Talacko v Talacko [2014] VSC 470

3 The first plaintiff, Jan Talacko, appears in person as executor of the estate of Helena Marie Talacko.

4 The first plaintiff confirmed in writing in a letter dated 16 September 2014 to the Court, that he supports the joinder application and seeks the relief in the form set out in the 3rd ASOC.

5 The plaintiffs rely on the affidavits of David Phelan sworn 26 August 2014 and 8 September 2014. They also rely on an Amended and Supplementary Outline of Written Submissions dated 11 September 2014 and Outline of Reply Submissions dated 15 September 2014.

6 The application is opposed by the first defendant, Jan Emil Talacko, and the two proposed defendants, Peter Talacko and Amanda Fischer. The fourth defendant, Judith Talacko objects to the joinder application if it is to result in a vacation of the trial date of 27 October 2014. Mr Glick, counsel for the fourth defendant, informed the Court that while the fourth defendant does not consider the proposed 3rd ASOC to be properly pleaded, the fourth defendant does not wish to make any submissions in relation to the form and content of the pleadings and that these matters will be dealt with at trial. The complaint by the fourth defendant is the potential vacation of the trial date should the joinder application be granted, and the injustice that this would cause.

7 Peter Talacko relies on a written submission dated 9 September 2014.

8 The first defendant relies on the affidavit of Joseph Guss sworn 12 September 2014 and written submissions dated 11 September 2014. The first defendant also adopted and relied upon the submissions made on behalf of Peter Talacko.

9 The plaintiffs objected to Mr Guss' affidavit on the basis that it was not in a proper form. The affidavit exhibits two letters from medical practitioners, Dr Pi Ang from the Epworth Eastern Hospital and Miss Madalena Liu. The affidavit is not in proper form. There is no affidavit from the individual medical practitioners or the first defendant. It is not clear in what capacity the doctors have treated the first defendant. Having made these observations, this is an interlocutory application. The deficiencies can be cured. I will allow the affidavit as the exhibited letters provide important evidence. It may be necessary in due course for the first defendant's solicitor to obtain affidavits from the treating doctors.

10 The second and third defendants have not been served with the current writ. On 29 May 2014, Daly AsJ made orders extending the time for service of the writ until 28 May 2015.

11 On 7 August 2014 the Court made further orders in relation to the service on the second and third defendants, that:

The Second to Fifth Plaintiffs are to give to the First and Fourth Defendants and to the Court notification of whether the Second and Third Defendants have been served with the writ in accordance with the requirements of the Hague Convention on or before 4.00 pm on 29 August 2014.

12 The Court was informed by Mr Howells, counsel for the plaintiffs, that service has not as yet been effected on the second and third defendants.

13 The first defendant's parents, Alois and Anna Talacko ('the Parents'), left their home country of Czechoslovakia in 1948. In so doing, they left behind a large number of properties located in Czechoslovakia and in what was then East Germany, including properties the subject of the dispute between the parties ('the Properties').

14 The parents had three children; the first defendant, Helena (her executor is the first plaintiff) and Peter. Peter died on 24 November 1995. His children, Alexandra (the second plaintiff), Martin (the third plaintiff) and Rowena (the fourth plaintiff), have claimed for what they allege was Peter's entitlement.

15 Since on or about 16 October 1998, Judith Talacko, the fourth defendant, has been the registered proprietor of a property located at 312 Glenferrie Road, Malvern in the State of Victoria ('the Malvern Property'). The registration occurred pursuant to a transfer of land dated 23 September 1998. Immediately prior to the time of the transfer to Judith, the Malvern Property was owned by Judith and the first defendant as joint proprietors.[2]

16 On 2 October 1998, a proceeding was commenced by the plaintiffs to enforce an agreement that they alleged was made in 1990 between Helena Talacko, Jan Emil Talacko (the first defendant) and their late brother Peter Talacko in respect of the Properties (the 1998 Proceeding). The Properties were confiscated by the communist regimes of Czechoslovakia and East Germany progressively from 1948. Interests in the Properties were later transferred to Jan Emil Talacko, the first defendant, under the local restitution laws. The plaintiffs alleged that Jan Emil Talacko had agreed to hold the Properties on behalf of himself and his siblings in equal shares and that he had breached that agreement. Their claim was based on breaches of contract, trust and fiduciary duty.

17 Kyrou J in Talacko v Talacko[3] conveniently sets out the background to the 1998 Proceeding and the commencement of this proceeding:

The trial of the 1998 proceeding commenced on 21 February 2001. The parties agreed to settle and terms of settlement dated 23 February 2001 were executed ('Terms'). ...

The plaintiffs reinstated the 1998 proceeding in 2005, alleging that Jan Talacko had breached the Terms. On 24 April 2008, Osborn J held that Jan Talacko had breached the Terms. Subject to resolution of some outstanding defences, Jan Talacko is liable to pay equitable compensation to the plaintiffs in accordance with cl 6 of the Terms. Apart from the outstanding defences, the principal issue in the 1998 proceeding is the assessment of equitable compensation.

In the 1998 proceeding, the plaintiffs claim equitable compensation by reference to two-thirds of the value of the Properties together with an adjustment for income earned on those Properties. The plaintiffs were looking to the Properties as the main assets of Jan Talacko from which to satisfy any judgment in the 1998 proceeding.

On 16 October 1998, Jan Talacko transferred his interest in the family home located at 312 Glenferrie Road, Malvern ('Malvern property') to his wife, Judith Talacko, the fourth defendant in the 2009 proceeding. The transfer was executed a few days before the commencement of the 1998 proceeding. ...

In May 2009, Jan Talacko transferred interests in some of the Properties to his sons David and Paul Talacko, the second and third defendants in the 2009 proceeding, by way of gift. Some of the transfers have been registered whereas the registration of the other transfers is pending. ...

The plaintiffs commenced the 2009 proceeding on 17 July 2009. They allege a number of causes of action against the first three defendants in respect of the transfers of the Properties. Against Jan Talacko, they allege a breach of the Terms, a breach of trust, a breach of fiduciary duty and conspiracy. Against David and Paul Talacko, they allege tortious conduct involving inducement of Jan Talacko to breach the Terms, causing loss by unlawful means and conspiracy, and knowing participation in Jan Talacko's breach of trust and breach of fiduciary duty. ...

David and Paul Talacko have not yet appeared and nothing in the August Order or these reasons is intended to preclude them from presenting evidence or making submissions on any matter that affects them.[4]

18 As noted, the plaintiffs commenced this proceeding 7819 of 2009 ('the 2009 Proceeding') on 17 July 2009. On 24 July, 10 August and 21 August 2007, freezing orders were made against Jan Emil Talacko and the second and third defendants.

19 On 17 December 2009, Kyrou J made orders in the 2009 Proceeding for the service of the second amended statement of claim. Standard interlocutory orders were made on 17 December 2009, 1 March 2010 and 8 June 2010 for particulars, discovery and the filing of affidavits and pre-trial orders.

20 On 23 November 2010 there was a hearing of an appeal by the first defendant from judgments and liability in equitable compensation in the 1998 Proceeding. On 18 March 2011 the first defendant's appeal from judgments in the 1998 Proceeding were dismissed by the Court of Appeal.

21 On 7 November 2011, the first defendant was declared bankrupt by order of the Federal Court.

22 On 16 January 2012, the District Court of Prague One approved enforcement of judgments against the first defendant in the Czech Republic and on 18 October 2012, the Municipal Court of Prague confirmed the decision of the District Court of Prague One to approve enforcement of the judgments against the first defendant.

23 On 10 December 2012, the plaintiffs obtained leave pursuant to the Bankruptcy Act 1966 (Cth) to proceed against the first defendant in this proceeding and the 1998 Proceeding.

24 On 25 May 2013, a directions hearing was held and the 2009 Proceeding was listed for trial on 8 October 2013.

25 On 5 September 2013, a subpoena for production was issued by the plaintiffs against Peter Talacko. On 11 September 2013, solicitors acting on behalf of Peter Talacko accepted service of the subpoena. On 16 September 2013, the plaintiffs were informed by Peter Talacko's solicitors that he would be unable to comply with the subpoena prior to the conclusion of the trial commencing on 8 October 2013.

26 On 18 September 2013, the plaintiffs' solicitors received a letter from lawyers in Poland advising that they did not have instructions to accept service of any documents on behalf of the second and third defendants.

27 On 20 September 2013, Peter Talacko's solicitors filed a notice of objection regarding the subpoena.

28 On 27 September 2013, orders were made, inter alia, vacating the 8 October 2013 trial date. It was the plaintiffs who had applied for a vacation of the trial date. Time was extended for compliance with the subpoena directed to Peter Talacko to a date to be fixed and the hearing of the objection to the subpoena was adjourned to 14 November 2013. Orders were also made for a further schedule of documents to be served on 30 September 2013.

29 On 14 October 2013, the plaintiffs filed a summons supported by affidavit of David Phelan sworn 11 October 2013. The summons proposed the joinder of Peter Talacko and Amanda Fischer.

30 On 14 November 2013, Daly AsJ heard Peter Talacko's objection to the subpoena served on him.

31 On 4 December 2013, an application to serve the second and third defendants under the Hague Convention was filed. On 10 December 2013, a ruling on the Peter Talacko subpoena was given by Daly AsJ and her Honour fixed a new trial date for 25 August 2014.

32 On 13 February 2014, there was a hearing before Daly AsJ of claims of client legal privilege with respect to documents produced by Peter Talacko. On 27 March 2014 there was a further hearing of claims of client legal privilege before Daly AsJ.

33 On 14 May 2014, there was an application to extend the validity for service of the writ filed.

34 On 16 May 2014, Daly AsJ gave judgment on the claims of client legal privilege. Orders were made granting leave to inspect eight documents produced by Peter Talacko which her Honour found had come into existence for the furtherance of a fraud.

35 On 29 May 2014, Daly AsJ made orders extending the validity for service of the writ.

36 On 6 June 2014, the first defendant filed a notice of appeal against Daly AsJ's orders dated 16 May 2014.

37 On 13 June 2014, the plaintiffs filed a further application to serve the second and third defendants under the Hague Convention.

38 On 19 June 2014, Elliott J heard the appeal against the 16 May 2014 orders and on 16 July 2014 judgment was delivered allowing the appeal in respect of part of one of the documents.

39 On 29 July 2014, the first defendant filed a summons seeking leave to appeal from Elliott J's judgment.

40 On 5 August 2014 the first defendant's application for leave to appeal was dismissed by the Court of Appeal with costs. On 7 August 2014, the plaintiffs' application for a vacation of the trial date of 25 August 2014 was heard. Orders were made vacating the trial date and refixing the trial for 27 October 2014 on an estimate of seven days.

41 Other relevant orders made on 7 August 2014 included that any application by the plaintiffs to join a party or amend their claim was to be made before 4pm on 25 August 2014.

42 Rule 9.06 allows for the addition of a person as a party to a proceeding. Under r 9.06, the Court may at any stage of a proceeding order that a person be removed, added or substituted as a party. Rule 9.06(b) and (c) relates to the addition of a person as a party. Application to add a person as a party may be made in the circumstances described in r 9.06(b)(i) and (ii). Paragraph (b)(i) provides that there may be added 'a person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all questions in the proceeding are effectually and completely determined and adjudicated upon'. Under paragraph (b)(ii), the Court may add 'a person between whom and any party to the proceeding there may exist a question arising out of, or relating to, or connected with, any claims in the proceeding which it is just and convenient to determine as between that person and that party as well as between the parties to the proceeding'.

43 In Main Road Property Group v Pelligra and Sons,[5] Bell J said as to the principles governing the exercise of discretion under r 9.02(b):

The joinder discretion is conferred by Rule 9.02(b) in wide and ample terms, not to be cut down by restrictive interpretation, and is to be exercised like the general power of amendment, by reference to considerations of general procedural convenience, fairness and practicability, on a case by case basis. ...

The Court should take the course most conducive to the just resolution of the dispute between the parties, having regard to the desirability of reducing, so far as practicable, costs and delay in litigation. If joinder will increase costs and delay without a sufficient corresponding benefit, this may be a compelling negative consideration.

Regard should be had to practical matters and the unfairness or prejudice that joinder may cause to any party, as well as the powers of the Court to manage the case so as to address or minimise such consequences, which will include the specific powers in Rule 9.04. In some cases 'there may be competing considerations of relative inconvenience and relative fairness or unfairness which need to be resolved.' The advantages of joinder should be identified and weighed against any disadvantages, having regard not only to the impact on the parties but also to the need to efficiently use the resources of the Court.

Delaying making an application for joinder is a relevant but not a decisive consideration. Rules of procedure are not ends in themselves. As the amendment cases show, the purpose of such rules is to promote the just and efficient determination of disputes, not the punishment of parties for inadvertence. In cases of delay, there should be a consideration of the explanation and the prejudice, or lack of it, that a party has or will suffer in consequence. For example, if the delay has resulted in a party being no longer able to call a necessary witness in the proceeding to be joined, this may be a reason to refuse joinder. ...

What is the relevance, if any, of the merits of, or the prospects of, or success of, the claims to be joined? We have seen the amendment rules and the joinder rules have a common purpose - the complete and final determination of controversies and the avoidance of multiplicity of proceedings. I can therefore safely examine the approach adopted in amendment cases. There the question is whether issues may be raised, not whether the claims have merit. If the proposed claims were obviously bad in law or futile, the amendment would not be allowed on this ground alone. But the Court would not refuse to allow an amendment because it raised a claim that ought not to succeed, for this will be an issue at trial. In New South Wales these are the principles that apply both in amendment and in joinder cases. This is the approach I will follow here. Therefore beyond determining whether the claim to be joined is obviously futile or bad in law, I will not consider its merits or prospects of success.[6]

44 It should be noted that in Matthews v SPI Electricity and SPI Electricity Pty Ltd v Utility Services Corporation (Ruling No 6),[7] Forrest J noted that:

... A court, on this type of application, will not engage in an examination of the merits of the case foreshadowed by the proposed amendment, but where that amendment introduces a patently hopeless issue for determination then its inclusion will be futile and that will be a significant, and probably decisive, matter in the exercise of the Court's discretion.[8]

Perhaps, given the terms of the Civil Procedure Act 2010, the test is best expressed in the words of s 63 of that Act: If the amendment has no reasonable prospect of success at trial then that would be a highly relevant factor in the exercise of the discretion to refuse the application.[9]

46 As discussed, by summons filed 14 October 2013 the plaintiffs sought to join Peter Talacko and Amanda Fischer to the 2009 Proceeding. The application was refused. The plaintiffs now reagitate the joinder application and rely, to an extent, on the emails which have been produced by Peter Talacko pursuant to the subpoena for production dated 5 September 2013.

47 The plaintiffs submit that the joinder application is based on the emerging evidence of the extent of the fraud practised by the defendants and Peter Talacko's involvement in it.

48 The proposed pleading[10] advances claims against Peter Talacko for:

3. knowing assistance and causing loss by unlawful means.

1. the existence of the terms of settlement dated 23 February 2001 ('the Terms'). This is the contract that Peter Talacko is alleged to have induced the first defendant to breach;

2. that the first defendant breached the Terms and trusts;

3. that since February 2001, the first defendant has breached the terms implied into the Terms, that is by failing to do all things reasonable and necessary in carrying out the Terms. It is alleged that in or about May 2009 the first defendant 'sought covertly, knowingly and dishonestly to transfer his interest in the Properties (being the properties in Eastern Europe listed in paragraph 9 of the proposed 3rd ASOC), so as to deny the plaintiffs of their and entitlement under the Terms; and

4. by reason of the first defendant's breaches of the Terms and trust, the plaintiffs have suffered loss.[11]

50 The case against Peter Talacko commences in effect from paragraph 15 of the proposed 3rd ASOC. The plaintiffs allege that:

(a) the second, third, fourth and fifth (Peter Talacko) defendants were aware:

(i) of the claims made and the relief sought by the plaintiffs in the proceeding;

(ii) that the plaintiffs were actual, contingent and potential creditors of the first defendant;

(iv) of the failure by the first defendant to comply with the Terms; and

(v) of the intention of the first defendant to deal with the Properties in a manner (including disposing of the Properties without consideration) that was intended and was likely, to deprive the plaintiffs of the benefit of the Terms;

(i) knew of, encouraged and supported the entry by the other defendants into those dealings for the purpose of causing injury and damage to the plaintiffs; and

(ii) sought to keep the second and third defendants and the Properties from the reach of the jurisdiction of this Court and from enforcement by the plaintiffs.

51 The particulars relied upon by the plaintiffs to support the material facts alleged at paragraph 15(a) state:

The second to fifth defendants have since at least 2000 communicated frequently and regularly by email and other means about the dispute between the first defendant and the plaintiffs and about the ways in which they might prevent the plaintiffs from recovering any judgment they may obtain from the Court against the first defendant by execution against either 312 Glenferrie Road, Malvern or the Properties. The emails were invariably copied to the other defendants and to another child of the first and fourth defendants, namely, Nicole Talacko, and oftentimes to their legal advisers, David Findlay and Michael Witt. On 29 March 2000, the fourth defendant circulated to the first, second, third and fifth defendants and Nicole Talacko an email in which she discussed securing a mortgage over 312 Glenferrie Road to provide a basis for the first defendant to declare bankruptcy in order to defeat the plaintiffs' claims. On 29 April 2008, the third defendant emailed a solicitor at Baker and McKenzie, Martin Hrodek in Prague, and sought advice about transferring the Properties to a holding company, concealing the ownership of the sales in the company and having the first defendant declare bankruptcy in order to defeat the claims and any judgment obtained by the plaintiffs.

Further to paragraph 15 hereof from at least March 2000 the first to fifth defendants communicated amongst themselves discussing ways in which they might defeat the claims of the plaintiffs by encumbering 312 Glenferrie Road Malvern and by transferring the Properties to entities or persons beyond the jurisdiction of this Court and by concealing the manner in which this was to be done and the reasons for which it was being done.

53 The pleading then sets out the claims against the first to fifth defendants. It is alleged at paragraph 16 that:

By reasons of the foregoing matters, each of the second, third, fourth and fifth defendants wrongfully and unlawfully:

(a) induced and procured the first defendant to breach the Terms;

(i) to defraud the plaintiffs of the benefits to which they were entitled under clauses 1 and 6 of the Terms;

(ii) to render nugatory the benefit to the plaintiffs of any judgment of this Court against the first defendant pursuant to the Terms; and

(c) were parties to, and knowingly, directly and indirectly, participated in the breaches of trust of fiduciary duty by the first defendant ... ; and

(d) intentionally caused loss and damage to the plaintiffs by unlawful means.

54 In paragraph 16A, the overt acts done in furtherance of the alleged conspiracy are pleaded. Paragraph 16A(a), (b), (c), (d), (e), (f), (g), (i), (j), (k) and (l) refer to the overt acts of the first, second and third defendants. Paragraph 16A(h) pleads the overt acts done by Peter Talacko in furtherance of the conspiracy:

From in or about late 2008 and thereafter the fifth defendant refrained from objecting to or protesting against the disposition of the clause 6 Properties by the first defendant to the second and third defendants.

55 At paragraph 16B, it is pleaded that by reason of the overt acts done by the first to fifth defendants in furtherance of the conspiracy, as set out in paragraph 16A, the plaintiffs have suffered loss and damage and reference is made to the loss and damage pleaded and particularised in paragraph 14, namely:

(a) that the plaintiffs have been prevented from obtaining the benefits of the Terms because the clause 6 Properties have been transferred by the first defendant to the second and third defendants who reside outside the jurisdiction of this Court;

(b) the plaintiffs have been prevented from recovering the 11 December 2009 judgment debt in the sum of €10,073,818 and accruing interest and indemnity costs because the clause 6 Properties have been transferred by the first defendant to the second and third defendants; and

(c) the plaintiffs have incurred consequential costs and losses in seeking to enforce their entitlement and recover the 11 December 2009 judgment debt in Czech Republic.

56 Finally, paragraphs 20 to 28 set out the s 172 Property Law Act 1958 (Vic) claim against Peter Talacko in relation to the 23 Ethel Street property. In essence, it is alleged that upon being served with the subpoena dated 5 September 2013 Peter Talacko transferred all of his estate and interest in 23 Ethel Street Malvern in the State of Victoria ('the Ethel Street property'), of which he was the sole registered proprietor, to Amanda Fischer, in consideration of 'natural love and affection' and for no other reason. It is alleged that the transfer was entered into with the intent to defraud the plaintiffs of the benefit of the judgment which they may obtain in this proceeding.

57 The particulars to paragraph 15(g) relate to the fourth and fifth defendants' knowledge and state of mind. They refer to an email dated 13 January 2009 from Peter Talacko to the fourth defendant and copied to the second and third defendants and Nicole Talacko (daughter of the first and fourth defendants). In the email, Peter Talacko suggested that the first defendant might obtain a substantial mortgage on the Malvern Property. The email states:

Ma I have thought of two ideas in relation to Glenferrie Rd, they are a little drastic:

1. Pa takes out a very large mortgage over the property (be careful of this because it implies that he owns a chunk)

58 Paragraph 15A of the proposed 3rd ASOC is to be read with paragraph 15, which pleads the knowledge that the conspirators had and the communications between them. The particulars of paragraph 15A refer to emails which the first to fifth defendants sent and copied to each other.[13] I will not repeat the content of the emails but make the following observations:

(a) the emails are predominantly sent and received by the fourth and first defendants from March 2000 to June 2009;

(b) the relevant emails are copied to the second and third defendants and Peter Talacko and Nicole Talacko; and

(c) the emails discuss a variety of topics but specific to this claim: the Terms; the possibility of the first defendant being declared a bankrupt; the transfer of the Malvern Property from the first defendant to the fourth defendant; advice from solicitors that the fourth defendant take a mortgage over the Malvern Property 'to pay off debts elsewhere';[14] reference to a solicitor wanting to 'chat' to the fourth defendant and Peter Talacko about the mortgage;[15] the possibility of 'Peter' guaranteeing interest payments if a mortgage were taken;[16] that the fourth defendant and Peter Talacko had made enquiries about a loan from an individual called Craig;[17] that a loan was approved and that the fourth defendant thought 'it's utter madness and I hate everything about this loan (so does Pete, he never believed he would be reduced to this position) and now this, which is the LAST straw. August money to be chucked down the drain. Vermin are really scum. ... Now it is 7pm and things finally did sort out. ... Hopefully we won't have to suffer this for too long. I handed over the Title and so Vermin will now have to take on the bank if they want this property or compensation because you don't own it any more. I also gave him all the details for where the money is to go. He was pleased that it was a direct transfer and no currency change to worry about. The transfer should go through on FRIDAY. He then set off to get Pete's signatures somewhere in the city. ... '; an application by the second, third and fourth plaintiffs in relation to properties in Czechoslovakia;[18] a reference to the 1998 Proceeding and deliberate action by the first defendant to employ delaying tactics;[19] and an email from the third defendant to the fourth defendant in which there seems to be a plan to ensure that the second and third defendants are perceived not to be aware of the 'Australian case and submit to jurisdiction'.[20]

59 Counsel, Mr Osborne, on behalf of Peter Talacko submits that one of the primary reasons why the joinder application should not be allowed is that the pleading is so deficient that even if joinder were allowed, the pleading would be liable to be struck out. In particular, it was noted that given the serious nature of the allegations, including the allegations of dishonest and fraudulent design, the pleading must be pleaded properly and particularised. In CC Containers Pty Ltd v Lee,[21] Ferguson J said in relation to pleading amendment principles in claims of this nature:

It is well established that fraud and conspiracy are allegations which should not be made lightly. Allegations of criminality, fraud or serious wrongdoing must be pleaded with precision and sufficient supporting particularity. The Rules of Court require that particulars be given of any fraudulent intention that is alleged.

The discretion to allow a proposed amendment is unlikely to be exercised if the proposed amended pleading would be liable to be struck out. ... [22]

60 Mr Osborne submitted that the pleading deficiencies include:

(a) the lack of sufficient particulars of a range of allegations (for example, those in paragraphs 15(g), 15(h) and 15A;

(b) the exact acts in which Peter Talacko is said to have been involved and/or the acts which he induced or conspired in are not clearly identified;

(c) the causal link between any conduct alleged to have been done by Peter Talacko and any actions taken by the other defendants is not pleaded or is entirely unclear;

(d) there is no causal link drawn between the pleaded conduct of Peter Talacko and the alleged loss and damage sustained by the plaintiffs;

(e) having regard to r 9.11(3)(a) the proceeding against the added defendants commences only on the filing of the amended process. As such, Peter Talacko will be entitled to rely on limitation defences to tort claims where the cause of action accrued prior to September 2008; and

(f) there is no proper basis for the assertion that Peter Talacko from late 2008 refrained from objecting to or protesting against the disposition of the Properties by the first defendant to the second and third defendants.

61 It is further submitted by Peter Talacko that the claims against him in the proposed 3rd ASOC have no reasonable prospect of success.

62 The parties are essentially in agreement about the requirements of the causes of action pleaded against Peter Talacko, namely inducing breach of contract; knowing assistance; and conspiracy.

63 The tort of inducement to breach contract comprises the following elements:

(b) the defendant must have knowledge of the contract;

(d) the plaintiff must suffer more than minimum nominal damages; and

(e) the interference must not be justified.[23]

64 In Greig v Insole,[24] Lord Sleydon held that:

... the phrase 'direct interference' covers the case where the intervener either by himself or his agents, speaks, writes or publishes words or does other acts which communicates pressure or persuasion to the mind of a person of one of the contracting parties themselves, while 'indirect interference' refers to the case where, without actually doing any of these things, the intervener nevertheless procures or attempts to procure a situation which will result in a breach of the contract.[25]

65 In relation to conspiracy, in CC Containers Pty Ltd v Lee, Ferguson J noted:

(1) an 'unlawful means' conspiracy in which the participants combine together to perform acts which are themselves unlawful; and

(2) a combination to perform acts which, although not themselves unlawful, are done with the sole or predominant purpose of injuring the claimant.

The learned authors of Bullen & Leake & Jacob's Precedents of Pleadings identify the necessary elements that must be pleaded where the tort of conspiracy is alleged:

(a) a combination of agreements between two or more individuals (required for both types of conspiracy);

(b) an intent to injure (required for both types of conspiracy but most be shown as the sole or predominant purpose for type (2) above);

(c) pursuant to which combination or agreement and with that intention certain acts were carried out;

A conspiracy can be proved without evidence of an express agreement:

The Court is entitled to have regard to the overt acts pleaded, and to infer from those acts that there was an agreement to further the common object of the combination. All of those said to be parties to the conspiracy should be sufficiently aware of the surrounding circumstances, and share the same object, for it properly to be said that they are acting in concert.

An intention to injure is an important part of establishing the tort of conspiracy. In this regard, a conspiracy to injure a person is distinguishable from an agreement to do an unlawful act that results in damage to that person.[26]

66 The plaintiffs rely on the decision of R v Associated Northern Collieries,[27] in support of the submission that there are a number of cases dealing with conspiracy where some conspirators who are active participants and the other conspirators are less active or are 'passive' supporters. Mr Howells describes such conspirators as fellow travellers and describes them as having an interest in the outcome. Mr Howells submitted that, accordingly, the question of drawing inferences becomes material and important. In R v Associated Northern Collieries, Isaacs J said:

Two things must be carefully kept distinct, viz, the fact of combination and acts done in pursuance of the combination. There is a tendency to confuse the two, because in many instances acts of individual defendants may be regarded as evidence of the first as well as of the second.

But it is an error to say that acts of one defendant, however numerous, and however pointedly in furtherance of the prohibited purpose, are necessarily admissible as overt acts of offence against a codefendant charged with conspiring with the first. They are not so admissible unless the two defendants are shown to be associated for that purpose, so as to make the purpose common to both.

Community of purpose may be proved by independent facts, but it need not be. If the other defendant is shown to be committing other acts, tending to the same end, then though primarily each set of acts is attributable to the person whose acts they are, and to him alone, there may be such a concurrence of time, character, direction and result as naturally to lead to the inference that these separate acts were the outcome of pre-concert, or some mutual contemporaneous engagement, or that they were themselves the manifestations of mutual consent to carry out a common purpose, thus forming as well as evidencing a combination to effect the one object towards which the separate acts are found to converge. ...

In the latter aspect, if it be established, then separate acts of the several defendants in furtherance of those purposes of the contract which are part of the common plan may affect the liability of the other parties to the contract; but if it be not established then those separate acts may have first to be examined in order to determine whether they indicate or form a combination, before the acts of one person can be allowed to affect another.[28]

67 Mr Osborne submits that the proposed claims against Peter Talacko for inducement and conspiracy lack the necessary elements of the causes of action, namely:

(a) any active, direct or persuasive role by Peter Talacko in the relevant breach of contract by the first defendant;

(b) any agreement by Peter Talacko that the allegedly wrongful acts occur and subsequent involvement in causing them to occur; and/or

(c) any causal link between the alleged acts of Peter Talacko, the conduct of the other defendants and the loss allegedly suffered by the plaintiffs.

68 It is submitted that even though Peter Talacko is copied into numerous emails between the parties he did not participate in sending them and that mere silence cannot be said to be an inducement to act or an agreement by him that the act be carried out. The only active suggestion made by Peter Talacko in the emails relied upon is in an email to Judith Talacko where he notes a 'drastic' thought by him about the Malvern Property. That 'drastic' thought was that the first defendant 'takes out a very large mortgage over the property'. Mr Osborne submitted that the Malvern Property was not the subject of the Terms, the first defendant did not take a mortgage over the Malvern Property, and the mooted transaction is not alleged to have occurred. Therefore, there is no causal connection or loss or damage suffered relevant to the proposed mortgage by Peter Talacko.

69 The chain of emails relied upon in the 3rd ASOC raises the issue of what Peter Talacko's role was in the conspiracy or the defendants' wrongful acts. The emails put into issue Peter Talacko's awareness of the Terms; a plan to mortgage the Malvern Property so as to take it out of the reach of the plaintiffs; and Peter Talacko being directly involved in the loan (for example, the fourth defendant referring to Peter Talacko having signed the loan documents and saying that he would guarantee the loan). Importantly, it is Peter Talacko who suggests the loan and mortgage over the Malvern Property and he is aware of the first defendant employing delaying tactics.

70 It is not clear at this stage to what extent Peter Talacko was involved but it is at least open to consider that he was more than a mere spectator.

71 Even if Peter Talacko's assistance in mortgaging the Malvern Property did not cause loss to the plaintiffs, it is evidence of his possible complicity in a conspiracy with the defendants to cause harm to the plaintiffs.

72 Peter Talacko is correct in submitting that any allegation of fraud or conspiracy must be properly pleaded and particularised, given the seriousness of the allegation. Equally, such claims are generally not amenable to being tested at an interlocutory stage. They are claims which need to be properly tested at trial on all the evidence. Claims which are founded on knowledge cause difficulties for courts in determining whether conspiracy or inducement to break a contract or knowingly participating in an unlawful act are adequately pleaded. The difficulties arise in determining what degree of knowledge is required before it can be said that a person has been knowingly concerned in or involved in a contravention. Given the complexity in these issues, which are questions of law, and the disputed facts in this case, I do not consider it appropriate here to determine whether the claims are adequately pleaded. Further, it is not appropriate here to embark on the process necessary to find that the 3rd ASOC does not have a reasonable prospect of success.

73 In relation to the possibility of some of the claims being statute barred, even if the defence is raised, it may be the subject of exceptions which the plaintiffs may plead.

74 Peter Talacko further submits that the Court, in exercising its discretion, should refuse the joinder application given:

(a) the late stage at which the plaintiffs seek to join Peter Talacko and Amanda Fischer; and

(b) the plaintiffs' use of documents obtained by subpoena from a nonparty for an improper purpose.

75 In relation to the submission that the emails produced by Peter Talacko under subpoena in the proceeding cannot be used as evidence in the application to join him as a party, Mr Osborne relied on the decision of 42 International Pty Ltd v Barnes[29] ('Barnes' case'). In the Barnes' case, the documents relied on in the joinder application were produced under subpoena in a separate proceeding. That is not the case here. Given the emails produced by Peter Talacko were produced under a subpoena issued in this proceeding, I do not consider that the plaintiffs' use of the subpoenaed documents offend the implied undertaking as described in Barnes' case. To that end, the principle that prohibits a party from using for a collateral purpose documents obtained on discovery has no application where the party wishes to rely on a document in the proceeding in which it was discovered/produced in support of an application to add a new cause of action or a new party.[30]

76 The chronology which I set out earlier in my reasons highlights the complexities and difficulties encountered by the parties in the conduct of this litigation. I do not consider that the plaintiffs have deliberately delayed or failed to be active in the conduct of this litigation. For example, the plaintiffs initially filed a summons which proposed the joinder of Peter Talacko and Amanda Fischer on 14 October 2013. They were unsuccessful in that application, however, the order specifically contemplated that the plaintiffs were not barred from making a further application to join Peter Talacko and Amanda Fischer.

77 The subpoena for production issued by the plaintiffs against Peter Talacko was filed on 5 September 2013. The objections and appeals in relation to the subpoenaed documents were not finalised until 5 August 2014 when the first defendant's application for leave to appeal was dismissed by the Court of Appeal.

78 I make no criticism of any party for taking the various steps in this proceeding. However, those very steps have resulted in significant delays in this proceeding and the vacation of trial dates. In particular, no criticism can be made of Peter Talacko who produced the documents to the Court. What has not been explained to date is why these very emails have not been discovered by the first and fourth defendants who were the primary authors or recipients of the emails.

79 Criticism has been made of the plaintiffs by the defendants and Peter Talacko for the plaintiffs' failure to notify and/or serve Peter Talacko directly with the proposed joinder application in October 2013 and recently. The plaintiffs' decision not to inform the proposed defendants is not ideal. However, it is not a strict requirement under the Rules.

80 An important consideration in determining whether to refuse the plaintiffs' application is the impact that an order allowing the joinder will have on the trial date of 27 October 2014 and any prejudice that flows to the defendants.

81 Dr Pi Ang, in a letter dated 10 September 2014, describes the first defendant as:

... currently critically ill in our intensive care at Epworth Eastern. He presented with blood in his urine and unfortunately has been found to have an aggressive form of bladder cancer. He has and continues to have bleeding issues from his cancer resulting in anaemia. This has consequently put significant stress on his organs, especially his heart. His blood and clinical tests show a significant heart attack ...

Given all the factors stated above, he is in no condition to either travel overseas or by plane to attend court proceedings which will significantly stress his body even further. I would think he would be unfit for any such activities for at least three to four weeks ... [31]

82 Exhibit JG-2 to the affidavit of Joseph Guss is the letter from Miss Madalena Liu dated 10 September 2014. It is not clear what area of medicine Miss Liu practises in, however the letter recommends that the first defendant should commence radiation therapy as soon as possible.

83 The letters from the medical practitioners suggest that the first defendant is very ill and there is therefore a serious question as to his ability to participate in a trial commencing on 27 October 2014, particularly if he is to commence radiation therapy. Based on the medical letters it seems that vacating the trial date may actually be beneficial to the first defendant. The difficulty is the paucity of information in relation to his prognosis, any future treatment and his life expectancy. It is difficult to know if the current trial date is in the first defendant's interest or not.

84 The first and fourth defendants submit that rather than allowing the joinder, the plaintiffs should issue separate proceedings against Peter Talacko and Amanda Fischer so that the trial date is maintained. I do not consider this to be a sensible option for the Court. If a claim against the proposed defendants is pursued in a separate proceeding, the same or similar evidence would have to be given in both proceedings, in particular in relation to the claim of conspiracy with the other defendants. There would be a substantial risk that different findings of fact would be made in the separate proceedings. In addition, it would lead to a multiplicity of proceedings and inefficiencies of costs and time. This impacts not just on the parties but also on the Court's resources.

85 It is convenient to have regard to the nine matters that Besanko J in Humphries v Newport Quays Stage 2A Pty Ltd[32] said were relevant when determining an application for joinder or consolidation of a proceeding. In this case, the proceedings are of a similar nature and there are common issues of fact and law. It is likely that witnesses in one proceeding will be witnesses in the other proceeding. There has been no suggestion by the parties to agree that the findings of fact in the 2009 proceeding stand in a fresh proceeding against Peter Talacko and Amanda Fischer. There is a high likelihood of multiple appeals with substantial delays if the proceedings are not tried at the same time. In this proceeding there will be a sharing of time and costs if they are heard at the same time compared to each proceeding being tried separately. The 2009 proceeding is further advanced in terms of preparation for trial but Peter Talacko is aware of the issues in the proceeding, he has already produced documents under subpoena and there was no evidence before the Court that he or Amanda Fischer would not be able to prepare for trial in a relatively short period.

86 It was suggested by the defendants and Peter Talacko that the plaintiffs always intended to apply for an adjournment of the trial date if the joinder application were granted. The plaintiffs on the other hand have strenuously denied that any adjournment application would be made but accepted that a joinder of Peter Talacko and Amanda Fischer could result in an adjournment by the Court's own motion. At the conclusion of the hearing, there was no formal application for an adjournment of the trial date. In fact, the overwhelming position of all of the parties, excluding Peter Talacko, was a strong desire for the trial date to be maintained.

87 Realistically, if Peter Talacko and Amanda Fischer are joined to the proceeding, it would be unfair to expect them to be ready for trial in four weeks' time.

88 Regrettably, there is no ideal solution to the issue of the trial date. It seems to me, however, that it is in the interests of justice to adjourn the trial date and to fix it as a special fixture on 16 February 2015. In the event that the first defendant's health deteriorates, he has liberty to apply for orders allowing him to give his evidence by way of de bene esse or by deposition.

89 I have concluded the plaintiffs will have leave to join Peter Talacko and Amanda Fischer. Refusing leave to join would force the plaintiffs to issue a separate proceeding, which would lead to multiplicity of proceedings.

90 The plaintiffs will also be given leave to file and serve their 3rd ASOC incorporating the further proposed amendments at paragraphs 27 and 28 of the amended and supplementary outline of submissions dated 11 September 2014.

91 An issue arose as to whether the proposed claim against Peter Talacko and Amanda Fischer had any prospects of success. Bell J in Main-Road Property Group v Pelligra & Sons,[33] considered that the merits or prospects of success of a claim to be joined is not a relevant consideration. I follow the comments of Bell J. In any event, I consider that the proposed claim is not obviously bad in law or futile.

92 Finally, the serious issue of the vacation of the trial date can be dealt with by a brief adjournment and ensuring that the proceeding is fixed as a special fixture on 16 February 2015. The delay will be three months. This will provide Peter Talacko and Amanda Fischer an opportunity to prepare for trial.

93 I will hear the parties on costs and the form of order. I will ask the parties to turn their minds to and endeavour to resolve a timetable for the further interlocutory steps that will now be required bearing in mind a trial date of 16 February 2015.

JAN TALACKO (as Executor of the Estate of HELENA MARIE TALACKO)

[1] Exhibit DPP-2, affidavit of David Phelan sworn 26 August 2014.

[2] Talacko v Talacko [2014] VSC 328, at [5]-[9].

[3] [2009] VSC 349, at [6]-[13].

[4] [2009] VSC 349, [6]-[13].

[5] [2007] VSC 43.

[6] Ibid, [20], [24]-[26] and [28] (citation omitted).

[7] [2012] VSC 70.

[10] Exhibit DPP-2 to the affidavit of David Phelan sworn 26 August 2014.

[11] Paragraph 14(a), (b) and (c) of the proposed 3rd ASOC.

[12] Exhibit DPP-5 to the affidavit of David Phelan sworn 26 August 2014 - email dated 13 January 2009.

[13] Exhibit DPP-5 to the affidavit of David Phelan sworn 26 August 2014.

[14] Exhibit DPP-5 to the affidavit of David Phelan sworn 26 August 2014 - email dated 29 March 2000.

[15] Exhibit DPP-5 to the affidavit of David Phelan sworn 26 August 2014 - emails dated 29 March 2007 and April 2000.

[16] Exhibit DPP-5 to the affidavit of David Phelan sworn 26 August 2014 - email dated 7 April 2000.

[17] Exhibit DPP-5 to the affidavit of David Phelan sworn 26 August 2014 - email dated 2 May 2000.

[18] Exhibit DPP-5 to the affidavit of David Phelan sworn 26 August 2014 - email dated 12 October 2000.

[19] Exhibit DPP-5 to the affidavit of David Phelan sworn 26 August 2014 - email dated 27 April 2000.

[20] Exhibit DPP-5 to the affidavit of David Phelan sworn 26 August 2014 - email dated 12 June 2009.

[21] [2011] VSC 537.

[22] Ibid, [8]-[9] (citations omitted).

[23] Talacko v Talacko [2009] VSC 239 at [107].

[24] [1978] 1 WLR 302.

[26] [2011] VSC 537, [11]-[14] (citations omitted).

[27] [1911] HCA 73; (1911) 14 CLR 387 at 400.

[29] [2010] FCA 397.

[30] Sybron Corporation v Barclays Bank plc [1985] Ch 299 at 328; [1984] 3 WLR 1055; Allstate Life Insurance Co v AN Banking Group Ltd (1995) 57 FCR 360.

[31] Exhibit JG-1, affidavit of Joseph Guss sworn 12 September 2014.

[32] [2009] FCA 699 at [11].

[33] [2007] VSC 43 at 77.