Hyhonie Holdings Pty Ltd & Anor v Leroy & Anor [2005] HCATrans 28 (4 February 2005)

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Hyhonie Holdings Pty Ltd & Anor v Leroy & Anor [2005] HCATrans 28 (4 February 2005)

Last Updated: 17 February 2005

[2005] HCATrans 028

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S140 of 2004

B e t w e e n -

HYHONIE HOLDINGS PTY LTD

First Applicant

LEILA MARIE YAZBEK

Second Applicant

and

PAUL LEROY AS TRUSTEE OF THE BANKRUPT ESTATE OF ROBERT LEWIS YAZBEK

First Respondent

ROBERT LEWIS YAZBEK

Second Respondent

Application for special leave to appeal

GUMMOW J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 4 FEBRUARY 2005, AT 1.08 PM

Copyright in the High Court of Australia

__________________

MR R.J. POWELL, SC: If it please the Court, I appear with my learned friend, MR J.A.C. POTTS, for the applicant. (instructed by W lawyers)

MR B.A.M. CONNELL: May it please the Court, I appear for the first respondent. (instructed by Clinch Neville Long)

MR POWELL: Your Honours, the legal proposition is set out at page 48 of the application book.

GUMMOW J: There is no appearance for the second respondent.

MR POWELL: There will not be, your Honour.

GUMMOW J: Yes, I think we hold a certificate to that effect. Yes, go on.

MR POWELL: At paragraph 43 of the Court of Appeal’s judgment, which is page 48 of the application book, we rely on the first two sentences where Chief Justice Bray said:

It is clear law that despite the unambiguous words of the declaration the trust . . . can be rebutted by evidence of a contrary intention . . . But the onus is on those who seek to prove such an intention –

and that refers to the contrary intention, is on those people –

and strong evidence is required for the purpose –

Your Honours, that proposition of law is accepted in paragraphs 44 by the Court of Appeal. In paragraph 45 Justice Hodgson says he accepts that it is “some evidence of the required intention”, that is the signing of the declaration.

Then the judgment, the relevant part, is on page 50, paragraph 54, where his Honour says “the appellants cannot rely on Browne v Dunn.” Although the defendant “accepted that the document had been signed and witnessed”, by tendering the material I have referred to, and that is a large amount of material which shows that after the declaration of trust Mr Yazbek acted as though there was no declaration of trust; for example, by.....annual returns that he held the shares beneficially rather than simply legally. He goes over to say:

he plainly put in issue whether Mr Yazbek had the intention . . . Where Mr Yazbek led no direct evidence as to what the intention was . . . there was no need for Mr Leroy to cross-examine such evidence into existence.

So the point, your Honours, is this. What the Court of Appeal is saying is that the declaration of trust in writing, which appears at page 40 of the application book, is not direct evidence of intention and in those circumstances the rule in Dunn in effect does not apply where other evidence, subsequent to the making of the declaration, has been produced by the other side.

Your Honours, that was the only evidence, a declaration of trust and, as appears at the bottom of page 41, Mr Yazbek’s evidence that he made the declaration, and the evidence of the accountant that he witnessed the declaration on that date. In the body of the declaration Mr Yazbek declares that he now and at all times thereafter holds the property on trust, the family trust. What we say is that by putting forward that declaration and relying on In re Lamshed, Mr Yazbek in fact did give direct evidence of his holding the shares on trust. There was no requirement for him to say that what he states in the declaration was in fact the case.

HEYDON J: The application of Browne v Dunn turns on avoiding surprise, does it not? If the issue is clear between the parties, then in this particular case, for example, your client cannot say, “Well, if only I’d had a chance to deal with this.” It was - - -

MR POWELL: They took - - -

HEYDON J: Mr Justice Austin in earlier proceedings put a very large question mark, did he not, over that declaration of trust?

MR POWELL: Yes, your Honour. The answer to that is this. At page 13 of the application book Justice Young sets out what the defendant’s case is. Now, this is a case enunciated at the hearing – the proceedings were brought by summons, there was no requirement to put on a defence – and
there are a number of matters set out at paragraph 31 on page 13, the first of which is “There was no intention to create any trust”, and that is how the case has been decided against the applicants. He also sets out a number of other matters, including:

3. The transaction was effectively abandoned.

4. The transaction was a sham.

The evidence that the defendant relied upon, as I have said, was all evidence as to conduct by Mr Yazbek, or accounting and other representatives on his behalf, after the declaration. That evidence is consistent with some of these other defences that were being run. It is not blindingly obviously, your Honour, that it was not being accepted on the evidence that was being put forward, that there was no intention to create any trust.

GUMMOW J: We are at the level of special leave, Mr Powell.

MR POWELL: Yes, your Honour.

GUMMOW J: We have got to get a bit real. What do you say about paragraph 31 of Mr Connell’s submissions on page 74?

MR POWELL: Well, what we say, your Honour, is, relying on In re Lamshed, it was not our job to go any further. We also say this in relation to that. The point having been taken at the hearing on Browne v Dunn, it was open to the defendant to ask the court under section 46 of the Evidence Act to recall Mr Yazbek for examination on the point. To my learned friend’s credit he was very brief in cross-examination, but we say that was in detriment of his client, and he made a choice. We made a choice. We say on the law we were entitled to make that choice.

Your Honours, the reason why it is a matter of importance is that Browne v Dunn is most likely being – perhaps not now at a quarter past one, but being raised in courts all over the country, along with its good friend Jones v Dunkel.

GUMMOW J: It is probably being raised in Perth, Mr Powell. They do little else over there.

MR POWELL: Yes, your Honour.

GUMMOW J: Yes, we do not need to call on you, Mr Connell.

There are insufficient prospects of success on any appeal in this matter to warrant a grant of special leave. Accordingly, the application for special leave is refused with costs.

AT 1.16 PM THE MATTER WAS CONCLUDED