Re Mark William Bowra
[2023] WASC 478
•14 DECEMBER 2023
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RE MARK WILLIAM BOWRA; EX PARTE MARK WILLIAM BOWRA [2023] WASC 478
CORAM: HILL J
HEARD: 14 DECEMBER 2023
DELIVERED : 14 DECEMBER 2023
FILE NO/S: TRU 12 of 2023
EX PARTE
MARK WILLIAM BOWRA
Plaintiff
Catchwords:
Practice and procedure - Application for interim injunction - Ex parte application - Defendant is trustee of a testamentary trust - Where defendant has failed to file accounts despite order of court - Where defendant has failed to provide information in relation to testamentary trust - Where plaintiff has filed application for replacement of trustee - Serious question to be tried as to whether defendant has breached duties as trustee - Balance of convenience - Turns on own facts
Practice and procedure - Application for freezing order - Ex parte application - Whether there is a risk of removal or dissipation of assets - Turns on own facts
Legislation:
Rules of the Supreme Court 1971 (WA), O 52A
Result:
Application granted
Category: B
Representation:
Counsel:
| Plaintiff | : | J S Slack-Smith |
Solicitors:
| Plaintiff | : | CX Law |
Case(s) referred to in decision(s):
Australian Broadcasting Corp v O'Neill [2006] HCA 46; (2006) 227 CLR 57
Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380
Deputy Commissioner of Taxation v Winter (1988) 92 FLR 327
Distinctive FX Pty Ltd v Wright [2015] VSC 299
Glenwood Management Group Pty Ltd v Mayo [1991] 2 VR 49
Jackson v Sterling Industries Ltd (1987) 162 CLR 612
Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319
Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [2011] WASC 188
Perth Mint v Mickelberg (No 2) [1985] WAR 117
Rimex Wheel Pty Ltd v Wulff [2018] WASC 180
Victoria University of Technology v Wilson [2003] VSC 299
Zhen v Mo [2008] VSC 300
HILL J:
(This judgment was delivered extemporaneously and has been edited from the transcript.)
The plaintiff filed an originating summons on 5 September 2023, seeking orders for the removal of the defendant as trustee of a testamentary trust (Trust) and for his appointment as trustee of the Trust.
On 8 November 2023, orders were made for substituted service of the originating summons and the affidavits that had been filed on behalf of the plaintiff by email to two separate email addresses. On 13 November 2023, these orders were amended to include service by delivery of these documents to an address in Malaga, Western Australia, which is the defendant's place of employment.
As at the time of the hearing today, no memorandum of appearance has been filed by the defendant.
On 13 December 2023, the plaintiff filed a notice of motion for an injunction to preserve the assets of the Trust and also sought orders for a freezing order to be issued. In support of the application, the plaintiff relied on four affidavits he has sworn in these proceedings (filed 24 July 2023, 26 September 2023, 6 November 2023 and 13 December 2023), together with three affidavits filed by Nerida Jane Smith, a legal practitioner employed by the plaintiff's solicitors, on 8 November 2023, 14 November 2023, and 14 December 2023. I note the application was supported by an undertaking as to damages signed by the plaintiff and there is evidence before me that the plaintiff holds assets by way of cash in a bank account within Australia.
The application came on before me on an urgent ex parte basis. The plaintiff sought a waiver of the requirements of O 59 r 9 of the Rules of the Supreme Court 1971 (WA) (Rules). In the circumstances of this case, particularly in respect of an application for a freezing order, I am satisfied it is appropriate to grant the waiver sought.
From the outset, I note that the freezing order sought by the plaintiff is a drastic remedy and that at the time of the hearing of the application, I only have the plaintiff's version of the facts before me.
Factual background
The plaintiff's evidence is that he and the defendant are siblings and that they have another brother. Their father died in November 2020 and the defendant was appointed as executor of their father's will on 23 August 2021. Under the terms of their father's will, three separate testamentary trusts were to be established.
The will provided for the residue of the father's estate to be divided into three equal parts, with one part for each of the testamentary trusts. In relation to the Trust, the will provided that:
(a)the appointor of the Trust would be the plaintiff or, if he was not willing and able to act, the defendant;
(b)the trustee would be the appointor, or the person nominated by the appointor; and
(c)the primary beneficiary of the Trust would be the plaintiff.
In July 2022, in response to a query from the plaintiff, the defendant's former solicitors advised him that the balance of the residue estate was approximately $3 million, subject to ongoing costs.
In July 2023, the defendant provided the plaintiff with a printout that indicated $1,301,999.53 (or possibly $950,500.53) was held in a bank account, which was said to be the only asset of the Trust. Following this, the plaintiff continued to make enquiries of the defendant, including for an explanation as to the meaning of the printout. None of these queries have yet been answered.
On 26 July 2023, the defendant delivered a cheque for $500,000 to the plaintiff's solicitors, which has been banked into their trust account. However, since that date, the plaintiff has received nothing further from the defendant.
On 4 October 2023, the court issued a notice to the defendant to pass the accounts of the estate and required the accounts to be filed by 13 November 2023. The evidence before the court is that, at this stage, the accounts have not been filed and that there has been no activity in respect of the probate files.
Despite the efforts of both the plaintiff and his solicitors to contact the defendant, including her solicitors and former solicitors, they have not received any substantive response from the defendant in relation to the queries that have been raised, nor that the defendant has complied with the notice that was issued by the court.
Based on information provided to the plaintiff on 4 December 2023, the plaintiff believes the defendant and her husband have left Australia to travel overseas until sometime in January 2024, and that the defendant has relatively recently spent significant amounts on holidays and bought a very expensive vehicle.
Legal principles governing the grant of an interlocutory injunction
The principles to be applied on an application for an interlocutory injunction are well-known and are not in dispute. The court must first consider whether there is a serious question to be tried and then second whether the balance of convenience favours the grant of the injunction.[1]
[1] Australian Broadcasting Corp v O'Neill [2006] HCA 46; (2006) 227 CLR 57.
In relation to the balance of convenience, the learned authors of Ford & Lee: The Law of Trusts at [8.370] express the view that where an injunction is sought in equity's exclusive jurisdiction, the adequacy of damages is not a relevant aspect of the balance of convenience. Other commentary has suggested that is not sufficient for a trustee to answer a claim by a beneficiary for an injunction to restrain a breach of trust by contending the beneficiary be left to a pecuniary remedy and for the breach of trust to be allowed to continue.
Freezing order
In determining the application for a freezing order, I have accepted the version of facts set out in the affidavits that have been filed in support of the application. In my view, this evidence meets the test set out in O 52A of the Rules. In reaching this view, it is important to stress that, at this stage, I am not making any findings of fact, nor is it necessary for me to do so in determining the application. Nothing in these reasons can nor should be taken as amounting to any final or conclusive finding of fact.
Applicable legal principles
The plaintiff's application is made pursuant to O 52A r 5 of the Rules, which relevantly provides as follows.
(1)This rule applies if … an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in … the Court …
(4)The Court may make a freezing order or an ancillary order or both against a … prospective judgment debtor if the Court is satisfied, having regard to all the circumstances, that there is a danger that a … prospective judgment will be wholly or partly unsatisfied because … the assets of the … prospective judgment debtor … are … disposed of, dealt with or diminished in value.
The purpose of a freezing order is to prevent frustration or abuse of the process of the court, not to provide security in respect of a judgment or order, nor to substitute for the use and methods of execution.[2]
[2] Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380 [43], referring to Jackson v Sterling Industries Ltd (1987) 162 CLR 612, 626, 633, 637 and Deputy Commissioner of Taxation v Winter (1988) 92 FLR 327, 328 - 331.
Before the discretion to make a freezing order is enlivened, it is necessary for the court to be satisfied that:
(a)the plaintiff has a good arguable case against the defendant on either an accrued or prospective cause of action that is justiciable in the court; and
(b)there is a danger that the prospective judgment will be wholly or partly unsatisfied because assets of the defendant might be removed or otherwise disposed of, dealt with, or diminished in value.
The remedy in respect of a grant of a freezing order is discretionary. The strength of the plaintiff's case, the danger of frustration of a prospective judgment, the balance of convenience and any other relevant discretionary factors are all considered together in the exercise of the discretion whether to grant the orders sought.[3]
Assets available to the defendant
[3] Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [2011] WASC 188 [142], citing Perth Mint v Mickelberg (No 2) [1985] WAR 117, 119; Glenwood Management Group Pty Ltd v Mayo [1991] 2 VR 49, 54 - 55.
The plaintiff is not aware of the details of the defendant's financial circumstances, apart from the fact that she would have received the benefit from her interest in their late father's estate.
I accept on the evidence before me that the defendant is the registered proprietor as joint tenant of one property, being a unit in Scarborough, which she owns with her husband. A mortgage is registered against the certificate of title, although there is no evidence as to the amount of this mortgage. The documents before the court suggest this unit was purchased for the sum of approximately $2 million.
Disposition
On the evidence before me, I am satisfied that the plaintiff has demonstrated he has a prima facie case (in relation to the injunction) or a good arguable case (in relation to the freezing order).
Based on the evidence adduced by the plaintiff, I accept that it would be open for a court to find that the defendant has breached her duties as trustee, including her duty to keep proper accounts of the Trust and to report to the plaintiff, as beneficiary of the Trust. I also accept that on the evidence before me, the defendant has failed to comply with an order of this Court to prepare and file accounts or to answer the questions asked of her.
On this basis, I accept that the plaintiff has a prima facie case for relief as well as a good arguable case in relation to this cause of action. I also accept the cause of action has accrued and is justiciable in this court, as evidenced by the commencement of these proceedings.
Balance of convenience
In my view the balance of convenience also favours the grant of an interim injunction. On the evidence before the court, the plaintiff in my view has a strong prima facie case. I consider it would not be a sufficient answer for the defendant to contend that the plaintiff be left to a claim for damages.
On this basis, I consider it is appropriate for an interim injunction to be granted to prevent the defendant from dealing with the bank account referred to in the orders. This is the bank account which the defendant has said was the only asset of the Trust.
Danger that the prospective judgment will be wholly or partly unsatisfied
Counsel for the plaintiff explained that in addition to the injunction, an interim freezing order was sought as the plaintiff did not know the current balance of the Trust's bank account. If the balance is not less than $801,999.53 (being the amount the defendant advised was the amount of the Trust less the payment made to the plaintiff's solicitors), orders for the continuance of the freezing orders would not be sought and the freezing order would cease to have effect. However, if the Trust's bank account is less than this, the plaintiff seeks the freezing orders to protect against the frustration of a prospective order requiring the transfer of the assets of the Trust to a new trustee.
The affidavit evidence relied upon by the plaintiff in seeking to establish an arguable case against the defendant may also be relied upon to demonstrate that there is a danger that a prospective judgment will be wholly or partially unsatisfied because assets of the defendant might be removed or otherwise disposed of, dealt with, or diminished in value. Where the allegation made against a defendant concerns serious dishonesty, that evidence of itself may satisfy the court that the requisite danger exists.[4]
[4] Distinctive FX Pty Ltd v Wright [2015] VSC 299 [39], citing Victoria University of Technology v Wilson [2003] VSC 299 [33]; and Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319, 325F ‑ 326A.
In this case, the affidavit evidence strongly suggests that there has been apparent dishonesty on the part of the defendant in her failure to provide any accurate information as to the amount of the Trust, or to respond to any queries from the plaintiff or his solicitors, including as to an explanation for the limited information that has been provided to the plaintiff.
On the evidence before me, while I accept the defendant has some assets available to her, there is evidence that in the last year the defendant has transferred an asset that was previously in her name and owned jointly with her husband to a superannuation fund. In these circumstances, I consider there is a danger that a prospective judgment could be wholly or partially unsatisfied unless freezing orders are granted at least on an interim basis.
Discretionary considerations
In considering whether or not to grant the orders sought, it is also necessary to consider whether there are any discretionary considerations which mitigate against the granting of a freezing order, such as a delay in bringing the application, or a lack of candour in the materials placed before the court.[5]
[5] Zhen v Mo [2008] VSC 300 [30].
In this case, I do not consider there has been any undue delay in bringing this application. On the evidence before me, the plaintiff has been attempting to obtain information from the defendant (either personally or through his solicitors) since he became aware of the Trust and has sought to obtain the information without the need to commence proceedings.
The evidence filed by the plaintiff is detailed and does not suggest there is any lack of candour on his behalf.
In exercising my discretion, I am required to balance the interests of all parties. In all of the circumstances, I find that it is appropriate to grant the freezing orders. I am prepared to do so on the basis that a prompt return date is fixed, the defendant has liberty to apply at short notice, and the orders include the usual carve outs for ordinary living expenses and reasonable legal expenses. In the exercise of discretion, I have also weighed the protection afforded to the defendant by the undertaking as to damages.
Undertaking as to damages
The plaintiff has given an undertaking as to damages.
At least for the purposes of today's hearing, there is no information before me which would cast doubt on the ability of this plaintiff to meet the undertaking from assets held within Australia. In fact, all of the evidence is to the contrary.
Value of assets covered by freezing order
The value of the assets covered by a freezing order should not exceed the likely maximum value of the plaintiff's claim, although this may include interest and costs.[6]
[6] Rimex Wheel Pty Ltd v Wulff [2018] WASC 180 [48], referring to Consolidated Practice Directions PD 9.6.1 par 11.
In this case, the freezing order sought by the plaintiff is limited to the amount of $801,999.53, which he believes is the amount of the balance of the Trust.
Ordinary living expenses and reasonable legal expenses will be excluded from the freezing orders and the plaintiff has proposed an amount of $2,000 a week for living expenses and reasonable legal expenses of $25,000.
Other orders
The plaintiff also seek ancillary orders pursuant to O 52A r 3 of the Rules, concerning the provision of information about the defendant's assets.
In the exercise of my discretion, I do not propose to make disclosure orders on an ex parte basis. The question as to whether the proposed disclosure orders are appropriate can be raised by the plaintiff on the return date, particularly if information is then provided as to the balance of the bank account.
Conclusion
For these reasons, I am satisfied that it is appropriate to make the freezing orders sought against the defendant for a limited time period and to grant the injunction sought. These orders will extend until 4.00 pm on Friday, 22 December 2023 and the application will be returnable before me at 10.00 am on that date. In the circumstances of this matter, I consider that it is appropriate to give the parties liberty to apply on 24 hours' written notice.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
JN
Associate to the Honourable Justice Hill
18 DECEMBER 2023
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