R & I Bank of Western Australia Ltd v Anchorage Investments Pty Ltd; Lenby Pty Ltd (In Liquidatiion) v Lombardo

The High Court of Australia heard an application for special leave to appeal concerning the legal character of rights and powers held by an individual, Mr Lombardo, in relation to assets managed by a corporate trustee, Anchorage Investments Pty Ltd, which acted as trustee of a discretionary trust. The dispute involved R & I Bank of Western Australia Ltd, as a judgment creditor, and Lenby Pty Ltd (in liquidation), potentially as a trustee in bankruptcy, seeking to access or restrain these assets.

The central legal issues before the Court were twofold. Firstly, the Court was asked to determine the rights, if any, of a judgment creditor, or a trustee in bankruptcy of an individual, in relation to the rights, powers, and entitlements that conferred control on Mr Lombardo over the trust assets. Secondly, the Court was to consider whether these rights, powers, and entitlements could properly be the subject of a Mareva injunction.

The Court was presented with arguments that the structure, involving a limited liability company as trustee of a discretionary trust, often facilitated complete individual control over trust assets without significant fiduciary obligations. This was supported by references to dissenting and concurring judgments below, which suggested that the powers conferred on Mr Lombardo were so extensive as to constitute a general power of appointment, placing him in a position akin to a beneficial owner with a right of disposition equivalent to property. It was also argued that the trust deed's provisions severely limited the consequences for a trustee of a breach of duty, potentially rendering the arrangement not a true trust. The Court noted that the question was not merely whether such rights *could* be the subject of a Mareva injunction, but whether they *were* in this instance.