Pamplin v Irwin

[2024] NSWCA 213

Court of Appeal

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Pamplin v Irwin [2024] NSWCA 213

Hearing dates:

30-31 July 2024

Decision date:

28 August 2024

Before:

Bell CJ at [1];
Leeming JA at [2];
Griffiths AJA at [150]

Decision:

1. Appeal allowed in part.

2. Set aside order 5(a)(ii) made on 9 April 2024.

3. Direct the parties to supply an agreed calculation of the amount which should replace $451,000 in order 3 made on 9 February 2024 in accordance with this Court’s reasons, or in the absence of agreement, direct the appellants and the respondent to file and serve within 14 days of today the amounts for which they contend and submissions not exceeding five pages, with a view to the amount being determined by this Court on the papers.

4. Cross-appeal dismissed.

5. The appellants to pay the respondent’s costs of the appeal.

6. The cross-appellant to pay the cross-respondents’ costs of the cross-appeal.

Catchwords:

EQUITY – trusts – estoppel – siblings transferred assets to parent – ongoing businesses operated by trustee of discretionary trust – parent the sole director and shareholder of trustee – siblings found to be shadow directors of trustee – whether primary judge erred in finding that assets held by parent on trust for siblings – whether primary judge erred in finding that trustee estopped from distributions with less than 50% to one sibling – whether breach of non-fettering principle – trustee made determinations in favour of one sibling’s spouse – whether primary judge erred in finding that distributions not paid and were owing – whether unpaid distributions should attract interest – whether credit should be given for tax paid

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 100

Conveyancing Act 1919 (NSW), ss 23C, 54A

Succession Act 2006 (NSW), ss 104, 111

Cases Cited:

Catchpole v The Trustees of the Alitalia Airlines Pension Scheme [2010] EWHC 1809 (Ch)

Estate Pamplin; Irwin v Pamplin [2017] NSWSC 1477

Falkner v Bourke (1990) 19 NSWLR 574

Fielden v Christie-Miller [2015] EWHC 87 (Ch)

Irwin v Pamplin & Ors (No 4) [2024] NSWSC 73

Irwin v Pamplin (No 5) [2024] NSWSC 484

Public Trustee v Smith [2008] NSWSC 397; 1 ASTLR 488

Texts Cited:

C Mitchell, Paul Matthews, Jonathan Harris and Sinead Agnew, Underhill & Hayton Law of Trusts and Trustees (20th ed)

Lynton Tucker, Nicholas Le Poidevin and James Brightwell, Lewin on Trusts (20th ed)

Category:

Principal judgment

Parties:

Marie Dawn Pamplin (First Appellant/First Cross-Respondent)
Lionel Joseph Pamplin (Second Appellant/Second Cross-Respondent)
Mircon Pty Ltd (Third Appellant/Third Cross-Respondent)
Dennis G Pamplin Pty Ltd (Fourth Appellant/Fourth Cross-Respondent)
Halcrows Investments Pty Ltd (Fifth Appellant/Fifth Cross-Respondent)
NMOS Pty Ltd (Sixth Appellant/Sixth Cross-Respondent)
Mircorp International Pty Ltd (Seventh Appellant/Seventh Cross-Respondent)
OSCO (Australia) Pty Ltd (Eighth Appellant/Eighth Cross-Respondent)
Ann Margaret Irwin (Respondent/Cross-Appellant)

Representation:

Counsel:
N C Hutley SC, G George (Appellants/Cross-Respondents)
M Condon SC, P Sharp (Respondent/Cross-Appellant)

Solicitors:
Hitch Advisory (Appellants/Cross-Respondents)
Mersal & Associates (Respondent/Cross-Appellant)

File Number(s):

2024/77227

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

Supreme Court of New South Wales

Jurisdiction:

Equity

Citation:

[2024] NSWSC 73

Date of Decision:

09 February 2024

Before:

Henry J

File Number(s):

2018/179474

HEADNOTE

[This headnote is not to be read as part of the judgment]

In 2002, Mr Adrian Pamplin, now deceased, and his brother Mr Lionel Pamplin, the second appellant, transferred assets including shares in various companies (the other appellants) to their mother Ms Marie Pamplin, the first respondent. As part of this restructure, a new company was also constituted, Dennis G Pamplin Pty Ltd (DGP) as trustee of a discretionary trust – the DGP Family Trust – and of which Marie was sole director and shareholder. The brothers were members of the Nomad Motorcycle Club and had been the subject of investigations by the NSW Crime Commission in the 1990s. The respondent, Ms Ann Irwin, is Adrian’s former partner and the administratrix of Adrian’s deceased estate.

At trial, Ann successfully argued that the purpose of the share transfer to Marie was to insulate those assets from freezing orders and caveats that were being sought by the Commission in respect of the brothers’ assets. The language of “asset protection” appeared in documentary evidence with professional advisors, and testimonial evidence of conversations between members of the family. Henry J held that the transferred shares were held by Marie on express – and, in the alternative, resulting or constructive – trust for the brothers. Henry J also held that DGP owed Ann a debt of $451,000 based on distributions recorded in its financial statements between 2006 and 2012 which were found not to have been paid to Ann.

On appeal, the appellants argued that the primary judge erred in finding that Adrian and Lionel intended by their asset preservation scheme to reserve the beneficial interest in the assets. The appellants also contested the finding that the $451,000 was owing and argued that Ann could not recover the full $451,000 because that would amount to double recovery without accounting for tax liabilities. They further argued that the effect of the primary judge’s order – that the trustee was not permitted to distribute capital or income other than in a way that at least 50% went to Adrian’s estate – was inconsistent with the terms of the DGP Family Trust and impermissibly fettered the trustee’s discretions.

By cross-appeal, Ann argued that the primary judge erred in not finding that two of the companies held half of their assets on trust for Adrian’s estate. Ann also argued that the primary judge erred in not finding that the estoppel had retrospective effect.

The Court (Leeming JA, Bell CJ and Griffiths AJA agreeing) held, allowing the appeal in part and dismissing the cross-appeal:

In the appeal:

(1) There is no basis to interfere with the primary judge’s findings as to the existence of an arrangement or common understanding that Marie was to hold the transferred shares for the brothers’ benefit. The transfers were made at the time the Commission was seeking to encumber assets the brothers beneficially owned, and while the brothers formally resigned as directors of the corporate trustee after the transfers were executed, they continued informally to control the operations of the trustee as shadow directors: at [70]-[82]

(2) As a result, it was not necessary to determine the challenges to the alternative findings of resulting and constructive trust, as the appellants similarly had not established a proper basis for appellate intervention in findings of fact: at [83]-[85]

(3) There is no reason in principle that an estoppel may not extend to a power conferred on a trustee where the beneficiaries of the trust have acted upon the estoppel. In any event, the primary judge’s order did not preclude the trustee from considering any or all of the discretionary objects: at [93]-[107]

Public Trustee v Smith [2008] NSWSC 397; 1 ASTLR 488 at [83]-[97]; Catchpole v The Trustees of the Alitalia Airlines Pension Scheme [2010] EWHC 1809 (Ch); Fielden v Christie-Miller [2015] EWHC 87 (Ch), considered.

In the cross-appeal:

(4) The primary judge did not err in recognising an estoppel with retrospective effect because that would have had the capacity to affect distributions made in the decade after Adrian’s death: at [108]-[112].

(5) The primary judge did not err in finding that the $451,000 was owing to Ann, but Ann would obtain a double recovery if she were to receive the full $451,000 and were also to recover the amounts of tax paid on her behalf many years ago: at [116]-[130].

(6) The primary judge did not err in not holding that the assets of some of the companies (as opposed to the shares in those companies) were also held on trust. The essence of the transactions in mid-2002 was the transfer of ownership and nominal control of Mircon from Lionel and Adrian to Marie, reflected in the transfer of shares in the company and the resignation of the brothers as directors. All that reflects the fact that the subject matter of the trust was the company, not the assets of the company: at [143]-[146].

JUDGMENT

1. BELL CJ: I agree with the reasons of Leeming JA and with the orders his Honour proposes.

2. LEEMING JA: Ms Marie Dawn Pamplin and her son Mr Lionel Joseph Pamplin together with six companies controlled by them appeal from orders made in favour of the respondent, Ms Ann Margaret Irwin, who is the surviving partner of the late Adrian Dennis Pamplin, who was Lionel’s older brother and Marie’s older son. Adrian and Ann had no children; Lionel has a daughter Chantelle. Without conveying either disrespect or informality, I shall follow the parties’ usage and refer to the members of the Pamplin family by their given names.

Overview

3. There is a substantial amount of detail in the principal judgment given on 9 February 2024 by Henry J after a trial lasting ten days in early 2023 and which occupies some 459 paragraphs: Irwin v Pamplin & Ors (No 4) [2024] NSWSC 73, as well as the subsequent judgment by Parker J on 2 May 2024: Irwin v Pamplin (No 5) [2024] NSWSC 484. The principal issues on appeal are whether the primary judge, despite rejecting the evidence of Marie and Lionel (to which rejection no challenge is made) erred in upholding Ann’s case that most of the assets accumulated by companies controlled by Lionel and (during his life) Adrian should be made the subject of equitable relief – either (in the case of the assets held beneficially by Marie) by way of trust, or (in the case of a discretionary trust of which Marie was the sole director and shareholder of the trustee) by way of estoppel. The review to be undertaken by this Court turns on the documents which were tendered, the testimony of Ann, the inferences to be drawn from the absences in the documentary record and of witnesses who might have been expected to have been called by Marie and Lionel, and the way the trial was conducted.

4. By her cross-appeal, Ann seeks orders in addition to those made by the primary judge. The cross-appeal is relatively confined.

5. The full working out of the division of assets contemplated by the orders made at first instance has not occurred to date. To the extent that the appeal and cross-appeal require a grant of leave, leave was given without opposition at the commencement of the hearing. Further, it is possible that, as was mentioned at the hearing, there may be disputes about the form of certain of the orders (for example, the meaning of “half of the profits” of the various companies the subject of orders made at first instance). Such submissions as were made during the hearing were, necessarily, given that this appeal has been brought before a final accounting has occurred, divorced from the context of whether particular amounts of money fell within or without the scope of the order. It is not appropriate, in the course of resolving this appeal, to express any definitive views about the application of the Court’s orders independently of any particular dispute, and in advance of a ruling by a judge at first instance.

6. It will be necessary to deal with the details in due course. It may assist to bear in mind six points at the outset.

7. First, the critical dates are July 2002 when Adrian and Lionel restructured their way of doing business so as to leave minimal assets in their own names, and August 2013 when Adrian died.

8. Secondly, the documents are incomplete, and in particular there are very few documents from 2003 and 2004 after assets were transferred to Marie and the trust was established.

9. Thirdly, insofar as Ann gave evidence about what was told to her, either by Adrian or Lionel or a third party, it was not excluded as hearsay but instead was admitted as “evidence of the fact of the conversations and the facts contained therein” with the other side being “at liberty to make submissions as to weight”. This was not some ruling which simply emerged during the course of dealing with objections, but a formal, typed statement to which the parties agreed after an adjournment. It has the effect that hearsay evidence was admitted and available to establish the fact of what was said.

10. Fourthly, Marie and Lionel were cross-examined about their recollection of events and purpose, but in contrast, as her counsel emphasised in this Court, Ann’s evidence about what she was told and what she heard concerning the purpose of the restructuring was not the subject of any cross-examination. I have reviewed the entirety of her cross-examination, which occupied the majority of the third day of the trial (T68-166) and at no stage was any of her evidence concerning what she heard from Adrian, Lionel, Mr Winter or Mr Burrows challenged.

11. Fifthly, Ann was challenged on various other issues, but was found by the primary judge to be a credible and reliable witness.

12. Sixthly, it is true, as the appellants submitted, that “[t]he Court will not be referred to one scintilla of direct evidence that Adrian, Lionel and Marie had conversations leading to this alleged found arrangement or understanding”, and that “[t]he primary judge inferred there was an arrangement or understanding from hearsay evidence”. However, the course taken by Mr Hutley SC’s predecessor meant that much indirect evidence of events leading to the arrangement or understanding was unchallenged in cross-examination, and admitted without restriction.

Factual background

13. The evidence established that in mid-2002, Adrian and Lionel took deliberate steps, with the aid of professional accounting and legal advice, to restructure their affairs. The result was a new company, Dennis G Pamplin Pty Ltd (“DGP”). (Dennis Pamplin was Marie’s husband and Adrian’s and Lionel’s father, who died in 1996.) The sole shareholder and director of DGP was Marie. DGP was the trustee of a discretionary trust known as the Dennis G Pamplin Family Trust. The “Specified Beneficiaries” were Marie, Adrian and Lionel, and a wide range of other discretionary objects were also identified. Over the subsequent 11 years, substantial assets came to be held as assets of that discretionary trust.

14. Adrian died in August 2013 and, following a contested hearing occupying parts or all of nine days before Lindsay J, Ann was granted letters of administration of his intestate estate: Estate Pamplin; Irwin v Pamplin [2017] NSWSC 1477. It is now accepted, although it was formerly in contest, that Ann and Adrian were de facto partners, and she is beneficially entitled to the entirety of his deceased estate, pursuant to ss 104(b) and 111 of the Succession Act 2006 (NSW).

15. Ann commenced proceedings in 2018, principally in her capacity as administratrix, but also in one respect in her personal capacity, seeking relief by way of express, resulting and constructive trust over some of the companies and some of the real property owned and controlled by Marie as well as an entitlement to half of the assets of the trust.

16. The primary judge recorded at [118]-[124] that as young men Adrian and Lionel had been charged with drug-related offences. Adrian served time in prison. Lionel had been the subject of investigation by the New South Wales Crime Commission in 1995, and freezing orders had been obtained against his assets, while Adrian was ordered to attend the Supreme Court for an examination in relation to the joint affairs of him and his brother and any joint property they held. In 1998 the Crime Commission discontinued the proceedings it had brought against Lionel.

17. Although it was in issue at trial, the primary judge found at [127], and no attempt was made to impugn the finding on appeal – to the contrary, it was embraced as a central aspect of the case – that:

I am satisfied that in the period before and up to 2002, the deceased considered he was a potential target for investigation by the Crime Commission, his assets were at risk as a result and he told other people of his concerns. I also consider it likely and find that Lionel thought and said the same, despite his evidence that in 2002 he had no reason to be concerned of any future action by the Crime Commission.

18. Adrian and Lionel were members of the Nomads Motorcycle Club from around 1990. Through it they met Mr Thomas Browne, whom Lionel described as “Metho Tom”, who was a founding member and national president of the Nomads. With him they formed a company ALT Property Developments Pty Ltd in 1992, and each of Adrian, Lionel and Tom were directors from 1992 until 1994. Lionel maintained that the company “was established to acquire and undertake business activities with Tom, but we never agreed on a business to take over and ALT didn’t trade while Tom was a director”. After early 1994, Adrian and Lionel were sole directors and shareholders, each owning half of the issued shares, and in 1997 the name was changed to “Mircon Pty Ltd”, the third appellant. The primary judge recorded at [81] that Ann was told by Adrian that the derivation of Mircon’s name was “Nocrim”. Mircon was also appointed trustee of a discretionary trust for which Adrian and Lionel were specified beneficiaries.

19. Between 1996 and 2002 Mircon carried out a series of property developments at Woy Woy, Umina, Kingsgrove and Broken Bay. The scale of its operations at this stage was not disclosed by the evidence. Further property developments were undertaken by Adrian and Lionel in their own names (at Hebersham, Kingswood and Glenmore Park) and with Marie (at North Turramurra). Some of the developments were hampered by caveats lodged by the Crime Commission. The details were outlined by the primary judge at [79]-[100], and are not presently material.

20. Both men remained members of the Nomads, and part of Ann’s case involved evidence of very large amounts of cash being divided equally between them each fortnight, which was said to come from a waste-disposal business operated by them in Victoria which Lionel personally supervised each fortnight. It was also said that there was “not a scintilla of evidence” that they were “involved in anything nefarious”. To be clear, no aspect of this appeal turns on whether any aspect of the operations conducted by Adrian and Lionel was lawful or unlawful.

21. A large number of contemporaneous documents identified “asset protection” as the reason for running down the existing businesses, and transferring ownership of assets from the name of Lionel and Adrian to their mother in mid-2002. The primary judge found that Lionel and Adrian were shadow directors of DGP thereafter, and no challenge was made to that finding on appeal. The primary judge rejected the defendants’ positive case at trial, which was a case in which “asset protection” was explicitly disavowed. Her Honour made orders which substantially reflected success on behalf of Ann, although by a cross-appeal she seeks further orders in relation to the assets. Importantly, at the forefront of the appellants’ submissions on appeal was the positive submission that the primary judge should have found that the reason for the change of business structure in 2002 was not to give rise to the equitable entitlements recognised by the primary judge, but instead was for a legitimate form of “asset protection”.

22. By legitimate “asset protection”, Mr Hutley made it clear that he meant establishing structures whereby neither Adrian nor Lionel had any legal or equitable entitlement to any asset. One way in which this might occur was whether they had merely the hope, as a discretionary object, that their mother might exercise a trustee’s discretion in their favour. This was in contrast with the holding of assets as a “cloak” by an owner with the intent of disguising the true beneficial ownership of others. As it was put orally:

The evidence which we will take your Honours through rises no higher than at most establishing that the arrangements between Adrian, Lionel and Marie made in 2002 were legitimate, what might be called legitimate asset protection measures as opposed to a warehousing situation, by which we understood her Honour in effect to say a mere cloak was created of the true equitable interests rather than reflecting the actuality.

23. But this distinction is more blurred than it might appear. Adrian and Lionel continued to be shadow directors of DGP, and in effect controlled its activities and decisions, despite Marie being DGP’s sole director and shareholder. As was acknowledged in argument, based on Ann’s evidence which the primary judge found at [281] to be “credible and compelling”, Adrian and Lionel “were running the show”. Adrian and Lionel had much more than a mere hope that a distribution might be made to them as discretionary objects of the trust; to the contrary, they controlled the trustee.

24. At the forefront of the submissions made by Mr Hutley (who had not appeared at trial) was the proposition that in rejecting the defendants’ case at trial, including by seriously adverse findings as to the credit of Marie and Lionel, although those findings fell short of conscious dishonesty, the primary judge had neglected separately to assess whether the positive case propounded by Ann was sufficient to make out any entitlement to equitable relief. This appeal in large measure, therefore, turns upon an evaluation of evidence, which is either documentary or, to the extent it is testimonial, was evidence of events many years ago and therefore subject to the frailties of human memory.

25. At the forefront of the submissions made by Mr Condon SC (who had conducted the trial on behalf of Ann) was that the case sought to be run in this Court was not run at trial, and indeed had been disavowed at trial, and that that had consequences for the review by the Court and the discretion to make findings of fact. Thus it was said that “the short point is that Henry J was not asked to make any findings that benign asset protection was the raison d’etre for what occurred … Had her Honour been asked to do that it’s at least conceivable, in our submission likely that her Honour would have made additional factual findings which her Honour didn’t have to make having regard to the way in which the case was presented to the primary judge”.

26. It will be clear from the foregoing that it is necessary to summarise many of the facts in a substantial trial. After doing so, many of the grounds of appeal and cross-appeal may be resolved relatively concisely. The evidentiary summary falls into the following categories:

1. The testimonial evidence adduced by Ann;

2. The contemporaneous documents addressing the 2002 restructure;

3. The business records of the DGP Family Trust; and

4. Adrian’s 2013 application for life insurance.

The testimonial evidence adduced by Ann

27. There is no point in summarising the testimonial evidence of Marie and Lionel. Both were cross-examined at length. There was no challenge to the rejection by the primary judge of their evidence, including as to the circumstances in which the restructure in 2002 took place, and very little reference was made to any of that evidence in the written or oral submissions on appeal.

28. As mentioned, an unusual aspect of this litigation is that Ann gave evidence of statements by Adrian and Lionel and third parties to her concerning the effect of the restructure in 2002, about which she was not cross-examined.

29. Ann gave evidence, which was admitted on the basis that it was available for use for all purposes, as follows:

In or about late 2001 Adrian told me he had spoken to Mr Burrows about setting up a trust. He said; “We’re going to set up a trust for the assets and make mum the trustee on paper, but we’ll [he and Lionel] still be running the show. It’s still going to be 50/50 split between me and Lionel but mum will own it on paper for the peering eyes. We’re also going to transfer Mircon into mum’s name on paper. Me and Lionel will still be doing what we always did.”

In or about 2002, Adrian and I had the following conversation:

Adrian: “Me and Lionel are transferring everything into mum's name. I have spoken to Ron [Winter]. He is going to set up a family trust making mum the trustee. He is going to do it through Burrows.”

Me: “If you can’t trust your mother who can you trust?”

Sometime later Adrian and I had the following conversation:

Adrian: “It’s all done. Everything is in mum's name but me and Lionel still own the shit.”

Me: “If you can’t trust your mother who can you trust?”

30. Ann also said that she heard Adrian and Lionel arguing, giving the following evidence, which once again was admitted on an unlimited basis:

On a number of occasions I heard Adrian threaten Lionel (and sometimes Lionel and Marie) about selling everything and everyone going their separate ways if things were not done his way. This was a constant issue. He often said to Lionel:

“I’ll shut everything down and take all my stuff out and we can go our separate ways”; or

“I’ll split it all up. You can take your half, I’ll take my mine and you can paddle your own canoe”; or

“You want to carry on like a fuckwit, I’ll split everything. I’ll make money but how will you go?”

31. Ann also called Mr Pasquale (also known as “Peter”) Loccisano, who said that on “no fewer than 20 separate occasions”, Adrian said words to the effect “[a]ll the advice we have received is to put everything in Marie’s name to protect it from the Crime Commission”. Once again, that was admitted and available for use for all purposes. Mr Loccisano had been convicted of conduct which was dishonest and fraudulent, a matter noted by the primary judge at [37], which led to his evidence being viewed with caution.

Contemporaneous documents addressing the 2002 restructure

32. In mid-2002, there was discussion between Adrian and Lional and their advisers concerning the structure of their property development operations.

33. Evidently there was a conference between Adrian, Lionel and the accountant Mr Steven Lower on 13 May 2002. No notes of that conference were in evidence, but a confirmatory letter the following day, 14 May 2002, was tendered at trial:

Dear Adrian & Lionel,

Further to our conference, 13^th May 2002, I thought it worth summarising the points raised.

Asset Protection

We discussed the following strategies.

A & L Pamplin Earthmoving & Contracting Pty Ltd

1. A wind down of the company’s operations;

2. A transfer of the fixed assets to mum’s trust. Mum’s trust would then hire this equipment to Mircon Pty Ltd.

You to discuss with Reimer Winter for a proper sale agreement from the company to mum’s trust of the fixed assets. I believe stamp duty will be payable on this transfer. In addition, you should discuss with Ron, whether there is any external register that maintains a record of leased vehicles (something like REVS) etc.

Mircon Pty Ltd

1. Mircon Pty Ltd would take over the previous function of “A & L Pamplin”, providing earthmoving and contracting services.

2. Mircon will continue to acquire your personal vehicles. It was felt that the limited equity that was built up in these vehicles should not be of concern.

3. Both Adrian and Lionel to remain as directors and shareholders of this company.

4. Cash balances in Mircon’s account would be maintained at a low level to avoid any creditor claims.

The Pamplin Family Trust

It was felt that we would wind down the Pamplin Family Trust.

Mum’s Affairs

1. It was felt that mum should set up her own separate company with a name to be chosen by you.

2. That a separate trust would be set up under the company for mum to operate through. This trust would own all projects undertaken by mum, however Mircon Pty Ltd would act as the manager of those projects and would receive a fee for the work done on those projects.

3. Any profits made in this trust over and above mum’s $50,000 per year would be retained in the trustee company.

4. This company to be a sole shareholder and director company, with mum taking both positions.

5. Mum has recognised that she will have to provide personal guarantees for projects entered into by her trust.

6. It was agreed that Adrian and Lionel would be prepared to provide personal guarantees to any lenders in addition to mum, as they would earn income by way of Mircon’s management of projects.

Your Homes

• We discussed the importance of the CGT exemption available on personal homes and the need to take advantage of this exemption. As you will both be exposed as directors in Mircon Pty Ltd, ii would be beneficial if these homes were held in your spouse’s names.

• Alternatively, you might buy properties in your own names, however have mum advance funds to you for the purchase of those properties by way of a second mortgage behind the bank. She would charge a high interest rate on these, so that no substantial equity built up in your names on these properties.

You were to discuss these points with Reimer Winter, and if Ron was happy, he was to organise for a company and trust to be set up on mum's behalf.

You should mention to Ron that it may be necessary to exclude both of you as beneficiaries of the trust to ensure that creditors have no access to the trust assets.

Current Position

1. You currently hold Unit 1 and Unit 2 at Broken Bay Road as your personal residences and you expect these to be sold in the next three to four months.

2. Mum has already commenced her Castle Hill project.

3. Mum is about to acquire interest in an eight lot subdivision. You were to discuss with Ron, whether this should be undertaken under her new company.

Tax Planning

We discussed the current year tax position. You advised that Adrian has purchased shares in CCCX for approximately $180,000. That these shares have unfortunately “gone south”. I suggested that you might like to realise your loss on shares by transferring these to a third party.

It would be possible for mum to acquire these shares at the market value. If we are to crystallise your loss, you will need to do this on the public register prior to the 30^th June.

Obviously we need to discuss the above matters further.

Look forward to hearing from you.

34. It is clear that not all of the matters recorded in that letter took place. It is true that Dennis G Pamplin Pty Ltd was incorporated two days later, on 16 May 2002, with Marie as its sole director and shareholder, and on 24 May 2002 the DPG Trust was settled, with that company as its trustee. However, contrary to what was recorded under the heading “Mircon Pty Ltd”, on 27 May 2002, Lionel and Adrian resigned as directors of Mircon, and Marie became that company’s sole director.

35. On 1 July 2002, Mr Burrows sent a fax to Adrian and Lionel headed, “who does what”, which stated:

Hi Adrian,

Here’s a summary of who does what in the new regime:

MIRCON

Mircon takes over “A&L Pamplin” functions of running any earthmoving/contracting work that comes in;

Mircon will continue to own and run your personal vehicles, phones etc;

Mircon will retain a minimum level of cash in its bank a/c to protect it from creditors;

Mircon will receive management fees for looking after Mums projects

PAMPLIN TRUST

This is winding down operations after the sale of its properties and will be “shelved”

DENNIS G PAMPLIN PTY LIMITED

This is Mums new trust which new projects will go through

A&L PAMPLIN EARTHMOVING & CONTRACTING PTY LIMITED

This company is now surplus to our needs and will be wound up (or struck off) in the next year or so

Hope this helps - please give me a call if you need any clarification

36. On around 17 July 2002, Lionel and Adrian transferred their Mircon shares to Marie. They had also resigned as directors of A and L Pamplin Earthmoving & Contracting, in June 2002, and transferred their shares in that company to Marie, also on or around 17 July 2002.

37. There is nothing to suggest that Marie paid any consideration for the shares transferred to her.

38. It is plain enough that some aspects of the proposal in the letter of 14 May 2002, were not implemented, notably, Adrian and Lionel remaining owners and controllers of Mircon. To that extent the transfer of legal ownership and control to Marie was more extensive. However, there was no challenge to the finding that Adrian and Lionel continued as shadow directors of Mircon, and were shadow directors of DGP.

Business records

39. A and L Pamplin Earthmoving and Contracting was deregistered in September 2005. The property development activities ensured, some in the name of Marie but in large measure by DGP in its capacity as a trustee. In particular, Marie acquired land at Pitt Town Road, Kenthurst in November 2005.

40. Some of the financial statements referred to below have utility because they record the securities obtained by the Bank. In particular, in order to permit DGP as trustee to obtain a loan from the National Australia Bank of up to $970,000, each of Marie, Adrian and Lionel gave personal guarantees in July 2004. Using a loan from that bank of $1,054,000, DGP acquired properties at Macquarie St, Windsor in 2006.

41. The documentary records are incomplete. In particular, there are very few records concerning the affairs of the DGP Family Trust in the three years after its creation. There are no documents explaining how assets first became held on trust, nor trust accounts nor trust estates’ tax returns for those years. In the earliest financial statements, Marie appears as a trust creditor in the amount of some $1,000,000.

42. There were minutes of board meetings of DGP dated late June in the years 2006-2012 recording distributions in specified amounts to named discretionary objects, invariably distributing “any surplus” to another discretionary object, with the intention of ensuring that the trustee retained no income at the end of the financial year (which would be taxed at the top marginal rate). These documents were prepared by an accountant, and, with one exception, all made limited provision in favour of Chantelle Pamplin (Lionel’s daughter) in a small amount which appears to correspond to the tax-free threshold.

43. Relevantly to ground 14 of the appeal and grounds 4 and 5 of the cross-appeal, which challenge the judgment debt of $451,000, these minutes (coupled with Ann’s tax returns) recorded distributions in most years in her favour, as follows:

$20,000 in the financial year ending 30 June 2006;

$60,000 declared 26 June 2007;

$65,000 declared 26 June 2008;

$66,000 in the financial year ending 30 June 2009;

$80,000 declared 29 June 2010;

$80,000 declared 29 June 2011; and

$80,000 declared 29 June 2012.

44. The same accountant appears to have prepared tax returns for both the trust estate and Marie and Ann. The accountant was Mr Burrows in 2007 and Mr Aboud in 2013. In all cases, distributions in favour of Ann correspond to amounts of income described as “distribution from trusts” in the supplementary section of Ann’s tax return.

45. Comparatively few of Marie’s tax returns were in evidence, but those that were in evidence corresponded with the trustee’s minutes. Thus for example in Marie’s 2007 tax return, the amount of $45,000 appears as income described as “distributions from trusts” and accords with the distributions recorded in DGP’s minutes. The approach taken is consistent with making distributions of taxable income to recipients who have deductions. Thus in that year, Marie made a contribution of $150,000 to the Pamplin Super Fund and the distribution from the trust did not prevent her from achieving a relatively low taxable income of $70,641.

46. There were two classes of financial statements of the DGP Family Trust. There were a limited number of conventionally prepared balance sheets and profit and loss statements. All save one were unaudited. The exception was audited by the purportedly “independent” auditor Mr Lower (who continued, so far as the evidence discloses, to be the appointor of the trust). One aspect of the balance sheets is of some significance in determining the extent to which distributions have been made. For, at one stage, it was said, by reference to the 2013 balance sheet, that there were very substantial “unpaid trust distributions” – in the order of $3,000,000 – owed to Marie Pamplin. There are difficulties in reconciling the ordinary meaning of labels with the evident intent of (lawful) tax effective planning that is disclosed from the financial records of this trust. At one stage the appellants flirted with the submission that the trustee’s decision to make a distribution, but not to pay it, would absolve the trustee from its tax obligations, but not require the beneficiary named in the decision to declare the income if she accounted on a cash rather than on an accruals basis. That seems most unlikely, to say the least.

47. In any event, it is tolerably plain, as was pointed out at the commencement of the second day of the hearing, that “unpaid trust distributions” does not bear its ordinary meaning.

48. This is established by a comparison between the balance sheets at 30 June 2011 and 2012. Each balance sheet comprises three categories of liabilities. Both include “current liabilities” and “non-current liabilities”. The 2011 balance sheet also includes “beneficiaries’ current accounts”. In the 2012 balance sheet, the third category is described as “unpaid trust distributions”. The historical numbers recorded in the 2012 balance sheet under the heading “unpaid trust distributions” correspond precisely to those numbers under the heading “beneficiaries’ current accounts” in the 2011 balance sheet. That is to say, according to the 2011 balance sheet, there were, as liabilities of the trustee, current accounts in favour of the following beneficiaries: Marie ($2,597,884.07), Mircon ($1,394,627.57) and Ann ($200,000). In the 2012 balance sheet, the historical column for 2011 records “unpaid trust distributions” with respect to Marie, Mircon and Ann in precisely the same amounts. The inference is inescapable that the current accounts reflecting indebtedness by the trustee to those three discretionary objects were relabelled in the 2012 financial statements (which approximately coincides with Mr Vincent Aboud becoming the accountant) as “unpaid trust distributions”. The significance of this is that it is unsafe to infer that the missing three years of decisions of the trustee, from 2002 to 2004, immediately after the trust was settled, could give rise to approximately $2,000,000 of distributions to Marie. A much more plausible inference, although it is not necessary to draw it for the purpose of resolving this appeal, is that the missing financial statements record transfers of assets by Marie in her own name to be held by her as trust assets and at the same time for a credit in her favour in what was (at that time) known as the beneficiary current account.

49. There were also financial statements which have every appearance of having been prepared by a bank. (I say that because they include a “short form credit memorandum”, said to have been prepared by Mr Craig Barnes, and who is described in the document as a Banker, and in which the group known as Pamplin is described as a “customer”, and because the particular document states “This submission seeks New Market Rate Facility $840,000 into The Peak on Andrew Pty Ltd ATF The Peak Unit Trust”.) The document goes on to record:

Background/ History:

Valuable clients of nab [sic] originally introduced by regular introduction source. Adrian and Lionel Pamplin were primarily involved in earthmoving although now are more residential developers, investors and consultants. A basic family tree is attached to eBI [sic] and a brief outline of [entities] and income streams appears below:

Adrian Pamplin

Key person and contact. Major driving force and decision maker.

Lionel Pamplin

Key person. Operator of earthmoving machinery, superior skills in this trade by external accounts.

Marie Pamplin

Mother of the above gents and sole director of Mircon Pty Ltd and Dennis G Pamplin Pty Ltd. Owner of properties at Kenthurst and Dural.

Dennis G Pamplin Pty Ltd ATF Pamplin Family Trust

Receives investment income from investments in other [entities] as well as share trading. Also conducts the groups real property development and owns properties at Airlie Beach and Windsor. Shareholder in The Peak On Andrew Pty Ltd

Mircon Pty Ltd

Earthmoving company - hires out labour and machinery for external contracts. In last 9-12 months has been operating primarily out of a Tip and Quarry site at Sunbury in Vic (BTQ Group Ply Ltd)

50. That document states that it was prepared by Mr Barnes on 17 July 2008. Attached to it is a document with a date of 18 July 2008 described as “Mircon Pty Ltd Detailed Financial Report” which provides a variety of ratios apt to be used by banks making lending decisions. Those statements do not have the level of detail as the more conventionally prepared financial statements, and the Court was not in oral submissions taken to any of them in detail. As noted above, their principal significance is that they record securities and guarantees granted by Marie, Lionel and Adrian and the companies they controlled.

Adrian’s life insurance application

51. In 2013, Adrian made an application for life insurance. A policy seems never to have issued prior to his death. However, the documents which came into existence, and the communications between Adrian and Ann, bore upon whether Adrian retained an interest in the assets the subject of these proceedings.

52. On 12 April 2013, Adrian gave instructions to Mr Winter:

As far as the “Pamplin family tree” so to speak. Mum obviously sits at the top along with the various companies. Then myself and Lionel sit equally under her and the companies. In the event of mums death, I believe the family assets are split 50/50 between my brother Lionel and myself. The only real provision I insist on from my side is that should mum outlive me, Ann moves up into my beneficial position thus rendering at mums death a 50/50 split between Ann and Lionel. What Lionel decides to do in his similar situation is entirely up to him and should be attended to by him ASAP…

53. In May 2013, after making inquiries concerning life insurance, Adrian wrote to Ann:

Baby just so you have it on record. If or when l die you’ll get $2,000,000 and the company will get ... $2,500,000. Try and understand the graph below that shows what I just said. I’ve filled out 99% of the forms for the policy that you’ll “own”. Now that is how they are referred to[;] the beneficiary is the actual policy holder which is you although the company will pay the premiums. So once I’m dead, you enjoy and use the money to get over my death ASAP…

54. On 21 June 2013, Adrian and Lionel met with a financial adviser who recorded the following information on a document signed by both brothers:

Adrian and Lionel are both brothers and business partners across numerous business ventures.

Their business interests include, but are not limited to:

- a shoe manufacturing business in China;

- a earth moving and excavation business;

- several development sites;

- a quarry and tip site in Melbourne.

Due to asset protection reasons, Adrian and Lionel have no assets or businesses in their names. All assets are owned within a F/T with Mum Marie as the Director/Secretary of all entities.

…

Currently all entities hold approx. $5 mil worth of debt in total and Adrian and Lionel would like to ensure their mother and respective partners are financially secure should something happen by way of death or disability.

[Adrian and Lionel had] incorporated a testamentary trust already.

[Adrian and Lionel each stated that they earnt the same amount being] $70,000.

[Adrian and Lionel had expenses of] $104,000 pa combined.

…

$2,500,000 is each brother's share of the $5,000,000 debt load.

55. The substance of those instructions was relayed by the adviser to AMP, including stating the following:

I have two clients who are brothers/business partners that I am looking to obtain the following covers for…

The clients operate several businesses, such as

- An earthmoving/excavation business;

- They own several waste management sites in NSW, and Vic;

- A seafood importing business;

- They own a factory in China, that manufactures shoes and they distribute here in Australia to a number of major outlets;

- Also engage in property development within the Kenthurst/Dural area…..

…the brothers recently went through a risk management process with their Solicitor and Accountant to ensure asset protection is 100%. As a result, both brothers do not have any direct/legal ownership of any assets and hold a minimal amount of cash in their respective names. Currently, the family trust operates with a corporate trustee the structure that has their Mother as the Director of all their businesses….

56. On 19 August, the same adviser applied for life insurance from AIA, and wrote the following in support:

Both Adrian and Lionel have always had numerous involvement within several businesses. In the early 1990’s, both clients on the recommendation of their accountant for asset protection purposes, placed all their business interests and ownership into their mother’s name – Marie Pamplin. Marie is now retired, has never had any involvement in any of the boys businesses (besides being a Company Director/Shareholder to all the entities) and receives a pension from her SAS Pension account after many years of service in a government role.

…

Adrian is the person who facilitates the distribution of the shoes/clothes in numerous stores, through his business development skills and contacts with buyers.

…

Adrian has a phobia of flying and has never left Australia, as a result, Lionel is responsible for flying to Vietnam, China and Thailand on a regular basis to meet with the various stakeholders of their manufacturing organisation. Lionel's role is equally as important in the operation of their manufacturing business.

…

With their extensive knowledge of earth-moving, Adrian and Lionel acquired a Quarry in Bulla Vic (in 2007), which is owned by the BTQ group. Lionel manages the actual site from Sydney and flies down to Melbourne on a regular basis to meet with the site Manager and various employees who facilitate the day-to-day roles. Adrian's role is to deal with the EPA on a regular basis, as this industry is strictly regulated for the types of disposal that can be made and manages all the financials requirements for the site.

…

Both clients understand that their financial documentation does not provide a true reflection of their financial situation, but based on their numerous business interests and the risk they face in the above industries of being sued, one can understand why their accountant would recommend the clients to hold no personal ownership or limit the amount of income they draw from their respective businesses.

…

Though Marie Pamplin is the Director/Secretary of all Adrian and Lionel's business interest, Marie is currently 67 years of age (born on 7th of Dec 1946) and not really in a position to facilitate and manage all these businesses to ensure they run as profitably as they currently do…

57. Although AIA was agreeable to insuring Adrian’s life, he died on 23 or 24 August.

Findings by the primary judge concerning the restructure in 2002

58. The primary judge made the following findings at [127]-[132], reflecting the different stance taken by the defendants at trial, and which were not the subject of challenge on appeal:

Irrespective of whether the deceased was, or was not, the target of the 1995 Crime Commission investigation and notwithstanding that legislation existed prior to the Proceeds of Crime Act 2002 (Cth) that enabled authorities to take action in respect of property held beneficially, I am satisfied that in the period before and up to 2002, the deceased considered he was a potential target for investigation by the Crime Commission, his assets were at risk as a result and he told other people of his concerns. I also consider it likely and find that Lionel thought and said the same, despite his evidence that in 2002 he had no reason to be concerned of any future action by the Crime Commission.

Ann gave evidence, which I accept, that the deceased told her he had been the subject of inquiries from the Crime Commission and she overheard him say to Lionel, on a number of occasions in the 1990’s, that “Once this is over we should look at putting everything in mum’s name so if we get arrested again they will have nothing to take from us.” Although Ann's recollection of when she was told this may have been inaccurate (she said in the late 1990’s), her evidence that the deceased told her after he was arrested that, “I’ve transferred everything of mine to mum. Fuck the Crime Commission they’re not getting this shit”, was entirely plausible given the facts set above and later in these reasons, together with evidence from the other witnesses.

Mr Burrows gave evidence that in the 1990s and throughout the two to three year period to the end of 2001, the deceased and/or Lionel told him that they had been investigated by the Commission, their assets had been frozen and they were very concerned about the resurgence of investigation by the Crime Commission, which concerns were ongoing at the time of the 13 May 2022 meeting described below.

As for Mr Loccisano, he may have been off with timing when he deposed that the deceased said to him in 2004 that new laws were being introduced to disrupt and dismantle motorcycle clubs and about a meeting at Belmonte’s when he first met Mr Burrows (Mr Loccisano and Lionel said it occurred in the early 2000’s; Mr Burrows said in 2006 or 2007), but his evidence that the deceased was scared that his and Lionel’s involvement with the Nomads made them subjects of investigation by the police, the Commission and other law enforcement authorities, they feared that their assets would be seized and they had instructed Mr Winter and Mr Burrows to put everything into Marie’s name was not, in my view, both “implausible and contradicted” (as the Defendants submit), having regard to the totality of the evidence.

Marie also accepted that the deceased told her that he had been the subject of inquiries by the Commission, had concerns about members of motorcycle clubs being targeted for investigation, including by the police, and he expressed those concerns for a number of years, both before and after 2002 (T388).

For these reasons and based on other evidence (to which I will come), I am satisfied that the risks referred to above and the desire to protect their existing and future assets was the motivating factor for the deceased and Lionel changing the way they did business together and why, together with Marie, they restructured their affairs from May 2002.

59. Mr Loccisano’s evidence to which her Honour referred in that passage included the following, of a meeting with Adrian, Lionel, the solicitor Ron Winter and the accountant Peter Burrows:

Adrian: Ron, you know we were recently investigated by the Crime Commission. We covered this the other day. I don’t want anything in mine or Lionel’s name. I want it so anyone investigating us finds nothing in our name. How can we hold these assets and run our businesses and keep them safe? I don’t want anyone coming after us. I just want to run my business.

Ron: I’ve discussed it with Peter (Burrows) and our advice is for all assets and shares should be held in Marie’s name. Properties should be held in a self-managed super fund and it should be Marie’s super fund because she is approaching retirement a lot sooner than you boys. Any new companies are to be held in the same manner.

Peter added: Its tax effective to put property in a self-managed super fund.

Adrian: Well them, from now on everything goes in Marie’s name. Ron and Peter, go ahead and start setting it up.

The appeal and cross-appeal

60. The principal grounds of appeal are 1, 2 and 3, which challenge the finding that there was an understanding or common assumption which reflected the purpose found by the primary judge summarised above.

61. Grounds 6, 7 and 9 challenge alternative findings, by way of common intention or resulting or constructive trust, made by the primary judge. Grounds 10 and 11 challenge the extension of the finding to the assets of the DGP Family Trust. Grounds 13 and 14 deal with the finding that DGP owed Ann a debt of $451,000 based on distributions recorded in its financial statements between 2006 and 2012 which were found not to have been paid to Ann. Grounds 15, 16 and 17 of the appeal were added when the appeal was heard, and were not the subject of written submissions from the appellants. Grounds 4, 5, 8 and 12 were not pressed.

62. The cross-appeal has five grounds. They fall into two categories. Grounds 1-3 contend that based on the findings of fact made in her favour, the relief to Ann should have extended more broadly. Grounds 4 and 5 concern the interest to be calculated on the $451,000 found to be owing to Ann; it will be convenient to address these grounds simultaneously with grounds 13 and 14 of the appeal.

63. In light of what has already been recorded concerning the documentary and testimonial evidence, many of these grounds can be addressed and resolved concisely.

Grounds 1, 2 and 3

64. These grounds were as follows:

1. The totality of the evidence did not establish that there was an “understanding or common assumption” as Henry J found.

2. Henry J was in error when she held that the parties intended an “understanding or common assumption” to have legal effect.

3. Events giving rise to the “understanding or common assumption” occurred in 2002. Oral evidence about the facts and matters relied on second or third-hand hearsay. Further, memory is a constructive and reconstructive process. There was therefore no proper basis for the respondent’s evidence to establish (a) the existence of the “understanding or common assumption,” or (b) foundations for it.

The reasons of the primary judge for finding an understanding or common assumption

65. Ann had alleged that there was an understanding or common assumption shared by Adrian, Lionel and Marie that Marie would hold the transferred business and property assets and any future assets generated by ongoing or new business ventures for the benefit of or on trust for the deceased and Lionel in equal shares, which Marie would hand over if asked to do so. Ann maintained that the understanding or common assumption also provided that Adrian and Lionel would act as shadow directors of the companies and keep de facto control of them and the assets, and that they did so: at [7].

66. The primary judge elaborated upon the arrangement or understanding at [248]:

The agreement or understanding and what the common assumption provided are said to be in the same terms, which included that:

(a) the existing businesses and assets owned by the deceased or Lionel, including their property developments, would be sold and the proceeds used to buy land or otherwise be invested in the name of Marie or entities which Marie nominally owned and/or controlled;

(b) the deceased and Lionel’s shares in ALPEC and Mircon would be transferred to Marie and the real property at Russell Island would be transferred to a corporation that Marie would nominally own and control, and those assets would be held on trust for them, for their several benefit;

(c) the deceased and Lionel would resign as directors of Mircon and ALPEC, and cause Marie to be appointed as director;

(d) Marie would acquire assets in the future (defined to be “the Further Venture Assets and Activities”) on behalf of the deceased and Lionel and hold them on trust for them, for their several benefit;

(e) Marie would act as a nominee director of corporations (including Mircon and ALPEC) to be run by the deceased and Lionel for their several benefit;

(f) Marie would permit the deceased and Lionel to act as shadow or de facto directors of the corporations;

(g) Marie would re-convey to the deceased and Lionel the assets and any rights in her name or which she controlled on request by either of them, or upon their death, to their respective estates; and

(h) the deceased and Lionel would continue to share equally in the benefits and expenses of the Further Venture Assets and Activities.

67. The primary judge was satisfied that the understanding alleged by Ann existed, giving reasons at [271]-[287]. Her reasoning involved the rejection of the evidence of Marie and Lionel (at [272]-[276]), to which no challenge is made. Her Honour then addressed what she stated to be the more significant reasoning supporting her conclusion at [277]:

Second, and more significantly, in my view, the existence of the asserted understanding or common assumption is supported by the objective evidence, particularly the contents of Mr Lower’s 14 July letter, Mr Burrows’ facsimile of 1 July, the NAB memoranda and Mr Marianne’s Fact Find and other written communications. Overall, that evidence satisfies me, on the balance of probabilities, that:

(a) the new regime was put in place for asset protection purposes in the context of the Crime Commission investigation and the introduction of the Proceeds of Crime Act, noting that many of the contemporaneous documents refer unambiguously to “asset protection”, including to ensure that “creditors have no access to trust assets”;

(b) pursuant to the new asset protection regime and not for any other reasons, the deceased and Lionel transferred their shares and resigned as directors in Mircon and ALPEC in favour of Marie and sold their remaining business assets (namely the last First St property and the Broken Bay lots) and together with Marie, arranged for the establishment of DGP (with Marie as sole director and shareholder) through which most of the property developments were to be carried out and the DGP Trust;

(c) other than having Marie warehouse the assets, in the sense of being the legal owner and controller of the relevant companies and assets, there was no change in the way in which the deceased and Lionel conducted their business affairs after mid-2002. They continued to work together as the strategic decision makers by locating properties and other business opportunities (such as the seafood business and CWS), deciding where and with whom to invest, providing personal guarantees for finance facilities and dealing with third parties. They also directed to whom trust distributions would be made; and

(d) the deceased and Lionel and Marie discussed and understood or proceeded with the common intention that Marie’s direct ownership and control of the transferred and new businesses and assets was in name only and that the deceased and Lionel were to share and undertake de facto ownership and control, consistent with the position under the old regime, as evidenced by the equality of their interests in Mircon, SPD, ALPEC, the First St development, the loans to Mr Loccisano, and their liabilities in respect of the same.

68. Her Honour also relied on the brothers’ equal sharing of financial responsibilities, manifested by giving guarantees in the same amounts and applying for insurance in the same amounts, and documents which referred to the brothers as “key players and decision makers” and Ann’s testimonial evidence at [281]-[282]:

Considered in the above context, Ann’s evidence of the statements made to her by the deceased, including in Lionel’s presence, her evidence of some of Lionel’s statements in her presence, and her evidence that she saw the deceased and Lionel divide and share cash derived from the landfill business, is credible and compelling, in my view. Those statements include: that everything was being transferred to “Mum’s name”; that “we’re going to set up a trust for the assets and make mum the trustee on paper but we’ll still be running the show… mum will own it on paper for peering eyes”; that they continued to “still own the shit”; the deceased telling Ann about new assets that “they” (Lionel and he) had acquired (such as the landfill facility, the Pitt Town properties, the Garland property and the Dural property); and the deceased saying to Lionel (in front of Ann) that he would “take his half” of “his money”. I accept Ann’s evidence that the deceased and Lionel made those statements and did divide the cash and I am persuaded that they are likely to reflect the truth of what occurred, namely there was an understanding or the holding of a common assumption by them (and Marie) as outlined above. The deceased’s statements not only corroborate the existence of the arrangement between, or common assumption held by, the deceased, Lionel and Marie, but also evidence its continued existence and the deceased’s reliance upon it and performance of its terms.

17. Parker J was in error when he made orders 1 - 7 on 9 April 2024.

137. These grounds were added by leave granted at the hearing. Although they accompanied the appellants’ written submissions in reply, these grounds were not developed in those submissions.

138. Ann conceded at the commencement of the appeal that ground 15 – a factual error as to the date of the transfer of shares by Marie to DGP in its capacity as trustee recorded in a narrative portion of the reasons – was made out. She also maintained, with respect correctly, that the error as to the transfer of shares was without consequence. I did not understand any submissions to have been advanced by the appellants to the contrary.

139. It was also conceded that order 5(a)(ii) made on 9 April 2024 that Marie account to Ann for half of the profits derived by her from her ownership of the shares in A and L Pamplin Earthmoving and Contracting should not have been made; the company was deregistered in 2005. A further complaint was made in oral submissions concerning the ownership of the shares in OSCO (Australia) Pty Ltd but, as Ann submitted in response, her Honour’s finding at [193] appears accurate, and accords with the ASIC search in evidence; in any event it was not suggested that anything turns on any error.

140. Ground 16 challenged an order made by Parker J under the slip rule. His Honour did so for reasons explained at [26]-[31] of his judgment Irwin v Pamplin (No 5) [2024] NSWSC 484. His Honour made several changes to the orders, which reflected the fact that property already impressed with the trust found by her Honour to have existed was subsequently transferred to a different entity controlled by Adrian and Lionel, which were unopposed. His Honour said at [30]-[31]:

I decided to give effect to these variations by making changes to the wording of the chapeau, so that it would declare both Marie and DGP (as the case might be) to have been, and to be, trustees. I also added a reference in sub-paragraph (b) to Marie owning the Pitt Town Properties, for consistency with sub-paragraphs (a) and (c).

With these variations, the declaration covered all of the shares held by Marie, whether or not still held (sub-paragraph (a)), and the units in the Peak Unit Trust, whether held by Marie, as they were in the past, or by DGP, as they now are sub-paragraph (c). But it did not cover the shares in POA following the transfer of those shares to DGP, and this appeared to me to have been an accidental omission. That was not conceded by counsel for the defendants, but I considered the shares in POA were in the same position as the units in the Peak Unit Trust. I therefore added a new sub-paragraph (d) to cover the POA shares in DGP’s hands.

141. I did not understand any submissions to be made in respect of this ground of appeal. I see no error in the exercise of the discretion to correct what on its face appears to be an obvious slip.

142. Ground 17 was explicitly consequential. The appellants said that the orders made by Parker J relied on the orders made on 9 February 2024, and should be set aside if there were success on the earlier grounds challenging those orders. Nothing more need be said.

Grounds 1-3 of the cross-appeal

143. The remaining aspect of the cross-appeal concerns Ann’s claim that she was entitled to declarations that the assets of Mircon and NMOS were held on trust for Adrian’s estate. No oral submissions were directed to Ann’s cross-appeal. Ann’s written submissions confirmed that no declaration of trust was sought in relation to the “fourth, fifth, seventh or ninth defendants”, which correspond to DGP, Halcrows Investments, The Peak on Andrew Pty Ltd and OSCO (Australia) Pty Ltd.

144. In written submissions, Ann said that consistently with the findings at [306] and [308], the fact that Marie became the sole director and shareholder of Mircon and NMOS and The Peak on Andrew in furtherance of the understanding or common assumption justified a finding (and accompanying declarations) that each of those companies held half of their assets and half of the profits derived therefrom on trust for Adrian’s estate. Ann submitted that an inference was available that the knowledge of Marie, Lionel and Adrian about the terms of the understanding or common assumption could be imputed to each of Mircon and NMOS. The terms of the understanding or common assumption found by her Honour were broad enough to cover the assets of Mircon and NMOS. There was no reason for her Honour to distinguish between Marie’s shares in Mircon and NMOS and the assets of those companies. She also said that the findings in [313] supported this relief. Her Honour there stated:

the new structure was put in place and the assets that were sold and acquired by DGP and Marie were for the specific purpose of asset protection pursuant to the arrangement that I have found existed and continued to exist until the deceased’s death, and I consider that the parties intended for Marie to hold those assets and the profits derived from them for and on behalf of the deceased and Lionel as the legal but not the beneficial owner. It follows, in my view, that the express trusts extend beyond the shares in Mircon and ALPEC that were transferred to Marie (and the financial benefits derived from them) and extend to the shares and units in DGP and the other entities in which Marie holds or held interests, namely Halcrows, NMOS, OSCO, Peak on Andrew, X-Dist, Corel and the Peak Unit Trust, together with the financial benefits Marie derived from them, as well as to the Pitt Town properties that Marie acquired in her name.

145. The cross-respondents said that this contention was “misconceived as it sought to lift the corporate veil when the basis for doing so was not pleaded, the evidence did not address the issue and Ms Irwin’s opening and closing submissions did not provide particulars of how or why the relief should be granted”.

146. I do not accept these grounds. The essence of the transactions in mid 2002 was the transfer of ownership and nominal control of Mircon from Lionel and Adrian to Marie, reflected in the transfer of shares in the company and the resignation of the brothers as directors. All that reflects the fact that the subject matter of the trust was the company, not the assets of the company.

Conclusion and orders

147. For those reasons, I have concluded that the appeal fails, save in relation to ground 14 in a minor respect, and ground 15 in an immaterial respect. As presently advised, I see no reason for the very limited success achieved by the appellants, in a point not the subject of oral submissions, to affect the discretion as to costs. I have also concluded that the cross-appeal fails.

148. It will be necessary for the parties to calculate the lesser amount to which Ann is entitled, being the extent to which tax was incurred by Ann and paid on her behalf in respect of the seven determinations by DGP in the financial years ended 30 June 2006 – 2012. That amount is to be deducted from $451,000, and the difference will accrue interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) from 8 June 2018. It is possible that the amount may be agreed, but if not the orders I propose will permit the parties to be heard on that issue.

149. I propose the following orders:

1. Appeal allowed in part.

2. Set aside order 5(a)(ii) made on 9 April 2024.

3. Direct the parties to supply an agreed calculation of the amount which should replace $451,000 in order 3 made on 9 February 2024 in accordance with this Court’s reasons, or in the absence of agreement, direct the appellants and the respondent to file and serve within 14 days of today the amounts for which they contend and submissions not exceeding five pages, with a view to the amount being determined by this Court on the papers.

4. Cross-appeal dismissed.

5. The appellants to pay the respondent’s costs of the appeal.

6. The cross-appellant to pay the cross-respondents’ costs of the cross-appeal.

150. GRIFFITHS AJA: I agree with Leeming JA.

ADDENDUM

151. On 11 September 2024, the parties confirmed that they were agreed that the amount of $451,000 in order 3 made on 9 February 2024 should be replaced by $341,673, and the Court thereafter made this order: “Vary order 3 made on 9 February 2024 by replacing $451,000 with “$341,673””.

.

**********

Amendments

12 September 2024 - inserting addendum, at [151], describing order made by consent.

Decision last updated: 12 September 2024