Jadewest 2024 Pty Ltd v BTFMS Pty Ltd [No 3]

[2024] WASC 244

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   JADEWEST 2024 PTY LTD -v- BTFMS PTY LTD [No 3] [2024] WASC 244

CORAM:   HILL J

HEARD:   25 - 26 JUNE 2024

DELIVERED          :   28 JUNE 2024

PUBLISHED           :   4 JULY 2024

FILE NO/S:   CIV 1487 of 2024

BETWEEN:   JADEWEST 2024 PTY LTD

First Plaintiff

SILVER FOX (WA) PTY LTD

Second Plaintiff

PINETTA NOMINEES PTY LTD

Third Plaintiff

AND

BTFMS PTY LTD

First Defendant

BENJAMIN-CHARLES WALTER VELLA

Second Defendant

Catchwords:

Practice and procedure - Freezing orders - Injunction - Whether freezing orders and injunction granted by court should be extended - Hearing de novo - Where plaintiffs have seriously arguable case and defendants have seriously arguable defence - Where plaintiffs' claims are proprietary - Whether risk of dissipation of assets - Orders extended and varied

Legislation:

Nil

Result:

Freezing orders and injunction to be continued as varied

Category:    B

Representation:

Counsel:

First Plaintiff	:	N Lucarelli KC & B J Tomasi
Second Plaintiff	:	N Lucarelli KC & B J Tomasi
Third Plaintiff	:	N Lucarelli KC & B J Tomasi
First Defendant	:	M C Goldblatt
Second Defendant	:	M C Goldblatt

Solicitors:

First Plaintiff	:	Forbes Kirby Lawyers
Second Plaintiff	:	Forbes Kirby Lawyers
Third Plaintiff	:	Forbes Kirby Lawyers
First Defendant	:	MPH Lawyers
Second Defendant	:	MPH Lawyers

Case(s) referred to in decision(s):

Badman v Drake [2008] NSWSC 968

Bell Group NV (in liq) v Aspinall (1998) 19 WAR 561

Bentley v Nelson [1963] WAR 89

Bosanac v Commissioner of Taxation [2022] HCA 34; (2022) 275 CLR 37

Jadewest 2024 Pty Ltd v BTFMS Pty Ltd [2024] WASC 166

National Australia Bank Ltd v Human Group Pty Ltd (No 2) [2020] NSWSC 1900

Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [2011] WASC 188

Popovic v Panagoulias [2014] WASCA 86

Thomas A Edison Ltd v Bullock (1912) 15 CLR 679

Westwind Air Charter Pty Ltd v Hawker De Havilland Ltd (1990) 3 WAR 71

Willhart Ltd v Samimi [2000] WASC 239

HILL J:

(This judgment was delivered extemporaneously and has been edited from the transcript to include references, headings and to correct matters of grammar and expression).

1. On 1 May 2024, I made orders on the plaintiffs' ex parte chamber summons to grant freezing orders against certain assets of the defendants, as well as an interlocutory injunction to prevent the defendants from disposing of any asset of the BA Accounting Practice other than in the ordinary course of business.

2. Following the making of these orders, on the weekend of 4 and 5 May 2024, the computer servers and various files of the BA Accounting Practice were removed from the offices, and internet and phone services were disrupted.  On 7 May 2024, I made orders requiring the defendants to restore these items to the offices of the BA Accounting Practice.

3. The plaintiffs' chamber summons of 1 May 2024 has been programmed through to an inter partes hearing.  Since the original orders were made, amendments have been made to both these directions, as well as the date of the hearing.

4. At 1.00 pm on 7 June 2024, the third plaintiff gave notice to the first defendant that it intended to retake possession of the offices occupied by the BA Accounting Practice by 4.30 pm that day, unless outstanding rental payments were made.

5. Later that day, the defendants filed an urgent application for an injunction against the third plaintiff which was heard after hours by Whitby J, who was then the duty judge.  On that date, her Honour made orders restraining the third plaintiff from re-entering, occupying or resuming possession of the premises leased to the BA Accounting Practice.  By agreement between the parties, this application was also programmed through to hearing on 25 June 2024.

6. The plaintiffs' application for a continuation of the freezing orders and injunction, together with the defendants' application for an injunction, came before me for hearing on 25 and 26 June 2024.  The plaintiffs do not seek to discharge the orders of Whitby J and accordingly, it is unnecessary for me to address this matter in any detail.

7. In the affidavits and submissions that have been filed by all parties, the parties have referred to the members of the Vella family by their first names.  Without intending any disrespect, I have adopted this same practice.

Overview

1. Christine was previously married to Charles, who passed away on 1 February 2014, after a period of poor health.  They had four children: Melissa, Domenic, Ben and Rachelle. 

2. The plaintiffs' claim against the defendants arises in respect of three matters: the BA Accounting Practice; properties previously owned by the second plaintiff in West Kalgoorlie; and properties located in Ida Street, Bassendean (Ida Street Properties).

3. The defendants oppose any continuation of the freezing orders, alternatively seek a variation of the orders to release funds to enable payment of their legal fees.  Counsel for the defendants indicated the second defendant was prepared to give an undertaking not to sell, encumber or dispose of the Ida Street Properties without notice (of a time period to be agreed or ordered) being given to the plaintiffs.  Two primary reasons were advanced by the defendants as to why the orders should be discharged.  First, they contended that there was material non-disclosure by the plaintiffs at the ex parte hearing.  Second, it was submitted that, on the evidence before the court, the plaintiffs cannot now establish a good arguable case or that there is a serious question to be tried on any of these matters that would justify a continuation of the orders that the plaintiff obtained on an ex parte basis.

4. The plaintiffs denied both of these matters.  Senior counsel for the plaintiffs submitted that on the evidence before the court, there was a factual dispute between the parties in relation to each of the claims which cannot be resolved at an interlocutory hearing.  The plaintiffs say that on each of their claims, the plaintiffs have established, at a minimum, that they have a good arguable case.  The plaintiffs relied on the conduct of Ben in these proceedings, as well as their contention that the claims over both the BA Accounting Practice and the Ida Street Properties are proprietary claims, in support of their submission that the subject matter of their claims should be preserved and that there is a risk that the assets of the defendants in Australia would be dissipated unless the orders were continued.  On the basis of each of these matters, the plaintiffs contended that the orders which were previously made by the court should be extended until further order. 

Evidence on the application

1. In support of its application for a continuation of the orders, the plaintiffs relied on the following affidavits:

   (a)two affidavits of Christine, filed 1 May 2024 and 21 June 2024; and

   (b)three affidavits of Melissa, filed 1 May 2024, 7 May 2024 and 21 June 2024.

2. In opposing any order for the continuation of the plaintiffs' injunction and freezing orders, the defendants relied on the following affidavits:

   (a)five affidavits of Ben, two filed on 13 June, two on 25 June and one on 26 June 2024;

   (b)an affidavit of Rachelle, filed 14 June 2024; and

   (c)an affidavit of Tiffany Fay Kennedy, filed 7 June 2024.

Legal principles

1. In the reasons for decision that were published following the making of the orders on 1 May 2024, I summarised the legal principles that apply to the granting of an interlocutory injunction and a freezing order.[1]  It is unnecessary for the purposes of these reasons to repeat that summary. It is sufficient, in order to explain the conclusion that I have reached, to summarise the legal principles that have governed my decision.

Interlocutory injunction

[1] Jadewest 2024 Pty Ltd v BTFMS Pty Ltd [2024] WASC 166 [38] - [46].

1. In considering whether to grant an interlocutory injunction, the court must consider whether there is a serious question to be tried and whether the balance of convenience favours the grant of the injunction.  Generally, in considering the balance of convenience, a relevant factor in the exercise of the court's discretion is the question as to whether damages would be an adequate remedy. 

2. Where an injunction is sought in equity's exclusive jurisdiction, the adequacy of damages is not a relevant aspect of the balance of convenience.  Where the claim is a proprietary claim, it is not a sufficient answer to a claim for an injunction to contend that the plaintiff should be left to a pecuniary remedy.

Freezing order

1. The purpose of a freezing order is to prevent frustration or abuse of the processes of the court and is not to provide security in respect of a judgment or order, nor is it a substitute for the use and methods of execution.

2. A freezing order should only be granted with a high degree of caution. The courts recognise that it is a drastic remedy which should not be granted lightly.[2]

   [2] Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [2011] WASC 188 [139].

3. It requires the court to be satisfied that:

   (a)the plaintiffs have a good arguable case against the defendants on either an accrued or prospective cause of action that is justiciable in the court; and

   (b)there is a danger that the prospective judgment will be wholly or partly unsatisfied because assets of the defendants might be removed or otherwise disposed of, dealt with, or diminished in value.

4. The danger of dissipation must be sufficiently substantial and not merely a suspicion.  It is necessary for the plaintiffs to establish by evidence that the defendants are likely to remove assets from the jurisdiction of the court.  The fact that assets within the jurisdiction are moveable and that the defendants are located outside the jurisdiction is not sufficient, of itself, to warrant an inference being drawn that there is a danger of dissipation.  There must be evidence before the court from which a prudent, sensible, commercial person can properly infer that there is a danger of default if assets are removed from the jurisdiction.

5. The remedy is a discretionary one.  The strength of the plaintiff's case, the danger of frustration of a prospective judgment, the balance of convenience and any other relevant discretionary factors are all considered together in the exercise of the discretion whether or not to grant the orders sought.

6. In National Australia Bank Ltd v Human Group Pty Ltd (No 2), Henry J summarised the distinction that has been drawn by the courts in respect of freezing orders where no proprietary interest is claimed as against those where a proprietary interest is claimed.  Relevantly, her Honour stated as follows:[3]

   In circumstances where no proprietary claim is made, the object of a freezing order is to restrain an owner from dissipating their own property to preserve the integrity of the Courts' processes. Such an order operates in personam and not as an attachment on the property itself or as security for an anticipatory judgment. On the other hand, the object of a proprietary claim is to secure the property to which the plaintiff has at least a prima facie case of a proprietary interest and ensure that it is available to the plaintiff in the event it proves its claim to that property.

   This distinction is also of practical importance and particularly relevant to NAB's application for a variation to the Freezing Orders.

   When freezing orders are made in relation to non-proprietary claims, the usual position is that defendants generally have an entitlement to use their assets for legitimate purposes, such as to pay their ordinary living and business expenses and their reasonable legal expenses in defending the claims made against them.

   In contrast, there is no reason, in general, why defendants should be permitted to use property or money belonging to another in order to pay their legal costs or other expenses. There is an obvious risk of injustice if assets the subject of the proprietary claim are used to finance the defendants' litigation as the money is not the defendants at all but represents money which is held on trust for the plaintiff. The Courts will be attentive to the protection of trust property and a defendant may not be allowed to access money to which they have no legal or moral right to enable them to spend it on their own living expenses or on private representation of their choice.

   In cases concerning proprietary claims, a "careful and anxious judgment" is required whereby the Court must assess whether any injustice to a plaintiff … would be outweighed by the potential injustice to the defendants … if they were precluded from accessing funds and therefore perhaps denied the opportunity to advance an arguable defence.

   The weighing of the interests of justice may involve a consideration of whether a defendant has shown that it is necessary for them to have access to funds over which a proprietary claim is made in order to defend the proceedings and other relevant discretionary factors that may be relevant, such as delay. (citations omitted)

   [3] National Australia Bank Ltd v Human Group Pty Ltd (No 2) [2020] NSWSC 1900 [107] - [112].

7. As acknowledged in her Honour's summary, even where the claim is a proprietary claim, the court retains a discretion as to the relief that should be granted. 

8. In Badman v Drake, Brereton J expressed the view that where what was in issue was a specific identifiable fund which corresponded with most of the defendant's realisable assets, the court, as a matter of discretion, may make an exception for the payment of living and legal expenses.[4]  In considering whether or not to make the exception, his Honour had regard to whether the granting of the injunction would impact the defendant's ability to defend the claim against them and the strength of the defendant's defence. 

Non-disclosure and the obligation of candour in obtaining an ex parte order

[4] Badman v Drake [2008] NSWSC 968 [7].

1. In considering whether or not the orders should be extended, varied or discharged, it is also relevant to consider whether there has been material non-disclosure by the plaintiffs in seeking the orders on an ex parte basis.

2. When making an application on an ex parte basis, an applicant is required to make full and frank disclosure of all material facts.  The extent of disclosure that would constitute material disclosure was considered by the Full Court in Bell Group NV (in liq) v Aspinall in an appeal against a decision of the Master, granting an ex parte order extending the validity of a writ. Relevantly, the Full Court stated that:[5]

   In relation to material non‑disclosure, we think the principles are the same as those that apply to the grant of interim injunctions.  Where there has been a deliberate lack of candour relating to material of a major character there may be grounds for saying that a discharge of the order will follow almost as of course.  However, it is clear that the court retains a discretion even in the face of material non‑disclosure.  It is very difficult to give a general definition of the extent of the disclosure required because each case depends so much on its own facts.  It is sufficient to say that the applicant must make a full and fair disclosure of all matters within its knowledge which are material to the proceedings and which tend in favour of the other party.  There is a very helpful description of the broad principles in the judgment of Ralph Gibson LJ in Brink's Mat Ltd.

   According to Spry, Equitable Remedies, in deciding whether to continue or discharge an injunction in the face of material non‑disclosure, the court takes into account a number of factors.  They include the conduct of the plaintiff, the importance of the undisclosed facts, the prejudice that may be caused by granting or refusing relief and the public policy inherent in the rule requiring candour.  Given the public policy considerations which underpin the rule we can see no reason why these principles should not translate to the setting aside of ex parte orders generally. (citations omitted)

   [5] Bell Group NV (in liq) v Aspinall (1998) 19 WAR 561, 570.

3. Part of the duty to disclose all facts material to the determination of the right to an injunction in an application is that it is no excuse for the applicant to say he or she was not aware of their importance.  In Thomas A Edison Ltd v Bullock,[6] Isaacs J made it clear that the authorities establish that a duty of utmost disclosure is required of the party inducing the court to act in the absence of the other party, and that the party will fail in his or her obligation unless he or she supplies the place of the absent party to the extent of bringing forward all material facts which that other party would presumably have brought forward in his or her defence to the application.  Unless that is done, the condition upon which the court acts in forming its judgment is unfulfilled and so the order obtained must, inevitably, fail.[7]

   [6] Thomas A Edison Ltd v Bullock (1912) 15 CLR 679.

   [7] Thomas A Edison Ltd v Bullock 681 - 682; Bentley v Nelson [1963] WAR 89, 93.

4. Where there has been no deliberate lack of candour and the non-disclosure was innocent or, if the matter which is not disclosed is not of a major character overall, the injunction will not necessarily be set aside.[8]

   [8] Willhart Ltd v Samimi [2000] WASC 239 [34] (Hasluck J); applying Westwind Air Charter Pty Ltd v Hawker De Havilland Ltd (1990) 3 WAR 71, 87 - 88 (Murray J).

5. It is important to emphasise that the application before me for hearing was not an application by the defendants to set aside the ex parte orders that had been made. Instead, the application was the return of the original interlocutory application on an inter partes basis, to determine whether the orders that have been made by the court should continue. For this reason, it is strictly unnecessary for me to resolve the question as to whether I should follow the decision in Bell Group NV v Aspinall or the approach proposed by the Court of Appeal in Popovic v Panagoulias.[9]  Instead, it is my view that it is necessary for the application to proceed as a hearing de novo based on all of the material currently before the court.  For this reason, I consider that the plaintiffs bear the onus of establishing an entitlement to the orders that they seek, and the plaintiffs accept this is the case.

   [9] Popovic v Panagoulias [2014] WASCA 86 [54] - [55].

Approach to evidence

1. Before turning to the particular issues, it is necessary to explain the approach that I have taken to the evidence filed in this matter.

2. Voluminous materials have been filed by both parties, including the filing of affidavits by the defendants both immediately prior to and during the course of the hearing.  The affidavits filed by the parties exceed 2,000 pages and annex almost 200 documents.  Given the urgency of the matter, it is not possible and would be of little use or assistance for the court to address each of these documents or the details of each of the affidavits.  Instead, I have summarised the key matters that I consider are relevant to the decisions that I have made on the application before me.

3. In considering the evidence that has been filed, I make two initial observations.  First, it is clear from the evidence that has been filed that, at present, there is a significant split in the Vella family; with Christine and Melissa on one side, and Ben and Rachelle on the other.

4. Second, the factual matters that are the subject of the issues in these proceedings extend back to events that have occurred from the 1980s, which is before Ben and Rachelle were born.  Many of the events concern the conduct of Charles, who is now deceased.  Given the passage of time and the fact that the events concern a relatively complex structure for what was a family enterprise, there is no clear documentary evidence as to what occurred.  The court is being asked to draw inferences from documents or rely on the evidence of one party to a conversation, where the other party is now deceased.  It is apparent that the evidence of the witnesses on some of the matters has been reconstructed from documents that are currently available to that person.

1. On the face of the affidavits, it appears that the evidence of each of the deponents (other than Ms Kennedy) has been influenced by these matters.  However, on an interlocutory application, it is not possible to resolve whether and, if so, the extent to which this is the case.  It is simply not possible on an interlocutory application to resolve contested matters of fact, without the parties having an opportunity to give discovery, complete inspection and for cross-examination to occur.  The resolution of these contested factual issues must await any final hearing of the matter.

2. In determining what orders should be made, I have carefully considered the evidence filed by each of the parties.  I have placed more weight on the documentary evidence and the matters which are not in dispute between the parties.

Is there is a good arguable case or a serious question to be tried?

BA Accounting Practice

1. In about 1988, Charles, through interests associated with him, purchased an accounting practice in Midland, that was then trading as Beattie & Associates.  There is a significant dispute between the parties as to which entity or entities purchased the business and then subsequently carried on the business.   

2. In about February 2002, the BA Accounting Practice moved from its then location in Midland to offices at Unit 12 - 14, 398 Great Eastern Highway, in Ascot (Ascot offices).  Since that time, an accounting practice operated by members of the Vella family has operated from the Ascot offices.  In these reasons, for ease, I will refer to this accounting practice as the BA Accounting Practice.

3. The Ascot offices are owned by the third plaintiff and occupied by the BA Accounting Practice.  The only written lease tendered in evidence was entered into on 1 May 2007, which is a lease between the third plaintiff and Jadewest Holdings as trustee for the BA Management Trust. This lease expired on 30 April 2012.  There is no evidence before the court as to the basis on which the BA Accounting Practice currently occupies the property, or what the terms of the current lease are.

4. For a significant period of time, Christine has received weekly payments of $1,500 from the BA Accounting Practice.  Ben's evidence is that these payments are for the payment of rent for the Ascot offices.  Christine does not accept this is the case and says these payments, at least initially, were an allowance for the work she undertook at the BA Accounting Practice. Ultimately, for the purposes of this application, it is unnecessary for me to resolve this issue.

5. The major dispute between the parties is who owned or owns the BA Accounting Practice.  In her first affidavit, Christine's evidence was that she was not aware of who owned the BA Accounting Practice when it was purchased and that she believed that the practice operated through the BA Trust.  The basis for this belief is stated to be her review of tax returns and financial statements of the BA Trust.  

6. Ben denies the BA Accounting Practice is or ever has been owned by the BA Trust and says that an incorrect assumption that has been drawn from these documents.  Instead, Ben's evidence is that:

   (a)the BA Accounting Practice was initially carried on by Beattie & Associates WA Pty Ltd (BAWA) and comprised two streams: a tax practice, and a consulting and advisory practice;

   (b)the BA Trust was a service company that employed staff who were supplied to the BA Accounting Practice for a fee; and

   (c)in about August 2012 or November 2012, following conversations between Charles and Ben, Charles agreed to bifurcate the tax practice and the consulting practice, with the tax practice being transferred to BTFMS Pty Ltd for no consideration, and the consulting practice being carried on by BT Management Consultants Pty Ltd, as trustee for the BT Management Trust.

7. Ben says that at the time of Charles' death in February 2014, there was no value in the consulting practice.  Ben annexed to his affidavit various documents that disclosed that there were issues with the work done by Charles prior to his death, and that a number of clients of the consulting practice had decided to transfer their business to other accountancy practices.  Ben says that the accounting and tax practice that is currently run by him through BTFMS is a completely different business to that that had been previously operated by Charles.

8. Senior counsel for the plaintiffs denied the business was bifurcated in 2012 and submitted that this was not supported by the evidence including, importantly, the tax returns of the various companies, all of which were prepared by Ben, as well as the bank statements evidencing receipt of income from clients of the BA Accounting Practice.  The plaintiffs submitted that Ben's evidence relied on oral conversations with Charles and there was no evidence that Christine consented to any transfer of the practice or part of it, despite being a director of both Jadewest Holdings and BAWA.

9. The documentary evidence of records obtained from the Australian Securities and Investments Commission (ASIC) and the various financial statements and tax returns of the companies disclose the following.

   (a)The business name of Beattie & Associates, which was the practice that was purchased, was registered in August 1986 and cancelled in October 1998.  At the time it was cancelled, the business name was owned by BAWA and had been since 1 September 1990.  Prior to this, it was owned by Charles and, for a short time, Paul Vella.

   (b)BAWA was a registered proprietary company until 13 February 2015, when it was voluntarily deregistered.  At the time of its deregistration, the sole director, company secretary and shareholder of this company was Christine.  Christine was a director of BAWA from 1981.  Charles was a director at various time periods, as was Christopher Allen Oversby, the previous tax agent who worked in the BA Accounting Practice.[10]

   [10] Affidavit of Benjamin-Charles Walter Vella filed 13 June 2024, 'BCV-001' page 91.

   (c)The company which became BT Management Consultants Pty Ltd operated under this name from May 2012 until its voluntary deregistration on 13 April 2015.  At the time of its deregistration, the sole director and company secretary was Christine and its sole shareholder was the third plaintiff, Pinetta Nominees. Christine has been a director of this company since 1994, and Charles was director of the company from December 1996 until June 2007.

   (d)BTFMS was registered in June 2011.  Its registered office and principal place of business is and always has been the Ascot offices.  Ben is the sole director, company secretary and shareholder of this company.

   (e)The financial statements and tax returns for the BA Trust for the financial years ending 30 June 2009 and 30 June 2010 disclose income being received from 'professional fees' of approximately $250,000 and expenses of almost an identical amount, including consultants' fees and salaries.  Its main business activity is described as 'accounting services'.  No other financial statements or tax returns from any other companies, including BAWA, were adduced in evidence for these periods.

   (f)For the financial year ending 30 June 2011:

   (i)BAWA had a gross income of a little of $800,000 and paid service fees of $611,167.  Fees for consultants and salaries are recorded as expenses of a little over $55,000. Its main business activity is described as 'accountants'; and 

   (ii)an almost identical amount to the service fees paid by BAWA is recorded as income from 'professional fees' in the financial statements of the BA Trust.  The cost of salaries and consultants' fees increased from $250,000 in the previous financial years, to more than $300,000.

   (f)For the financial year ending 30 June 2012:

   (i)BAWA reported gross income of $590,000 and paid general expenses of $540,121.  From this time, its main business activity is described as 'accounting services'. Salaries of only $14,000 are recorded as expenses in its accounts.  There are amounts in its accounts for work in progress and trade debtors;

   (ii)an identical amount to the general expenses paid by BAWA is recorded as income in the BA Trust.  Expenses include salaries and consultants' fees of approximately $275,000 and bad debts of approximately $48,000; and

   (iii)this is the first year that BTFMS prepared financial statements, which disclosed that it had assets of $1.

   (a)               For the financial year ending 30 June 2013:

   (i)BAWA's income dropped significantly from almost $684,000 to only $86,000. General expenses of $83,000 were paid this year.  No amount is recorded in the accounts for work in progress, although almost $130,000 is recorded for trade debtors;

   (ii)there is nothing in the accounts of BAWA that matches the income received by the BA Trust.  The BA Trust recorded an income of in excess of $555,000 from 'professional fees' and expenses for salaries and consultants' fees of more than $370,000.  No amount is recorded for bad debts;

   (iii)BTFMS recorded income of $89,000 from 'professional fees' and consultants' fees of $46,000.  Its main business activity is described as 'accountants'; and

   (iv)the BT Management Trust, which was formerly known as the C & C Vella Trust, recorded no income that year.  Its description of its main business activity is 'Other Auxiliary Finance and Investment Services'.[11]

   (i)For the financial year ending 30 June 2014:

   (i)the BA Trust recorded income of more than $528,000 from 'professional fees' and salaries of almost $196,000.  Its main business activity is still described as 'accounting services'.  No amount is recorded for bad debts;

   (ii)BTFMS recorded income of more than $345,000 and wages and professional fees of more than $120,000.  Work in progress of $82,000 is recorded as an expense, and its main business activity is described as 'accountants'; and

   (iii)there was no evidence before the court in respect of the financial statements or tax returns of the BT Management Trust for this financial year.

   (j)For the financial years ending 30 June 2015 and 30 June 2016, the only evidence before the court is that of the financial statements of the BA Trust.  For the financial year ending 30 June 2015, the BA Trust recorded no income and bad debt expenses of $25,000.  For the financial year ending 30 June 2016, the BA recorded other income of approximately $62,000 and bad debt expenses of $22,000.  In each of these years, the main business activity of the BA Trust remains 'accounting services'.

   [11] Affidavit of Christine Louise Vella filed 21 June 2024, 'CLV-39', page 17.

10. In addition to the tax returns and the financial statements, various pieces of correspondence, letterhead, invoices and bank statements were adduced in evidence.

11. Broadly speaking, these documents included:

    (a)letters from BAWA to various people between July 2009 and April 2013, offering them employment with Jadewest Holdings Pty Ltd and stating this company provided services to BAWA; and

    (b)invoices issued by the BA Accounting Practice, which disclosed that:

    (i)between February 2010 and February 2012, invoices were issued by BAWA;[12]

    (ii)from May 2012, invoices were issued by BM Consultants as trustee for the BM Trust for financial services work,[13] although at least some of these invoices were paid into the bank account of Jadewest Holdings as trustee for the BA Management Trust;[14] and

    (iii)from 30 October 2013, invoices were issued by BTFMS for taxation services, as well as the preparation of financial statements.[15]

    [12] Affidavit of Benjamin-Charles Walter Vella filed 13 June 2024, 'BCV-122', pages 915 - 926, 943 - 950.

    [13] Affidavit of Benjamin-Charles Walter Vella filed 13 June 2024, 'BCV-122', pages 927 - 942, 'BCV-123'.

    [14] Affidavit of Melissa Jane Oliver filed 21 June 2024, 'MJO-20'.

    [15] Affidavit of Benjamin-Charles Walter Vella filed 13 June 2024, 'BCV-124'.

12. There are various documents in August 2012 which appoint BM Consultants as the new trustee of the BT Management Trust.  There is also evidence that, in this month, new letterhead was ordered for BTFMS,[16] professional indemnity insurance for the provision of tax services by BTFMS was arranged,[17] and new bank accounts opened for that entity.[18]

    [16] Affidavit of Benjamin-Charles Walter Vella filed 13 June 2024, 'BCV-050'.

    [17] Affidavit of Benjamin-Charles Walter Vella filed 13 June 2024, 'BCV-046'.

    [18] Affidavit of Benjamin-Charles Walter Vella filed 13 June 2024, 'BCV-052'.

13. Significant reliance was placed by the defendants on an email from Charles to Melissa on 25 August 2012, which instructed her to use the letterhead of BTFMS for letters accompanying income tax returns and business activity statements, and the letterhead of BM Consultants for all other work.[19]

    [19] Affidavit of Benjamin-Charles Walter Vella filed 13 June 2024, 'BCV-056'.

14. In October 2012, the trust accounts of BAWA were closed and the funds transferred to BTFMS.[20]

    [20] Affidavit of Benjamin-Charles Walter Vella filed 13 June 2024, 'BCV-058'.

15. A work in progress ledger of BM Consultants from October 2012 recording various time entries was adduced in evidence.[21]

    [21] Affidavit of Benjamin-Charles Walter Vella filed 13 June 2024, 'BCV-060'.

16. There are also various emails that were sent by Melissa in 2013 to clients, requesting payments to be made to BTFMS[22] and evidence of the use of a letterhead by BTFMS during 2013, including by Charles.[23]

    [22] Affidavit of Benjamin-Charles Walter Vella filed 13 June 2024, 'BCV-061', 'BCV-063', 'BCV-064'.

    [23] Affidavit of Benjamin-Charles Walter Vella filed 13 June 2024, 'BCV-068', 'BCV-070'.

17. Correspondence with the Australian Tax Office (ATO) discloses that the BA Trust ceased trading in December 2013, on Charles' death (although I note this did not occur until 1 February 2014).[24]

    [24] Affidavit of Benjamin-Charles Walter Vella filed 13 June 2024, 'BCV-014'.

18. In addition, reliance was placed on various emails with BA Accounting Practices' insurance brokers.  These emails record that:

    (a)as at July 2013, the corporate structure of the BA Accounting Practice was BTFMS, which undertook taxation work with an estimated turnover of $300,000 with two employees, Ben and Charles, and that BM Consultants as trustee for the BT Management Trust, undertook general accounting work with an estimated turnover of $800,000 with seven employees, including both Charles and Melissa;[25]

    (b)as at 17 February 2014, the trustee of the BA Trust had no employees.[26] At that time, BTFMS had five employees, excluding Ben, and total wages of approximately $410,000;[27] and

    (c)in May 2014, run-off professional indemnity insurance was arranged, which covered BM Consultants as trustee for the BT Management Trust, the BA Management Trust and BAWA. The run-off insurance did not extend coverage to or include Jadewest Holdings or the BA Trust.

    [25] Affidavit of Benjamin-Charles Walter Vella filed 13 June 2024, 'BCV-075'.

    [26] Affidavit of Benjamin-Charles Walter Vella filed 13 June 2024, 'BCV-082'.

    [27] Affidavit of Benjamin-Charles Walter Vella filed 13 June 2024, 'BCV-012', 'BCV-084'.

19. Also adduced in evidence was correspondence between Wilson & Atkinson and BM Consultants, concerning the defence of legal proceedings which were commenced by a former client of Charles in the Federal Court.[28] The correspondence includes statements that BM Consultants were the accountants for the former client and that tax returns were lodged by BAWA.

    [28] Affidavit of Benjamin-Charles Walter Vella filed 13 June 2024, 'BCV-081', 'BCV-083', 'BCV-085', 'BCV-093', 'BCV-094', 'BCV-095'.

20. In submissions, counsel for the defendants also emphasised that no letterhead of the BA Accounting Practice referred to the BA Trust, nor were invoices issued by that entity.

21. I accept the defendants' submission that a number of these documents - in particular, the correspondence to which I have referred to - were in the possession of Melissa (and to a more limited extent, Christine), and that these documents are relevant to the question as to whether the first plaintiff has a claim in respect of the BA Accounting Practice.  In my view, these documents are material to the consideration of whether the orders sought should be granted and should have been disclosed to the court at the ex parte hearing.

22. However, this, of itself, does not mean that the court is required to discharge the orders that it previously granted.  It is a matter of discretion for the court as to whether the orders that it has previously made should be extended.

23. While many of the contemporaneous documents support Ben's contention that the BA Trust did not carry on the business of the BA Accounting Practice but provided services to other companies within the family group, and that the BA Accounting Practice was bifurcated sometime in 2012 between the taxation practice and the remaining accounting practice, there are also documents which support the plaintiffs' contention.  Importantly, these include the financial statements and tax returns for the financial year ending 30 June 2013, all of which were prepared by Ben.  These documents show no income being recorded by the entity Ben now contends was operating the accounting practice at that time and also show that significant income was recorded as being received by the BA Trust.  As was submitted by counsel for the defendants at the hearing, it is accepted that there was only one accounting practice being operated at all times and there is no evidence of any other business generating significant income.[29]  In addition to these financial statements, it appears that some clients of the BA Accounting Practice paid their invoices into bank accounts operated by entities other than that which Ben contends operated the practice, and that it was not until February 2014 that the BA Trust ceased to have any employees.  Each of these matters support a conclusion that at least in the period encompassing the financial years ending 30 June 2013 until February 2014, the BA Trust operated at least a significant portion of the BA Accounting Practice.

    [29] ts 125.

24. I also accept on the evidence currently before me that the BA Trust did not employ anyone in the BA Accounting Practice after February 2014 and that, at this time, there were issues with the work that had been undertaken by Charles prior to his death, and a number of clients of the practice had elected to move their business elsewhere.  However, Ben's own evidence is that when he spoke to Charles' clients, he told them that BTFMS could provide all of the services that Charles had previously provided to them.[30] 

    [30] Affidavit of Benjamin-Charles Walter Vella filed 13 June 2024 [183].

25. Given these matters, it is my view that the first plaintiff has demonstrated that it has a good arguable case and that there is a serious question to be tried as to whether, as at February 2014, the first plaintiff had an interest in the BA Accounting Practice, which had at least some value, and that BTFMS wrongfully diverted this property to itself without payment.  In reaching this conclusion, it is important to stress that I have made no findings of fact and that I also consider, on the evidence presently before the court, that the defendants have a seriously arguable defence to, at least this part of, the claim.

West Kalgoorlie property

1. In May 2003, the previous trustee for the White Eagle Unit Trust purchased the West Kalgoorlie property.  The second plaintiff is the current trustee of that trust.

2. In September 2017, the West Kalgoorlie property was leased to Nouchy Mining Services Pty Ltd.  Between 1 September 2017 and 31 August 2023, the lessee paid the rent of $343,200 to the first defendant. 

3. Ben accepts that rent was paid by Nouchy Mining Services directly to BTFMS, but says that BTFMS paid a number of expenses related to the property, including the mortgage payments.  On his high-level calculation, he says that BTFMS has paid expenses of more than $260,000 (excluding any amount that might be payable to BTFMS for management fees) and that, at best, a little less than $80,000 is outstanding.[31]

   [31] Affidavit of Benjamin-Charles Walter Vella filed 13 June 2024 [265] pages 78 - 80.

1. Counsel for the defendants accepts that it will be necessary for an account to be taken as to the amount required to be paid by the first defendant to the second plaintiff but says this amount is significantly less than $100,000.[32]

   [32] ts 197 - 199.

2. On the evidence before me, I consider that the second plaintiff has demonstrated that it has a good arguable case that it is entitled to payment of the difference between the rent received by BTFMS and the expenses it has paid on behalf of the second plaintiff.

3. Senior counsel for the plaintiffs accepted that this matter alone would not justify the continuation of the orders, but submitted it was a relevant factor in the exercise of the court's discretion; particularly the concession now made by the defendants that they hold funds which need to be paid to the second plaintiff.

Ida Street Properties

1. On 8 May 2009, Ben entered into a contract to purchase the Ida Street property.  The contract was subject to finance being obtained from the ANZ bank for $365,000. 

2. On 9 May 2009, Charles sent an office memo to Melissa referring to the Ida Street property and stating that he and Christine had purchased a property through Ben so that they did not pay stamp duty.  The memo requested that Melissa establish a file and arrange for him and Christine to meet 'Leo' to discuss the layout to subdivide the property into two lots.[33]

   [33] Affidavit of Melissa Jane Oliver filed 21 June 2024, 'MJO-22'.

3. Ben denies that he has ever seen this memo and says that Charles and Christine helped him to buy and develop the Ida Street Properties to reward him for the effort he had made in learning the business, his achievements at school and university and to ensure that he bought property in Perth and not Canada.  He has also adduced in evidence a certificate evidencing that stamp duty was paid on the transfer of the property.

4. On 3 June 2009, Charles (on the letterhead of his accounting practice) wrote to the ANZ bank, noting that Ben wished to borrow $410,000 to purchase the Ida Street property and that Pinetta Nominees as trustee for the Charles Vella Property Trust, Christine and he were prepared to act as guarantors.  The letter noted that monthly mortgage payments would be paid by him and Christine.

5. Correspondence received from the ANZ bank on 22 July 2009 indicates that the loan was not provided to the second defendant, but to Pinetta Nominees as trustee for the Charles Vella Property Trust.  The loan was secured by a mortgage over the Ida Street property.

6. On 19 October 2011, Ben entered into a cost-plus contract with a builder for the construction of a house at the Ida Street property.  The following day, Charles emailed the ANZ bank to arrange a meeting 'with Benjamin and yourself' for a housing loan to develop the Ida Street property.[34] In his correspondence with the ANZ bank, Charles stated that Ben owned the Ida Street property.  He sought loans of $970,000 to be secured by a first mortgage over the Ida Street property, a first mortgage over one of the units at the Ascot offices, and guarantees to be given by Jadewest Holdings as trustee for the BA Trust as well as Pinetta Nominees as trustee for the C Vella Property BA Trust.  The letter noted that interest on the loan would be paid by 'Jadewest Pty Ltd as trustee for the BA Trust'.[35]

   [34] Affidavit of Benjamin-Charles Vella filed 13 June 2024, 'BCV-036'.

   [35] Affidavit of Benjamin-Charles Vella filed 13 June 2024, 'BCV-037'.

7. On 23 November 2011, the ANZ bank offered to lend the third plaintiff $970,000.  The letter was addressed to Charles, Christine and Ben.  The proceeds of this loan were used to repay the initial loan from the ANZ bank and to construct two residential houses on the Ida Street property.  The balance of the construction costs, as well as payment of interest and other charges on the property, were paid by Jadewest Holdings in its capacity as trustee of the BA Trust. 

8. In June 2013, titles to the two properties were issued, it appears, to the offices of the BA Accounting Practice.  Charles forwarded copies of these titles to Ben under cover of an email.  The email congratulated Ben on his achievements and said that he and Christine were very proud of what he had achieved.

9. On 23 May 2014, Ben and his now-wife received approval from Westpac for a facility of $920,000.  These funds were used to repay the second ANZ loan in its entirety, which occurred on 17 June 2014. 

10. Between July 2009 and June 2014, interest and other charges were paid by Jadewest Holdings, or the third plaintiff, in the amount of approximately $250,000.

11. There was a contest between the parties as to whether Christine was aware that Ben had obtained a loan from Westpac and whether she signed the discharge of the ANZ mortgage.  Christine says that she was unaware the mortgage had been discharged, which Ben says is untrue.  The document which was initially relied upon by Ben in support of this is a discharge and variation authority, signed on 7 May 2014.  The document attached to Ben's first affidavit contains two separate authorities: the first is in relation to a property in Noranda, and the second concerns the Ida Street Properties.  The signature pages on each of these documents appears, at least to the naked eye, to be identical. 

12. In his fifth affidavit, Ben annexed a number of documents from June 2014.  These documents include a further variation and discharge in relation to the Noranda property, including a document signed by Christine.[36]  Ben maintains that his recollection is that Christine signed the discharge authority for the Ida Street Properties.

    [36] Affidavit of Benjamin Charles Walter Vella filed 26 June 2024, 'BCV-137'.

13. It is not possible on an interlocutory application to resolve this disputed question of fact.  It is sufficient for the purposes of this application to say that on the evidence currently before the court, it does not establish that Christine's evidence is untrue and that the signature page on the discharge signed in May, that was initially relied upon, appears to be identical to another discharge document signed at or about that time.

14. Senior counsel for the plaintiffs submitted that based on the fact that significant sums were paid by the first or third plaintiff towards the purchase of the Ida Street property, there is a strong presumption that a resulting trust arises.  The plaintiffs accept that if the second defendant has made contributions to the property, there is likely to be an argument that there should be an equitable set-off.  However, at present, there is no evidence before the court as to what, if any, contributions have been made and by whom.

15. At the hearing, both parties referred me to the decision of the High Court in Bosanac v Commissioner of Taxation.[37] In this decision, Kiefel CJ and Gleeson J summarised the basis on which a presumption of a resulting trust arises, namely that it is taken to result to the person who advances money for the purchase of the property.  It is a legal response to facts which have been proved.  Their Honours emphasise that as a presumption, the presumption can be rebutted by evidence from which it can be inferred there was no intention on the part of the person providing the purchase money to have an interest in the land held on trust for it.[38]

    [37] Bosanac v Commissioner of Taxation [2022] HCA 34; (2022) 275 CLR 37.

    [38] Bosanac v Commissioner of Taxation [12] - [18] (Kiefel CJ and Gleeson J).

16. The presumption of advancement allows an inference as to the intention of the parties to be drawn from the fact of certain relationships, including transfers of property from parents to a child.  Their Honours explained that this presumption was not strictly a presumption, but provided the absence of any reasons for an assumption that a trust arises.  As a matter of evidence, it is a circumstance which may rebut the presumption of a resulting trust or prevent it arising and may be rebutted by evidence of actual intention.

17. Their Honours expressed the view that in circumstances where the court is considering as to whether a resulting trust arises, the focus of the court is to determine what was intended by the parties when the property was purchased.

18. In this case, there is a factual dispute as to what was intended when the Ida Street Properties were purchased.  Ben says it was a gift to reward him for his hard work.  The plaintiffs rely on the contemporaneous handwritten note of Charles, which says the property was bought in Ben's name on behalf of Charles and Christine.  While I accept that stamp duty was paid on the purchase of the property, this does not resolve the factual dispute.  At best, this is only evidence of an expressed reason as to why the property was in Ben's name and does not negate the intention, expressed in the email, that the property that was purchased was Charles' and Christine's. This factual dispute cannot be resolved on an interlocutory hearing.

19. On the basis of the evidence before the court, I am satisfied the plaintiffs have established they have a good arguable case and that there is a serious question to be tried as to whether, and to what extent, Ben holds the Ida Street Properties on resulting trust for the first or third plaintiffs.

Risk of dissipation of assets

1. Ben denies that there is any risk that he will leave Perth or remove any or all the defendants' assets from the jurisdiction.  In support of this denial, he points to the following matters:

   (a)his close relationship with his sister Rachelle, who lives in one of the Ida Street Properties;

   (b)the fact that BTFMS has many clients in Perth, that he would not abandon or risk his professional reputation; and

   (c)that he and his wife have always planned to live between Western Australia and Canada.

2. In contrast, in support of their submission that there is a risk of the dissipation of assets, the plaintiffs point to the following factors:

   (a)the fact that Ben is an overseas resident and the assets which they seek freezing orders over (in particular, the bank account of the first defendant) are liquid assets;

   (b)the conduct that is referred to in the statement of claim; and

   (c)the conduct of the defendants during these proceedings, including the removal of the servers and documents shortly after being served with the orders of the court, and the annexing to the affidavit of the discharge of the mortgage over Ida Street and the contention that this document was signed by Christine.

3. To the extent that it is relevant, for the following reasons, I consider that there is a risk that the defendants will dissipate assets and remove them from the jurisdiction of the court.

4. First, it is clear that there is significant animosity between members of the Vella family.  Ben says that his conduct in authorising the removal of the servers and documents on the weekend, after the making of the orders on 1 May 2024, was driven by his concern to keep them safe.  Even if that is the case, his conduct in authorising this was, in my view, unwise, given the proximity of this conduct to the time and date of service of the order.  Given the animosity between the parties and this conduct, I consider that unless orders are made by the court, there is a risk that funds from the bank account will be transferred out of the jurisdiction.

5. Second, Ben admits that there are amounts owing to the plaintiffs in relation to the West Kalgoorlie property.  No attempt has been made previously to account for this, or to pay these amounts to the second plaintiff.  

6. Third, Ben has made a number of serious accusations against both Melissa and Christine in respect of non-disclosure.  While I accept that some of these matters have substance, I do not accept his accusation in relation to the discharge of the mortgage over the Ida Street Properties.  His conduct in saying that Christine's version of events is untrue based on this document is not to his credit.

7. Fourth, Ben's evidence is that he requires access to these funds in order to fund his defence of these proceedings. On the evidence before me, I accept that if these funds are dissipated, it does not appear that Ben has the capacity to replenish these funds.

8. In any event, I accept the submissions of senior counsel for the plaintiffs that the claims made by the plaintiffs in these proceedings are proprietary claims.  On this basis, I consider that orders should be made to preserve the property that is the subject of these claims, pending their resolution.  On this basis, even if I were not satisfied that there was a risk of dissipation, I would grant an interlocutory injunction, which would have the same effect.

Balance of convenience

1. Given my conclusion that the plaintiffs' claims are proprietary in nature, it is unnecessary for me to consider the balance of convenience in any significant detail.

2. It is sufficient to state that I accept the balance of convenience favours the granting of the injunction.  In my view, given the proprietary nature of the claims that are made, I do not consider that the plaintiffs should be left to a claim for damages.

Should the freezing order be maintained over the entirety of the bank account and the Ida Street Properties?

1. In considering whether or not the orders should be maintained in their present form, it is necessary to consider the evidence as to the assets of the defendants.

2. There is very little evidence before me as to the position of either of them.  The evidence of Christine and Melissa as to Ben's financial position is based on what they contend Ben has told them and assumptions they have made from the positions he holds. 

3. Ben's evidence is that he and his wife (in their personal names) have savings of less than $30,000; through companies they own, have access to cash of approximately $50,000; have limited investments in listed companies; and receive salaries of CAD$85,000, together with gross dividends of almost CAD$150,000.  Initially, his evidence was that he had equity in a house in Canada of almost CAD$1.2 million and in the Ida Street Properties of $1.4 million.  Ben subsequently clarified that these amounts were his opinions of the value of these properties and not his equity, and that his equity in these properties is approximately CAD$130,000 and $767,240 respectively.  His evidence is that he is not currently withdrawing a salary for his work at the BA Accounting Practice.

4. Ben says that he is able to meet his living expenses but has insufficient funds to meet the costs of defending these proceedings, the costs of which he believes will be substantial and could extend to or exceed $1 million.

5. Senior counsel for the plaintiffs complained that no independent evidence, such as pay slips or contracts, had been adduced in evidence to support Ben's evidence.  While I accept this is the case, even if I were to accept that Ben's salary and drawings are closer to the 'half a million dollars a year' referred to by Melissa, I do not consider that this would be sufficient to fund Ben's legal costs.[39]

   [39] Affidavit of Melissa Jane Oliver filed 21 June 2024 [10].

6. In circumstances where it is my view that the defendants have a seriously arguable defence as to the proprietary claims that are made against them, I consider that unless the orders are varied, it is likely the defendants will not have access to the necessary funds to defend these proceedings.  In exercising my discretion, I have taken into account the fact that the resulting trust that is claimed over the Ida Street Properties does not extend to the entirety of the property, and that it is strongly arguable that the plaintiffs' claim over the BA Accounting Practice does not extend to the entirety of the practice.

7. In all of the circumstances of this case, I consider the orders that have been made by the court should be varied so that funds can be released from the bank account of the first defendant to enable the payment of the defendants' reasonable legal expenses.  At this stage, there is insufficient evidence before the court as to what those costs are or are likely to be.  Taking all matters into account, I consider the freezing orders should be varied to enable payment of the defendants' reasonable legal fees, but at present, there is insufficient evidence to enable me to reach any considered view as to what the initial amount should be, or the stages at which these costs should be reviewed.

8. Senior counsel for the plaintiffs accepted that Ben is entitled to receive remuneration for the work that he performs in the BA Accounting Practice.[40]  Ben's evidence is that he received a salary of $100,000 per financial year up to 30 June 2018, that he received $75,000 plus super in the financial year ending 30 June 2019 and that he has drawn approximately $105,000 since 2019.  While I accept that these matters are not the subject of any documentary evidence, his evidence that his salary was approximately $100,000 is not inconsistent with the financial statements of BTFMS of 30 June 2014, which show wages and superannuation of almost $100,000 being paid.  At this time, Ben did not work full-time in the BA Accounting Practice for the entirety of that year.  My preliminary view is that Ben is entitled to remuneration of $100,000 per annum, consistent with the historical payments.

   [40] ts 81 - 82.

Conclusion

1. For these reasons, it is my view that the orders that were made on 1 May 2024 (as extended) should be extended until further order, save that they need to be varied to enable the payment of the defendants' reasonable legal fees from the bank account of the first defendant, as well as reasonable remuneration of the second defendant.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

JN

Associate to the Honourable Justice Hill

4 JULY 2024