Pezula Trustee Limited as trustee for the Ptarmigan Trust v The Estate of Alexander Jacobus Morkel Meyer By Its Representative Alexander John Meyer
[2014] WASC 51
•27 FEBRUARY 2014
PEZULA TRUSTEE LIMITED AS TRUSTEE FOR THE PTARMIGAN TRUST -v- THE ESTATE OF ALEXANDER JACOBUS MORKEL MEYER BY ITS REPRESENTATIVE ALEXANDER JOHN MEYER [2014] WASC 51
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 51 | |
| Case No: | CIV:2446/2013 | 16 DECEMBER 2013 | |
| Coram: | ALLANSON J | 27/02/14 | |
| 15 | Judgment Part: | 1 of 1 | |
| Result: | Application for summary judgment dismissed Freezing order continued on an interim basis Security for costs ordered | ||
| B | |||
| PDF Version |
| Parties: | PEZULA TRUSTEE LIMITED AS TRUSTEE FOR THE PTARMIGAN TRUST THE ESTATE OF ALEXANDER JACOBUS MORKEL MEYER BY ITS REPRESENTATIVE ALEXANDER JOHN MEYER ALEXANDER JOHN MEYER |
Catchwords: | Practice and procedure Summary judgment application by defendant Continuation of freezing order on funds claimed to be subject to trust Security for costs |
Legislation: | Rules of the Supreme Court 1971 (WA), O 18 r 15, O 52A r 2, O 52A r 5 |
Case References: | BGC Contracting Pty Ltd v WA Construction Hire Pty Ltd [2010] WASC 25 Brundza v Robbie & Co (No 2) [1952] HCA 49; (1952) 88 CLR 171 Cardile v Led Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380 Chianti Pty Ltd v Leume Pty Ltd [2007] WASCA 270; (2007) 35 WAR 488 Glendinning v Cuzens [2009] WASCA 21 Global Finance Group Pty Ltd (in liq) v Marsden Partners [2004] WASC 52 Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [2011] WASC 188 SMEC Australia Pty Ltd v Valentine Falls Estate Pty Ltd [2011] WASCA 138 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
THE ESTATE OF ALEXANDER JACOBUS MORKEL MEYER BY ITS REPRESENTATIVE ALEXANDER JOHN MEYER
First Defendant
ALEXANDER JOHN MEYER
Second Defendant
Catchwords:
Practice and procedure - Summary judgment application by defendant - Continuation of freezing order on funds claimed to be subject to trust - Security for costs
Legislation:
Rules of the Supreme Court 1971 (WA), O 18 r 15, O 52A r 2, O 52A r 5
Result:
Application for summary judgment dismissed
Freezing order continued on an interim basis
Security for costs ordered
Category: B
Representation:
Counsel:
Plaintiff : Mr D M Bruns
First Defendant : Mr S Penglis
Second Defendant : Mr S Penglis
Solicitors:
Plaintiff : Jackson McDonald
First Defendant : Hotchkin Hanly
Second Defendant : Hotchkin Hanly
Case(s) referred to in judgment(s):
BGC Contracting Pty Ltd v WA Construction Hire Pty Ltd [2010] WASC 25
Brundza v Robbie & Co (No 2) [1952] HCA 49; (1952) 88 CLR 171
Cardile v Led Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380
Chianti Pty Ltd v Leume Pty Ltd [2007] WASCA 270; (2007) 35 WAR 488
Glendinning v Cuzens [2009] WASCA 21
Global Finance Group Pty Ltd (in liq) v Marsden Partners [2004] WASC 52
Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [2011] WASC 188
SMEC Australia Pty Ltd v Valentine Falls Estate Pty Ltd [2011] WASCA 138
1 ALLANSON J: Alexander Jacobus Morkel Meyer lived in the Republic of South Africa until his death in 2013. In the weeks before Mr Meyer's death, Pezula Trustees Ltd, transferred $US1.5 million into an account in Mr Meyer's name with the HSBC Bank Australia Ltd. Pezula claims the money was held by Mr Meyer on trust on its behalf and seeks orders for its return.
2 The second defendant in this action is Mr Meyer's son, Alexander John Meyer. To reduce confusion from the similarity of names, I will refer to father and son as the deceased and the second defendant.
3 The second defendant lives in Western Australia. He held an enduring power of attorney for his father, and also an authority to operate the HSBC account.
4 Pezula is the trustee of the Ptarmigan Trust, a discretionary trust created in 1996. The original trustee resigned in 2010, and Pezula became the trustee with its appointment effective from 22 July 2010. The certificate of registration for Pezula discloses that it is registered in New Zealand, and has three directors: one in Geneva, one in Uruguay, and one in New Zealand. The Geneva based director, Sara Jane Blackshaw, was the active director in relation to the present matters.
5 Ms Blackshaw has other roles. She has deposed that she is also a director of Air Sport Internationale SA, a company incorporated in Switzerland. She signed the appointment of the deceased as a beneficiary of the Ptarmigan Trust as a director of the original trustee, GC & T Nominees Limited. The letters in evidence which have been sent to Ms Blackshaw are addressed to her at CJF SA, in Geneva. Letters and emails sent by her, or on her behalf, are from CJF SA. No evidence has been presented about CJF SA, or its role in the affairs that led to this action.
6 The beneficiaries of the Ptarmigan Trust were:
(a) such charities or charitable purposes as the trustees may from time to time in their absolute discretion by deed revocable or irrevocable appoint.
(b) such other persons as are added to the class of beneficiaries in exercise of the powers conferred upon the trustees.
7 The deceased was a beneficiary of the Ptarmigan Trust. There is no evidence that any charity or charitable purpose was ever appointed as a beneficiary.
8 The proper law of the trust is that of the Island of Jersey. No evidence was led regarding that law.
Chronology
9 The following chronology is confined to events from June 2013 to the commencement of the current action.
10 On 12 June 2013, the deceased, through a South African lawyer, Johannes Cornelius Smit, instructed Ms Blackshaw at CJF SA to transfer $US1.5 million into an account at HSBC Bank in Australia. The direction was in a letter headed 'Re Ptarmigan/Million Dollar'. It followed earlier correspondence in which Mr Smit gave instructions to Ms Blackshaw, ostensibly on behalf of the deceased, about how the funds held in the Ptarmigan Trust were to be invested. Mr Smit wrote:
As previously stated [the deceased] has had a bad experience with investments. His experience is the reason why he was not interested and will never be in any investment scheme. The funds must remain as per previous instruction in a normal bank savings account which must at all times remain immediately available.
His instruction is to transfer the amount of $1 500 000 into the following account …
11 On 13 June 2013, Ms Blackshaw responded to Mr Smit's letter by an email in which she agreed to give instructions for the transfer as requested.
12 On 13 June 2013, the trustee resolved in these terms:
Pezula Trustees Limited, the current Trustee of the irrevocable and discretionary Trust known as 'The Ptarmigan Trust' hereby resolve to make a distribution of USD$1,500,000 (one million five hundred thousand US Dollars) to Mr Alexander J M Meyer, first beneficiary of the Ptarmigan Trust. It is also resolved to authorize Sara J Blackshaw to proceed with the payment instruction by debiting the Trust account with Bank Pictet & Cie (Asia) Limited.
- The resolution was signed by Ms Blackshaw and Karen Marshall, the New Zealand based director of Pezula.
13 On 13 June 2013, Ms Blackshaw instructed Pictet & Cie to pay $US1.5 million to an account in the name of the deceased with the HSBC Bank in Australia. After that transfer, approximately $970,000 remained in the account with Pictet & Cie.
14 On 17 June 2013, the amount of $US1.5 million was credited to the deceased's account with HSBC.
15 On 21 June 2013, $450,000 was withdrawn from the HSBC account in two transactions. On 27 June another $250,000 was withdrawn, leaving a balance in the deceased's account at HSBC of $814,390.70. The $700,000 that had been withdrawn was deposited into accounts in the name of the second defendant.
16 On 30 June 2013, the deceased died. The limited but undisputed evidence before the court is that he took his own life. There is no evidence to support an inference that he had intended to do this when he instructed that the funds should be transferred into the HSBC account, or when the $700,000 was taken out.
17 On 4 July 2013, there was a meeting in South Africa between the second defendant, Ms Blackshaw, and Mr Smit. The second defendant's cousin, Eric Meyer, also attended. Ms Blackshaw requested the second defendant to return the funds to Pezula.
18 On 23 September 2013, Pezula commenced this action by writ of summons against the estate of the deceased. No personal representative had yet been appointed in Western Australia. Pezula claimed:
1. The plaintiff is the trustee of the Ptarmigan Trust. The trust operates a business known as the South African Million Dollar Pigeon Race (the Business).
2. At all material times prior to his death, the defendant was a beneficiary of the trust and a director of the Puttrie Strain Racing Pigeons CC, a company engaged by the plaintiff to perform certain functions of the Business.
3. During June 2013, by an agreement which was partly verbal and partly in writing, the trustee agreed to deposit the sum of $US1.5 million into the defendant's bank account with HSBC Bank Western Australia (Meyer bank account) on the basis that the funds would be applied in respect of the Business.
4. On or about 17 June 2013, the funds were transferred from the plaintiff's trust account to the Meyer bank account.
5. The funds were held on trust for and on behalf of the plaintiff for the purpose of conducting the Business.
6. On 30 June 2013, the defendant died.
7. The funds were not used in respect of the Business and have not been returned to the plaintiff.
8. The plaintiff is the beneficial owner of the funds.
19 The plaintiff claimed the return of the sum of $US1.5 million and damages.
20 On 24 September 2013, Martin J made a freezing order in relation to the $1.5 million which the plaintiff then believed was still in the HSBC account of the deceased.
21 On 2 October 2013, I extended that order. On 3 October, the matter was again before me when the solicitors for Pezula became aware, from information given to them by the second defendant, that the $700,000 had been transferred to another account. The second defendant gave an undertaking to not remove from Australia, or in any way dispose of, or diminish the $700,000 now held in accounts in his name. The undertaking was given for a limited time, although it has been extended from time to time with the second defendant's agreement.
22 On 18 October 2013, I ordered that the second defendant be appointed to represent the estate of his father for the purpose of the proceedings (pursuant to O 18 r 15 of the Rules of the Supreme Court 1971 (WA)), and that he be joined in his personal capacity as the second defendant to the action.
23 Pezula filed an amended writ of summons. The indorsement of claim now includes the withdrawals from the HSBC account by the second defendant and the transfer to accounts in his own name. Pezula seeks orders against both the estate of the deceased and the second defendant for the return of the money. Pezula also claims damages, although I am not clear on what basis it makes that claim.
The evidence
Mr Smit
24 Mr Smit is a legal practitioner practising in the Republic of South Africa. He made an affidavit, dated 30 September 2013. The affidavit was made in South Africa and filed in this court on 4 October.
25 Mr Smit says that he was appointed during November 1997 as attorney for Air Sport Internationale Ltd, a company incorporated in the British Virgin Islands. He was later appointed as attorney for Air Sport Internationale SA, a company incorporated in Switzerland. Ms Blackshaw is a director of both companies. The companies have 'hosted' the Million Dollar Pigeon Race since its inception.
26 Mr Smit attached publicity material relating to the Million Dollar Pigeon Race. It is an international pigeon race, conducted annually in South Africa. It carries prize money of $US1.5 million although, apparently to comply with South African gaming laws, the payment of prize money is at the discretion of the organisers.
27 Mr Smit also attached some, largely unexplained, account statements.
28 The deceased was the 'director' of the race from its inception. Mr Smit says that over the years he received his instructions from the deceased and from Ms Blackshaw. Mr Smit was the intermediary in an exchange of views between Ms Blackshaw and the deceased about how the funds held in the Ptarmigan Trust should be invested. The deceased insisted that he did not want the funds in the hands of an investment manager. The deceased instructed Mr Smit that the 'race funds' (Mr Smit's term) must be in the control of Ms Blackshaw, and only her control, and in a normal savings account.
29 Ms Blackshaw persisted in putting forward proposals for investment and on 12 June 2013 Mr Smit and the deceased met. Mr Smit deposes at par 25:
On the 12th June 2013 we discussed the content and letter of Sara dated the 4th June 2013. The proposal by Claes Orn [the investment manager] was for a defensive long term portfolio, which included 16 bonds and 3 funds with maturity from 4 to 10 years. That was exactly what he did not want. … He said to me that he made enquiries with his bankers in Australia and that the race funds will be safe with them. A reasonable interest will be earned.
30 Mr Smit says that the deceased decided to transfer $1.5 million race money to be invested in his banking account 'on behalf of the race to at least cover the prize money'. At the request of the deceased, Mr Smit dictated the letter of 12 June.
Ms Blackshaw, affidavit of 14 September 2013
31 On 4 October 2013, Pezula lodged an affidavit of its solicitor Jennifer Rose Cass, to which she annexed an affidavit of Ms Blackshaw, made on 24 September 2013 in the Republic of South Africa. The original of Ms Blackshaw's affidavit was later filed.
32 Ms Blackshaw deposed that she is a director of Pezula. She had known the deceased for approximately 18 years. She annexed the declaration of trust for the Ptarmigan Trust, together with the appointment of the deceased as a beneficiary of the trust, made the same day. The original trustee was GC & T Nominees Limited, a company incorporated in the Channel Islands and with an address in Liberia. Pezula was incorporated in New Zealand on 16 July 2010, and on 22 July was appointed as the trustee of the Ptarmigan Trust.
33 Ms Blackshaw said that the Million Dollar Pigeon Race is 'operated on a local level' by Puttrie Strain Racing Pigeons CC and administered on an international level by a 'service company' called Air Sport Internationale SA.
34 Air Sport Internationale receives funds on behalf of the trustee from participants in the race, and makes a payment of approximately $US30,000 per month to Puttrie to enable it to carry out its functions in respect of the race. Air Sport Internationale deposits remaining funds into an account with Pictet & Cie in Singapore. Presumably, this is the Ptarmigan Trust account.
35 Ms Blackshaw gave evidence regarding the correspondence with Mr Smit in which she pressed on the deceased the wisdom of investing the funds held by the trustee. At par 39 she referred to the letter from Mr Smit dated 12 June 2013, and said, at par 40:
I believe, based on my previous discussions with Mr Meyer, that the request to transfer the Funds into the HSBC Account was so that the funds could be used by Mr Meyer in respect of the Race and that he was concerned that the Funds should always be available for use in that regard.
36 Ms Blackshaw said that the funds were mistakenly referred to in the resolution of the trustees as a distribution to the deceased. The mistake was caused by using a template and failing to change the words to reflect the circumstances. She did not notice the 'error' at the time, and nor apparently did Ms Marshall when she signed it.
37 Ms Blackshaw said that on 2 July 2013 she went to South Africa, following the death of the deceased. On 4 July she spoke with the second defendant. She said that she told the second defendant that the funds needed to be returned to the trustee, and if they were not returned the trustee would 'claw' them back by taking legal action. Ms Blackshaw's conversation with the second defendant was recorded, apparently without her knowledge, by the second defendant and his cousin.
The second defendant
38 In an affidavit, sworn 8 November 2013, the second defendant deposed to the meeting on 4 July 2013 in South Africa with Ms Blackshaw, and also attended by his cousin, Eric Meyer, and Mr Smit. Eric Meyer recorded the meeting (and has made a short affidavit to that effect). Both an audio recording and a transcription of that recording are in evidence. The transcription is provided in a later affidavit of the second defendant. There are difficulties in following the conversation: there are gaps in the transcription and Mr Smit speaks in a mixture of English and Afrikaans. The Afrikaans is not translated.
39 Ms Blackshaw, however, speaks in English throughout.
40 In his affidavit, the second defendant sets out no matters, from his personal knowledge, about the various transactions. He relies on the resolution distributing the funds to the deceased, and on statements made by Ms Blackshaw at the meeting on 4 July 2013, to show that the $US1.5 million was beneficially owned by the deceased.
The meeting of 4 July 2013
41 From the transcript, Ms Blackshaw made statements to the effect that:
1. Over a period of some years before the payment on 13 June 2013, $1.8 million had been paid to the deceased out of the trust account.
2. Recently the deceased made a request for a distribution of $1.5 million. At the time there was $2.5 million in the trust account so Ms Blackshaw agreed to pay those funds to him.
3. The money was a distribution rather than a dividend payout. It was a payment to a beneficiary, with no expectation of it coming back.
4. In effect, Ms Blackshaw warned the second defendant that questions would be asked when he made an inventory of the deceased's assets and it was revealed they came out of a trust account abroad.
5. Ms Blackshaw suggested that if the second defendant could authorise the repayment of the money, then she could write it into the books of the trust as a loan, and it would not form part of the estate.
Ms Marshall
42 Ms Marshall also made an affidavit dated 4 December 2013, filed 9 December 2013. She said that the day-to-day running of the trust was undertaken by Ms Blackshaw, that she received the email attaching the resolution which had been signed by Ms Blackshaw, had no discussion with anyone about it, and signed it.
Ms Blackshaw, affidavit of 5 December 2013
43 Ms Blackshaw made a further affidavit sworn 5 December 2013. Here she gave a little more information about her role in things, although much is still left unexplained. She said:
At all relevant times, I have been a member of what in Switzerland is known as a 'family office' - a multi-disciplinary firm which offers legal, banking, accounting and trust services to various families. We use Pezula Trustees Limited as a trust company for many of these families.
I first met the deceased in 1996 or 1997 through another client. He explained his ambition to create the greatest pigeon race in the world and discussed his need for an offshore structure for the organisation of that race.
I gave him advice on a structure and set it up accordingly. Air Sport Internationale (in Geneva) was to be the promoter and would accept entry fees. A local administrative company in South Africa - later to become Puttrie Strain would charge for the maintenance of the pigeons. There were many other elements of the structure.
My primary concern is to give our clients tax efficiency, security and confidentiality.
Over the first 10 years of the race, it had a chequered financial history. Indeed in 1998 Mr Meyer had to sell his own house in Bassonia, South Africa and cash in insurance policies and sell platinum and gold coins in order to be able to pay out the prize monies. As of 2004 however we were able to distribute money to him through the Trust - a total of $2.5 million between 2004 and 2011 in seven instalments, usually just after the race was concluded so that the financial position of the whole structure was reasonably clear.
The circumstances of the transfer in June 2013 were quite different. … [The] request was in the context of a lengthy debate about where to invest the $2.5 million in the Trust. On that basis, I saw the request dated 13 June 2013 as a proposal to invest the money in a bank account in Australia rather than take up the other proposals I had put to him. In this context I believed that any money sent to him in that way would remain to be called on for the 2014 race if needed. Accordingly, it was never intended to be a 'distribution' in the technical sense.
44 Ms Blackshaw attached a 'correcting' resolution, that revokes the resolution dated 13 June 2013 as having been made in error, and also amends it by replacing the word 'distribution' with 'payment as custodian for investment purposes'.
45 Ms Blackshaw referred to the recording that was made of her meeting with the second defendant on 4 July 2013. She did not deny or dispute what is recorded as having been said, but explained her remarks as the use of words in a non-technical sense.
The application for summary judgment
46 The principles to be applied in deciding this application were recently summarised by the Court of Appeal in SMEC Australia Pty Ltd v Valentine Falls Estate Pty Ltd [2011] WASCA 138 [20]:
The power to order summary judgment is one that should be exercised with great care: Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87, 99. It is only in the clearest of cases, when there is a high degree of certainty about the ultimate outcome of the proceedings if it went to trial, that summary judgment ought properly be granted: Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 [57]; Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; (2006) 226 CLR 256 [46]. And whilst the court may determine any difficult question of law on such an application, it will usually be appropriate to leave the determination of such questions for trial: see Theseus Exploration NL v Foyster [1972] HCA 41; (1972) 126 CLR 507, 514 - 515; Casella v Hewitt [2008] WASCA 13; (2008) 36 WAR 1 [36].
47 In this application, the defendants have not attempted to show that they have a positive defence to the claim. They rely upon the material filed by Pezula in support of the freezing order, and apparent inconsistencies between its claim and the evidence. In particular, they rely on the resolution of Pezula, dated 13 June 2013, which describes the payment to the deceased as a distribution to a beneficiary. The defendants also rely on the admissions (if that is what they are) made by Ms Blackshaw.
48 In considering this application, I have regard to the fact that the plaintiff has not yet pleaded. The indorsement of claim is not a pleading, although it sets out the metes and bounds within which the statement of claim must be framed: Glendinning v Cuzens [2009] WASCA 21 [29].
49 Pezula's claim, in substance, is that
1. it agreed with the deceased to deposit the sum of $US1.5 million into his bank account 'on the basis that the funds would be applied in respect of the business';
2. the funds were transferred;
3. the deceased held the funds on trust for the plaintiff for the purpose of conducting the business.
50 The undisputed facts include that the Ptarmigan Trust was a discretionary trust and the deceased was a beneficiary. On the evidence now before the court, he was the sole beneficiary. The funds were transferred to the deceased following a resolution by the trustees to distribute that sum to him. Counsel for the defendants submitted that the deceased became the legal and beneficial owner of the funds on the making of the resolution. It relied in this regard on Chianti Pty Ltd v Leume Pty Ltd [2007] WASCA 270; (2007) 35 WAR 488. The trust deed in Chianti expressly provided that any amount set aside for a beneficiary, upon the setting aside, was held by the trustee for that person absolutely: see [24], [63], [70]. There is no such clause in the declaration of the Ptarmigan Trust. There was, however, an actual payment into the account of the deceased, and no appreciable delay between the resolution and the payment. At the latest, from 17 June 2013 the deceased was the owner of the money.
51 Although Ms Blackshaw has now said that the resolution to distribute the funds to the deceased was incorrect, and Pezula has purported to correct it, the indorsed claim is not based on mistake. Pezula's claim, as formulated in the indorsement, is that it had an agreement with the deceased under which he held the funds on trust for Pezula, for the purpose of conducting the business known as the South African Million Dollar Pigeon Race.
52 The evidence that Pezula has filed to date is not sufficient to establish a claim for such a trust by agreement, and some of it is inconsistent with that claim. The evidence, however, was filed primarily to support an urgent order to preserve the funds. I do not assume that it is the whole of the case that can be made. Pezula must also overcome apparent admissions made by Ms Blackshaw, not only at the meeting on 4 July 2013 but in her affidavit of 5 December 2013, regarding the basis on which the money was distributed to the deceased. But Pezula should only be denied the opportunity to proceed in the ordinary way, and after taking advantage of the usual interlocutory processes, where there is a high degree of certainty about the outcome. It may be able to plead and establish an arguable case, within its indorsement.
53 I will not grant summary judgment. Given the limited area of factual dispute, it would be preferable to program this matter for an early trial.
The freezing order
54 The purpose of a freezing order is to prevent the frustration or inhibition of the court's process: Rules of the Supreme Court O 52A r 2. My assessment of the strength of Pezula's claim is relevant to the discretion whether to continue or discharge the freezing order. But it is necessary only for Pezula to establish that it has a good arguable case, that is, it must establish that it has a reasonably arguable case on legal and factual matters: see Rules of the Supreme Court O 52A r 5; Cardile v Led Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380 [68]; Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [2011] WASC 188 [141] - [144]; BGC Contracting Pty Ltd v WA Construction Hire Pty Ltd [2010] WASC 25 [5]. The strength of that case is one of the factors, along with the danger of frustration of a prospective judgment, to be balanced in the exercise of the discretion.
55 One of the matters on which Pezula relies for the continuation of the freezing order is the need to preserve the funds to enable the plaintiff to meet its obligations in respect of the 2014 Million Dollar Pigeon Race. There are obvious difficulties in this submission. First, on the evidence, there is nothing to show that Pezula itself has obligations with respect to the race. Ms Blackshaw (and to the extent he enters that area, Mr Smit) have identified a structure for the conduct of the race that includes Puttrie, in South Africa, Air Sport Internationale in Switzerland, and many other elements which have not been identified. The obligations of Pezula are not clear. Second, the court is asked only to freeze the funds, and not to make them available for the conduct of the race. Third, it is likely the 2014 race has now been completed.
56 The position of the first defendant remains unclear. When I last inquired, I was told that probate of the deceased's will in Western Australia had not yet been granted. The will is in evidence. Subject to some specific gifts of property, including real property in South Africa, the estate passes to the second defendant. There is no evidence that he would deal with the property in such a way that it would frustrate any future judgment in favour of Pezula. Were the claim for a debt or damages, I would not be prepared to extend the order. But the claim is that an identified sum within the deceased's estate is subject to a trust. Subject to the provision of a sufficient undertaking as to damages, I believe it is appropriate to preserve that property, at least on an interim basis.
57 The defendants have raised the adequacy of Pezula's undertaking as to damages. The evidence is sufficient to raise a real question about the value and enforceability of the present undertaking. While probate has not been granted in Western Australia, the defendants suffer no prejudice from the funds in the account being frozen. I will give Pezula the opportunity to put forward a proposal for an undertaking of substance. Until then I will preserve the freezing order on the funds in the HSBC bank account. In my opinion, the continuation of the freezing order should not be for an indefinite period. I will hear the parties on an appropriate regime to review the matter.
Security for costs
58 The defendants apply for security for costs. Pezula does not oppose an order for security, and I am satisfied that this is a proper case for such an order. Pezula is a foreign corporation with no assets in Western Australia. It is a trustee corporation. There is a significant risk that an order for costs will be unenforceable or will be enforceable only by a significant expenditure of time and money.
59 The defendants rely on the affidavit of Peter William Van Der Zanden, a partner in the firm of solicitors representing the defendants. Mr Van Der Zanden attaches a draft bill of costs. The draft bill is, on its face, reasonable. It is based upon the costs to the end of these proceedings, including a four day trial. The total is approximately $144,000. Of that, something less than $100,000 is attributed to matters leading up to and including mediation.
60 In making an order for security, the court does not set out to give a complete indemnity to the defendants: Brundza v Robbie & Co (No 2) [1952] HCA 49; (1952) 88 CLR 171, 175. At this early stage, where the matter has not even been pleaded, the best the court can do is to estimate the sum which it thinks just to order to be secured, having regard primarily to a reasonable estimate of the likely taxable costs of the defendants: see, for example, Global Finance Group Pty Ltd (in liq) v Marsden Partners [2004] WASC 52 [57].
61 Taking a broad view, and in seeking to do justice to both parties, it seems to me that the sum of $70,000 would be an appropriate sum in all the circumstances in respect of costs between the date of this application and the entry of the matter for trial.
62 I have estimated the amount of security on the assumption that the defendants will continue to be jointly represented. Should that change, the amount of security may have to be reconsidered. I will hear the parties about the form of the orders, including the time within which security must be provided. The plaintiff's action should be stayed unless the amount ordered is paid into court in that time. It may not be appropriate to order an immediate stay. Pezula has still not pleaded its case and should not be delayed in doing so.
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