Rambaldi v Mullins

IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 193 of 2014

JUDGE: MURPHY J DATE: 28 march 2014 PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 Before the Court is an urgent application for interlocutory relief by the applicants, Gess Rambaldi and Andrew Yeo as trustees of the property of George Alex, a bankrupt ("the Trustees"). The application seeks that monies shortly due to be paid to the JA Investment Trust by the second to eighth respondents instead be paid into Court so as to preserve the status quo while the Trustees conduct further investigations. 2 The application was short served on the basis that it was urgent, and I accept that it is. There was no appearance for the various respondents who all reside interstate. Innis Cull of ICA Lawyers filed an affidavit sworn 28 March 2014 in which he deposes that on that date he advised the parties of the urgent application, providing copies of the application and the interlocutory orders sought. He deposes that: (a) the first respondent, Teagan Mullins, is represented by Ms Subeska of Astoria Lawyers but she has said that Ms Mullins would need to engage new lawyers given the complexity of the matters. Ms Subeska was not in a position to appear at the interlocutory hearing; (b) the second, third, fourth and seventh respondents, namely Civil Pacific Services Group Pty Ltd, Global HR Group Pty Ltd, Global Civils Group (NSW) Pty Ltd and Kevin McHugh are represented by Patrick Moloney of Maloney Lawyers. A letter from Mr Maloney of 28 March 2014 is in evidence in which Mr Maloney indicates his clients' agreement to an interim order that monies due to be paid by them are instead paid into Court. The letter opposes aspects of the form, but not the substance, of the other interim orders sought; and (c) the fifth, sixth and eighth respondents, namely GHR Custodian Pty Ltd, James Byrnes and Angelo Russo are represented by Alistair McKeough of Whittens Lawyers. Mr Cull states that, without admission, McKeough's clients consent to the orders sought. 3 Mr Rambaldi filed an affidavit in support of the application sworn 28 March 2014 which includes amongst its attachments an affidavit made 20 May 2013 by the seventh respondent, Kevin John McHugh, in proceedings in the NSW Supreme Court. 4 The Trustees assert that the act of bankruptcy relied upon in the creditor's petition occurred on 20 July 2009, and Mr Alex was made bankrupt on 19 April 2011. They contend that the assets vested in them as trustees of the property of Mr Alex include rights held in the name of Joseph Antoun (deceased) as trustee for the JA Investment Trust ("the Trust") pursuant to a deed made between the respondents herein on 22 October 2013 ("the October Deed"). 5 The Trustees submit that the Trust is in fact a sham designed by Mr Alex and Mr Antoun to conceal Mr Alex's interest under the October Deed and in a labour hire business in Queensland ("the GHR business"). 6 The terms of the October Deed provide that the respondents were required to pay $5 million to Mr Antoun as trustee of the JA Investment Trust. The October Deed was made the same day as the settlement of the proceedings in the NSW Supreme Court brought by Mr McHugh, and involves largely the same parties as those proceedings. The Trustees contend that the Deed was made in respect of the dispute in the NSW Supreme Court proceedings and concerns Mr Antoun and Mr Alex's interest in the GHR business. 7 The October Deed provides for payment of $5 million by five instalments commencing on 22 October 2013. The first two instalments were $1 million on 22 October 2013, and $350,000 on 12 November 2013. The third instalment of $1.15 million due under the Deed is required to be paid to the JA Investment Trust on or before Monday, 31 March 2014, that is, the next working day after the hearing before me. 8 The Trustees contend that the October Deed replaced earlier deeds between the same parties on 11 March 2013 ("the March Deeds") under which Mr Antoun as trustee of the purported Trust sold his interest in the GHR business to the respondents, Jim Byrnes and Kevin McHugh and their associated corporate entities. 9 On the Trustees' contentions the consideration payable under the March Deeds was $12 million, and the Deeds falsely attributed an amount of $6.35 million to Mr Alex in respect of defamation. Defamation compensation is exempt property in a bankruptcy, and the amount payable to him stands in contrast to the maximum damages amount for non-economic loss in a defamation claim in New South Wales of $355,500: s 35 of Defamation Act 2005 (NSW); Gazette No 65 of 31.5.2013, p 2307. 10 The Trustees contend that the true nature of the payment due to Mr Alex under the March Deeds was consideration for his interest in the GHR business, and that under the October Deed the respondents are dealing in Mr Alex's property which is vested in the Trustees. 11 The factual position is complicated by the fact that Mr Antoun was shot and killed on 16 December 2013, and two men have been charged with his murder. 12 On 17 March 2014 Ms Subeska appeared on behalf of the Mr Antoun's estate at a public examination into the affairs of Mr Alex. She advised the Registrar that Mr Antoun's former spouse, Ms Mullins, may be the trustee of the estate. Mr Rambaldi deposes that he believes that Ms Mullins is either the executor of Mr Antoun's estate, or his estate's lawful representative being entitled as his spouse to apply to Court for letters of administration. It seems likely that Ms Mullins will also be the new protector of the purported Trust. Clause 26 of the JA Investment Trust deed provides that, unless Mr Antoun has appointed someone by Will or Deed, upon his death the legal personal representative of Mr Antoun becomes protector. 13 Although the JA Investment Trust deed provides that only his family members are beneficiaries, the March Deeds states that Mr Alex is one of the beneficiaries of the JA Investment Trusts. I make no finding in this regard, but note that it appears on the face of the March Deeds that Mr Alex and Mr Antoun were parties to them, initialled each page, and took security for performance of them. In his affidavit of 20 May 2013 Mr McHugh swears that Mr Alex and Mr Antoun were owners and controllers of the GHR business and other labour hire companies. 14 The Trustees seek interim orders preserving the status quo by: (a) requiring that any payments made under the October Deed by the respondents be paid into the Federal Court Litigant's Fund by Ms Mullins and any trustee of the JA Investment Trust; and (b) by restraining the respondents from otherwise dealing with, disposing or encumbering the amounts received. Upon the making of that payment into the Federal Court Litigant's Fund, there will in effect be an interpleader between the Trustees and the Antoun interests as to those monies. 15 I make it clear that I make no factual findings. This is an urgent application and the respondents have not had the opportunity of being heard. I set out the matters above on the basis of the Trustees' contentions and my review of the materials attached to the affidavit of Mr Rambaldi. The respondents will soon have an opportunity to be heard and may put an entirely different complexion on these matters. 16 It appears on the information presently before me that there is a serious question to be tried as to: (a) whether Mr Antoun's rights (as trustee of the purported Trust) under the October Deed are held by him on trust for Mr Alex, or for himself and Mr Alex; (b) whether those rights have vested in the Trustees as after-acquired property of the bankrupt estate of Mr Alex pursuant to sections 58, 115, 116 of the Bankruptcy Act 1966 (Cth) ("the Act"); alternatively (c) whether amounts payable under the October Deed are the traceable proceeds of the bankrupt's interests under the March Deeds and/or the Mr Alex's interest in the GHR companies. 17 On the basis of the information presently before me it appears that there is a serious risk that assets that may belong to the bankrupt estate of Mr Alex will not be capable of being recovered if the orders are not made. It therefore appears that the balance of convenience favours the grant of an injunction on an interim basis. This will preserve the status quo pending hearing from the respondents. 18 I have brought the matter back on for hearing upon 14 April 2014 at which time any party opposing the order can be heard and the orders can be vacated if appropriate. 19 I make the orders sought, including the injunctive relief, on the basis that they are necessary for the purpose of carrying out and giving effect to section 30(1)(b) of the Act. The applicants provide the usual undertaking as to damages. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Murphy.