Re RH; Ex Parte RH by next friend Ch - [2020] WASC 13

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA
CITATION:   RE RH; EX PARTE RH by next friend CH [2020] WASC 13
CORAM:   FIANNACA J
HEARD:   14 JANUARY 2020
DELIVERED          :   14 JANUARY 2020
FILE NO/S:   CIV 1039 of 2020
MATTER:   Section 77 Trustees Act 1977 (WA)

EX PARTE
RH by next friend CH
Plaintiff

Catchwords:

Requirements for appearance by next friend - Freezing Order – Misconduct in respect of trust funds – Arguable case that trustee should be removed as trustee and new trustee appointed – Possibility that trustee will engage in future misconduct and diminish value of the funds to the detriment of beneficiary - Order for substituted service – Turns on own facts

Legislation:

Age of Majority Act 1972 (WA)
Guardianship and Administration Act 1990 (WA)
Mental Health Act 1962 (WA)
Rules of the Supreme Court 1971 (WA)
Trustees Act 1997 (WA)

Result:

Application for freezing order granted
Application for order for substituted service granted
Question of costs reserved

Category: B

Representation:

Counsel:

Plaintiff

Mr S Shepherd

Solicitors:

Plaintiff

Kershaw Legal

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

Bermingham v Corrective Services Commission of New South Wales (1988) 15 NSWLR 292, (1988) 38 A Crim R 412
Newcastle City Council v GIO General Ltd (1997) 191 CLR 85
PT Bayan Resources TBK v BCBC Singapore Pte Ltd (2015) HCA 36; (2015) 258 CLR 1

FIANNACA J:

(These reasons were delivered extemporaneously on 14 January 2020 and have been edited from the transcript).

Introduction

This is an application by the plaintiff by her next friend for a freezing order in respect of funds in a trust account. Henceforth, when I refer to the plaintiff seeking orders or making submissions it is to be understood as the plaintiff doing those things by her next friend.
By an originating summons filed 10 January 2020, the plaintiff seeks an order pursuant to s 77 of the Trustees Act 1977 (WA) for the appointment of a new trustee for the H Family Trust and the RH Trust in substitution, in each case, for NH on the grounds of misconduct by NH, in the administration of the trust.
The defendant is named as NH as trustee for the H Family Trust and the RH Trust. NH is the plaintiff''s mother.
By a chamber summons in the proceedings commenced by the originating summons, also filed on 10 January 2020, the plaintiff seeks orders ex parte pursuant to O 52A r 2 of the Rules of the Supreme Court 1971 (WA) (the Rules), that, until further order, the defendant be restrained from dealing with or diminishing the value of any and all property of the H Family Trust and the RH Trust, including, but not limited to, the term deposit held at the Commonwealth Bank of Australia in the name of the trustee of the H Family Trust [number stated in document].
The plaintiff also seeks consequential orders in relation to the service on the defendant of any orders made by the court.

Preliminary issue – requirements for appearance by next friend

The plaintiff is a minor, also referred to in legislation as 'an infant'.[1] Therefore, the proceedings must be commenced for her by a next friend. That follows from the provisions of O 70 r 2(1), which provides:
Subject to subrule (4) a person under disability may not bring, or make a claim in, any proceedings except by his next friend ...
[1] See the Age of Majority Act 1972 (WA) s 5.
A 'person under disability' is defined in O 70 r 1 to mean, inter alia, a person who is an infant. I will come back to other aspects of the definition shortly.
Order 70 r 2(3) provides that a next friend of a person under disability must act by a solicitor. That is the case in the present proceedings.
Order 70 r 3(2) states that, save as provided by subrules (5) and (6) or by r 5 (none of which have application in this case):
[A]n order appointing a person next friend or guardian ad litem of a person under disability is not necessary.
The position, then, is that it is not necessary for the court to appoint the next friend who has been nominated in these proceedings, CH. CH is the plaintiff's grandmother.
Order 70 r 3(7) provides that:
(7)Unless the next friend or guardian ad litem of a person under disability has been appointed by the Court, is a guardian or administrator referred to in subrule (3), or is the Public Trustee –
(a)the name of any person shall not be used in a cause or matter as next friend of a person under disability, unless and until the documents specified in subrule (8) have been filed.
The documents specified in subrule (8) include a written consent to be the next friend of the person under disability signed by the person proposing to act as such friend or guardian. A consent form by CH consenting to be the next friend of the plaintiff in these proceedings has now been lodged with the court.
The documents specified in subrule 8 also include the following:
(c)except where the person proposing to be such friend or guardian of a represented person is so authorised under Part 5 or Part 6 of the Act, an affidavit by the solicitor for the represented person deposing -
(i)that he knows or believes, as the case may be, that the person to whom the affidavit relates is an infant or a represented person, stating (in the case of a represented person) the grounds of his knowledge or belief; and
…
(iii)that the person named in the affidavit as next friend or guardian, as the case may be, has no interest in the cause or matter in question adverse to that of the person under disability; and
(iv)that in the case of an infant (who is not a represented person) who has attained the age of 14 years, the infant consents to the person named in the affidavit acting as such next friend or guardian, as the case may be.
The reference in subrule 8(c) to 'the Act' is a reference to the Guardianship and Administration Act 1990 (WA): see O 70 r 1.
The provisions of subrule (8)(c) reveal an anomaly. As I noted earlier, the definition of a 'person under disability' includes a person who is an infant, but it also includes a 'represented person'. That term is defined to mean a represented person within the meaning of 'the Act', which, as I have said, is the Guardianship and Administration Act 1990.
The opening words of cl (c) suggest that what is required is an affidavit by the solicitor for a 'represented person'. It is necessary to construe the provision by having regard to its context and purpose, but the literal meaning of the words used in the clause – having regard to the definition of 'represented person' – would suggest that the clause does not require an affidavit from a solicitor for an infant who comes within the provisions of O 70.
However, to read the opening words of cl (c) literally would leave no room for the operation of part of subclause (i), where it refers to an infant, or the whole of subclause (iv), which relates only to an infant. That is, because 'represented person' is used in a manner that is exclusive of an infant in O 70 r 1. That conclusion follows from the definition of represented person in O 70 r 1 and by virtue of the fact that the references to 'infant' and 'represented person' in the definition of person under disability in r 1 are disjunctive. The reference to 'represented person under the Act' in r 1 is a reference to a represented person in respect of whom an order has been made appointing a person to be guardian of the person under s 43 of the Guardianship and Administration Act 1990.
It is sufficient for present purposes to say that s 43 of the Guardianship and Administration Act 1990 is not concerned with infants or minors, but with adults[2] who are under a disability (whether by reason of mental disorder, intellectual handicap or other mental disability) and unable to make reasonable judgments in respect of matters relating to all or any part of that person's estate, and in respect of whom there is a need for the appointment of an administrator of his or her estate.
[2] Section 43 of the Guardianship and Administration Act 1990 provides that the tribunal must be satisfied that the person in respect of whom a guardianship order is sought has attained the age of 18 years.
In relation to children, the Legal Representation of Infants Act 1977 (WA) effectively enacts the inherent jurisdiction of the court to safeguard the interests of children in litigation.
In my view, it is clear from the above that the references to 'represented person' in O 70 r 3(3) exclude an infant.
It seems to me that the purpose of O 70, in particular r 3, is to ensure that the interests of a person under disability (including an infant) who is a party to proceedings are adequately protected, and that the person who seeks to appear as a next friend or guardian has proper standing.
It is tolerably clear that the protection of r 3(8)(c) was not intended only for a 'represented person' as defined in r 1. That is because subclause (i) refers to an affidavit that relates to an infant or represented person, and subclause (iv) relates only to 'the case of an infant' who has attained the age of 14 years. In the latter case, the infant's consent is required for the person named in the affidavit to act as the infant's next friend.
The current wording of r 3 came about by an amendment in 1994 which was published in the Government Gazette on 22 July 1994.[3] Prior to that amendment, O 70 r 1 referred to the Mental Health Act 1962 (WA), rather than the Guardianship and Administration Act. It referred to a 'patient', which included an incapable person within the meaning of the Mental Health Act, and it defined 'a person under disability' to mean, 'a person who is an infant or a patient.'
[3] Western Australia, Government Gazette, No 2 (22 July 1994) 3746 – 3748.
It is obvious that the amendment sought to introduce the new regime in respect of persons with disabilities who would be covered by the Guardianship and Administration Act. It was by that means that the reference to 'represented person' came to replace references to 'patient'.
Rule 3(8) in the original version of the rules provided that 'the documents referred to in par (7) are as follows', [4] and subparagraph (c) read:
[4] Paragraph (7) was the equivalent of the current subrule (7) and, in relevant respects, was in identical terms.
(c)Except where the person proposing to be such friend or guardian of the patient is so authorised under Part VI of the Act [i.e. the Mental Health Act 1962], an affidavit by the solicitor for the person under disability deposing that he knows or believes, as the case may be, that the person to whom the affidavit relates is an infant or a patient, stating in the case of a patient the grounds of his knowledge or belief.
…
(ii)Where the person under disability is a patient, that there is no person authorised as aforesaid.
(iii)That a person named in the affidavit as next friend or guardian, as the case may be, has no interest in the cause or matter in question adverse to that of the person under disability.
(iv)That in the case of an infant who is not a patient who has attained the age of 14 years, the infant consents to the person named in the affidavit acting as such next friend or guardian as the case may be.
(Emphasis added)
It can be seen therefore that, in relevant respects, so far as (c) related to infants, it has not changed. What is important to note is that the provision previously referred to the requirement for an affidavit from the solicitor for the person under disability, which, by the definition in r 1, included an infant.
One can only assume that the substitution of the word 'solicitor for the represented person' for the original wording of 'solicitor for the person under disability' occurred in error, without regard for what can only be taken to be the unintended effect of depriving part of the rule of any scope for operation. I say that because there would be no basis upon which a solicitor for a represented person would be deposing that the person to whom the affidavit relates is an infant (cl (c)(i)), and there would be no scope for a solicitor for a represented person to be stating that, in the case of an infant (who is not a represented person) who has attained the age of 14 years, the infant consents to the person named in the affidavit acting as such next friend or guardian as the case may be (cl (c)(iv)).
It is necessary therefore to consider the principles that have evolved in relation to rules of statutory construction. There are circumstances where it is permitted for the court to read words into legislation.
The general rule of construction is that the provision must be given meaning in accordance with the purpose and context of the provision. The golden rule, that words should be read literally, allows for an exception where to do so would lead to some absurdity. Of course, that rule is now subject to the more general principle that regard must be had to purpose and context.
There have been cases in which words have been read differently from the way in which they appear in legislation because it has been necessary to correct what is an obvious printing or drafting error. However, it seems to me that the more relevant line of authority is that which relates to implying words in legislation. It is sufficient for present purposes for me to refer to what was said by McHugh JA in Bermingham v Corrective Services Commission of New South Wales[5] where, after suggesting that it could be legitimate to give words used inadvertently a strained construction to produce an interpretation that was consistent with the purpose of the legislation, his Honour commented:[6]
[I]t is not only when Parliament has used words inadvertently that the court is entitled to give legislation a strained construction to give effect to the purpose of the legislation. The court may read words into a legislative provision if, by inadvertence, Parliament has failed to deal with an eventuality required to be dealt with if the purpose of the act is to be achieved.
[5] Bermingham v Corrective Services Commission of New South Wales (1988) 15 NSWLR 292, (1988) 38 A Crim R 412.
[6] Bermingham v Corrective Services Commission of New South Wales, 302.
His Honour identified the conditions that must be met before words can be read in, as follows:[7]
First, the court must know the mischief with which the Act was dealing. Secondly, the court must be satisfied that, by inadvertence, Parliament has overlooked an eventuality which must be dealt with if the purpose of the Act is to be achieved. Thirdly, the court must be able to state with certainty what words Parliament would have used to overcome the omission if its attention had been drawn to the defect.
[7] Ibid.
When his Honour was on the High Court, he repeated the three preconditions in Newcastle City Council v GIO General Ltd.[8]
[8] Newcastle City Council v GIO General Ltd (1997) 191 CLR 85, 113 – 116.
In my view, each of those conditions can be met in this case. I have already referred to the mischief with which the Rules are dealing, namely the need to protect the interests of a person under disability, and to ensure that the person who proposes to appear as the next friend has proper standing. Secondly, there is an obvious eventuality that results from giving the opening words of subrule (8)(c) their literal meaning, namely, that part of subclause (i) and the whole of subclause (iv) would be rendered otiose and Parliament could not have intended that result. And finally, it is readily apparent what words can be read in with certainty to overcome the omission, and that is to add the words 'or infant' after the words 'represented person', so that the clause would read 'an affidavit by the solicitor for the represented person or infant'.
In all the circumstances, I am of the view that that is the way in which subrule (8)(c) should be read. I have had regard to the fact that, on the face of it, it appears to have been a deliberate change of the wording away from the more general reference to a solicitor for the person under disability. However, as I have said, it seems to me that it was done in error, if effect is to be given to the whole of cl (c).
Counsel for the plaintiff agreed that the rule should be construed in that way. It had been assumed, on behalf of the plaintiff, that r 3(8)(c)(iv) applied, as a consent form had been signed by the plaintiff consenting to CH being her next friend, and the only place where that is required is in r 3(8)(c)(iv).
I have taken time to deal with this issue because the proceedings for the freezing order are brought ex parte. In my view, in those circumstances, it is necessary to ensure that proper process is followed.
That proper process has not resulted in any additional requirement being made of the plaintiff. There had been an oversight, in that initially the documents filed for the plaintiff did not include an affidavit from the solicitor for the plaintiff confirming that CH, who seeks to be the next friend, has no interest in the cause or matter in question adverse to that of the person under disability. Further, the consent of the infant, namely the plaintiff, had been included in the materials as a consent form, rather than being deposed as a fact in the affidavit of the plaintiff's solicitor. However, those omissions have been rectified, and I now have an affidavit from the plaintiff's solicitor attesting to the matters about which I must be satisfied for the purposes of O 70 r 3(7) and (8).
The plaintiff's consent is not dated, but was part of the material that was filed on 10 January 2020. It indicates that she consents to the appointment of her grandmother, CH, as her next friend for the purpose of making any application in relation to trusts established for her benefit of the proceeds of the superannuation funds of her late father, IC. She also consents to the appointment of her grandmother, CH, as trustee for that trust or those trusts. That is a separate issue that goes to the substantive application, which seeks the substitution of CH for NH as trustee of the trusts.

The evidence in support of the applications

It is necessary then to turn to the evidence that has been filed in support of both the application the subject of the originating summons and the application for the freezing order that is the subject of the chamber summons. That evidence consists of:
(1)an affidavit of CH, sworn 9 January 2020 which contains a number of annexures that I will refer to, and;
(2)a further affidavit that was lodged subsequently, sworn on 13 January 2020, in which CH refers to other matters that are relevant and that arose from a matter I raised at the conclusion of the hearing on 13 January 2020 concerning the maintenance of the plaintiff in the event that the trust funds are frozen.
CH attests that she is the grandmother of the plaintiff in these proceedings, who was born on 13 August 2004. A birth certificate is annexed to the affidavit. She states that she is the mother of the plaintiff's mother, who is NH. CH goes on to attest that the plaintiff's father, IC, died on 9 October 2016. He had superannuation benefits with AustralianSuper Proprietary Limited ('Aussuper') and the Motor Trade Association of Australia Superannuation Fund Proprietary Limited ('MTAA Super') at the date of his death.
Both Aussuper and MTAA Super resolved to pay the proceeds of the superannuation funds and death benefits to the plaintiff, to be held on trust for her until she reached the age of 18 years.
Aussuper entered into a deed of trust dated 23 May 2017 with NH as trustee. That trust deed established a trust for the sum of $85,994.77 for the plaintiff's benefit. The trust deed, which is annexed to the affidavit, established the trust under the name the H Family Trust. The terms of the trust are those that would ordinarily be expected, in terms of the obligations placed on the trustee. It goes without saying that the funds in the trust were to be used by the trustee for the benefit of the plaintiff, as beneficiary.

MTAA Super also entered into a deed of trust, again nominating NH as trustee. CH says that she does not have a dated or signed copy of that trust deed, but she has annexed to her affidavit a copy of the trust deed, which purports to be signed by NH on 20 June 2017. There is no reason to suppose that the copy of the trust deed that is annexed to the affidavit does not represent the terms of the trust of which NH was prepared to be trustee. That trust related to a fund of $224,700.57, which, again, was placed in trust for the plaintiff's benefit to be administered by NH. That trust was to be known as the RH Trust. As with the H Family Trust, it is in the usual terms for a trust deed which places the ordinary obligations on a trustee to hold the funds and use them for the benefit of the plaintiff.
Of course, both trusts allowed for NH, as trustee, to meet her own expenses to the extent that they were necessary to carry out her responsibilities as trustee for the plaintiff, but they do not allow for the funds to be used for personal purposes unrelated to her role as trustee.
CH states that the sum which is the subject of the H Family trust, together with the sum which is the subject of the RH Trust, were paid into an account opened with the Commonwealth Bank on or about 4 July 2017. The account was opened in NH's name as trustee for the H Family Trust. The account number was [number stated in document]. Statements relating to that account have been annexed to the affidavit of CH, and it appears that the account was described as a Premium Business Cheque Account.
CH states that in or about April 2018, she became aware that NH, who is unemployed, was using the trust fund for her own purposes. She says that she established that an amount of approximately $113,000 had been removed from the bank account.
In her affidavit of 13 January 2020, CH states that she has previously received funds from the trust fund. She says that when the bank account was established, she asked NH for funds which she could use for the plaintiff's benefit, which included:
Education needs, dental work, singing and dancing lessons and other of the more expensive items that a child requires.
She says that, in or about July 2017, she received $10,000. In or about August 2017 she received a further $10,000, and in or about April 2018 she received a further $9,000 from NH, which was money withdrawn from the trust fund. It would seem that, at that point in time, it was from the original bank account into which the trust funds had been paid.
CH states that she has kept records of all amounts that she has paid on behalf of the plaintiff from the total funds of $29,000. She states that the plaintiff is aware of all the amounts that she (CH) has spent on those items. She says that there is currently $3,750 left in cash, which she holds on the plaintiff's behalf. Finally, she says that she has not accessed any funds from the money paid from the trust account for day to day expenses, such as food and clothing, other than for school uniforms.
It would seem, therefore, that CH has arrived at the conclusion that NH has removed money for purposes other than for the benefit of the plaintiff, by virtue of deducting the sum that she has received in total of $29,000 from the sum that can be calculated to have been withdrawn from the account by reference to the bank statements that are annexed to the affidavit of CH. It is not clear from the affidavit whether the reference to $113,000 is a reference to the total withdrawn including the $29,000, or without the $29,000. It does not matter for my purposes, because clearly the total that has been withdrawn is substantially more than the sum that has been made available to CH to assist in the maintenance of the plaintiff.
CH says that she approached NH regarding the discrepancy in the bank account and that NH provided her with receipts for approximately $3,000 for expenses she had paid on behalf of herself and her children, including the plaintiff.
CH says that the following day she took NH to the Commonwealth Bank at Bull Creek and a term deposit was established for five years for the remaining sum in the trust fund which, at that stage, was approximately $180,000. That term deposit is [number stated in document]. She states that she was given access to enable her to view the term deposit online so that she could check that no sum was removed from the term deposit.
CH goes on to say that until around September 2019, NH was living with CH, her husband and NH's children, including the plaintiff, at an address in Bull Creek, being CH's home. She says that on or about 14 September 2019 NH was involved in an altercation with the plaintiff at their home. She says that she is informed by the plaintiff and police officers, who subsequently attended, that NH had become violent and aggressive towards the plaintiff. She says that the police later informed her that if NH continued to reside at CH's home, NH's children were likely to be removed by the Department of Child Protection. CH states that following that incident she asked NH to leave her house and reside elsewhere.
CH states that she does not know of any permanent address for NH.
The plaintiff and her half‑brother and sister remain living with CH and her husband. CH attests, in her affidavit sworn 13 January 2020, that her husband and she provide for the day to day living expenses of all three of NH's children and intend to continue to do so.
CH goes on to say that, on or about 24 December 2019, she noticed that an amount of $2,000 had been removed from the term deposit. She sent NH a text message asking her where that amount had gone. She says that NH told her that it had been stolen by an ex‑boyfriend who she said was stalking her.
The partial prepayment notice for the term deposit printed on 25 December 2019 is annexed as CAH6 to the affidavit of CH sworn 9 January 2020, and it indicates that the balance after the prepayment of the $2,000 was $182,950.
CH says that on 27 December 2019 she went to the Commonwealth Bank at Bull Creek and the bank officer showed her a statutory declaration made by NH saying that she needed money to live. She says that she understands from discussions with the bank officer that before any funds can be released from the term deposit the bank requires a statutory declaration setting out circumstances of need. Although that is hearsay evidence, I can rely upon it for present purposes. I am comforted in doing so by the fact that CH says that she saw a statutory declaration to that effect, and that money had subsequently been paid out of the term deposit account.
CH says that, on the same day (27 December 2019) she sent a text message to NH saying that she had seen the statutory declaration. She says that NH responded by an abusive text message with no explanation for the withdrawal. No details are provided of that. What is of significance is that it appears NH was not prepared to explain why the money had been withdrawn.
CH goes on to say that on 3 January 2020 she received an email from the Commonwealth Bank which stated that changes had been made to the term deposit. A copy of that email is annexed as CAH7. She says she went to the Commonwealth Bank on 3 January 2020 and was informed by a bank officer that she could no longer view the term deposit online. The only reasonable inference that can be drawn from those circumstances is that NH had withdrawn permission for CH to be able to view the transactions in respect of the term deposit online.
CH states that on 7 January 2020 she received a telephone call from a bank officer, who told her that approximately $4,000 had been removed from the term deposit.
Annexed to the affidavit[9] is a notice form the bank to 'The Trustee, [H] Family Trust', at CH's address in Bull Creek (which obviously remained the address on the account, despite the fact that NH had moved out). That notice refers to a pre‑payment of $4,738.91 having been made from the term deposit account on 4 January 2020. The balance after that partial pre‑payment was $178,000.
[9] Affidavit of CH sworn 9 January 2020, annexure CAH8.

The plaintiff's submissions

On the basis of those facts deposed to by CH, the plaintiff submits that the court can be satisfied there is an arguable case that the defendant, as trustee for the RH Trust and the H Family Trust, has engaged in misconduct by withdrawing money from the trust fund and applying it for purposes other than for the benefit of the plaintiff. That inference is to be drawn from the fact that none of that money has in fact been applied for the benefit of the plaintiff. The conclusion is drawn also from the fact that CH has said that she and her husband have been looking after the plaintiff and paying for her maintenance.
I infer that none of the money that was withdrawn from the term deposit has been provided to CH, as she makes no mention of that having occurred.
It is submitted on behalf of the plaintiff that there is a real risk that NH will continue to diminish the funds in the account in a manner that is inconsistent with her responsibilities as a trustee. It is submitted that, if the funds held on trust are not the subject of a freezing order, then any judgment of the court by which NH is replaced as trustee, and by which therefore the funds that are the subject of the trust will be invested in or conveyed to the new trustee, may be wholly or partially frustrated.

Legislation and principles concerning freezing orders

Order 52A r 2 of the Rules provides that:
(1)The Court may make an order (a freezing order) upon or without notice to the respondent for the purpose of preventing the frustration or inhibition of the Court's process by seeking to meet a danger that a judgment or prospective judgment of the court will be wholly or partly unsatisfied.
(2)A freezing order may be an order restraining the respondent from removing any assets located in or outside Australia or from disposing of, dealing with or diminishing the value of those assets.
I have given consideration to the question of whether the provisions of r 2 could be said to apply to a judgment that results in the substitution of a trustee of a trust. The question is whether it might be said that the judgment or prospective judgment of the court will be wholly or partly unsatisfied if the judgment is to appoint a new trustee. Strictly speaking, it is difficult to see how that could not be satisfied.
However, I accept that it may be said that the purpose of appointing a new trustee is to administer the trust and the funds that are the subject of the trust. If those funds are diminished in a way that is inconsistent with the interests of the beneficiary, then the purpose of substituting the trustee, particularly where there has been an allegation of misconduct on the part of the existing trustee, could be said to have been frustrated.
In any event, the court has inherent jurisdiction to make a freezing order to prevent the abuse or frustration of its process in relation to matters coming within its jurisdiction.[10] That statement of principle has not been confined to relate to monetary orders that might be made by the court, whether by damages or in some other form.
[10] PT Bayan Resources TBK v BCBC Singapore Pte Ltd (2015) HCA 36; (2015) 258 CLR 1 (PT Bayan Resources)[41] – [43].
For reasons I have already stated, it might be questioned whether the rules in O 52A have application. Nevertheless, I have had regard to r 5(1)(b) of the Rules. It applies if an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in the court. If so, r 5(4) states:
The Court may make a freezing order or an ancillary order or both against a judgment debtor or prospective judgment debtor if the Court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because any of the following might occur –
(a)the judgment debtor or prospective judgment debtor or another person absconds; or
(b)the assets of the judgment debtor or prospective judgment debtor or another person are –
…
(ii)disposed of, dealt with or diminished in value.
Arguably, the assets in the bank account in this case may be regarded as assets of the current trustee for the two trusts.
However, as I have said, it is sufficient to rely on the inherent jurisdiction of the court. The matter may also have been able to be dealt with by way of an interlocutory injunction, but I am satisfied that it is appropriate to make a freezing order if I am satisfied that the court's judgment may be frustrated or, as I noted from the decision of PT Bayan Resources,[11] to prevent the abuse or frustration of the court's process in relation to the matters coming within its jurisdiction.
[11] See [69] above.

Conclusions

I am satisfied on the evidence contained in the affidavit of CH that there is an arguable case in respect of the application by originating summons. That is, an inference can be drawn that the current trustee of the trusts, NH, has used money in a way that is inconsistent with the trust for her own benefit or the benefit of someone other than the plaintiff, and there is a risk that that may continue. There is an arguable case, therefore, that she should be removed as trustee and a new trustee be appointed.
It has been submitted that CH ought to be appointed. That is a matter to be dealt with in the substantive application. All that is of relevance, for present purposes, is that the court may well be persuaded, ultimately, to appoint a new trustee.
Secondly, I am satisfied that there is a danger that the current trustee might engage in misconduct in respect of the trust funds and diminish the value of the funds to the detriment of the plaintiff, who is the beneficiary. Before I can grant the freezing order, I must be satisfied that, as a result of that possibility, there is a danger that the court's processes will be frustrated. I am so satisfied.
The trustee has the means by which money might be withdrawn. That can be inferred from the events that have occurred to date, as deposed by CH. There is evidence that money has been withdrawn even from the term deposit account, and that there is a means to do so by way of providing a statutory declaration.
I take into account also that, since the current trustee has left the home of CH (admittedly, at the request of CH), she has not provided information to CH in respect of where she is residing. That is not to say that she is deliberately trying to be elusive, but it does mean that it may hamper the ability of CH and others who may have the interests of the plaintiff in mind to prevent the current trustee from withdrawing money from the term deposit account in a manner that is inconsistent with her obligations as trustee under the trust deeds.
As I noted earlier, in the event that a new trustee is appointed because of misconduct on the part of the current trustee, the purpose of doing so would be frustrated if the funds in the account continue to be diminished in any significant way. The amounts that have been withdrawn most recently are significant amounts.
Obviously, because of the fact that the money is in the term deposit account, the withdrawals have not been as frequent as appears in the bank statements for the previous account, where it is apparent that on occasions there were numerous withdrawals on the same day or within a few days of each other. Nevertheless, the capacity to withdraw money in the way that NH has from the term deposit, as the person who has legal control over the account, does raise a very real concern that the trust funds will be diminished.

Freezing order granted

I am satisfied, therefore, that the court should make a freezing order in respect of the funds in the term deposit account, being the Commonwealth Bank of Australia account in the name of the trustee of the H Family Trust, [number stated in document], but not limited to those funds. In other words, it is appropriate that the freezing order relate to all of the trust funds that may remain in the control of the defendant.

Consequential orders

I turn then to the other aspect of the application, which relates to the consequential orders. Those are concerned mainly with the service of any orders that are made in the application.
In that regard, CH states in her affidavit, at pars 25 – 29, that she is not aware of the trustee's current address and that communications from the Commonwealth Bank regarding the term deposit had continued to be sent to CH's address - at least, that is the address shown on the communications. She states she has previously been able to contact the defendant by telephone or text message on a mobile telephone number that is identified in the affidavit. She says that she is not aware if that telephone remains in use. She says that the defendant had previously used an email address, which is also identified in the affidavit. She says she does not know if that email address remains in use.[12] She states that, as far as she is aware, the defendant does not have access to a computer. However, she goes on to say that, as far as she is aware, the defendant has a Facebook account under the name 'NB'.
[12] CH uses the term 'effective', which I take to mean in use by the defendant.
In those circumstances, it is submitted on behalf of the plaintiff that the plaintiff does not have a personal address at which the plaintiff could serve process or the orders made in this application on the defendant. The plaintiff seeks an order for substituted service, which will permit that the orders be served on the defendant by email to the identified address, by text message to the identified telephone number, and by personal message to the Facebook page that I have referred to.
The same request is made in respect of service of the originating summons in these proceedings. That is required only in respect of the defendant.
In respect of the Commonwealth Bank, the plaintiff asks that service of the orders be by post and email.
Order 72 r 4 of the Rules provides for substituted service, and states:
(1)Where, by these rules, personal service of a document is required and it appears to the Court that personal service of such document on a person required to be served is impracticable, the Court may order that the document be served on that person by substituted service.
(2)An application for an order for substituted service shall be supported by an affidavit stating the facts on which the application is founded.
(3)Substituted service pursuant to an order under this rule is effected by taking such steps as the court directs to bring the document to the notice of the person to be served, and has the same operation as personal service.
There are not otherwise any restrictions placed on the means by which the court might order that the document be brought to the notice of the person to be served.
I am satisfied on the evidence in the affidavit of CH that it is impracticable to effect personal service of the documents, as the person who it would appear would be in a position to deal with the defendant, namely, CH, does not know where she may be at any particular time and does not have a permanent address for her. In the circumstances, I am prepared to make an order for substituted service.
It seems to me that the means that have been suggested are appropriate. It appears from CH's evidence that the Facebook page kept by the defendant may be still in use, and that a personal message to that Facebook page may be effective. Although the first two proposed means of service may not be effective, in that CH has not been able to confirm that they are in use, in the event that the email address and the telephone number are still in use by the defendant, then it will be appropriate to order that service can be effected by each of those means. I am of the view that all three means should be attempted. So the order sought is, appropriately, in the conjunctive form.

Costs

Although there was an application for costs in the orders originally sought, counsel for the plaintiff agreed, ultimately, that the question of costs should be reserved to the hearing of the substantive application. That is appropriate, given that the application that was made, namely that the cost be met out of the assets of the trusts (which was not unreasonable), could not be given effect while the funds remain frozen, at least not without a variation to that order. Counsel has quite properly acknowledged that that should be left until a later time.

Orders

The orders that I make, then, are as follows:
1.Until further order, the defendant be restrained from dealing with or diminishing the value of any and all property of:
(1)the H Family Trust and
(2)the RH Trust,
including but not limited to the term deposit held at the Commonwealth Bank of Australia in the name of the trustee of the H Family Trust, [number stated in document].
2.Notice of any orders made in this application be served on:
(1)the defendant:
(i) by email to the address [email] and
(ii) by text message to the mobile telephone number [number] and
(iii) by personal message to the Facebook Page under the name NB.
(2)the Commonwealth Bank of Australia by post and email.
3.Notice of the originating summons in these proceedings be served on the defendant:
(1)by email to the address of [email];
(2)by text message to the mobile telephone number [number]; and
(3)by personal message to the Facebook page under the name NB.
4.The question of the costs in this application is reserved to the hearing of the substantive application, pursuant to the originating summons.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
HF
Associate to the Honourable Justice Fiannaca
21 JANUARY 2020