Irwin v Pamplin

Interlocutory Injunction Application

1. The present application was prompted by the issue of lapsing notices on the caveats on the sixteen properties to which I have referred. Those notices were served in December 2020. The application was made by way of notice of motion filed on 11 January. It initially came before Slattery J in the vacation list. His Honour made interim orders extending the caveats to allow the application to be fully argued. Those interim orders have been extended up until now.
2. The application sought orders with broader effect than just maintaining the caveats over the sixteen existing properties. If granted, the orders would prevent the defendants from transferring, alienating, charging, disposing of, in anyway diminishing the value of, or otherwise dealing with, various specified assets or classes of asset. I will refer by way of shorthand to the restriction as one which would prevent "dealing" with the assets in question.
3. In summary, there were five elements to the application. First, orders were sought against Marie to prevent her from dealing with the shares in the various companies which she owns, or with any of the four existing properties which she directly owns.
4. Second, orders were sought against each of DGP; its subsidiary, POA; Halcrows; Mircon; its subsidiary Mircorp; and NMOS, from dealing with any of its assets, except in the ordinary course of business.
5. Third, a specific order was sought against DGP preventing it from dealing with any of the existing properties which it owns, or the shares in POA, or "units" of the DGP Family Trust or the Pamplin Family Superannuation Fund.
6. Fourth, orders were sought against each of Halcrows and POA from dealing with the existing property that it owns, or, in POA's case, with the units in the unit trust.
7. Fifth, orders were sought against each of Halcrows and POA (but not DGP) from dealing with any real property (that is, not limited to the existing properties), except on 14 days' notice.
8. In the course of argument, for reasons which will emerge in due course, it became clear that the application for orders restraining DGP as trustee from dealing with any of its assets, or the existing properties, was too ambitious. The notice of motion was amended so as to substitute more limited relief.
9. The orders now sought against DGP would prevent it from distributing any income or capital to beneficiaries of the DGP Family Trust; from delegating the exercise of any of its powers as trustee; from appointing any other trustee of the Trust; from revoking, adding to or varying the terms of the Trust; and from winding the Trust up. This would otherwise leave DGP free to deal with the assets of the Trust, including the existing properties owned by DGP. But counsel for Ann continues to press for the wider restrictions against the companies other than DGP as set out at [26] and [29] above.
10. In support of the application, counsel for Ann relied on her principal affidavit in the proceedings. There was also a supplementary affidavit dealing with the balance of convenience. In opposition to the application, counsel for the defendant similarly relied on an affidavit dealing with the merits from Marie, and a further affidavit from Marie dealing with the balance of convenience. There was no evidence from Lionel.
11. As disclosed by her affidavit on the merits, Ann's evidentiary case is two-fold. First, Ann gives evidence of conversations which she had with Adrian in which, according to her version of events, Adrian recounted making the agreement which is the foundation of Ann's claim in these proceedings. Ann also deposes to a conversation with Lionel in which he referred to the agreement.
12. I interpolate that it is not clear on Ann's case exactly when the agreement was made. It is said to have been concluded over a period of time between around 2000 and 2002. But the particulars in support of Ann's case refer to the incorporation of DGP and the establishment of the DGP Family Trust as having occurred at about the same time as the agreement was first made, and partially putting that agreement into effect.
13. The second part of Ann's evidentiary case relies on documents. The most important of these are documents obtained from an insurance broker who was consulted by Adrian in 2013 a few months before he died. The documents include a description of the business structure through which Adrian operated, presumably as a result of instructions obtained from Adrian and perhaps other members of his family. The documents refer to assets of Adrian and Lionel being held by Marie for "asset protection purposes".
14. Marie's affidavit does not directly deny the arrangement described by Adrian in the conversations recorded by Ann in her affidavit. As I have already mentioned, there was no evidence from Lionel on the application; thus the conversation between Adrian and Lionel referring to the agreement is not denied for the purposes of this application.

Prima facie case

1. Plainly the evidence which I have described, if accepted, would establish an arrangement under which Adrian and Lionel would use their mother to warehouse their assets. Such an arrangement is consistent both with prior and subsequent events which are not, for the purpose of this application, in dispute.
2. Accordingly, there is a prima facie case that the assets which are the subject of the application, and which are held by Marie, are held by her on the terms of a trust under which Adrian had a one half share. Subject to other factors, that provides a basis for an interlocutory injunction against Marie so as to preserve the assets pending the resolution of the dispute as to their beneficial ownership at trial.
3. The case for an injunction directly against the companies themselves is weaker. As I have mentioned, it is part of Ann's case that the companies were subject to direct trust obligations in favour of Lionel and Adrian, but this has its difficulties.
4. In effect it would mean that, in circumstances where the companies are themselves assets of Marie, there will be superimposed an additional set of trust obligations directly on them. This would be unnecessary to effectuate the commercial purpose of the arrangement which Ann alleges existed. That purpose could have been achieved more simply by recognising a trust over the companies themselves. There is no evidence of any specific intention to create such a parallel set of obligations on the companies.
5. The language of the individuals involved, and of the insurance brokers after the event, is general in terms. It does not betray any appreciation of the difference between an arrangement under which Marie was to hold the shares in companies for the benefit of her sons, and an arrangement where in addition the companies themselves were to hold their assets for Adrian and Lionel.
6. This difficulty is especially acute so far as DGP is concerned. On Ann's case DGP was established with the benefit of advice of both accountants and solicitors. The decision to place the assets in a company which was then to be the trustee of a discretionary family trust was clearly a conscious one based on instructions.
7. This is reinforced by another piece of evidence upon which Ann relies in support of her case on the merits. Ann says that when one of the properties at Kenthurst was acquired in 2005 she was told by Adrian that it was being held by Marie for himself and Lionel. That of course supports Ann's overall case. But according to her affidavit, Adrian told her that the accountant's initial advice was to include the property as an asset of the family trust. The accountant then changed his mind (for reasons Ann does not report, and which Adrian may not have known) and told Adrian and Lionel to put the property in their mother's name directly.
8. This evidence suggests an ongoing consciousness that assets within the DGP Family Trust were held in a structure with its own specific features and presumably for specific purposes. It seems to me most unlikely that the sort of generalised statements reported by Ann would prevail over specific intentions and instructions taken with the benefit of legal and accounting advice.
9. None of this undermines the fact that the shares in DGP itself would be held, although nominally in Marie's name, on trust by her for Adrian and Lionel. Indeed, having regard to the importance of control over the trustee in a discretionary family trust structure, it would tend to reinforce that conclusion. But I think it is unlikely, on the evidence I have seen so far, that assets held by DGP were held on trust for Lionel and Adrian directly as Ann's case requires. That would involve displacing the discretionary trust's structure which had been consciously and deliberately chosen.

Balance of convenience

1. The evidence before me showed that some of the existing properties are being developed. This has necessitated the temporary lifting of the caveat to allow alterations to be made to the title of some of them. Otherwise there is no evidence of any need or wish on Marie's part to dispose of any of the shares in the companies which are the subject of the claim, or to deal with any of the existing properties which she owns.
2. Counsel for the defendants complained that there was a lack of evidence from Ann demonstrating that she had sufficient resources to meet the undertaking as to damages. But on the other hand I found the evidence from Marie of potential damage from the grant of interlocutory orders vague and unimpressive. That evidence spoke in general terms about the need to fund the costs of the litigation but, as I have said, there was nothing specific in it.

Delay

1. Counsel for the defendants submitted that there had been a lengthy and unexplained delay by the plaintiff in bringing forward this application. Strictly speaking that is correct. Ordinarily the Court would not contemplate for a moment granting interlocutory injunctions more than two and a half years after a case had begun. But I do not think the Court can overlook the caveats.
2. The use of caveats to achieve, in effect, a form of interlocutory restraint may be problematic. In this case, I think that the argument for restricting dealings with the existing properties (and in particular the properties owned by companies) was never a strong one. The plaintiff's best case for interlocutory relief was for restrictions on dealing with the shares and exercising the powers of the trust controlled by Marie.
3. But I cannot overlook the fact that the solution to this problem, from the defendants' point of view, always lay in the defendants' hands. They could have given notice requiring the lapsing of the caveats at the outset and thereby required the plaintiff, in effect, to make an application for interlocutory relief. They chose not to do so.
4. In effect there was an interlocutory regime constituted by the caveats and both parties were prepared to go along with that for a period of more than two years. In these circumstances I think that delay is a more neutral factor.

Conclusions

1. Bringing these factors together I think it is clear that I should not make orders restraining DGP from dealing with assets of the DGP Family Trust. As I have indicated, the plaintiff's prima facie case is weak to non‑existent. It is also relevant that DGP does not claim to hold the assets otherwise than on trust. The dispute is whether the trust is the one asserted by Ann, or is the discretionary trust in the trust deed. DGP has operated under the trust deed for many years now and I see no reason to think that it is likely to seek to dissipate the relevant assets.
2. Although the other companies' positions are not quite as strong, on balance I do not think I should make orders against them either. But I do think it is proper to make orders against Marie concerning assets in her name. There is a clear prima facie case against her and there is no apparent prospect of interfering with any business activity, since the assets in question, to the extent they have any value at all, appear to be passively held.
3. Accordingly, I propose to make an appropriately worded order restraining Marie from dealing with the shareholdings and the directly owned properties that I have identified earlier in this judgment. I think I should also make an appropriately worded order restraining Marie from exercising her powers as shareholder or director of DGP in such a way as to make capital distributions or to alter the structure or control of the trust.
4. These orders will not directly apply to Lionel. But once he is made aware of the orders against Marie, then if he were to assist her in breaching them he would himself be liable for contempt. I will consider whether any formal direction is required to ensure that Lionel is informed of the terms of the orders which I make. (The parties addressed on the form of orders and agreed to submit a minute of order). 25 March 2021
5. The parties have been unable to agree on the form of orders to give effect to my judgment of 9 March. Counsel for the defendants has circulated a proposed minute of order which is agreed by counsel for Ann so far as it goes, but counsel for Ann seeks the inclusion of some additional restraints on the defendants.
6. Counsel for the defendants objects to what he characterises as an expansion by the plaintiff in the orders that are sought. Counsel submits that the proper course would have been to raise those issues at an earlier point and it is now too late. Counsel referred me to the decision of the High Court in Autodesk v Dyason (No 2) (1993) 176 CLR 300.
7. Autodesk deals with the principles which apply when a party seeks to vary a judgment on the basis that something has been overlooked by the court. I do not think those principles directly apply here. I have not yet made final orders.
8. The present application is also an interlocutory one and there is more scope in such circumstances to ask the court to reconsider its position. Although on an interlocutory hearing it is expected that the parties will bring the whole of their cases forward, the Court will be more tolerant of a party who, before the making of final orders, seeks to raise some further or related matter than the Court would be where judgment is delivered following a trial at which there have been full submissions.
9. Therefore, I propose to deal on the merits with the additional points raised by counsel for Ann.
10. The first of those points is that counsel for Ann wishes to have the Court make specific orders concerning the exercise by Marie on behalf of DGP of powers going beyond the appointment of capital to the beneficiaries (which counsel for the defendants accepts). In particular, restrictions are sought on Marie from otherwise transferring assets of the trust to, or at the direction of, any beneficiary; delegating the exercise of all or any of DGP's powers or authorities to anyone else; appointing any other trustee of the trust; revoking or varying the terms of the trust or winding up the trust.
11. In my view, it is appropriate to make these orders (indeed I foreshadowed the making of such orders at [54] above). My intent was to allow the ordinary operation of the trust to continue. But unless orders of the type which I have mentioned are made, there is a possibility of the structure or control of the trust being altered in a way which would jeopardise Ann's ability to recover the assets if she is successful. The protection which I consider appropriate pending the hearing of Ann's claim would be incomplete.
12. The next restriction which is sought is one on the appointment of income as distinct from capital. Counsel for Ann seeks an order restraining any distribution of income without giving 14 days' notice, specifying the amount proposed to be paid and the identity of the proposed recipient. I interpolate that the Trust Deed provides that the income for each year is to be shared by the surviving nominated beneficiaries, who are currently Marie and Lionel (Adrian having died) but DGP as trustee has a discretionary power to appoint the income instead as it sees fit among the nominated beneficiaries, or any other beneficiaries it may nominate.
13. As I have already stated, my intent in making the orders is not to interfere with the day to day administration of the trust or the conduct of its businesses and investment activities. Given Ann's delay in pursuing this application, and the other factors to which I have referred in an earlier stage of this judgment, her case for restraining the distribution of income from the trust is weak. But the order sought only involves a "light touch". All it requires is notice.
14. By making the order the Court does not actually prevent the distribution of income. It should not be assumed merely because the order has been made that if it results in an application to restrain the exercise of the trustee's powers to distribute income, that application will necessarily be successful. However, given the potential for capital gains to be treated as income and streamed, I think it is appropriate to give Ann at least this minimal level of protection.
15. Thirdly, counsel for Ann seeks an order restraining Lionel from exercising his powers as appointor under the Trust Deed. These powers derive from a supplementary deed dated July 2017. Pursuant to that deed, the original appointor of the trust, who appears to have been an accountant involved in its formation, resigned and was replaced by Lionel. I expect that the Trust Deed gives the appointor powers over the trust, and in particular, the power to appoint a new trustee.
16. Counsel for the defendants objected strenuously to this particular restriction. Counsel submitted that Lionel had not even been made a respondent to the application. However, although not named in the original notice of motion, Lionel is named as a party affected in the amended form of the notice of motion which was filed prior to the hearings before me in February. The deed itself only emerged after the February hearings.
17. As with the orders concerning Marie's control over the trust, the protection which I consider appropriate for Ann, pending the resolution of her claim, would be incomplete if the relief sought were not granted. No reason has been offered for why Lionel would have any compelling need to exercise his powers as appointor in order for the ordinary administration of the trust and its businesses to continue. Accordingly, I propose to make the order sought.
18. Finally, there is the question of the caveats which were earlier lodged over the properties identified in my judgment. The parties agree that as a consequence of my judgment, the caveats lodged over the land held by the companies should be withdrawn or discharged. Counsel for Ann however seeks to have the caveats over the land owned by Marie herself maintained.
19. I do not think that this is a very important dispute. My orders in effect cover the same ground as the caveats. The only significance the caveats now have is as a publicly available indication of the claims that are made against the properties held by Marie.
20. Ann's application should have been made at a much earlier time. The lodging of caveats over the properties instead was not appropriate, but it was not disputed on the defendants' behalf. Whilst continuation of the caveats is unlikely to be of any great practical significance, their existence gives rise to no additional disadvantage to Marie.
21. Counsel for Ann specifically acknowledged that any loss that Marie might suffer as a result of the extension of the caveats would fall within the undertaking as to damages. In the circumstances I do not propose to require those caveats to be withdrawn or discharged. (Counsel agreed to submit a further minute of order). 29 March 2021
22. The orders of the Court are: 1. Upon the plaintiff by her counsel giving to the Court the usual undertaking as to damages, ORDER that until further order, the first defendant, by herself, her servants and agents: 1. be restrained from: 1. transferring; 2. alienating, 3. charging; 4. encumbering; 5. disposing of; 6. in any way diminishing the value of; or 7. otherwise dealing with, her shares, or any interest in her shares, or any shares over which she asserts the power, directly or indirectly, to dispose of or deal with as if she was the owner thereof, in Mircon Pty Ltd (the third defendant), Dennis G Pamplin Pty Ltd (the fourth defendant), Halcrows Investments Pty Ltd (the fifth defendant), NMOS Pty Ltd (the sixth defendant) and OSCO (Australia) Pty Ltd (the ninth defendant); 1. be restrained from: 1. transferring; 2. alienating; 3. charging; 4. disposing of 5. encumbering; 6. in any way diminishing the value of; or 7. otherwise dealing with the following real property: A. the land described as folio identifier 3/259725, otherwise known as 235 Pitt Town Road Kenthurst; B. the land described as folio identifier 1/1189317, otherwise known as 312 Pitt Town Road Kenthurst; C. the land described as folio identifier 2/1189317, otherwise known as 312A Pitt Town Road Kenthurst, and/or D. the land described as folio identifier 2/587185, otherwise known as 317 Pitt Town Road Kenthurst. 1. Upon the plaintiff by her counsel giving to the Court the usual undertaking as to damages, ORDER that until further order, the first defendant, by herself, her servants and agents, and as an officer and shareholder of Dennis G Pamplin Pty Ltd, be restrained from: 1. exercising any power of appointment as to any income (without first giving 14 days' notice to the plaintiff in writing as provided for in order 3) or any power of appointment as to any capital of the Dennis G Pamplin Family Trust (hereafter the Trust), to any beneficiaries from time to time thereof, or otherwise applying or setting aside such income (without first giving 14 days' notice to the plaintiff in writing as provided for in order 3) or capital to or for the benefit of any beneficiary of the Trust; 2. otherwise transferring to or at the direction of any beneficiary of the Trust, any other asset of the Trust or otherwise applying or setting aside such assets; 3. delegating the exercise of all or any of its powers and discretionary authorities to any third party; 4. appointing any other trustee of the Trust; 5. revoking, adding to, or varying the Trust; or 6. winding up the Trust. 1. ORDER that the notice referred to in order 2 shall be in writing to the plaintiff's solicitor and shall inform him of the: 1. amounts proposed to be paid from income; and 2. identity of the proposed recipient. 1. Upon the plaintiff by her counsel giving to the Court the usual undertaking as to damages, ORDER that, until further order, the second defendant, Lionel Joseph Pamplin, be restrained from exercising any rights as appointor of the Trust. 2. NOTES the undertaking given by the first defendant that she will provide a copy of these orders to Lionel Joseph Pamplin. 3. ORDER, pursuant to Real Property Act 1900, s 74MA that the plaintiff withdraw caveats AN267157 and AN267111 by 5pm Thursday 1 April 2021. 4. ORDER that the parties' costs of the motion be their respective costs in the cause. 5. ORDER that the motion otherwise be dismissed. 6. ORDER that orders 1 and 2 of the orders made on 1 March 2021 are discharged and otherwise dissolved.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 29 March 2021