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Bird v Bird (No 4)

Bird v Bird (No 4)

Case [2012] NSWSC 648 5 June 2012

Executor Liability

Breach of Trust

Causation

Limitation of Actions

Unequivocal Words or Acts

Statutes of Limitation

Succession Law

Equity

Limitation Periods

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Supreme Court

New South Wales

Medium Neutral Citation: Bird v Bird (No 4) [2012] NSWSC 648
Hearing dates: 5 - 13 March; 15 - 23 March 2012
Decision date: 05 June 2012
Jurisdiction: Equity Division
Before: Rein J
Decision:
1. On the plaintiff's claim against the defendants, judgment for the defendants.
2. On the defendants' cross claim against the plaintiff, judgment for the plaintiff.
3. On the first and second defendants' cross claim against the third defendant, judgment for the third defendant.
4. On the third defendant's cross claim against the first and second defendants, judgment for the first and second defendant.

Catchwords:
SUCCESSION - executors or administrators - proceedings by executors and administrators - beneficiary entitled to undertake claim if executors do not do so - beneficiary cannot be in better position than estate

POWERS OF ATTORNEY - breach of limitation on donee using power for own benefit - ratification of breach by principal - onus on defendant to establish ratification by unequivocal words or acts - onus on defendant to prove that principal had knowledge of all material circumstances - evidence deficient in that conversations with principal said to establish ratification were in very general terms

SUCCESSION - executors and administrators - rights, powers and duties - executor liability in devastavit for wilful default or want of prudence - where executors had or ought to have had knowledge of potential claim for misappropriated funds - executors entitled to take into account unpaid amounts to which potential defendant would be entitled - executors entitled to take into account fact that proceeds of misappropriated funds were paid to or for the benefit of residuary beneficiaries - executors not in breach of trust for failing to pursue beneficiary of legacy or withholding legacy from that beneficiary

EQUITY - claim of third party liability for breach of trust or fiduciary duty - knowing receipt - where knowledge of breach not established - where knowledge of receipt of property acquired through breach not established - third party not liable

LIMITATION OF ACTIONS - contracts, torts and personal actions - when time begins to run - cause of action accrues on suffering of loss or damage - trusts and deceased estates - where estate had potential claim for misappropriated funds against fourth defendant - devastavit claim against the executors accrued when executors failed to withhold legacy to the fourth defendant

LIMITATION OF ACTIONS - application of statutes of limitation - Limitation Act 1969 - Barnes v Addy claim brought by beneficiary in lieu of the estate can be characterised as remedy of conversion of trust property under s 47(1)(b) - applicable limitation period is 12 years
EVIDENCE - witnesses - lies told by witnesses - no inference to be drawn that the defendants understood that the powers of attorney were limited by reason of lies that they had not read the powers of attorney
Legislation Cited: Conveyancing Act 1919
Family Provision Act 1982
Limitation Act 1969
Powers of Attorney Act 2003
Succession Act 2006

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Bird v Bird (No 4)

Details

AGLC: Bird v Bird (No 4) [2012] NSWSC 648
Case: [2012] NSWSC 648
Decision Date: 05 June 2012

CaseChat Overview and Summary

The parties involved in Bird v Bird (No 4) were the executors and administrators of an estate, who were being sued by a beneficiary for alleged breaches of fiduciary duties and trust. The dispute centred around the handling of funds and powers of attorney within the estate. The case was heard by the Supreme Court of New South Wales. The court was tasked with determining whether the executors were liable for failing to pursue a claim against a beneficiary who had misappropriated estate funds and whether the executors had breached their duties by not withholding a legacy from that beneficiary. Additionally, the court had to decide if a third party could be held liable for knowingly receiving property acquired through a breach of trust when there was no evidence of knowledge of the breach.

The court found that the executors were not liable for failing to pursue the claim against the misappropriating beneficiary, as they had knowledge of the potential claim and had considered the rights of the residuary beneficiaries. The court also ruled that the executors were not in breach of trust for not withholding the legacy, as the proceeds of the misappropriated funds had been paid to the residuary beneficiaries. The court further held that the third party could not be held liable for knowing receipt, as there was no evidence that they knew of the breach of trust or that they received property acquired through such a breach. The court noted that the onus was on the defendant to prove ratification by unequivocal words or acts, and that evidence of general conversations with the principal was insufficient. The court also determined that the limitation period for the claim brought by the beneficiary was 12 years, as it could be characterised as a remedy of conversion of trust property under the Limitation Act 1969. Finally, the court held that lies told by witnesses did not give rise to an inference that the defendants understood the limitations on the powers of attorney.

The Supreme Court of New South Wales ruled that the executors were not liable for failing to pursue the claim against the misappropriating beneficiary and that they were not in breach of trust for not withholding the legacy. The court also found that the third party could not be held liable for knowing receipt due to the lack of evidence of knowledge of the breach of trust. The limitation period for the claim brought by the beneficiary was determined to be 12 years. The final orders of the court were that the executors were not liable for the claims made against them, and the limitation period for the beneficiary's claim was set at 12 years.

Orders