Talacko & Ors v Talacko

PRACTICE AND PROCEDURE - Interlocutory application - Cross-examination of deponent - Supreme Court (General Civil Procedure) Rules 2005, r.40.04.

1 This is an application by the plaintiffs, by a summons filed on 4 September 2009, for an order that until the hearing and determination of both this proceeding and proceeding No. 7819 of 2009 ("the 2009 proceeding"):

(a) the defendant not leave the State of Victoria;

(b) the defendant not attend any point of international departure; and

(c) the defendant not apply for any other passport.

(I will refer hereafter to this type of order as a "no departure injunction"). The summons also sought an order that the defendant's passport be held by his solicitor, Michael Witt of Findlay Arthur Phillips, pursuant to an undertaking by Mr Witt not to return the passport to the defendant unless the Court so ordered or the plaintiffs' solicitor consented in writing.

2 In support of the application, the plaintiffs filed an affidavit of Alana Brooke Giles, a solicitor employed by Holding Redlich, the firm of solicitors acting for the plaintiff, sworn on 4 September 2009 and an affidavit of Howard Roger Rapke, a partner of Holding Redlich, sworn on 7 September 2009. In opposition to the application, the defendant, Jan Emil Talacko, filed an affidavit sworn by him on 9 September 2009 and a short correcting affidavit sworn by him on 17 September 2009. In reply, the plaintiffs filed an affidavit of Jan Talacko sworn on 10 September 2009. Mr Jan Talacko is the son and litigation guardian of the first plaintiff, Helena Marie Talacko, the sister of the defendant.

3 There are a number of judgments in the Court which set out the protracted history of this dispute.[1] Although it is unnecessary to repeat that history, in order to understand the respective positions the parties now find themselves in, it is appropriate to set out the particular background to this application.

4 An order in similar terms to that sought in the present application was made by Byrne J on 14 July 2009 except that, as amended on 15 July 2009, the restraint was expressed to be "until the conclusion of the hearing of the summons filed 14 July 2009 or further order". It was recited in the "Other Matters" part of the order made on 14 July 2009 that Mr Witt had given an undertaking, which was in similar terms to that sought in the present application.

5 The summons filed on 14 July 2009 referred to in the order of Byrne J sought to have the defendant committed for contempt for breach of orders made by Kyrou J on 11 and 23 June 2009. Thus, the effect of the no departure injunction was to prevent the defendant fleeing the jurisdiction, if he had been so minded, prior to the contempt application being heard.

6 On 30 July 2009, Byrne J found that the defendant was in contumelious breach of paragraph 11 of the order made by Kyrou J on 23 June 2009 concerning the provision of copies of the defendant's tax returns. His Honour declined to commit the defendant for contempt. Instead, Byrne J ordered that his no departure injunction be extended until further order. It was recited in the "Other Matters" part of that order that "the intention" of the above order was that the no departure injunction remain in force until the defendant had complied with paragraph 11 of the order of Kyrou J made on 23 June 2009 "to the satisfaction of the Court". Mr Witt's undertaking was continued.

7 At a directions hearing in this proceeding on 10 August 2009, the defendant applied for an order discharging the no departure injunction and Mr Witt applied to be released from his undertaking. In a judgment delivered on 21 August 2009, Kyrou J ruled that the defendant had not fully complied with paragraph 11 of his order made on 23 June 2009 and he therefore refused the applications.[2] However, his Honour granted liberty to the defendant and Mr Witt to renew the applications.

8 In his judgment, Kyrou J made the following relevant observations:

I have taken into account Mr Williams' submissions about the defendant's human rights. The defendant's right to travel overseas is not an absolute right. Among other things, it is subject to what the interests of justice require in this proceeding. In my view, the interests of justice in this case overwhelmingly require that the defendant comply with his discovery obligations, which he has persistently failed to do, and, in particular, to comply with Order 11.[3]

9 On 4 September 2009, Kyrou J ordered that the plaintiffs have leave to file and serve the summons referred to above. It was recited in the "Other Matters" part of that order that Kyrou J had informed the parties that he was satisfied that the defendant had complied with his order made on 23 June 2009 requiring production of copies of the defendant's tax returns. However, it was further noted that the no departure injunction granted by Byrne J and the undertaking in respect of the defendant's passport was to continue until further order.

10 Because Kyrou J now has the management of this proceeding and the 2009 proceeding, and will be hearing the trial of this proceeding commencing on 5 October 2009, it was considered inappropriate for his Honour to hear an application such as this. Therefore, by an order made on 14 September 2009 the application was referred to me.

11 Prior to the hearing of the application, the plaintiffs sought an order under r.40.04(1) of the Supreme Court (General Civil Procedure) Rules 2005 ("the Rules") that the defendant attend for cross-examination. As this course was opposed, I informed the parties that I would hear argument on the matter at the hearing itself, but that I expected Mr Talacko to be available for cross-examination if I decided to allow it.

12 Mr Howells of counsel, who appeared with Ms Kinda of counsel for the plaintiffs, submitted that there were a number of matters in the defendant's affidavits which he wished to challenge by cross-examination and a number of other matters which he wished to raise in cross-examination because they were not dealt with in those affidavits.

13 In response, Mr Williams of counsel, who appeared for the defendant, submitted that cross-examination was not normally allowed on interlocutory applications and that no reason had been given why it would serve any useful purpose. He referred me to what was said by Nicholson J in Scanlon v American Cigarette Company (Overseas) Pty Ltd (No. 1):

There is clearly a discretion in the Court to permit cross-examination on affidavits or otherwise: see LaTrinidad v Browne [1887] WN 208; R v Stokesley Justices; Ex parte Bartrain [1956] 1 All ER 563. In interlocutory matters which, as I have said, this one is, such a discretion is normally exercised somewhat sparingly.[4]

This statement has been cited with approval by Branson J in Friends of Hinchinbrook Society Inc v Minister for Environment (No. 1)[5] and by Kenny J in Wu v Avin Operators Pty Ltd (No. 3).[6] Mr Williams further submitted that the plaintiffs were seeking to gain an unfair advantage in the imminent trial of this proceeding by having a practice run at cross-examining the defendant.

14 Mr Howells then outlined the particular topics on which he wished to cross-examine and the reasons for wanting to do so, and Mr Williams replied with respect to each topic. He submitted that the suggested topics were not relevant to the application.

15 I indicated at the end of the argument that I would allow cross-examination on all but two topics and that I would give fuller reasons for this decision in this judgment. The critical factor, in my opinion, for allowing cross-examination was that this was an unusual application and therefore that it was difficult to know at that early stage what issues would eventually be seen as relevant to the decision. It was important, therefore, to allow the parties a reasonable amount of latitude.

16 Even accepting that the discretion to permit cross-examination in interlocutory applications is "normally exercised somewhat sparingly", it seemed to me that this was an appropriate case to exercise my discretion in favour of allowing cross-examination given the nature of the application. Further, the pressure of other matters waiting to be heard, which was often present with interlocutory applications, was not a factor with this specially fixed hearing.

17 The first of the two topics, on which I did not allow cross-examination, was the defendant's tax status in Australia. Mr Howells wanted to cross-examine on this because he submitted that the existence of a potential capital gains tax liability in Australia was another reason for the defendant not to return to Australia if he were free to depart. Mr Williams submitted that it was both irrelevant and unfair to Mr Talacko to subject him to cross-examination on such a topic. I was concerned about the possible implications of allowing cross-examination of the defendant on taxation questions. But, in any event, it seemed to me that cross-examining a 80 year old man about his tax status was unlikely to be of assistance to the resolution of the application.

18 The second topic on which I did not allow cross-examination was the current financial position of the defendant and his intentions in relation to defending the claim. Mr Williams submitted that it would be quite inappropriate to allow the defendant to be cross-examined about matters such as what his budget was for the imminent hearing, what level of representation he was planning on, and how much money he had available to spend on his defence. I agreed that requiring the defendant to answer such questions would have given the plaintiffs an unfair advantage in the hearing. This was not to say that whether or not the defendant had assets within Victoria was not a relevant consideration in the application itself, but in the absence of any evidence from him about this matter, the Court would be entitled to draw an adverse inference against him.

19 Overall, I found Mr Talacko to be a most unsatisfactory witness, resorting whenever he was confronted with a difficult question to claimed lack of memory or claimed lack of understanding of the question. As Mr Howells pointed out, this claimed lack of ability to remember matters he was asked questions about, even recent events, contrasted sharply with his quick response to one question where he recounted the details of the plaintiffs' unsuccessful attempts at litigating in the Czech Republic.

20 The defendant's attitude to other matters was quite extraordinary. In his affidavit sworn on 9 September 2009 ("his main affidavit"), the defendant complained that because he was not living at his home address in Prague he was not able to receive service of court documents by way of registered delivery and therefore that the plaintiffs had been able to proceed in the last two months with applications in their further court action against him in the Czech Republic "effectively ... unopposed". However, in cross-examination Mr Talacko said that he had not made any arrangements for his sons or his attorney in Prague to collect his mail or to arrange for a power of attorney "because I thought I'd be in Prague".

21 The defendant's evidence about when this action in the Czech Republic was coming on for hearing was also unsatisfactory. In his main affidavit, he stated that "the most recent advice" he had received from his Czech attorney was that it was "due to have a final trial at some time during September 2009". In cross-examination, he said that he did not know when the Czech action would be heard.

22 However, the most unsatisfactory answers the defendant gave in cross-examination were in response to a question about whether he considered it fair that all four of his children should share equally in the properties and to a question about whether he would return to Australia if free to leave. Prevarication, dissembling and evasion are apt descriptions of this part of his evidence.

23 A number of different bases were advanced as the possible source of the power of the Court to make the orders sought. They were:

(b) the statutory power to grant injunctions in s.37 of the Supreme Court Act 1986 ("the Supreme Court Act");

(c) the power to make an order ancillary to a freezing order, pursuant to r.37A.03(1) of the Rules;

(d) the Arrest in Pending Proceedings provisions in Part 6 Division 6 of the Supreme Court Act; and

(e) the remedy in the nature of that formerly given by a writ of ne exeat colonia, pursuant to s.3(6) of the Supreme Court Act and r.57.10 of the Rules.

24 I propose to deal with these suggested bases of power in reverse order, starting with the anachronistically named writ of ne exeat colonia. Section 3(6) of the Supreme Court Act states:

(6) In this or any other Act or enactment or any subordinate instrument or other instrument a reference to a writ of prohibition, mandamus, certiorari or ne exeat colonia by which the Court had before the commencement of this Act jurisdiction to grant any relief or remedy is, subject to subsection (7), to be taken as a reference to the judgment or order by which the Court may after that commencement grant that relief or remedy under this Act and the Rules.

57.10 Departing debtor

(1) The jurisdiction of the Court to grant relief or remedy in the nature of that formerly given by writ of ne exeat colonia shall be exercised only by way of order and in a proceeding commenced in accordance with these Rules.

(2) The proceeding shall be commenced by originating motion in which no person is named as defendant.

(3) The Court may make an order granting the relief or remedy if it is just and convenient to do so.

25 In Cardile v LED Builders Pty Ltd[7] in the judgment of the plurality it was said that:

Finally, before judgment and in cases of an equitable debt or demand, courts of equity ... may, by order in the nature of a writ of ne exeat colonia, prevent a defendant quitting the country without giving adequate bail or security. Dixon J in Glover v Walters said that the order is made where: "real ground appears for believing that the defendant is seeking to avoid the jurisdiction or for apprehending that if the defendant is allowed to depart the plaintiff will lose his debt or be prejudiced in his remedy".[8] [Citations omitted]

26 Clause 6 of the Terms of Settlement made by the parties in February 2001 provided that:

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

Insofar as part of the plaintiffs' claim is for judgment in accordance with clause 6, I consider that it is one of an equitable nature.

27 According to Dixon J (as his Honour then was), the requirements for the issue of the writ of ne exeat colonia were as follows:

(a) there must be an equitable debt in a sum certain;[9]

(c) it must be shown that "the defendant is about to depart beyond the seas";[11] and

(d) the defendant is departing "to avoid the jurisdiction or that the debt will be endangered or, at all events, that the remedy for its recovery will be prejudiced".[12]

28 Mr Williams submitted that several of the requirements for the issue of a writ of ne exeat colonia were not satisfied with this application, even apart from the fact that it had been made by summons in this existing proceeding rather than by originating motion in accordance with r.57.10(2). First, Mr Williams submitted that the claim for equitable compensation was not a sum certain. This is clearly correct as the amount of any equitable compensation is one of the issues in dispute in the hearing which is about to commence before Kyrou J.

29 Secondly, Mr Williams submitted that the purpose of the writ of ne exeat colonia was to prevent the defendant from departing the jurisdiction and thereby hindering the plaintiffs from obtaining judgment. It was not intended to be a means of assisting enforcement of a judgment once obtained. Thus, Dixon J's reference to the remedy for the recovery of the equitable debt being "prejudiced".

30 Mr Williams submitted that this point was made abundantly clear by the judgment of Megarry J in Felton v Callis[13] which was concerned with the issue of a writ of ne exeat regno, being the English equivalent of a writ of ne exeat colonia. His Lordship held that by analogy with the provisions in respect of arrest for legal debts, in particular s.6 of the Debtors Act 1869 (UK), it had to be established that "the absence of the defendant from England will materially prejudice the plaintiff in the prosecution of his action".[14] That meant, according to Megarry J, that what the plaintiff had to establish was that the debtor's absence would:

materially prejudice the plaintiff in his progress towards judgment.[15]

If the debtor's presence was not required for the purpose of assisting the plaintiff to obtain judgment, then a writ of ne exeat regno could not be issued to restrain the departure of the defendant.[16]

31 Mr Howells struggled valiantly in an attempt to show that the defendant's presence could be required to assist the plaintiffs to obtain judgment, but in my opinion he did not succeed. The suggestion that the plaintiffs might want to subpoena the defendant to give evidence or that during the trial documents could be called for from the defendant were not persuasive. Nor was the reference to the possibility of seeking to examine Mr Talacko if costs remained unpaid following a taxation listed for 27 and 28 October 2009. That step relates to enforcing a judgment not to obtaining it.

32 I therefore consider that this would not be an appropriate case in which to restrain the defendant from leaving Victoria by means of a writ of ne exeat colonia.

33 I turn then to the Arrest in Pending Proceedings provisions in Part 6 Division 1, or ss.86 to 100, of the Supreme Court Act. These sections are concerned with arrest in respect of legal debts. Clause 1 of the Terms of Settlement between the parties required the defendant to transfer "all the right, title and interest" that he had in certain specified properties to "such person or entity as shall be nominated by the plaintiffs". Insofar as part of the plaintiffs' claim is for damages for breach of clause 1, I consider that it is one of a legal nature.

34 Section 87 of the Supreme Court Act provides as follows:

If a plaintiff in a proceeding in which a defendant would (prior to 3 October 1839) have been liable to arrest, shows to the satisfaction of the Court by affidavit (whether of the plaintiff or of some other person) -

(a) that the plaintiff has a cause of action against the defendant to the amount of $50 000 or more or has sustained damage to that amount; and

(b) that there is probable cause for believing that the defendant is about to remove out of Victoria or is making preparations to remove out of Victoria; and

(c) that the proceeding will be defeated unless the defendant is forthwith apprehended -

the Court may order that the defendant be arrested and imprisoned until further order of the Court or until security is given by the defendant.

35 In my opinion, reliance on this provision also fails because the plaintiffs are unable to show that the 1998 proceeding "will be defeated unless the defendant is forthwith apprehended" and stopped from removing himself "out of Victoria". Section 90(1) of the Supreme Court Act states that:

(1) An order to arrest may be made, and the defendant arrested under it, at any time after the commencement of the proceeding and before final judgment has been obtained.

This makes it plain, in my opinion, that the defeat of the proceeding with which s.87(c) is concerned relates to the plaintiffs' ability to obtain judgment and not to execution on that judgment.

36 I therefore consider that s.87 of the Supreme Court Act does not give the Court power to make the order sought in this application.

37 The next suggested source of power was an order ancillary to a freezing order pursuant to r.37A.03. That rule states:

37A.03 Ancillary order

(1) The Court may make an order (an ancillary order) ancillary to a freezing order or prospective freezing order as the Court considers appropriate.

(2) Without limiting the generality of paragraph (1), an ancillary order may be made for either or both of the following purposes -

(a) eliciting information relating to assets relevant to the freezing order or prospective freezing order;

(b) determining whether the freezing order should be made.

38 Although the present situation does not fall within either sub-paragraph (a) or (b) of r.37A.03(2), those examples are given "without limiting the generality of paragraph (1)" and the power in that paragraph is that the Court may make an ancillary order "as the Court considers appropriate". Thus, the discretion is very broad.

39 Since 11 June 2009, there has been a freezing order (and other orders) in place restraining the defendant dealing with a number of properties in the Czech Republic, Slovakia and Germany. However, it appears that the making of that order came too late to prevent the registration of transfers following gifts by the defendant in May 2009 to his two sons living in the Czech Republic of all of the properties in that country. Only the forest land near Sucha in Slovakia and the apartment building and land in Dresden in Germany remain in the defendant's name. The plaintiffs' concern is that if the defendant is allowed to return to the Czech Republic he may be prepared to deal with those properties in breach of the freezing order last made by Kyrou J on 21 August 2009, knowing that he would never return to Victoria and expose himself to contempt proceedings. That freezing order was made in the 2009 proceeding rather than, as previously, in this proceeding. However, in my opinion, it is irrelevant in which proceeding the order was made.

40 It seems to me that a Court might consider it "appropriate" that a no departure injunction be granted as an ancillary order to a freezing order in order to prevent its orders being abused. I therefore conclude that r.37A.03 is a possible source of power for the making of a no departure injunction. Whether or not such an injunction would be appropriate in the circumstances of this case will be considered below.

41 The fourth suggested source of power was s.37 of the Supreme Court Act. That section reads as follows:

(1) The Court may by order, whether interlocutory or final, grant an injunction or appoint a receiver if it is just and convenient to do so.

(2) An order made under subsection (1) may be made either unconditionally or on such terms and conditions as the Court thinks just.

(3) The Court may grant an interlocutory injunction under subsection (1) restraining a party to a proceeding from removing from Victoria or otherwise dealing with assets located within Victoria, whether or not that party is domiciled, resident or present within Victoria.

42 In Bayer A.G. v Winter,[17] Mareva and Anton Piller orders were made ex parte. However, the judge refused to make orders that the first defendant be restrained from leaving England and Wales and that he forthwith deliver up his passports. The plaintiffs successfully appealed. Fox LJ, with whom Ralph Gibson CJ agreed, said that this was not a case in which a writ ne exeat regno would be applicable. The jurisdiction relied on by counsel for the appellants was s.37(1) of the Supreme Court Act 1981 (UK), which is in similar terms to the Victorian s.37(1) quoted above. In granting the order, Fox LJ said that:

... the court has a wide discretion to do what appears to be just and reasonable in the circumstances of the case. The court has to exercise that discretion according to established principles, and the particular matter with which we are concerned at the moment, namely an injunctive restraint upon a person leaving the jurisdiction, is not one on which there appears to be previous authority. It is clear, however, that the law in relation to the grant of injunctive relief for the protection of a litigant's rights pending the hearing of an action has been transformed over the past 10 years by the Anton Piller and Mareva relief which has greatly extended the law on this topic as previously understood, so as to meet the needs of justice.

Bearing in mind we are exercising a jurisdiction which is statutory, and which is expressed in terms of considerable width, it seems to me that the court should not shrink, if it is of opinion that an injunction is necessary for the proper protection of a party to the action, from granting relief, notwithstanding it may, in its terms, be of a novel character.[18]

...

Therefore it seems to me that the court is faced with a situation in which there is a risk to the plaintiffs that they may not obtain the information ordered to be disclosed, unless the order which is now sought is granted; while, at the same time, any risk of hardship to the first defendant is dealt with by his capacity to apply to a judge to vary or discharge the order.

It should be noted, however, that his Lordship limited the duration of the restraint to a period of two days after service of the order because:

It is an interference with the liberty of the subject, so that the period should be no longer than is necessary to enable the plaintiffs to serve the Mareva and Anton Piller orders which they have obtained, and endeavour to obtain from the defendant the information which is referred to in those orders.[19]

43 Thus, I consider that this Court has the power "if it is just and convenient to do so" to restrain a person from leaving Victoria.

44 Finally, there is the inherent jurisdiction of the Court. In Jackson v Sterling Industries Limited,[20] Wilson and Dawson JJ said:

... if the power of a court to grant injunctions of the Mareva type and associated relief is to be found in its capacity to prevent the abuse of its processes, then it is as much to be found in its inherent power as in any statutory power to grant such relief as is "just or convenient" or "appropriate".[21]

That general power [to grant a Mareva injunction] should, however, now be accepted as part of the armoury of a court of law and equity to prevent the abuse or frustration of its process in relation to matters coming within its jurisdiction.[22]

45 In Cardile v LED Builders Pty Ltd,[23] the plurality judges referred to the above passage from the judgment of Deane J and added:

By this means, the risk of the stultification of the administration of justice is diminished.[24]

46 It seems to me, therefore, that this Court has the inherent power to make orders for the purpose of preventing the abuse of its processes or for the purpose of enhancing the administration of justice. That is, the Court has the power, in an appropriate case, to make a no departure injunction for one or other of those purposes.

47 I turn then to consider whether any no departure injunction should be made in this case. There is no doubt that such an order would be a serious interference with the defendant's right to enter and leave Victoria freely and with his freedom to choose where to live, as set out in s.12 of the Charter of Human Rights and Responsibilities Act 2006.

48 Mr Williams referred me to statements along the same lines as s.12 in cases heard well before the Charter was enacted. Deane J said in Re Tyndall:[25]

A citizen should be free to travel if and when his commercial activities or personal desires prompt him so to do.

A similar observation was made by Bowen CJ in Weiss v Official Trustee in Bankruptcy:[26]

It is a basic principle that a resident of Australia is entitled to expect that he may travel freely ...

49 Both of these cases were concerned with s.272 of the Bankruptcy Act 1966 (Cth), which deals generally with the position of persons who seek to leave Australia for the purpose of defeating or delaying their creditors. In Reemac Pty Ltd v Financial Partners Pty Ltd,[27] Jessup J referred to Re Tyndall and continued:

... the circumstance that special provision is made in the Bankruptcy Act to restrain persons in defined circumstances from leaving Australia underlines the general inappropriateness of such restraints when sought on no basis other than the interests of applicants in normal civil proceedings.

50 Even where specific powers are given to public bodies, such as the Australian Securities and Investments Commission[28] and the Commissioner of Taxation,[29] to prevent the departure of persons in the public interest, judges have expressed the need for caution. For example, Finkelstein J said in Australian Securities and Investments Commission v Wiggins[30] in respect of an application by ASIC under its statutory powers under the Corporations Law:

In my view the power to restrain a person from leaving the jurisdiction or requiring a person to deliver up his passport, which would have the same effect, is a power that should be exercised with great caution. I regard any restriction on a person's individual freedom of movement from one country to another as being a sufficiently serious interference with that person's personal rights and liberties that the power to impose the restriction should be exercised only in the most clear case.

51 An order restricting a person from travelling overseas is one thing. It is an even greater infringement when the order prevents that person from living where he or she chooses to live. In this case the defendant stated in his affidavit sworn on 9 September 2009 ("his main affidavit") that:

My principal reason for wishing to be free to return to the Czech Republic as and when I choose is that it is my home.

He also said that although he no longer owned his house at Hastalska 12, Prague he had been told by his sons David and Paul, who were now the owners, that he could continue to reside there "for the rest of my life".

52 Further, the defendant claims a closer connection with the Czech Republic than with Australia, even though he has lived in Australia for over 30 years. In his main affidavit, the defendant stated that he was and at all times had been a Czech citizen. He was born and educated in Czechoslovakia and only left, as a young adult, because of the communist takeover. It seems to me that it is really irrelevant whether he returned to Czechoslovakia as soon as he could following the removal of the communist government, which the plaintiffs disputed, or whether he only returned some years later to re-establish his residency in the Czech Republic in order to comply with the restitution requirements of that country, as the plaintiffs maintained. For whatever reason, the defendant stated that he had spent the vast majority of his time in the Czech Republic since re-establishing permanent residency there in 1992. He has two children, and grandchildren and old school friends in Prague. He chose to celebrate the occasion of his recent 80th birthday in Prague. Finally, the defendant stated that he had comprehensive medical insurance in the Czech Republic which would allow him to take advantage of the medical services available to him there, so that he did not need to remain in Australia for any "on-going medical condition". The defendant also said that he was not a resident of Australia for taxation purposes. At all times since he obtained restitution of the properties in 1992 he had filed tax returns in the Czech Republic, as a citizen and resident of that country.

53 The defendant played down any suggestion of a close connection with Australia. Whilst acknowledging in his main affidavit that he had an Australian passport and that he stayed in his "wife's home" in Glenferrie Road, Malvern when in Melbourne, he referred to his "years in exile" when living in European countries and then Australia after leaving communist Czechoslovakia. The defendant stated that although he had remained a reasonably frequent visitor to Australia, he had not lived in Australia since 1992. He said that he only came to Australia for holidays and to visit his family and, in particular, two of his children and grandchildren. The reason that he came to Australia during the European summer this year was because of his daughter's wedding in early July.

54 However, the defendant's claim that he had, since 1992, lived in the Czech Republic for a much longer time than in Australia could not be tested at all in cross-examination because he asserted that as a result of his poor memory he was unable to give any details of the lengths of his stays in Australia in previous years, not even in 2008.

55 It is relevant, in my opinion, that despite his disclaimer of any close connection with Australia, if Mr Talacko is required to remain in Victoria for some further period, he will not be isolated in a foreign community. On the contrary, his wife and two of his children and grandchildren live here and he is able to live at his former residence which was once jointly owned by him and his wife but which is now owned solely by his wife. His interest in the property in Glenferrie Road, Malvern was transferred to his wife, Judith Talacko, "in consideration of the marriage between the transferor and transferee" by a transfer executed on 23 September 1998, which was a few days before the commencement of this proceeding. The transfer was registered on 16 October 1998.

56 The purpose of restraining the defendant from leaving Victoria is not to keep him in Victoria for its own sake. Indeed, the plaintiffs' task of obtaining judgment against Mr Talacko would be a lot easier if neither he nor his lawyers attended the forthcoming hearing. Nor should the purpose be, in effect, to hold the defendant to ransom by restraining him from departing Victoria until he reverses the reduction in his assets. After all, a freezing order is not a means of obtaining "a secured position against other creditors".[31] Rather, a legitimate purpose of such an order would be to seek to ensure that other orders of the Court are not flouted.

57 I am satisfied that if the defendant leaves Australia and returns to the Czech Republic, there is an unacceptable risk that he will ignore the freezing order made against him and deal with one or other or both of the two properties still in his name, namely those at Sucha in Slovakia and Dresden in Germany. There are a number of reasons why I have reached this conclusion. First, there is the fact that commencing in May 2009 the defendant gave his two sons, David and Paul Talacko, all of his properties in the Czech Republic, including those at Repy and Kbely which, pursuant to clause 1 of the Terms of Settlement, were part of the properties which he had agreed to transfer to the plaintiffs. To understand the significance of this step, I can do no better than quote how Kyrou J described the sequence of events:

1. During an interlocutory hearing before Osborn J on 20 June 2008, there was discussion about whether there was any real prospect of Jan Talacko dissipating his assets. The discussion was in the context of an ex parte injunction application the plaintiffs had made in the District Court of Prague in relation to the Properties. The following exchange took place between Osborn J and Jan Talacko's senior counsel, Mr Berglund QC:

MR BERGLUND: Your Honour, if I can address the question of the spectre of disposition having been raised.

HIS HONOUR: Yes.

MR BERGLUND: The judgment and the injunction was ex parte.

HIS HONOUR: Yes.

MR BERGLUND: My client says that he had no intention of disposing of the assets, and the court said, if he has no intention. But he didn't say it to the court when the injunction was raised. It was ex parte, and - - -

HIS HONOUR: He can undertake to this court not to dispose of them. There's no - if he did that that simplifies it all.

MR BERGLUND: That's right.

HIS HONOUR: If he did that, you would say there would be no reason at all to maintain the Czech proceedings.

MR BERGLUND: No.

HIS HONOUR: Yes, I understand.

MR BERGLUND: Those are the issues, and we ought not to be diverted from the spectre of it being disposed of because it was ex parte. There was no indication that he was intending to dispose of it, they just said, well you know we just want an injunction to restraining him from doing it.

1. On 14 August 2008, the plaintiffs filed a summons seeking a freezing order under Order 37A of the Supreme Court (General Civil Procedure) Rules 2005 ("Rules") in respect of Jan Talacko's assets, including the Properties. In response to this application, Jan Talacko swore an affidavit on 9 September 2008 in which he stated:
   1. In the 16 years since I first recovered some of the properties I have not disposed of any of the interests in them that I have acquired. To the contrary, I have purchased other shares in these properties from either government bodies or other owners so that my interest in these properties has in fact increased over time.
   2. Further, despite all the time, effort contributed by me to date, there is still a substantial amount of work that is required to be done in order to complete the task of restoration and it is possible that this will not be completed in my lifetime. As a result, I have no intention of disposing of any of these properties[.]
   3. My sole intention with respect to the properties is to continue to rehabilitate and modernise them to a comparable state to which they were prior to them being forcibly taken from my parents. I have no intention of selling, disposing, encumbering or in any other way dealing with the properties other than in the normal course of letting some of them out on normal commercial terms where that is permitted.

1. During the directions hearing on 11 March 2009 - being the first directions hearing I conducted in relation to the 1998 proceeding - I informed the parties that the final hearing might take place in September 2009. I also informed them that, in principle, I favoured the appointment of a special referee to value the Properties.
2. On 25 March 2009, I ordered that the final hearing of the 1998 proceeding be fixed for six weeks commencing on 5 October 2009 and gave directions for the completion of interlocutory steps. ...
3. On 12 May 2009, Jan, David and Paul Talacko executed in Prague:

(a) a donation agreement in respect of interests in some of the Properties in Repy;

(b) a donation agreement in respect of interests in some of the Properties in Kbely and Prague 1;

(c) a donation agreement in respect of interests in the Properties in Holesovice; and

(d) applications for change of ownership under a donation agreement in respect of the interests in the Properties referred to in (a), (b) and (c) above ("Applications for Registration").[32]

58 Despite these unequivocal statements about his intention, the defendant did not give the plaintiffs any notice of his changed intention with respect to retention of the properties prior to giving them away to his sons.

59 Secondly, there is the recent development with respect to the forest land near Sucha. During the course of the hearing on 18 September 2009, in response to a question from me, Mr Howells, said that the defendant's solicitor had written to the plaintiffs' solicitor advising that "no transfer document had been entered into about Sucha or Dresden". Mr Williams confirmed Mr Howell's understanding. He further informed me that there had been "no gift" of either of the above properties. The defendant was present in Court when these statements were made by Mr Williams, although I accept that he may not have heard or have been following my discussion with counsel. Subsequently, by an email dated 24 September 2009, Mr Williams drew to the attention of the Court and the plaintiffs' legal representatives that in the course of conferring with the defendant on the previous day in preparation for the trial, it emerged that the defendant "thought that he may have signed some documents in connection with the Slovakian land, but that they had proved to be ineffective". After urgent enquiries were made overnight, the defendant instructed Mr Williams as follows:

(a) My client did sign donation/transfer documents in favour of his two sons Paul and David in relation to the Slovakian land. These documents were very similar to, and were signed and delivered to his sons' lawyer at or about the same time as, the documents which he signed (and which his sons subsequently had registered) in relation to the Czech properties. However, my client understands that these documents were rejected by the Slovakian land registry apparently on the basis of a Slovakian statutory law concerned with foreign ownership controls.

(b) My client has not ever prepared, signed or had any document seeking to gift, transfer or otherwise deal with his interest in the Dresden properties. ...

60 I accepted Mr Williams' apology and his assurance that he did not intentionally mislead the Court and that what he told me in good faith was based on his instructions as he and his instructing solicitor then understood them to be. As was only to be expected, Mr Williams very properly and promptly corrected the error. However, at the plaintiffs' request, I relisted the application so that Mr Talacko could be cross-examined about his dealings with the Sucha property. Once again, his evidence was unsatisfactory.

61 The relevant correspondence between the solicitors revealed, in my opinion, that the defendant had misled the plaintiffs, as well as his own legal representatives, about what had happened with the Sucha land. By a letter dated 12 August 2009, Holding Redlich wrote to Mr Witt of Findlay Arthur Phillips as follows:

Please advise our office as a matter of urgency whether your client has taken any steps to deal with the land located at Sucha, Slovakia (a Clause 1 property under the Terms of Settlement).

...

If your client has sold or transferred the land at Sucha, Slovakia, we require details of to whom the land has been sold or transferred and for what consideration. We also require copies of any documentation in relation to the sale or transfer of the land.

We are instructed that our client remains the owner of the land at Sucha, Slovakia and has not taken any steps to deal with that property.

63 Thirdly, in my opinion, the defendant has given no credible explanation for:

(a) giving away most of the properties at this time, or

(b) choosing to give those properties to his two children living overseas, to the exclusion of his other two children living in Australia.

All the defendant could say was that he could no longer look after the properties and that he gave them to David and Paul because they lived in the Czech Republic.

64 Thus, by all of these actions and others, the defendant has demonstrated, in my opinion, that he is determined not to allow the plaintiffs to enjoy the fruits of any legal victory against him. I consider that he would understand that there would be no prospect of him being prosecuted for contempt if he breached the freezing order but did not return to Victoria.

65 I also am satisfied that, if the no departure injunction is not made, the defendant will leave Australia sooner rather than later and certainly before judgment is handed down. He said in his main affidavit that for all of his adult life he had travelled widely and that freedom to travel was therefore important to him. The defendant said in cross-examination that he had "no immediate plans to return to Prague", if free to do so. But he also said that he would "go almost immediately" if he had to defend the plaintiffs' action against him in the Czech Republic or if his grandchildren or children in that country fell ill. He further said that he had "no other reasons at the moment" for departing from Australia and that he intended to be present in Australia for the hearing commencing on 5 October 2009 if he was able to be. But if the defendant decided not to give evidence, he could still be represented at the hearing of this proceeding to oppose the plaintiffs' claims, without having to remain in Australia. Even if the defendant remains in Australia for the duration of the hearing, I consider it likely that he would leave Australia immediately after the hearing is completed and before any judgment is given.

66 All of this points to the desirability of restraining the defendant from leaving Victoria before judgment is delivered in this proceeding. As previously stated, the summons sought the no departure injunction not just in respect of this proceeding but also until the hearing and determination of the 2009 proceeding. In that proceeding, Mr Talacko is the first defendant, his sons David and Paul are the second and third defendants respectively and his wife Judith is the fourth defendant.

67 During the first hearing of this application I indicated that my very strong tentative view was that, if I were to make a no departure order, I would not make any order lasting beyond the delivery of judgment in this proceeding. This was because the interlocutory steps in the 2009 proceeding were still at a very early stage and a hearing date appeared to be well into the future. In any event, it seemed to me to be unnecessary to restrain the defendant beyond the delivery of judgment in this proceeding, as any appropriate further steps could be taken at that stage in the light of what has been said in the judgment. In the end, the plaintiffs did not press for the longer period.

68 As I understand it, the time before the judgment is likely to be given is now estimated at between six and twelve weeks. A restraint of that duration would be longer than any of the short time periods mentioned in earlier cases. Mr Williams submitted that the plaintiffs had been unable to refer me to any case in which in ordinary civil litigation there had been an injunction restraining a party from leaving the jurisdiction until the hearing and determination of the proceeding. An order of such duration, he submitted, would be "remarkable".

69 However, Mr Howells did refer me to the decision of Harman J in Re Oriental Credit Ltd.[33] In that case, Harman J made an order ex parte on 26 June 1987 restraining the applicant from leaving the jurisdiction until after the completion of a private examination to take place on 21 July 1987 before the joint liquidators of a company of which the applicant was one of two shareholders and directors. The applicant had left the jurisdiction shortly before the liquidation and was known to be returning from Pakistan for a very short time to visit his wife. He had made no attempt to co-operate with the liquidators. His Lordship refused to discharge the order absolutely but agreed to vary it to allow the applicant to return to Pakistan for "very proper" family reasons. Harman J said that he regarded the applicant's undertaking to return for the examination "as inadequate by itself" and required him to support his undertaking by a bond in the sum of £250,000. The Court of Appeal reduced the amount of the bond to £50,000, on certain undertakings being given by the applicant.[34]

70 As I have said already, there is no justification in keeping the defendant in Victoria just for the sake of it. The justification is that such an order would assist in attempting to ensure that the defendant complies with the freezing order. The defendant having successfully given away all of his properties in the Czech Republic, the only scope for the operation of this order is with respect to the property in Slovakia and the property in Germany. The position with the forest land near Sucha in Slovakia is more complicated now that it appears that the defendant had also tried to give that property to his two sons before any freezing order was made by this Court. Nevertheless, the transfer to the sons apparently having been rejected by the Slovakian authorities, there can be no doubt that the Slovakian property is now subject to the freezing order. In a rather confused way, the defendant acknowledged in the second hearing that the freezing order prevented him from dealing with the Sucha property. At no stage, however, did he give any undertaking or assurance that he would continue to comply with the freezing order if he returned to live in the Czech Republic.

71 I initially considered whether the plaintiffs could be protected from the apprehended breach by the defendant of the freezing order by an order requiring the defendant to sign transfers of the Sucha property and the Dresden property to be held, as it were, in escrow pending the delivery of judgment. However, I was concerned that even if the relevant authorities in Slovakia and Germany were notified of these steps, the proposed procedure could still fail to protect the plaintiffs against a breach by the defendant of the freezing order. My concerns about this procedure have only been strengthened by the revelations about the defendant's earlier dealings with the Sucha property.

72 Therefore, I have concluded that the only way of ensuring that the plaintiffs are not prejudiced by the defendant breaching a Court order once he has left Victoria, is to make the permission to depart conditional upon him paying into Court, or otherwise securing to the satisfaction of the plaintiffs' solicitors, a sum of money which represents the value of the two remaining properties held by him, to await the outcome of the proceeding. If this is done, then compliance with the intent of the freezing order will not be defeated even if the defendant breaches it once he returns to the Czech Republic.

73 By the time of the second hearing, the Special Referee's report had been received by the parties. Mr Howells tendered that report, without opposition from Mr Williams, for the purpose of giving me some indication of the current value of those properties. Mr Williams did indicate that one criticism that would be made of the Special Referee's report was that he had over-estimated the current size of the Sucha land by about 20 per cent.

74 The Special Referee's current valuation of the Sucha land was € 1,218,000, consisting of € 1,188,000 for the land and € 30,000 for the hunting lodge. If the Special Referee has over-estimated the size of the area of forest by 20 per cent, presumably this would reduce the valuation to € 980,400. The Special Referee's current valuation of the Dresden property was € 185,000. Thus, depending on whether the criticism is right or not, the current value of these two properties is said to be between € 1,165,400 and € 1,403,000. Obviously, I cannot decide whether or not the Special Referee has over-estimated the size of the Sucha land. It therefore seems to me that, given the purpose of the contemplated order, the figure I should work on is the higher one. At the time of writing, that figure converts to $2,328,400. On the other hand, one cannot be too precise in an exercise such as this. I therefore propose to use the figure of $2.3 million.

75 This is an extremely large amount, although it is only a fraction of the current valuations by the Special Referee of all of the clause 1 properties at € 10,083,000[35] and of all of the properties at € 19,573,000. As I understand it, the defendant's position is that he has virtually no assets in either Victoria or the Czech Republic and has had to borrow funds, from his wife if not others, in order to be represented at the hearing commencing next week.

76 On the other hand, the defendant seems to be able to raise money when it suits. Thus, in recent times he has paid:

(a) the sum of $50,000 into Court on 23 July 2009, as his share of the Special Referee's costs, pursuant to an order made on 17 July 2009;

(b) the sum of $74,919.16 to the plaintiffs on 4 August 2009 for their taxed costs, thereby avoiding an oral examination of him about his assets scheduled for 6August 2009; and

(c) the sum of $18,962.72 to the plaintiffs for their taxed costs shortly before another oral examination scheduled for 14 September 2009.

77 I am not persuaded, therefore, that it would be impossible for the defendant to pay the amount of $2.3 million into Court. It beggars belief, in my opinion, that, if the defendant wanted them to, the sons would not use the extraordinarily valuable properties in the centre of Prague which he has given them, to raise the necessary funds. In cross-examination at the first hearing, Mr Talacko said that he had "enough faith" in his sons in the Czech Republic that "if somebody else from the family ... had a problem, they would help". He said that he assumed they would help because they had been "brought up very nice children". He also said that he could not say how the two sons would help. Later, Mr Talacko said that his assumption of help was limited to his "immediate family", that is, the brother, sister and mother of the two sons in the Czech Republic, not cousins. This evidence reinforces my conclusion that if the defendant wants it, the properties given by him to David and Paul are able to be utilised by him and the other members of his immediate family.

1. Unless the defendant pays into Court, or otherwise secures to the satisfaction of the plaintiffs' solicitors, the sum of $2,300,000 to be held pending the hearing and determination of this proceeding:

(b) the defendant not attend any point of international departure; and

(c) the defendant not apply for any other passport,

until after 5.00 pm on the day on which the judgment of the Honourable Justice Kyrou in this proceeding is handed down, or until further order.

1. Upon the sum of $2,300,000 being paid into Court or secured to the satisfaction of the plaintiffs' solicitors, the solicitor for the defendant, Michael Witt of Findlay Arthur Phillips, shall be discharged from his undertaking to the Court to hold the defendant's passports and not return them to the defendant or any other person at the defendant's direction unless the Court so ordered or the plaintiffs' solicitors so consented in writing, and that otherwise the undertaking shall continue until 5.00 pm on the day on which the judgment of the Honourable Justice Kyrou in this proceeding is handed down, or until further order.

[1] Talacko v Talacko [2008] VSC 128 (Osborn J); Talacko v Talacko [2008] VSCA 229 (Kellam JA and Hargrave AJA); Talacko v Talacko [2009] VSC 349 (Kyrou J).

[2] Talacko v Talacko [2009] VSC 348.

[3] Talacko v Talacko [2009] VSC 348, [41].

[4] [1987] VicRp 21; (1987) VR 261, 272.

[5] (1996) 69 FCR 1, 17.

[6] [2006] FCA 1321, [18].

[7] (1999) 198 CLR 380.

[8] (1999) 198 CLR 380, [39] (Gaudron, McHugh, Gummow and Callinan JJ).

[9] Glover v Walters [1950] HCA 1; (1950) 80 CLR 172, 173.

[10] [1950] HCA 1; (1950) 80 CLR 172, 173 citing Boehm v Wood [1823] EngR 718; (1823) Turn. & R. 333 [37 ER 1128] (Lord Eldon).

[11] [1950] HCA 1; (1950) 80 CLR 172, 173.

[12] [1950] HCA 1; (1950) 80 CLR 172, 173-4.

[13] (1968) 1 QB 200.

[14] (1968) 1 QB 200, 211.

[15] (1968) 1 QB 200, 213.

[16] (1968) 1 QB 200, 214.

[17] [1986] 1 WLR 497.

[18] [1986] 1 WLR 497, 502.

[19] [1986] 1 WLR 497, 503.

[20] [1987] HCA 23; (1987) 162 CLR 612.

[21] [1987] HCA 23; (1987) 162 CLR 612, 617.

[22] [1987] HCA 23; (1987) 162 CLR 612, 623.

[23] (1999) 198 CLR 380.

[24] (1999) 198 CLR 380, [26] (Gaudron, McHugh, Gummow and Callinan JJ).

[25] [1977] FCA 15; (1977) 30 FLR 6, 15.

[26] [1984] FCA 2; (1983) 1 FCR 40, 43.

[27] [2007] FCA 434, [11].

[28] See s.1323 of the Corporations Act 2001 (Cth).

[29] See s.14S(1) of the Taxation Administration Act 1953 (Cth).

[30] [1998] FCA 1727.

[31] Jackson v Sterling Industries Limited [1987] HCA 23; (1987) 162 CLR 612, 618 (Wilson and Dawson JJ).

[32] Talacko v Talacko [2009] VSC 349, [51]-[55] [Footnotes omitted].

[33] [1988] 1 All ER 892.

[34] [1988] 1 All ER 892, 896.

[35] The defendant disputes this figure on the ground that the Special Referee in valuing one of the properties at Repy has ignored the impact of a proposal for the construction of a freeway through that property.