II IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGTSTRY GENERAL DIVISION BETWEEN: WAREA PTY. LTD. AND: STRIPE LIMITED "NOT FOR DISTRIBUTION" ) QLD G6 of 1986 First Applicant Second Applicant AND: WATERLOO INDUSTRIES PTY LTD & ORS trading as DELTRITE FINANCTAL SERVICES First Respondent AND: WILLIAM LEONARD ARMSTRONG AND: LISA N. VIRBA Second Respondent Third Respondent AND: ROBEPT WAYNE COLLINS DATE OF HEAPING: DATE JUDGMENT DELTVEPED: COUNSEL: for the applicants for the fourth respondent wr ' " ~ : Vw | RECEIWED ~9 APR 1986 FED ani. COURT OF AUSTRALIA P'INSIPAL Fourth Respondent 26 March 1986 26 March 1986 Mr. A.d.H. Morris instructed by Cooper, Grace and Ward Mr, D.R. Boughen instructed by Cannan and Peterson J. A. LYONS ASSOCTATE TO PINCUS J. 26 March 1986 me ee IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY ~ QLD G6 of 1986 GENERAL DIVISTON } BETWEEN: WAREA 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 MINUTES OF ORDER JUDGE MAKING ORDER: PINCUS J. DATE OF ORDER: 26 March 1986 WHERE, MADE: BRISBANE 2HE COURT ORDERS THAT: 1. 2. NOTE: The application to vary the injunction be dismissed. The costs of the first and second applicants in resisting this application be costs of those applicants in the principal proceedings, as between the applicants and the fifth respondent. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. "pea Bou PATIO ap ye eae eye ote ea a Gre royce wet ae we i a el parest cpa - ose en ee ene sae re a, a ~ IN THE FEDERAL COURT OF AUSTRALTA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION ) ~ QLD G6 of 1986 BETWEEN: WAREA 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 PINCUS J. 26 March 1986 EX TEMPORE REASONS FOR JUDGMENT In this matter, an application is made to vary a Mareva injunction granted by me on 4 March 1986 and varied on 7 March 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 ey mee copra oe oe pope on See ee ee srspaarce vO aoe a $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 subject 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 available, there is nothing to support the suggestion that the vehicle 1s trust property or to support the application so far as 1t relates to the vehicle. The more important issue, however, has caused me more difficulty. The evidence is that on 5 January 1985 the second respondent assigned his interest in certain land to the fifth respondent for the sum of $l. 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 susceptible 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 parties desire to affect their tax position. The assignment of 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 $47,000. It may be, for all I know, that the money was beneficially owned by the fifth respondent. However, that seems unlikely, as she 1s 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 as "my former matrimonial home." The statement of claim, 1n its present form, makes the allegation that the fifth respondent received a sum of $48,793.16 and other amounts as a volunteer, or with knowledge of the circumstances in which the same were received by the first respondent from the applicants and says, in effect, that that money may be traced back to the transaction with the respondents, of which the applicant has complained. I think the present application on behalf of the fifth respondent would have been more attractive 1f there had been some explanation of the source of the $47,000. It would, no doubt, have been simple enough for the fifth respondent, who has made two affidavits, to say in one of them where the money came from, and I take the absence of explanation into account. jaan rere en 8 ese rr rent ge wrpy cer cqree = ae orn en 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 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: first 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 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 only right to protection at this stage must be on the assumption TET. VG a' Thike yay 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 desired 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 living expenses months to cover. The interest she is presently receiving, however, seems to me quite adequate to fill the gap between her income and her outgoings, subject to the difficulty to which her counsel drew attention, which is that the greater part of the interest is not to be paid until September. That produces the result that to meet current legal expenses, if her solicitors 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 1t 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 ah alin bee Sohal teal ee oe Te 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. 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 50. She is able to obtain the desired sum from the funds in the bank, and while that will cause her to require a larger indemnity 1f she ultimately wins the 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 will be refused, and I will not vary the injunction further. I order: (1) that the application be dismissed; (2) that the costs of the first and second applicants in resisting this application be costs of those applicants in the principal proceedings, as between the applicants and the Fifth respondent. } certify that this andthe S preceding rages are a true copy of the reasons for judgment herein of His Honour Mr. Justice Pincus Pte Lgow : Associate Dated 7-4-6 a se ee wea V tere perm ee 'A . Ta TT com ry a a em wee pee ore