Warea Pty Ltd v Waterloo Industries Pty Ltd t/as Deltrite Financial Services

[1986] FCA 121

"NOT FOR DISTRIBUTION"

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IN THE FEDERAL COURT OF AUSTRALIA )

1	QUEENSLAND DISTRICT REGISTRY	)	QLD G6 of 19.36
GENERAL DIVISION	)
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BETWEEN: WFREZ PTY . LTD.

First Applicant

AND: STRIPE LIMITED

Second Applicant

AND: FIATERLOO	INDUSTRIES PTY LTD	& DRS	j.
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trading as DELTRITE FIbJANCIAL SERVICES

First Respondent

AND: WILLI4M LEOMARD P.RMSTRONG

Second Respondent . _

AND: LISA N. VIRBA .

Tflird Respondent

AND: ROEFPT WAYNE COLLIMS

Fourth Respondent

DATE OF HEAPING: 2 6 March l 986

DATE JTJDGPIENT DELIVEPED: 26 March 1986

COCTNSEL :

. for the applicants	Mr. A. J.H. Morris instructed
by Cooper, Grace and Ward

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. for the fourth respondent Mr. D.R. Bouqhen instructed

by Cannan and Peterson

J. A . LYONS

ASSOCIATE TO PINCUS J.

26 March 1986

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IN THE FEDERAL COURT OF AUSTRALIA

9UEENSLAND DISTRICT REGISTRY	QLD G6 of 1986
GENERAL DIVISION

BETWEEN: WmEA PTY. LTD.

First Applicant

AND: STRIPE LIMITED

Second Applicant

AND:

WATERLOO INDUSTRIES PTY LTD & ORS

trading as DELTRITE FINANCIAL SERVICES

First Respondent

AND: WILLIAM LEONARD ARMSTRONG

Second Respondent

AND: LISA N. VIRBA

Third Respondent

AND: ROBERT WAYNE COLLINS

Fourth Respondent	I i
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MINUTES OF ORDER

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i	JUDGE MAKING ORDER:	PINCUS J.
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DATE OF ORDER:	26 March 1986

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I	WHERE MADE:	BRISBANE	, i
THE COURT ORDERS THP.T:
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1. The application to vary the injunctlon be l .>

dismissed.

2. The costs of the first and second applicants in

resistlng this application be costs of those

applicants in the principal proceedings, as between

the applicants and the fifth respondent.

I NOTE: Settlement and entry of orders is dealt with in Order 36

! of the Federal Court Rules.

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QLD G6 of 1986

BETWEEN: WAREA PTY. LTD.

First Applicant

AND: STRIPE LIMITED

Second Applicant

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AND: WATERLOO INDUSTRIES PTY LTD & ORS

trading as DELTRITE FINANCIAL SERVICES

First Respondent

AND: WILLIAM LEONARD ARMSTRONG

Second Respondent

AND: LISA N. VIRBA

Third Respondent

AND: ROBERT LWYNE COLLINS

Fourth Respondent

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PINCUS J. 26 March 1986

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I	EX TEMPORE REASONS FOR JUDGMENT
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I In this matter, an application is made to vary a Mareva

injunction granted by me on 4 March 1986 and varied on 7 March

1 1986. The application is made on behalf of the fifth respondent

and seeks an exception from the effect of the injunction

permitting the fifth respondent to pay her solicitors sums up to

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$7,110 towards the costs of resistance to the claims of the

applicants and certain other minor exceptions.

The minor exceptions relate to a motor vehicle, and the

fifth respondent says that the motor vehicle is the sub~ect of a

trust and that registration fees and insurance premium are due in

respect of it. The evidence relating to that matter is that the

fifth respondent says the vehicle was bought by the second

respondent 10 to 12 months ago, and he "told me then that it

would be put into the trust". I drew the attention of counsel to

the circumstance that the evidence just referred to did not seem

to me sufficient to show that the vehicle was trust property.

After taking instructions, counsel informed me that he could take

it no further. I therefore hold that, on the evidence presently

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available, there is nothing to support the suggestion that the

vehicle 1s trust property or to support the application	so far as
it relates to the vehicle.

The more Important issue, however, has caused me more

difficulty. The evldence is that on 5 January 1985 the second

respondent assigned his interest in certain land to the fifth

respondent for the sum of $1. It is not stated what was the

value of the property in question, but it is said to be a house

in which the second respondent lives. On the face of it, the

transfer for nominal consideration is usceptible of the

explanation that the second respondent desired the property not

to be in his name, for the purpose of keeping it out of the reach

of his creditors, actual or potential. The only other common

reason for forming a trust inter vivos these days is that the

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parties desire to affect their tax posltlon. The assignment or

the house seems not likely to have that effect, and I therefore

infer, prima facie, that it was intended to keep the property

away from creditors.

The fifth respondent has given evidence, In the form of

an affidavit, that she has $47,000 In the "Armstrong Trust"

invested at call. There is no evidence as to the source of the

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$47,000. It may be, for all I know, that the money was I ,

beneficially owned by the fifth respondent. However, that seems unlikely, as she 1 s a pensioner living in rented accommodation,

and her only substantial asset seems to be a sum of money, to be

referred to later, obtained from the sale of	what she describes	t
as "my former matrimonial home.	!
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The statement of clalm, In Its present form, makes the

allegation that the fifth respondent received a sum of $48,793.16

and other amounts as a volunteer, or wlth knowledge of the

circumstances In which the same were received by the first

respondent from the appllcants and says, in effect, that that

money may be traced back to the transaction with	the respondents,
of whlch the applicant has complained.

I think the present application on behalf of the fifth

respondent would have been more attractive If there had been some

explanation of the source of the $47,000. It would, no doubt,

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have been simple enough for the fifth respondent, who has made I

two affidavits, to say in one of them where the money came	from,
and I take the absence of explanation into account.

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However, that is not the principal point. The question,

as finally fixed on by counsel in their arguments, was simply

this: counsel for	the fifth respondent said that, assuming that
the respondent is	a trustee in respect of the sum of $47,000

referred to, then she has a right, if she reasonably resists the applicant's claim to the money, to be indemnified for costs out

of the trust fund. Counsel for the applicants says that, while

he concedes that to be so, the matter may in the end become a

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contest of priorities, the applicants contending that they have a > .

right to assert their equitable Interest	in the fund ahead of the
trustee's right to indemnity.

It seems to me that the way to resolve the conflicting

arguments is to consider the position in two ways: flrst of all,-

on the assumption that the fifth respondent is successful in her

resistance, and, secondly, on the assumption that she is not. If

the fifth respondent is successful in her resistance to the claim

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she will, whether or not she obtains an order for costs, as it

seems to me, have ample funds against which to exercise her right

of indemnity. If, on the other hand, she is unsuccessful in her

resistance to the claim, it may well be that, as counsel have

argued, she would not be permitted a right of access to the

funds for indemnity in respect of her costs ahead of the

applicants, or indeed, perhaps any right of indemnity.

She, therefore, in my view, is not entitled to

protection on the assumption which I have just mentioned, and her

I only right to protection at this stage must be on the assumption

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that she will ultimately win. On that basis, the question really

becomes whether in the exercise of my discretion I should permit

the depletion of the funds to the extent deslred to avoid the

inconvenience to which the fifth respondent would be put by

having to have access to her own funds to meet solicitors' costs.

This involves some reference to the fifth respondent's

evidence. She estimates her living expenses to be up to $100 a

week, added to which is $100 rental. Her larger interest

investment does not mature until September, so that she has six

llving expenses months to cover. The interest she is presently

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receiving, however, seems to me quite adequate to flll the gap

between her income and her outqolngs, subject to the difficulty I I,

to which her counsel	drew	attention, whlch is that the greater	..
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part of the Interest is not to	be paid until September.	!
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That produces the result that to meet current legal

expenses, if her sollcltors insist upon that, she has to have

access to the smaller investment account, which presently stands

at something over $13,000. If she spent the sum which it is

desired to abstract from the trust account, namely $7,110, she

would have about $6,000 left, or a sum in excess of $200 a week,

if expended between now and September.

The figures placed before me, that is, show no necessity

or reasonable need to have access to the trust funds to meet

legal costs; as far as I can see, on the assumption that the

fifth respondent is ultimately successful, the only inconvenience

she will have suffered is that she will have to have access to

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the trust funds by way of indemnity for a slightly larger amount,

being the interest she will have lost by spending her own funds

on the defence of the action, a sum, as it seems to me, which

would be likely to be in the region of $350.

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Although I would be inclined, if a reasonable necessity ).

were shown, to give the fifth respondent access to the trust fund

at this stage, on the figures presented to me, it does not seem

to be necessary that she do so. She is able to obtain the

deslred sum from the funds in the bank, and while that will cause

her to require a larger indemnlty If she ultimately wins the

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case, I do not think that is such an inconvenience	as to warrant
a variation of the injunction.

It follows that in both respects the application wlll be

refused, and I will not vary the in~unction further.

I order:

(1) that the applicatlon be dismissed;

( 2 ) that the costs of the first and second appllcants in

reslsting this application be costs of those applicants in

the principal proceedings, as between the applicants and the

fifth respondent.

: cedy tba+ this and the 5 preceding

:noes are a true copy cf the reasons for l

judgrrent hcreln	of His Honour	l .
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Mr. Justice Pincus ; .,

Associate

Dated 7- -86