The son of former Australian prime minister Malcolm Turnbull has lost a court battle to secure up to $8m he claims he was owed by a former business partner, with the court finding Alex Turnbull’s evidence was “inconsistent” and “unreliable”.
The younger Turnbull and Russel Pillemer, a longtime friend and former business partner of the former prime minister, had been in business together through investment firm Pengana Capital, but it ended in 2016 with Alex Turnbull seeking to exit the investment at a time when NAB was selling its stake in the company.
Pillemer repaid a $6m loan to Alex Turnbull, effectively ending the business relationship. Alex Turnbull said he accepted cash to repay the loan, rather than keeping shares in Pengana, as Pillemer had convinced him keeping shares would be of little value.
After the loan was repaid, Pillemer completed a merger in June 2017 which more than doubled the value of the company. Alex Turnbull that month messaged Pillemer on WhatsApp saying “we haven’t come out well from this”. Pillemer said he agreed and would be happy to get the Turnbull family “additional value” given the value he placed on the relationship with the Turnbulls.
Alex Turnbull launched a case in the New South Wales supreme court in 2020 – after Malcolm Turnbull was ousted as prime minister and left the parliament. The action, brought on behalf of family company Maurtray, owned by Alex and Daisy Turnbull, came after Alex Turnbull’s attempts to get what he said was a “fair” additional amount of up to $3m from Pillemer proved unsuccessful.
He sought repayment of $12m, less the $6.1m loan that was repaid by Pillemer, and damages of up to $8.6m. Justice Kate Williams on Friday ruled against Alex Turnbull, finding that Pillemer not disclosing the potential value or sale of the firm was not in violation of the loan agreement.
Williams found Pillemer would have had obligations of confidence to Pengana in his role as chief executive, and the Corporations Act would have precluded him from providing information to someone else – such as Alex Turnbull – who might gain an advantage.
“In my opinion, a reasonable businessperson would not have understood clause 19 of the loan agreement to require the borrower to extract from Mr Pillemer and pass on to the lender information that they had no entitlement to access, particularly given the risk that this may constitute a contravention … of the Corporations Act,” she said.
Pillemer had told the court at the time he was “very keen” to have the Turnbull family remain invested in the company for reasons including “my close relationship with [Malcolm Turnbull] and because I regarded them as very powerful people, including [Malcolm Turnbull] being the prime minister of Australia”.
Pillemer alleged that Alex Turnbull said he wanted out as soon as possible because the loan arrangement was “a major political risk” to the then prime minister.
Alex Turnbull denied this, saying he was mildly concerned about the financial media’s interest in the firm, but that was secondary to any upside. In WhatsApp messages between Pillemer and Turnbull in June 2017, Turnbull said he would have taken shares but the Australian Financial Review would have linked the investment company to the then prime minister.
“Thank god this is the last one. Opportunity costs of being PM aren’t low that’s for sure,” a message at the time stated.
Pillemer met with Alex Turnbull and the then prime minister in December 2017. Malcolm Turnbull told the court it was his son’s decision to accept the cash to get out of the investment – not something he had directed his son to do.
The court found that Alex Turnbull’s recollection of the events was “unreliable in several respects” and “inconsistent”, including about whether Pillemer had urged him to stay in the deal.
Williams said Alex Turnbull “lied in his attempt to explain away other communications with Mr Pillemer”. She said he “initially gave false evidence” around the timing of complaints raised with Pillemer, and was “persistently non-responsive in cross‑examination about whether he had given false evidence”.
“Given Mr A Turnbull’s false evidence about the subject matter of these communications in his first affidavit, and his willingness to lie about the communications in cross-examination where he thought that would assist Maurtray, I was reluctant to accept his self-serving evidence seeking to rationalise the communications in a manner consistent with Maurtray’s claims in these proceedings unless it was inherently plausible or consistent with other undisputed or reliable evidence,” Williams said.
The judge found Pillemer had some issues with reliability but rejected suggestions from Alex Turnbull’s lawyers that their client’s version of events should be preferred to Pillemer’s.
The judge on Friday found there was no issue with Malcolm Turnbull’s credibility, noting the former PM was described by the defendants as “an honest witness who made reasonable concessions and appropriately acknowledged the limitations of his memory given the passage of time since relevant events”.
Costs will be decided after further submissions which are due on 16 September.