Woodward v Woodward

[2013] NSWSC 1664

Supreme Court

New South Wales

Medium Neutral Citation:

Woodward v Woodward [2013] NSWSC 1664

Hearing dates:

4 November 2013

Decision date:

04 November 2013

Jurisdiction:

Equity Division

Before:

Darke J

Decision:

Order that for the period up to and including 3 December 2013, the first and second defendants be restrained (and in the case of the second defendant by itself, its employees or agents) from:(a) operating any bank account of the Woodward Family Trust other than by depositing monies into such account; and

(b) taking any steps to remove any assets of the Woodward Family Trust from Australia.

Catchwords:

PRACTICE AND PROCEDURE -Judgments and orders - Interlocutory injunctions - Freezing orders - Threatened removal of trust assets from Australia - Balance of convenience - Injunction granted

Cases Cited:

Australian Broadcasting Corporation v O'Neill (2006) HCA 46; 227 CLR 57

Category:

Interlocutory applications

Parties:

George Lloyd Woodward (Plaintiff)Grant Nicholas Woodward (First Defendant)
Highland Grazing Company Pty Ltd (Second Defendant)

Representation:

Counsel: M. Bradford (Plaintiff)G. Carolan (First and Second Defendants)
Solicitors: Carroll & O'Dea Lawyers (Plaintiff)
Green & McKay (First and Second Defendants)

File Number(s):

SC: 2013/322337

Publication restriction:

Nil

Judgment - EX TEMPORE

1. These proceedings were commenced by Summons on 25 October 2013 following an approach by the plaintiff to the Duty Judge. On that occasion time for service was abridged and the matter adjourned to the Duty Judge list today.

1. The plaintiff, for whom Mr Bradford of counsel appeared, is a 67 year old self-employed businessman. He is the father of the first defendant, who is the sole shareholder of the second defendant. The first defendant is also the sole director of the second defendant, and has been so since 23 November 2010. The second defendant is alleged to be the trustee of a discretionary trust, which was established by the plaintiff in early 2008.

1. It appears from an affidavit of service that personal service was effected upon the second defendant in accordance with the orders made on 25 October 2013, but service has not been able to be effected upon the first defendant. I was informed by Mr Carolan of counsel, who appeared today for the defendants, that the first defendant is presently in Thailand. Mr Carolan informed the Court that his instructing solicitors, who have not yet filed an appearance, have not had the opportunity to obtain detailed instructions from the first defendant and hence the second defendant company which he controls.

1. The plaintiff seeks an order today in accordance with paragraph 7 of the Summons which is in effect an interlocutory injunction which would prevent the defendants from operating a certain bank account held by the second defendant with the National Australia Bank, pending the final hearing of the Summons. The plaintiff seeks various other orders in the Summons, including that the first defendant be removed as a director of the second defendant, that there be an account and inquiry in respect of the dealings of the trust, and that the defendants pay the plaintiff any amount found to be due to him upon the taking of such an account.

1. The defendants oppose the application for interlocutory relief and instead suggest that the matter be adjourned for about a month, by which time it is expected that the first defendant would have returned to Australia and provided detailed instructions.

1. At the hearing today Mr Bradford read an affidavit sworn by the plaintiff on 23 October 2013, and an affidavit sworn by Ms Belinda Maiden, solicitor, on 17 October 2013. The evidence, which was read without objection, establishes the following matters.

1. The second defendant was registered on 12 February 2008, and on 19 February 2008 the plaintiff paid amounts totalling $500,010 into a National Australia Bank account (Port Macquarie branch) in the name of The Woodward Family Trust. It appears that the second defendant is the trustee of that trust. There is no evidence of any other assets of the trust.

1. There is also no evidence of the terms of the trust. Attempts by the plaintiff to obtain a copy of the trust deed, including by the issuing of a notice to produce upon the second defendant, have been fruitless. However, the plaintiff deposes that it was his intention that the $500,010 would be invested and held "for the benefit of my grandchildren".

1. Initially the plaintiff and his wife were directors of the second defendant along with the first defendant. However, as noted earlier, since 23 November 2010 the first defendant has been the only director of the company.

1. There does not appear to have been any difficulties within the family in relation to the trust until April 2013 when the plaintiff's other son, Mark, was killed when he fell from a building in Thailand. Mark had travelled to Thailand with the first defendant. In the aftermath of that tragic event great bitterness has erupted between the plaintiff and the first defendant.

1. It is not necessary to go into the details of this, still less to express any view as to where any fault for the situation lies. Rightly or wrongly the plaintiff believes that the first defendant failed to "look after Mark" and therefore has to accept some responsibility for his death.

1. The bitterness of the situation led the first defendant to seek (and it seems, obtain) an apprehended violence order against the plaintiff based on alleged threats to harm him, and the plaintiff for his part alleges that the first defendant, from as early as 14 May 2013, has made threats to take all the money which is held in trust to Thailand.

1. There is evidence that the first defendant is in a relationship with a woman from Thailand and they regularly go there for extended periods.

1. There is also evidence which suggests that in May 2013 the first defendant consulted a solicitor about the trust and that at about that time the plaintiff and his wife were removed from the list of authorised signatories for the National Australia Bank account.

1. The plaintiff first consulted solicitors in relation to the matters concerning the trust in June 2013. As was candidly conceded by Mr Bradford, the matter proceeded very slowly thereafter until the Court was approached on 25 October 2013.

1. During that period efforts were made to obtain a copy of the relevant trust instrument from the second defendant or the firm of accountants which appears to be the accountants for the second defendant. These efforts were unsuccessful. On 23 August 2013 the plaintiff's solicitors sought undertakings from the defendants in relation to dealing with the trust funds, but no undertakings were given. Counsel was briefed in early September 2013.

1. Mr Carolan submitted that the evidence adduced by the plaintiff failed to establish any foundation for the plaintiff's standing to bring the proceedings. Not only was there no evidence of the terms of the trust, the plaintiff's evidence suggested that the trust was established for the benefit of his grandchildren. Mr Carolan also submitted that the application was unmeritorious in the light of the threats said to have been made by the plaintiff to the first defendant and which grounded the apprehended violence order. Finally, Mr Carolan pointed to the plaintiff's delay in seeking legal advice and in then bringing the matter before the Court.

1. Mr Carolan informed the Court that the first defendant was expected to return to Australia on about the 19th of this month and that a conference with him was to take place shortly thereafter. He suggested that the matter be adjourned for about one month, by which time the defendants would have provided detailed instructions. He confirmed that he had no instructions to offer any undertakings which would operate in the meantime.

1. Mr Bradford submitted that, notwithstanding the delay, interlocutory relief was appropriate in view of the threat to remove trust assets to Thailand, which he described as a real threat which gave rise to a risk of permanent loss of the trust funds. In answer to the submission made by Mr Carolan that the plaintiff had no standing to bring the proceedings, Mr Bradford pointed to the failure on the part of the defendants to produce a copy of the trust instrument and the failure to assert a lack of standing in circumstances where it must be accepted that the defendants are aware of the terms of the trust, including as to the rights of the plaintiff as the creator of the trust.

1. Whilst he accepted that there was delay, Mr Bradford submitted that there was no suggestion that a restraint upon the operations of the National Australia Bank account, especially if it was for a relatively short time, would cause any inconvenience.

1. The evidence relied upon by the plaintiff on this application today, despite its rather sketchy nature, is sufficient in my view to establish that the plaintiff, who established the trust and provided its funds in 2008, may well have standing to make complaints about the administration of the trust. That conclusion arises not only from the circumstances in which the trust was brought into existence but also from the fact that the trustee of the trust has, without giving any reasons, declined to accede to the plaintiff's requests for a copy of the trust instrument.

1. Further, the evidence of the threats made by the first defendant to remove the trust assets from Australia gives rise to serious issues as to the suitability of the second defendant, which is now under the sole control of the first defendant, to be or remain a trustee of the trust.

1. Overall, whilst the plaintiff has not established anything like what could be described as a strong prima facie case, I think that the plaintiff has shown a sufficient likelihood of ultimate success to justify, at least for a short period, the preservation of the status quo (see Australian Broadcasting Corporation v O'Neill (2006) HCA 46; 227 CLR 57 at [65]).

1. It seems to me also that the balance of convenience clearly favours making orders to preserve the status quo for the time being. As Mr Bradford submitted, there is no claim that the making of an interlocutory injunction for a short period will cause any inconvenience at all.

1. In these circumstances, I am prepared to make an order (provided the usual undertaking as to damages is offered) that for a period, say up to and including about 3 December 2013, the first and second defendants be restrained (and in the case of the second defendant by itself, its employees or agents), from operating any bank account of The Woodward Family Trust other than by depositing monies into such account, and from taking any steps to remove any assets of The Woodward Family Trust from Australia.

1. I will hear the participants as to the form of orders to be made in accordance with my reasons, but in the interim request that the parties confer and try to reach agreement on the form of orders. I would propose to stand the matter over to the Registrar's list on about 3 December 2013, and I am minded to make an order that the costs of the application for interlocutory relief be costs in the cause.

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Decision last updated: 12 November 2013