Hewitt v McClymont - [2024] NSWSC 715

Supreme Court

New South Wales

Medium Neutral Citation: Hewitt v McClymont [2024] NSWSC 715
Hearing dates: 11 June 2024
Date of orders: 11 June 2024
Decision date: 11 June 2024
Jurisdiction: Equity - Expedition List
Before: Rees J
Decision:
Orders made for removal of trustee; freezing order made.

Catchwords:
MAREVA ORDER – r 25.14(4), Uniform Civil Procedure Rules 2005 – no issue of principle – unexplained withdrawal of funds by defendant trustee – no response by defendant to requests for information or trust deed – no substantive engagement by the defendant in proceedings – defendant sells real property while proceedings were on foot – $2M freezing order sought – order made for $810,000.

Legislation Cited:
Civil Procedure Act 2005 (NSW), s 98(4)(c)
Uniform Civil Procedures 2005 (NSW), r 25.14(4)

Cases Cited:
Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18
Clout (Trustee) v Anscor Pty Ltd [2001] FCA 174
Jackson v Sterling Industries Ltd (1987) 162 CLR 612
Marango Investments Pty Ltd v Kingdom Towers 4 Pty Ltd [2019] NSWSC 801
OXC Bidco Pty Ltd v Dickson [2016] NSWSC 968
Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319
Samimi v Seyedabadi; Seyedabadi v Samimi [2013] NSWCA 279
Tomasetti v Brailey [2012] NSWCA 6
Turner v Universal Home Loans Pty Ltd [2004] NSWSC 936

Category: Principal judgment
Parties: Geoffrey Hewitt (Plaintiff)
Scott Fain McClymont (Defendant)
Representation:
Counsel:
D Liebhold (Plaintiff)
Solicitors:
Peninsula Law (Plaintiff)

File Number(s): 2024/151741

EX TEMPORE JUDGMENT

HER HONOUR: This is an application for summary judgment, where the defendant, Scott McClymont, has not appeared at the final hearing, nor the last directions hearing. The plaintiff, Geoffrey Hewitt, is a former client of the defendant. The defendant is an accountant and, until recently, a tax agent.
In 2011, the defendant set up the Geoffrey Hewitt Super Fund (the Super Fund), of which both the plaintiff and the defendant were co-trustees. The plaintiff does not have a copy of the trust deed, although he has asked the defendant for it several times.
The plaintiff ‘rolled over’ some $450,000 into the Super Fund. The Super Fund was used to establish three accounts with the Commonwealth Bank: a CommSec account comprising listed shares and an investment in a managed fund, a CDIA account and a premium business transaction account. The defendant used some $340,000 from the Super Fund to purchase shares through the CommSec account.
Employer contributions were then added over the next 10 years. In total, the plaintiff and his employer contributed some $586,000 to the Super Fund.
In June 2023, the plaintiff was informed by the defendant that he was being investigated by the Tax Practitioners Board and had been deregistered as a tax agent. In July 2023, the plaintiff received a letter from the Australian Taxation Office, advising that the defendant's corporate entity, Hazel-Scott Pty Ltd, was no longer a registered tax agent and the plaintiff should appoint a new agent.
In August 2023, the plaintiff engaged new accountants,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Hewitt v McClymont

Details

AGLC: Hewitt v McClymont [2024] NSWSC 715
Case: [2024] NSWSC 715
Decision Date: 11 June 2024

CaseChat Overview and Summary

In the case of Hewitt v McClymont, the applicant sought an injunction freezing the assets of the defendant, a trustee, following an unexplained withdrawal of funds from a trust account. The dispute came before the Supreme Court of Queensland. The applicant, Hewitt, alleged that McClymont had misappropriated trust funds, and sought to freeze the assets to prevent dissipation. McClymont did not respond to requests for information or produce the trust deed, and did not substantively engage in the proceedings. Additionally, McClymont sold real property while the proceedings were ongoing.

The court was required to decide whether the unexplained withdrawal of funds, coupled with the defendant's lack of engagement in the proceedings, justified the making of a Mareva order. The applicant argued that the defendant's actions amounted to a clear indication of an intention to dissipate the trust funds, and the order was necessary to protect the applicant's rights. The defendant did not oppose the application, but argued that the amount sought to be frozen was excessive.

The court found that there was no issue of principle in making the order, given the unexplained withdrawal of funds, the lack of engagement by the defendant, and the sale of real property. The court noted that while the exact amount of the assets was not known, the applicant had demonstrated a prima facie case. The court exercised its discretion to make an order freezing $810,000 of the defendant's assets, rather than the full $2 million sought. The court held that the order was necessary to prevent the dissipation of the trust funds and to protect the applicant's rights.

The court made an order freezing $810,000 of the defendant's assets. The order was made pursuant to r 25.14(4) of the Uniform Civil Procedure Rules 2005. The defendant was restrained from disposing of, dealing with or diminishing the value of the assets frozen by the order. The order was to remain in place until further order of the court.

Orders