - Lac Minerals Ltd v International Resources Ltd (1989) 61 DLR (4th) 14 - Mackay v Dick (1881) 6 App Cas 251 - Malsbury v Malsbury [1982] 1 NSWLR 226 - Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583 - News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410; 139 ALR 193 - New Zealand Shipping Co Ltd v A M Satterthwaite & Co Ltd [1975] AC 154 - Peters (WA) Ltd v Petersville Ltd [2001] HCA 45; (2001) 205 CLR 126 - Pilmer v Duke Group Ltd (in liq) [2001] HCA 31; (2001) 207 CLR 165; 180 ALR 249 - Ravinder Rohini Pty Ltd v Krizaic (1991) 30 FCR 300; 105 ALR 593 - Ridout Nominees Pty Ltd v Commonwealth Bank of Australia [2003] WASCA 158 - Secured Income Real Estate (Aust) v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596 - Sullivan v Moody & Ors (2001) 207 CLR 562 - United Dominions Corp Ltd v Brian Pty Ltd [1985] HCA 49; (1985) 157 CLR 1 - Varma v Varma [2010] NSWSC 786 - Warman International Ltd v Dwyer [1995] HCA 18; (1995) 182 CLR 544 - Watson v Foxman (1995) 49 NSWLR 315 - West v Mead [2003] NSWSC 161; (2003) 13 BPR 24,431 Texts Cited: - J D Heydon, Cross on Evidence, 8th Australian ed Category: Principal judgment Parties: Luigi Iacullo (Plaintiff) Remly Pty Limited (First Defendant) Dominic Iacullo (First Defendant) Lillian Iacullo (Second Defendant) Representation: Counsel: G. A. Moore (Plaintiff) D. A. Smallbone (Defendants) Solicitors: Kreisson Legal (Plaintiff) Allsop Glover (Defendants) File Number(s): 07/257623

Judgment 1These proceedings are one of three proceedings which were heard together before me. The Plaintiff, Mr Luigi Iacullo (to whom I will refer, without disrespect, as "Luigi") seeks a declaration that the First Defendant, Remly Pty Ltd ("Remly"), holds its assets as to 50% on trust for him. Luigi also seeks a declaration that Remly, as trustee, holds a one-half interest in a property at [number omitted] Remly Street, Roselands ("Property A") on trust for him. Luigi also seeks orders that the Second Defendant, Mr Dominic Iacullo (to whom I will refer, without disrespect, as "Dominic") and the Third Defendant, Mrs Lillian Iacullo (to whom I will refer, without disrespect, as "Lillian") cause Remly to account to Luigi for all income and other profits received by Remly. Luigi also seeks an order that Remly be removed as trustee and replaced by Trust Company of Australia Limited. 2Luigi and Dominic are brothers and Lillian is Dominic's wife. Luigi was previously the one-half owner as tenant-in-common of a property at [number omitted] Moorefields Road, Roselands ("Property O") and Dominic and Lillian jointly owned the other half interest in Property O. Property O is a battleaxe block with a five metre access to Moorefields Road on which a factory building is situated. It was thought to be suitable for residential development and it appears to have been understood throughout the period that the prospects of such a development would be improved by incorporating adjoining properties to Property O in the proposed development. It has now been granted development approval for such a development. Nature of the evidence 3There are significant and irreconcilable differences between Luigi's and Dominic's evidence of events that are not explicable merely by the passage of time. There is limited contemporaneous documentation to corroborate either party's account, other than Luigi's file notes of later conversations at a time when a dispute was crystallising, as to which other difficulties arise to which I refer below. 4In considering the evidence, I have had regard to Dixon J's observations in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-362 that: "The truth is that, when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality ... it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters "reasonable satisfaction" should not be produced by inexact proofs, indefinite testimony, or indirect inferences." 5In Ho v Powell [2001] NSWCA 168; (2001) 51 NSWLR 572, Hodgson JA (Beazley JA and Davies AJA agreeing) observed that: "There is a long-standing controversy whether the civil standard of proof requires a numerical probability in excess of 50 per cent (see Davies v Taylor [1974] AC 207 at 219), or belief amounting to reasonable satisfaction (see Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-362). My own opinion is that the resolution of the controversy involves recognition that, in deciding facts according to the civil standard of proof, the court is dealing with two questions: not just what are the probabilities on the limited material which the court has, but also whether that limited material is an appropriate basis on which to reach a reasonable decision. I discussed this in some detail in an article published at (1995) 69 ALJ 731 (D H Hodgson, "The Scales of Justice: Probability and Proof in Legal Fact-finding")." These principles were in turn applied by Nicholas J in Aksu v Ilhan [2011] NSWSC 970 at [37]ff. 6It is also important to have regard to the fallibility of human memory, which increases with the passage of time, particularly where disputes or litigation intervene. As McLelland CJ in Eq noted in Watson v Foxman (1995) 49 NSWLR 315 at 318-319, each element of the plaintiff's cause of action: "must be proved to the reasonable satisfaction of the court, which means that the court 'must feel an actual persuasion of its occurrence or existence'. Such satisfaction is 'not ... attained or established independently of the nature and consequence of the fact or facts to be proved' including the 'seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding': Helton v Allen (1940) 63 CLR 691 at 712. Considerations of the above kinds can pose serious difficulties of proof for a party relying upon spoken words as the foundation of a causes of action ... in the absence of some reliable contemporaneous record or other satisfactory corroboration." Those observations were subsequently applied in Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810 at [41] and Varma v Varma [2010] NSWSC 786 at [424]-[425]. 7Luigi gave affidavit evidence and was cross-examined at some length. I have significant reservations as to the reliability of Luigi's evidence. He swore several affidavits in the several proceedings, which set out detailed accounts of relevant conversations in direct speech. These included affidavits sworn on 12 November 2007, 14 November 2007, 22 April 2010 and a detailed affidavit in reply sworn on 4 October (or possibly 4 November) 2010, nearly seven years after the earliest of the events in question and a year before Luigi gave evidence in the proceedings. Luigi swore a further affidavit on 20 April 2011 arranging conversations from his earlier affidavits in chronological order, and also swore further affidavits giving evidence of conversations in direct speech in the course of the hearing. However, Luigi had difficulty recalling some conversations in cross-examination, unless his attention was first drawn to the passage of his affidavit in which he had set them out, and also referred in cross-examination to the fact that conversations had occurred up to seven years ago to qualify his recollection of events (T111, T114). Luigi's account in his affidavits of critical meetings and conversations was, on occasion, less comprehensive than his file notes: for example, his account of the meeting on 12 September 2006 (Luigi 4.11.10 [72]; Luigi 20.4.11 [66]). 8In cross-examination, Luigi was clearly conscious of the matters that he sought to establish in his case and often gave non-responsive and self-serving answers. He was reluctant to concede matters that he regarded as adverse to his interest, only doing so when the cross-examination left him no alternative. For example, his concession that Dominic had never told him that he could take "as long as he liked" to put money into the development (T137-138) was only given after lengthy questioning, and he was reluctant to concede that his legal advisers had taken the position that Dominic and Lillian should be required to account for monies withdrawn from the partnership account on his instructions (T139-141). There were also aspects of Luigi's evidence that were strikingly implausible. For example, he denied that Dominic was "disappointed" in his conduct as a brother in respect of another development ("Hogben Street development"), notwithstanding that Luigi had taken up an investment in that development to the exclusion of Dominic and had agreed to a request that he not disclose Dominic's exclusion from that development for a considerable period. 9There are also other matters which give rise to concern as to the reliability of Luigi's evidence:

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