Fourikis v Fourikis
[2014] VCC 1704
•24 October 2014
| IN THE COUNTY COURT OF VICTORIA | Revised (Not) Restricted |
AT MELBOURNE
COMMERCIAL LIST
GENERAL CASES DIVISION
Case No. CI-13-06129
| ALEXANDER FOURIKIS (who sues by his administrator, State Trustees Limited) | Plaintiff |
| v. | |
| JAMES FOURIKIS (also known as Dimitri Fourikis) | Defendant |
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JUDGE: | His Honour Judge Anderson | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 7 October 2014 | |
DATE OF JUDGMENT: | 24 October 2014 | |
CASE MAY BE CITED AS: | Fourikis v. Fourikis | |
MEDIUM NEUTRAL CITATION: | [2014] VCC 1704 | |
REASONS FOR JUDGMENT
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Catchwords: Guardianship – Intermingling of estate monies with the administrator’s personal funds – Use of estate assets for personal benefit – Breach of fiduciary duties and statutory obligations – Administrator required to make good losses to the estate during his period of administration – Section 49 Guardianship and Administration Act 1986 (Vic)
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A. Donald | State Trustees Limited Legal Branch |
| For the Defendant | Mr J. Fourikis in person |
HIS HONOUR:
1James Fourikis, the defendant, was appointed by the Victorian Civil and Administrative Tribunal (“VCAT”) on 17 March 2010 to administer the estate of his brother Alexander Fourikis (“Alexander”). Alexander suffered permanent brain injury in a motor vehicle accident in November 2004.
2On 9 March 2012, VCAT removed the defendant as trustee of the estate and appointed State Trustees Limited (“State Trustees”) in his place. State Trustees brought the present proceeding on behalf of Alexander by Writ filed 27 November 2013, alleging maladministration of the estate between March 2010 and March 2012.
3When the defendant was appointed to administer the estate in March 2010, the estate had net assets of $209,646, which sum included $204,171 standing to Alexander’s credit in three bank accounts.
4When the defendant was removed as trustee in March 2012, there remained $14,000 in one bank account and other assets comprising a car parking unit in St. Kilda, vacant land at Lismore Victora, a motor vehicle and shares. The net value of the estate after the realisation of these other assets was $60,846.
5State Trustees claims that the defendant should pay damages or equitable compensation quantified as the difference between the value of the estate at the start of the administration in March 2010 and the value at the termination of the defendant’s trusteeship in March 2012. There is a further claim of $24,000 comprising lost interest on the dissipated bank accounts and $14,000 in income received over the two years of the administration but not accounted for, which should have increased the capital sum of the estate.
6It was alleged that the defendant owed duties to Alexander pursuant to s.49 of the Guardianship and Administration Act 1986 (Vic) and ss. 6 and 7 of the Trustee Act 1958 (Vic) as well as duties as a fiduciary and at common law, arising from the relationship of trust between the parties.
7It was alleged that these duties were breached by the actions of the defendant, including:
a.using the trust assets for his own personal purposes;
b.intermingling the trust assets with his personal finances;
c.placing himself in a position of conflict between his responsibilities to Alexander and his own personal interests;
d.putting his own personal interests before those of Alexander’s in the administration of the estate.
8 The matters for determination in the proceeding are:
a.what were the nature of the duties owed by the defendant as administrator of his brother’s estate;
b.did the defendant breach those duties;
c.as a consequence of any breaches, should the defendant be required to pay damages or compensation to Alexander, and if so, in what amount?
Application at the start of trial
9At the start of the trial, plaintiff’s counsel, Mr Donald, asked me to disqualify myself on the grounds of apprehended bias. He relied upon comments I had made during the hearing on 4 February 2014 of the plaintiff’s application for a freezing order against the defendant and in my reasons for decision refusing the application.
10Mr Donald submitted that I had:
a.prejudged the issue of the defendant’s credit by my statement in paragraph 12 of the reasons for decision that certain matters, which I listed, “may be indicative of a person who is generally cooperative”;
b.put pressure on the plaintiff to withdraw the proceeding by suggesting, during the hearing and in the reasons for decision, that the plaintiff should assess the cost benefit of spending a substantial part of the remaining assets in the estate pursuing a claim where it was not apparent that the defendant would have any significant resources to meet any judgment entered against him;
c.formed an adverse view of the plaintiff’s principal witness as a result of the failure to include in her affidavit supporting the application the ABA (account by administrator) reports for 2010 and 2011 and a letter from VCAT to the defendant dated 28 December 2011 which noted that, “State Trustees Ltd has examined the 2011 ABA you sent us. They report the ABA is in order…VCAT is satisfied you are managing the represented person’s financial affairs properly. We do not require you to take any further action about the 2011 ABA”.
11Part of the plaintiff’s solicitor’s notes of the hearing on 4 February 2014 were tendered in evidence on the application. I am satisfied that the notes are an accurate summary of the exchanges between Mr Donald and the bench during the hearing of the application. However, I do not consider that the notes disclose any relevant matters going beyond those included in the reasons for decision.
12I did not believe that there was any basis upon which I should disqualify myself from hearing the trial. If I had, there would have been no other judge available to hear the matter and the trial would not have been able to be refixed before April 2015. Although this would be a matter of some consequence to both the parties and the Court, I did not consider that it should be a determinative factor upon the application.
13In my view, the circumstances relied upon by the plaintiff would not be reasonably apprehended by a fair-minded lay observer as indicating that I “might not bring an impartial and unprejudiced mind to the resolution of the question the judge [at trial] is required to decide” (per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ in Johnson v Johnson (2000) 201 CLR 488 at paragraph 11).
14 In summary, my reasons for refusing the application were as follows:
a.in order to decide the application, I expressed a tentative view as to whether the defendant has been “cooperative” in providing information and responding to enquiries. It was clear from the matters I suggested be investigated at mediation, the actions of the defendant during his administration of the estate and the extent of his financial resources, that I had not made a prejudgment about the issues relevant to the credit of the defendant;
b.the parties, and particularly the plaintiff, were urged to look at the case before further significant costs were incurred to see whether resolution was possible. This was the responsibility of the Court as well as the parties;
c.comments were made by me about the material presented to the Court by the plaintiff in support of the applicant and the omission of what I considered to be relevant information. These comments were not directed to the credit of the deponent of the affidavit. The deponent would not have been expected to appreciate the material necessary to be placed before the Court upon such an application.
15As a consequence, I refused the application and proceeded with the trial.
Credibility of the witnesses
16Raylene Blick is a senior personal financial consultant who has been employed at State Trustees since August 2008. In about March 2012 she was given the responsibility to investigate the administration of the estate by the defendant from March 2010 and March 2012.
17During the course of her investigations, Ms Blick obtained information primarily from the following sources:
a.the VCAT file which included the ABA’s since 2006;
b.the banking statements for the accounts in Alexander’s name;
c.under subpoena, the defendant’s banking records.
18Following analysis of the defendant’s banking records, Ms Blick prepared two schedules as follows:
a.a schedule recording all transactions involving monies transferred out of the plaintiff’s bank accounts, which it was alleged were apparently for the defendant’s benefit;
b.a schedule recording all transfers from Alexander’s share trading account with CommSec to the defendant’s bank accounts.
19Essentially, no challenge was made to the accuracy of these schedules. They appeared to be accurate reflections of the entries in the bank statements and other documents tendered in evidence on Alexander’s behalf.
20Whilst during the course of the hearing, the defendant was critical of the investigation into his administration, in my view, the financial position of the estate at the time he was removed as the administrator justified the suspicion of maladministration.
21Ms Blick has had only 3.5 years’ experience in the role of an administrator. She has no legal or accounting training. Although she worked under supervision during the 2.5 years since the investigation began, there was little evidence of Ms Blick being offered the guidance and support necessary for a task of the complexity she was given.
22In the circumstances, I consider that there are no credit issues in relation to Ms Blick which are relevant to my determination. In large part, the documents collected and analysed by Ms Blick speak for themselves.
23In contrast, the defendant was a very poor witness. He was combative and evasive. He did not attempt to seriously dispute the detail of the allegations made against him. In matters where his credibility was tested, the evidence he gave was generally unbelievable. The defendant has professional qualifications and was well aware of his obligations as a fiduciary. He admitted to knowingly breaching his obligations as the trustee of his personal superannuation fund. He had little credibility as a witness. Much of the case against him depends on documentary evidence. In the absence of any credible explanation for his conduct, the defendant did not offer any real defence to the claims made against him.
The defendant’s financial position
24The defendant is a certified public accountant. He holds the qualification of Bachelor of Business (Accounting) from Deakin University and has qualifications in International Currency Trading and as an international English teacher.
25In 2009, the defendant was employed as a financial controller at the Mariner Shores Resort, at Biggera Waters near Miami on the Queensland Gold Coast. His salary was about $55,000 per annum. In about March 2010, he commenced employment at the Novotel Hotel in Ballarat as the financial controller on a 6 month contract at a salary equivalent to $75,000 per annum. The defendant said that he resigned after 2 to 3 months in the position because the “constant travel was too much”.
26The defendant’s financial position has not been strong in recent years. He is aged 51 years. He said that he had never owned his own home. In 2009, when he was living on the Gold Coast, he had debts of $30-40,000. The defendant said that the Global Financial Crises in 2008 had an adverse effect on his finances. He ran up debts on a number of credit cards.
27In 2009, the defendant transferred the sum of $30,000 from his self-managed superannuation fund to pay off part of his debts. The defendant said that he knew that this was a breach of the law. He was aware that he may have been able to lawfully obtain permission to withdraw money from the super fund, but the most he would be able to withdraw would be $10,000. He did not consider that this sum would sufficiently alleviate the stress of his indebtedness so he withdrew 90% of the funds in the account to pay debts.
28As a consequence of this breach of the law, the defendant was served with a notice dated 15 May 2013 disqualifying him “from being a trustee or a responsible officer of a body corporate that is a trustee, investment manager or custodian, of a superannuation entity [on the grounds that he had] contravened the SIS Act [Superannuation Industry (Supervision) Act 1993 (Cth)] on one or more occasions and the nature, seriousness and number of the contraventions provided grounds for disqualifying you”. The defendant appealed against the decision, but the appeal was dismissed.
29On 14 May 2009, the defendant wrote to VCAT asking to be registered “as an interested party and be informed of all legal and financial decisions that may in future take place including Administrator hearing dates and financial reports pertaining to my brother’s affairs”.
30On 22 February 2010, the defendant again wrote to VCAT stating that he was “relocating back to Melbourne” and noting his proposed address. He continued, “My Dad was administrator of my brother’s affairs and it is my understanding that VCAT need to appoint a new administrator since he passed away on the 20th January 2010”. The defendant asked about “all procedural requirements that need to be undertaken”.
31By order made on 17 March 2010, VCAT appointed the defendant as administrator of Alexander’s estate “with all the powers and duties conferred by Part 5 Division 3 and 3A of the Guardianship and Administration Act 1986”.
32The defendant’s financial position at the time of his appointment might fairly be described as modest. The position was as follows:
a.he received a Newstart allowance from Centrelink of $1,139.20 on 26 March 2010 and had apparently not been in employment since before 4 January 2010, when the available bank statements commence;
b.on 31 March 2010, he received a salary payment from Novotel of $258.87 and a further payment of $857.28 on 7 April 2010. From 21 April to 9 June 2010, the defendant received weekly payments of $1,039.15. The final payment from Novotel was $856.08 on 16 June 2010.
c.on 25 October 2010, Newstart payments recommenced, initially $436.15 and, from 8 November 2010, $584.90 fortnightly until 28 March 2011 when the amount reduced to $480.16. Payments of $474.90 continued fortnightly until 20 April 2011. Fortnightly payments recommenced on 11 November 2011 and continued until 19 January 2012. The payments resumed on 20 September 2012;
d.the balances in his bank accounts and credit cards were as follows:
i.account no. 06 3148 10103716 at the Moorabin Vic branch of the Commonwealth Bank of Australia (“CBA”), $3.88CR on 17 March 2010;
ii.account no. 06448010182405 at the Elanora (The Pines) Qld. Branch of the CBA, nil balance on 1 February 2010. The next transaction was a netbank transfer of $200 into the account on 8 April 2010;
iii.personal loan account no. 233848707 with the CBA with an opening balance of $10,000DR on 1 January 2010 and a balance of $12,589.75DR on 17 March 2010.
e.the bank statements show payments into the following credit card accounts in March 2010:
i.St George, $200 on 24 March 2010;
ii.American Express, $223 and $500 on 26 March 2010;
iii.Bank West, $300 on 26 March 2010.
f.the defendant lived at Ayres Street, Creswick from about the end of April 2010, paying rent by bank transfer from 29 April 2010 to at least 14 March 2011. The payments were initially $350 per week, then reduced to $175 per week and later to $175 per fortnight.
The defendant’s administration of the estate
33The last accounts for the estate prepared by Mr George Fourikis (Alexander’s and the defendant’s father) was the ABA for 2009. The closing balances of the estate’s three bank accounts, all with the CBA, which totalled $204,171, were:
a.no. 06 3162 1032 4063, $9,397
b.no. 06 3162 5011 6947, $46,984
c.no. 06 3162 5013 1645, $147,790.
34In addition there were funds in a superannuation account of $8,975, less a liability in respect of a motor vehicle accident claim, resulting in net assets of $209,646. During the year to 30 June 2009, the estate had received income of $36,006 comprising:
a.bank interest, $12,007;
b.Transport Accident Commission, $12,727;
c.Disability pension, $11,272
The total expenditure for the year was $6,884 leaving a net surplus of income over expenditure of $29,122.
35The defendant commenced his administration with a series of ATM withdrawals from the estate’s bank account no. 06 3162 1032 4063 (“4063”) as follows:
22 March 2010
$500
24 March 2010
$500
24 March 2010
$500
26 March 2010
$750
29 March 2010
$450
6 April 2010
$270
6 April 2010
$350
6 April 2010
$750
6 April 2010
$600
9 April 2010
$480
12 April 2010
$350
15 April 2010
$300
$5,800
36In addition, also during the first month of the defendant’s administration, netbank transfers were made from the account as follows:
9 April 2010
$5,000
13 April 2010
$500
13 April 2010
$2,650
$8,150
37The destination of these transfers is unknown and no proper accounting was made or explanation given by the defendant for them. Later, commencing with a $50 transfer on 10 May 2010 and a series of transfers on 1 July 2010, amounts of $1,000, $8,000 and $8,904.55 were transferred directly into the defendant’s account no. 06 3148 1010 3716 (“3716”).
38The defendant was asked during cross-examination about purchases from Safeway using Alexander’s funds. The defendant responded that, “it all pertains to purpose…the whole purpose, the whole idea of me running my brother’s estate was to provide better housing, to move him from the current facility which was inadequate. In order to do that, I had to withdraw funds and keep myself going in order to buy the block of land and build the house and eventually get him out of there. That was the purpose from day dot”.
39Mr Donald then asked, “So to advance that purpose, you used his money for your domestic and personal consumption in the period from March 2010 and onwards?” The defendant answered, “Well, I mean if you’re talking about the Safeway issue and things like that, then yes. If you’re talking about the other withdrawals, I don’t know what I did with those. For all I know, from what you’ve instructed, I might have taken those and put it in – under my pillow to put them in a different bank account that’s earning interest, because this bank account doesn’t earn interest”.
40This pattern continued throughout the defendant’s administration. The funds distributed in this way from Alexander’s bank accounts were as follows:
$15,353.23
Transfers out to unidentified recipients
$16,151.79
Direct transfers to the defendant’s bank accounts
$10,063.42
Payments or BPAY transfers relating to the defendant
$996.69
EFTPOS payments for unidentified purposes not relating to Alexander
$12,363.61
ATM withdrawals
$651.11
Credit card payments
$5,008.55
Foreign currency purchase
__$1,067.46
Cheques for unidentified purposes
$110.655.84
41The defendant said that there were transfers back into Alexander Fourikis’ accounts from the defendant’s personal accounts. He said in answer to questions as to whether he was withdrawing cash and transferring money and making EFTPOS purchases using Alexander’s bank account, “I’ll agree with that if you agree that there’s money going the other way as well”.
42There are two examples of the “intermingling” of Alexander Fourikis’ estate funds which exemplify the approach taken by the defendant to his responsibilities as administrator:
a.The transfer of funds to Alexander’s accounts as the end of the financial year (and of the ABA reporting period) approached so that the apparent asset position of the estate was distorted. I will examine this issue further when discussing the assets of the estate listed by the defendant in the 2011 ABA;
b.the use by the defendant of Alexander’s bank accounts to fund speculative share and foreign currency trading.
43In the 2011 ABA, the defendant disclosed the extent of his share trading and similar activities. He listed under item 13 that he had bought investments in the form of shares at a total cost of $156,533. He attached to the report copies of the trading documents from CommSec which noted the names of the companies whose shares were purchased; mainly mining and exploration stocks. The report also recorded that $5,665.30 had been spent on an “Ultimate Forex Course”. It is surprising, in these circumstances, that State Trustees and VCAT considered that the report was “in order”.
44No real analysis was undertaken at the trial to determine what the result had been of the defendant engaging in the share and foreign trading activities. The 2011 ABA listed the shareholding at 30 June 2011 as the balance of $37,994 in the CommSec share account no. 436 0186. When State Trustees took over in March 2012, the shares held were sold, and realised $7,384.20.
45In the 2010 ABA, the defendant reported that, as at 17 March 2010, the “opening balance” of the bank accounts in the estate totalled $221,247. The “closing balances” as at 30 June 2010 totalled $227,065. As has already been discussed, in the first weeks of his administration, the defendant made unexplained transfers and ATM withdrawals from the estate bank account 06 3162 1032 4063. This pattern of behaviour continued throughout the whole of the defendant’s administration of the estate.
46On 14 June 2010, the sum of $13,379.81 was transferred into Alexander’s account 4063 via Netbank with the notation “End of yr balance”. The source of the funds was the defendant’s CBA Mastercard account no. 5353 1652 8056 4173. As a consequence of the transfer, Alexander’s account no 4063 had a credit balance of $18,904.55 on 30 June 2010.
47On 1 July 2011, the following transfers were made out of Alexander’s account 4063:
$1,000 transferred to the defendant’s account no. 3716
$8,000 transferred to the defendant’s account no. 3716
$8,904.55 transferred to the defendant’s Mastercard account no. 5353 1652 8056 4173. On the same day, $1,957.28 was transferred by the defendant from his bank account (3716) to his Mastercard account 4173.
48Similar transactions were undertaken in late June 2011 so that the 2011 ABA could reflect more healthy bank balances. In the 2011 ABA, the bank accounts listed were as follows:
Account
Opening balance
Closing balance
063162 10324063 – Savings
$18,904
$26,000
063162 50116947 – Term deposit
$51,431
Nil
063162 50131645 – Term deposit
$156,730
Nil
063162 10474360 – 1st Home Super a/c
N/A
$5,500
064783 058911400 – CommSec Inv a/c
___________N/A
______$30,093
$227,065
$61,593
49On 25 June 2011, the balance in Alexander’s account 4063 was $1,16CR. On 27 June, two separate amounts were transferred into the account to assist in bringing the balance at 30 June 2011 to $26,000. The two payments were:
$15,000 transferred from the defendant’s account 3716.
$10,669.48 transferred from the defendant’s Mastercard account 4173 with the notation “Yr. end”.
50The defendant’s personal account 3716 reveals that on 26 June 2011, the account had a balance of $381.29CR. The following day, on 27 June 2011, $15,000 was transferred from the defendant’s personal Netbank Saver account no. 06 3556 1016 7695 to account 3716, to provide the funds for the transfer that day to Alexander’s account 4063.
51These transactions were essentially reversed in early July 2011 and by 2 July 2011 the balance in Alexander’s account 4063 was nil. There were four transactions:
1 July 2011transfer of $20,000 to the defendant’s Mastercard account 4173 with the notation “repay”
2 July 2011transfer of $3,659 to an unidentified recipient
2 July 2011transfer of $800 to the defendant’s American Express account no. 376 0640 5650 7009
2 July 2011payment of $1,541 to Alexander Fourikis’ Mastercard account no. 5520 3313 0042 0956
52The defendant’s personal account 3716 had been the source of $15,000 to boost Alexander’s account 4063 at 30 June 2011. No payments appear to have been made directly back into that account in early July 2011. However, the bank statements for the defendant’s account 3716 show the following entries:
4 July 2011
$4,900
“Direct credit 303541 Mr Alexander Fou tfr”
5 July 2011
$5,000
“Direct credit 303541 Mr Alexander Fou tfr”
6 July 2011
$5,000
“Direct credit 303541 Mr Alexander Fou tfr”
7 July 2011
$5,000
“Direct credit 303541 Mr Alexander Fou tfr”
53There is no account with the number 303541 in the name of Alexander Fourikis listed in the 2011 ABA and there do not appear to be statements for the account in the documents tendered in evidence from the Court Book. The period, late June / early July 2011, includes many further transfers between the estate’s bank accounts and the defendant’s personal accounts.
54When the defendant was challenged about these types of transactions in cross-examination, he suggested in response that Mr Donald “can suggest what you like but you have obviously no idea of proper accounting practice”. No more enlightening explanation was given by the defendant. At one stage, when he was asked whether the transfer of money from Alexander’s bank account to the defendant’s American Express account had been done “to advance your purpose of enhancing Alex’s life”. The defendant replied, “It’s possible…if I’m taking money out of Alex’s account and if I’m giving him money out of my account and that’s got to go around and around and around, money makes the world go around, so it is possible”.
Other “assets” disclosed by the defendant in the 2011 ABA
55The 2011 ABA listed “assets” with a total value of $219.552 as follows:
CommSec shares a/c 4360186
$37,994
Superannuation – C Bus
$11,375
Real estate – 40 Brown Street, Lismore
$27,015
Real estate – 415/135 Fitzroy St, St Kilda
$10,557
Computers: iPad / Laptop / Access
$3,018
Van: 1998 Toyota Hiace with hydraulics
$15,150
2003 Hyundai Accent
$6,000
7 x 5 2 bed Cabin
$43,000
40 foot shipping container
$3,850
$219,552
56The property at 40 Brown Street Lismore comprised vacant land and was purchased in about September 2010 by the defendant on behalf of Alexander. The defendant said that he had purchased the land with the plan of building a house at some time in the future in which Alexander could live with the defendant and the defendant’s partner, Carol Laycock. The land was in the same street as the health centre in Lismore.
57In addition, it was planned to place a cabin on the property which would provide accommodation for a permanent carer for Alexander. It is clear on the evidence that a shipping container was purchased for storage, and that adjacent to the container a deck was constructed with a ramp leading up to it. This area was covered by shade cloth. It is not clear on how many occasions Alexander was taken to the Lismore property.
58In May 2013, when the Lismore property was being sold by State Trustees, the defendant wrote offering to purchase the property. He stated, “This property at 40 Brown Street is, I believe, ideal for my brother because it has a Health Centre on the same street, and it was because of this fact, that it was purchased in the first place. There has been a lot of time and effort to purchase and prepare this property, on the off-chance that Alex needs somewhere to live in later life”.
59There was serious contention at the trial in relation to the cabin included in the list of assets in the 2011 ABA, with the value of $43,000. The ABA was signed by the defendant on 21 September 2011 and it was declared by him that “all information given in this form is true and correct”.
60The ABA included as an attachment a “tax invoice / statement” dated 20 May 2011. The invoice records a “private sale” from Carol Laycock to Alex Fourikis of a “fully furnished 2 bedroom dependent persons unit” for $43,000. The document has a signature which the defendant said was Ms Laycock’s.
61The defendant’s evidence about the purchase of the unit was that:
a.he and Ms Laycock had spent some time looking at similar units in the region of Victoria that included Queenscliff and Apollo Bay;
b.he could not remember where they had found the unit, although he thought it was Queenscliff;
c.he could not remember the colour of the unit;
d.Ms Laycock had not bought the cabin but “there was an oath taken to purchase the cabin…So at the time of this invoice, it was more a promise or an oath”;
e.no one had paid any money to the owner of the cabin;
f.the invoice was produced as evidence “that Alex purchased the cabin”;
g.he was the other party to the sale with Ms Laycock;
h.he paid the purchase price of $43,000 to Ms Laycock, not in one lump sum, but “over the course of the year”. The defendant was unable to identify the payments by reference to bank statements;
i.he included the cabin “as one of Alex’s assets” in the 2011 ABA because “he [Alexander] had purchased it”;
j.he agreed that since March 2011 he had “not made any attempts to retrieve the cabin or made any attempt to have the cabin moved to the land”;
k.the cabin was now, “still in where we first saw it”.
62Although the defendant denied that the reference to the cabin as an asset was a fictitious entry, it is impossible on the evidence to come to any other conclusion. Ms Laycock was not called as a witness. No explanation for this was offered, although the defendant said that he and Ms Laycock were “not finally separated”.
63Even if the inference that it is likely that, if Ms Laycock had been called, her evidence would not have assisted the defendant, were totally discounted, the other evidence concerning the cabin suggests the likelihood that no cabin was ever purchased and that no monies were paid for the cabin to Ms Laycock from Alexander’s funds.
64The list of assets in the 2011 ABA also included a 2003 Hyundai Accent with a value of $6,000. The documents attached to the ABA include a document which reads, “19 April 2011. I Nicolleta E Fourikis sold my Hyundai Accent 2003 model (SMM096) to Alexander Fourikis for the amount of $6,000. Possession has been taken by administrator James Fourikis”. The document appeared to be signed by Nicolleta Fourikis.
65A certificate obtained from the Roads Corporation on 19 July 2012 showed that the only vehicle registered in the name of Alexander Fourikis (date of birth 4/12/1960) was a white 1998 Toyota bus, registered number OUI 331; the Toyota Hiace listed in the 2011 ABA.
66When he was cross-examining Ms Blick, the defendant said that the Hyundai was not in Alexander’s name because his sister, Nicolleta, did not want the money as “it could be misconstrued”. As a consequence, the defendant said he registered the car in his own name and later in his mother’s name. This was not evidence, and no evidence was later given by the defendant in relation to the Hyundai. State Trustees did not dispose of the Hyundai as part of the realisation of the real and personal asserts listed in the 2011 ABA.
67The defendant took out a policy of insurance in February 2012 on the life of Alexander. The sum insured was $250,000. The premiums of $57.60 per fortnight were paid from Alexander’s Mastercard account no. 5520 3313 0042 0956. The beneficiaries of the policy were the defendant as to 75% and Alexander’s daughter as to 25%. The policy apparently lapsed when State Trustees were appointed to administer the estate, as the premiums were not paid.
68The statements for Alexander’s bank account 4063 record the purchase on 21 September 2010 of “foreign currency” at a cost of $5,008.55. On the following day, $5,000.44 was transferred from account 4063 to the defendant’s account 3716.
69The defendant said he travelled to Hawaii to investigate the possibility of investing in real estate on Alexander’s behalf. He believed that as a result of the Global Financial Crisis there were good opportunities to invest in American real estate. Although the defendant did not find anything suitable, he said he deposited about $4,500 of the foreign currency he had brought in a bank account in Hawaii in his own name. He later withdrew the money.
70The defendant said that he was a very keen traveller and had gone to Greece, and other destinations in Europe or the Middle East, each year for the past five years, including during 2010 and 2011. In 2011 he was overseas from 2 May to 20 June. He said that he used his own money for this travel, relying on “plastic fantastic”. He said that he had perhaps 10 credit cards.
71The trip in May / June 2011 took place about two weeks after the transfer of $54,517.31, on 22 April 2011, from Alexander’s Term Deposit account no. 06 3162 5011 6947 to the defendant’s account no. 06 3356 1016 7695.
72On 11 September 2010, the defendant had transferred the sum of $159,100.60 from Alexander’s Term Deposit no. 06 3162 5013 1645 to the defendant’s account 3716.
Conclusions
73Mr Donald submitted that the defendant had breached the obligations he owed to Alexander as a fiduciary. Mr Donald relied upon the evidence as establishing that the defendant:
a.did not act in good faith;
b.profited personally from his administration of the estate;
c.placed his own interests in conflict with those of Alexander;
d.did not obtain informed consent from Alexander for his actions.
74As a consequence of these clear breaches of trust, Mr Donald submitted that the defendant must make good the losses suffered by the estate during his stewardship. It was submitted that the actions of the defendant in withdrawing and transferring money from Alexander’s bank accounts and spending money for a variety of purposes, was essentially for the sole benefit of the defendant and was not spent in aid of some broader concept of Alexander’s welfare.
75Mr Donald submitted that the defendant had offered no credible explanation for the transfers of money into his own bank accounts or for the substantial reduction in the value of the estate during his administration. Mr Donald suggested that the defendant’s own financial position, when he was appointed as administrator, provided the motivation for his maladministration of his brother’s estate. Alexander’s assets were used to fund the defendant’s lifestyle.
76Mr Donald submitted that upon each basis relied upon by the plaintiff – breach of the duties of a fiduciary, the obligations pursuant to section 49 of the Guardianship and Administration Act 1986 (Vic), the obligations under the Trustee Act 1958 (Vic) and the obligations at Common Law – required the defendant to make good the losses to the estate, either as damages or equitable compensation.
77The defendant made short submissions. He referred to the fact that when Alexander had suffered his injuries, he effectively “had no money”. Under their father’s administration, Alexander’s estate had been build up to about $250,000, a sum, the defendant said, his brother “wouldn’t have dreamed of”.
78I consider that based on the analysis undertaken during the course of reviewing the evidence, it is clear that the defendant breached the obligations he owed as a fiduciary and trustee. When asked in cross-examination what these obligations were, the defendant said that it was to ensure that there was “no improper use of funds”. This, the defendant failed to do by deliberately advancing his own personal interests whilst neglecting Alexander’s.
79It has not been possible for State Trustees to identify the destination of each transfer or payment of funds from Alexander’s bank accounts or the net effect of transfers of money back into those accounts or of the share trading and other investments undertaken with the estate funds. It is not appropriate, in my view, that the estate should be further dissipated by an order for the formal taking of accounts.
80The defendant has the professional expertise to understand the transactions for which he alone was responsible during the period of his administration of the estate. Despite having the opportunity to do so, he declined to give other than facile explanations of these transactions and the reasons they were undertaken.
81It is clear that, as a result of the defendant’s administration, substantial losses were incurred by the estate, both by the diminution of the value of assets by misappropriation or by unwise “investments”, and by the failure to preserve the income earned which was not properly expended on Alexander’s behalf.
82The defendant must make good these sums. They comprise the sum of $148,800 being the difference between the value of the assets of the estate on 17 March 2011, of $209,646 and the value of the estate following the realisation of the estate by State Trustees, of $60,846. To this sum must be added $24,000 lost interest, because of the failure to maintain the estate in proper investments, and $14,000 in income received but unaccounted for; a further $38,000.
Proposed Order
83There shall be judgment for the plaintiff against the defendant that the defendant pay to the plaintiff the sum of $186,800.
84I shall hear the parties further upon the questions of interest and costs.
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Certificate
I certify that these 19 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 24 October 2014.
Dated: 24 October 2014
Olivia Bramwell
Associate to His Honour Judge Anderson
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