Gillespie v Curran
[2011] QDC 278
•24 November 2011
DISTRICT COURT OF QUEENSLAND
CITATION:
Gillespie v Curran [2011] QDC 278
PARTIES:
VICKI CATHERINE GILLESPIE
(Plaintiff)AND
AMANDA CURRAN
(Defendant)FILE NO/S:
D783/10
DIVISION:
PROCEEDING:
Trial
ORIGINATING COURT:
District Court, Brisbane
DELIVERED ON:
24 November 2011
DELIVERED AT:
Brisbane
HEARING DATE:
9, 10 June 2011
JUDGE:
McGill DCJ
ORDER:
Judgment that the defendant pay the plaintiff $29,617.57.
CATCHWORDS:
TRUSTS AND TRUSTEES – Trust Funds – claim for balance of trust funds – dispute as to whether disbursements authorised – failure to keep proper records
Angullia v Estate and Trust Agencies (1927) Ltd [1938] AC 624 – applied.
Christensen v Christensen [1954] QWN 37 – followed.COUNSEL:
A. Julian-Armitage for the plaintiff
B.P. Wright for the defendant
SOLICITORS:
Gregg Lawyers for the plaintiff
O’Neill’s Business Lawyers for the defendant
In late 2007 or early 2008 there were two arrangements made between the plaintiff and the defendant for the defendant to hold money on behalf of the plaintiff. On 8 February 2008 the plaintiff paid $40,000 to the defendant, she claimed on the basis that the defendant would invest this sum for the plaintiff: p 6. There was a separate arrangement that the money earned by the plaintiff would be paid into the defendant’s bank account and disbursed from time to time as authorised by the plaintiff. At some point in late 2008 the plaintiff sought the repayment of the $40,000; she said she was given various excuses: p 17. Some time later, the plaintiff also complained that not all her earnings which had been deposited into the defendant’s bank account had been paid to or for her, and sought to recover the balance. The defendant’s position is that the whole of the money has been paid to the plaintiff or at her direction.[1] She said they fell out after she complained about the plaintiff’s unpunctuality at work: p 22.
[1]The defendant calculated she had received $40,000 and $38,186.23 and had paid back $75,582.96, and the plaintiff had also received a payment credited to the wrong account of $1,296.00: p 15.
The difficulty in the case is that neither party kept detailed records, or indeed any.[2] Copies of the defendant’s bank statements have been put in evidence,[3] but there was one account of the defendant into which both her own wages and income of the plaintiff were being paid, and the bank statements, while recording money paid out of the account, do not indicate whose money was being used on any particular occasion. The defendant has recently examined a copy of the statements and sought to identify into which category any particular payment falls, but it is clear enough that this was essentially a matter of reconstruction on her part. It is a classic case of a trustee falling into the error of mixing trust funds with her own funds.[4] Ultimately, there was no dispute that the money the defendant received in this way was held by her on trust for the plaintiff: p 91.
[2]The defendant said she asked the plaintiff to keep records, and the plaintiff said it was not necessary, she trusted me: p 20. The defendant claimed she had a system of keeping track of her money from pay to pay, which did not produce records she kept: p 19, p 33. She said the plaintiff kept her own records: p 42.
[3]Exhibit 5 is a clean copy from 14 January 2008 to 8 May 2009. Exhibit 7 is a copy for the same period marked by the defendant in pink for her transactions and in green or yellow for transactions she claimed were on behalf of the plaintiff. Exhibit 8 is a letter from her solicitors of 28 May 2010 endorsing a copy with what were then said to be her transactions blanked out.
[4]See Jacobs Law of Trust in Australia (6th ed.) 1997 p 435. No particular reliance was placed on this by the plaintiff, no doubt because it was part of the arrangement that the money would be paid into the defendant’s bank account, so that mixing could be said to be authorised in the present case. Nevertheless, the circumstances of this matter demonstrate why it is inappropriate.
The plaintiff said that, in relation to the income being paid into the defendant’s bank account, there was a system put in place where payments out were recorded in an exercise book so that the plaintiff could sign for them, and the plaintiff gave some detailed description of the book, which was essentially just a common school exercise book.[5] The defendant denied that there had ever been such an arrangement, or such a book, and did not produce such a book at the trial: p 24, p 26.
[5]Plaintiff p 36, 38, 39.
It is of course the duty of a trustee to keep proper accounts.[6] There appears to be no general principle, however, that in taking an account, which is what I am doing, no allowance is to be made in favour of the trustee in respect of any transaction which has not been properly documented.[7] Nevertheless, I think that the failure to keep proper records does have this consequence, that if I am ultimately left in a state of uncertainty as to any particular payment, the presumption is in favour of the plaintiff.[8] It would, however, be possible on the basis of the evidence, and any logical analysis of the evidence, to find in favour of the defendant that particular payments were authorised dispositions of trust money. Obviously, it is relevant to consider the extent to which I am prepared to act on the evidence of the parties.
[6]Jacobs op cit. p 429.
[7]See e.g. Christensen v Christensen [1954] QWN 37, where it appears the judge accepted and acted on oral evidence from a trustee that certain payments had been made.
[8]See also Angullia v Estate and Trust Agencies (1927) Ltd [1938] AC 624 at 637.
Background
The plaintiff was working in 2007 as a massage therapist at a physiotherapy centre where the defendant was the practice manager.[9] They also apparently had in common the practice of having foreign school students staying at their homes.[10] They became friends. The plaintiff had been married for about 30 years, but by 2007 the relationship was very unsatisfactory; she complained that there was a lot of domestic violence in the relationship and she was afraid of her husband: p 4. She separated from her husband in June 2007 (p 35), and at about the same time stopped working full-time for someone else: p 40. She had previously been doing some limited work as a massage therapist, and that became more regular after she stopped her previous full-time work, although at one stage she said that for the first 12 months after June 2007 she was not very healthy and was not doing much: p 40.
[9]Plaintiff p 5. She started working there in October 2006: p 43.
[10]Plaintiff p 24; defendant p 89.
The plaintiff said that the financial side of her life was a mess in the latter part of 2007, and that she was not very good at paying bills: p 5. This caused her a lot of stress and anxiety, and it was her reaction to this which led the defendant to offer to help her: p 5.[11] It was arranged that the plaintiff’s income would be paid into the defendant’s bank account, and if the plaintiff had a bill she would give it to the defendant who would pay it from that account.[12] The plaintiff spoke of her income as wages, but she was actually working as a contractor. The arrangement was put in place in early 2008, with the first payment of income being $1,808.20 which was credited to the account on 22 January 2008: p 57, Exhibit 7.
[11]The fact of the arrangement was uncontentious. The defendant said that she offered to help in a general way, but the idea of payment into her account came from the plaintiff: p 11, p 12.
[12]Plaintiff p 6; defendant p 11.
The plaintiff said that on 1 November 2007 she borrowed some money which cleared some of her debts and left a balance of $40,000 which the plaintiff had earmarked to pay lawyers for a property settlement.[13] According to the plaintiff there was an arrangement made that this money would be paid to the defendant to invest on behalf of the plaintiff at an interest rate in excess of 7%, which would enable it to produce some return until it was needed to pay the lawyers.[14] Exhibit 1 shows a withdrawal of $40,005.40 on 8 February 2008, and Exhibit 7 that a cheque for $40,000 was deposited to the defendant’s account on 14 February. When asked why she did not simply invest it herself, the plaintiff explained that she just wanted to hand it over to someone, she did not want to have to deal with it: p 48.
[13]Plaintiff: p 5. Exhibit 1, her bank statement, speaks of a settlement amount which, with a payment from some solicitors and a “deposit” changed a debit balance of about $215,000 into a credit balance of $75,924.27. This does not look like a loan.
[14]Plaintiff: p 6, p 48. The defendant said there was no discussion about interest, the plaintiff just spoke about her holding it, and said she needed to access it all the time: p 12.
One of the health problems referred to earlier was that the plaintiff was suffering some psychiatric issues. On 14 August 2007 the plaintiff was referred by her general practitioner to a consulting psychologist for treatment of anxiety and depression: Exhibit 2. She saw the psychologist on eight occasions between 12 December 2007 and 16 July 2008. The psychologist reported that during this period the plaintiff experienced panic attacks and generalised anxiety, and various depressive symptoms including difficulty making decisions and following through on practical and administrative tasks concerned with her day to day life. That is consistent with the plaintiff having been willing to enter into the arrangements referred to, and her explanation for not wanting to make the investment herself. The plaintiff’s history of having difficulty in meeting her obligations in paying bills also supports that. It is obviously also a factor relevant to her credibility. She acknowledged that this would have impacted on her recollection of events: p 34, and see p 49. As well, much of the plaintiff’s evidence was very vague, or inconsistent,[15] and she often said there were things she did not know about her financial affairs, even when given time to investigate them.[16]
[15]She claimed not to have shopped at Yamanto except for a butcher shop (p 93, p 96) but when shown entries in Exhibit 1 for Woolworths at Yamanto conceded that what she had said was wrong.
[16]For example, she could not explain a couple of significant entries in Exhibit 1 identified as “netbank transfer” on 7 January 2008 and 4 February 2008: p 90, 91. She was in the same position the next day: p 3. As well, no tax returns were produced, despite comment from me (p 15): she said she had provided material to an accountant, but did not know what had happened: p 5.
Evolution of the claim
One of the curious features of this case is that, although the plaintiff now claims that a good deal of her earnings paid into the defendant’s account has not in fact been returned to the plaintiff or disbursed at her direction, this aspect of her claim is relatively new. Initially the plaintiff’s complaint was confined to the failure to return the $40,000, and when the action was commenced on 12 March 2010 the initial statement of claim referred only to that transaction, and sought only damages for breach of an express trust or fiduciary duty, together with interest. On 8 April 2010 an amended statement of claim was filed adding an alternative cause of action in debt, but again directed only to the sum of $40,000. A defence filed on 16 April 2010 alleged that the defendant had paid all monies provided to her by the plaintiff either to the plaintiff or at the plaintiff’s direction: para 11.
A letter from the plaintiff’s solicitors of 12 May 2010 increased the amount said to have been paid from $40,000 to $80,000, but perhaps without explaining clearly what was being alleged; I have not seen the letter, but a reply dated 13 May 2010, alleging that this was the fourth version given by the plaintiff, is Exhibit 9, and a further reply of 20 May is Exhibit 10. On 18 May 2010 a further amended statement of claim referred for the first time to “the bill paying trust”, and included the allegation in paragraph 7G:
“The plaintiff does not have a record of all of the expenditure paid on her behalf by the defendant, as that information is in the possession or control of the defendant, but the plaintiff believes (but does not yet know) most, if not all of her wages, were used by the defendant to pay the plaintiff’s expenses in accordance with the terms of the trust.”
The plaintiff sought an account of the money paid by the defendant in respect of this trust. In the pleading as well it was alleged that the defendant at the plaintiff’s request paid to a car dealer the sum of $9,000 to assist in the purchase of a car for the plaintiff (para 4B) and gave credit for that payment.
The final version of the statement of claim was filed on 9 August 2010. In it the amount acknowledged in respect of the car was increased to $9,500, the amount alleged to have been paid into the defendant’s bank account in respect of the plaintiff’s income was quantified at $38,186.23, and it was alleged that a list of payments shown in Annexure A totalling $18,539.78 had been authorised from that amount, but no other payments: para 9D. However, when the plaintiff was cross-examined about the list of payments she said that she had not seen the document Annexure A before, and did not agree that the total of that list of payments had been paid to her or on her behalf with her authority.[17] She said that she recalled sitting down with her lawyer and going through transaction after transaction and trying to make it out over a period of about three hours, but it was very confusing: p 32. She said that the night before the trial she came up with a figure of about $10,000 looking at bills and so on as amounts which had been paid with her authority, but that this total did not cover the full period of the arrangement: p 31-2. Under cross-examination the plaintiff did admit that a number of the particular payments identified as being made on her behalf by the defendant had been so made, but there were many others alleged by the defendant to have been so made which she disputed, including some in Annexure A, particularly some payments to Telstra.
[17]Plaintiff p 31. She also said para 4B of the statement of claim was incorrect: p 32.
The fact that the plaintiff initially made no complaint in relation to the “bill paying trust”, and that when it was first mentioned her pleading records a belief that she had received that money back, supports a view that that was the case, and that at the time when the relationship broke down the plaintiff was not conscious of there being any balance retained by the defendant in respect of the plaintiff’s earnings deposited to her account. The fact that this claim arose subsequently, and has been changing as time passes, with more of the defendant’s payments disputed, suggests that the plaintiff’s evidence is not reliable in relation to these matters.
The plaintiff’s income
The process of constructing an account of the trust is also made more difficult because of some uncertainty about the extent to which the plaintiff was living off her earning as a massage therapist during this period. The plaintiff admitted that she was also receiving payments for the student home stays, and indeed such payments appear in her bank account statements: Exhibit 1. She was also receiving payments from Centrelink; she claimed to have been informing Centrelink of the earnings as a massage therapist, and that the Centrelink payments took those into account.[18] The plaintiff maintained that a particular account in her name, Exhibit 1, was the only bank account she held: p 9, p 44, p 94. I assume that at this time she was not getting any financial support from her husband, but she also referred to having a boyfriend, who was, however, living somewhere else: p 47. It is not clear whether and to what extent the boyfriend was providing any financial support to the plaintiff. The plaintiff conceded that the money that she was getting from Centrelink and from the home stay students was not enough to live on: p 50.
[18]However, Exhibit 1 shows regular payments of the same amount from Centrelink except for occasional small increases until January 2009. Exhibit 4, a set of accounts prepared to show limited profit from the marriage business, was apparently produced later.
Car payment
When cross-examined about the payment in respect of the car, the plaintiff disputed the admission in the pleading that the sum of $9,500 paid to the car dealer was an authorised return of part of the investment trust funds: p 32. She maintained that she had received from the defendant her personal cheque for the amount involved: p 32. She initially said that “she wrote a cheque for me”, but later conceded that she did not see the defendant write the cheque: p 32. It is clear, however, from the relevant entry in Exhibit 7 that the payment of $9,500 was made by way of bank cheque. The plaintiff said that the arrangement as she understood it was that the $9,500 was a loan from the defendant to her: p 11. On any view, the defendant is entitled to credit for this.
Plaintiff’s payments to defendant
At least the amount paid by the plaintiff’s employer into the defendant’s bank account can be ascertained with some confidence. The documents from the employer show payments into this account from April 2008 to February 2009 but that was incomplete since the first payment appearing for massages on Exhibit 7 was a credit on 22 January 2008 of $1,808.20. There are then a number of other such credits before one on 15 April 2008 for $1,176.22, which matches the first payment shown in Exhibit 3. Thereafter most but not all of the payments match until a payment of $1,920.06 on 16 February 2009, the last amount credited in respect of massages shown in Exhibit 7. According to Exhibit 3, the next payment to the plaintiff was $1,603 on 2 March 2009; that entry does not appear in Exhibit 7, but a deposit of $1,603.20 from Mazeborough Pty Ltd for massages does appear on that date in the plaintiff’s account, Exhibit 1. In these circumstances I find that the amounts paid into the defendant’s bank account in respect of the plaintiff’s earnings for massages were made from 22 January 2008 to 16 February 2009, 30 payments totalling $38,186.23.
Particulars of these payments are as follows:
DateExhibit 7 PaymentExhibit 3 Payment
22/1/08 $1,808.20 nil
5/2/08 $1,260.09 nil
20/2/08 $1,881.91 nil
3/3/08 $1,325.38 nil
18/3/08 $1,737.37 nil
31/3/08 $983.00 nil
15/4/08 $1,176.22 same
24/4/08 $1,120.72 same
13/5/08 $1,404.70 same
26/5/08 $1,747.66 same
11/6/08 $1,477.12 same
25/6/08 $1,435.52 $1,394.59
9/7/08 $237.00 same
23/7/08 $1,187.58 same
4/8/08 $1,208.52 same
19/8/08 $1,038.16 same
1/9/08 $912.91 $912.21
15/9/08 $1,676.40 same
30/0/08 $1,480.83 same
13/10/08 $1,670.70 same
27/10/08 $1,342.95 same
10/11/08 $1,397.82 same
25/11/08 $1,260.84 same
9/12/08 $1,688.80 same
23/12/08 $1,527.08 same
7/1/09 $509.62 same
22/1/09 $1,000.00 nil
28/1/09 $269.07 nil
3/2/09 $500.00 same
16/2/09 $1,920.06 same
TOTAL$38,186.23
Plaintiff’s bank records
The plaintiff said that, although sometimes money was withdrawn by the defendant from her account and paid into the plaintiff’s account, she never received money in cash from the defendant: p 26, p 46. However, she later said that she was not saying it did not happen, she was saying she was not familiar with the suggestion that money would be withdrawn on her behalf and left in an envelope for her to pick up at the clinic: p 47. One of the features that is notable about Exhibit 1, the plaintiff’s bank records, is that there are relatively few references to cash withdrawals in those records, except during a couple of periods when the plaintiff is on holiday, one when she is apparently on holiday in Sydney and one when she is apparently on holiday in New Zealand. No doubt one does go through cash more when on holidays, but I would expect her to be wanting cash from time to time in Brisbane as well, and it does not appear that very much was obtained by her from her own bank account.
During the period this scheme was in force there were still some ATM entries in the plaintiff’s statement, Exhibit 1, though generally not a large number. They varied from seven in June 2008 down to none in November 2008, with the monthly average between February 2008 and March 2009 being about 3.4. Some of them were associated with travel to New South Wales in the middle of 2008, and in August there were more than usual including two at the Treasury Casino. In March 2009 there were four, including two of $800 and $900 on 30 March, and there was a withdrawal of $150 on 12 March. In April there were six ATM transactions, but only one in May before the account was closed, though there was a withdrawal of $1,500 on 8 May and another of $100 on 13 May, the day after an ATM withdrawal of $500.
Exhibit 1 shows that from February 2008 to February 2009 there were ATM withdrawals averaging about $400 per month not counting November when there was none, although the amount in each month varied considerably, from $60 to $800. There was also a cash withdrawal of $1,500 on 10 October, after another of $300 on 7 October. After the arrangement stopped, in March 2009 there were four ATM withdrawals totalling $1,900, and a cash withdrawal of $150, in April 2009 five ATM withdrawals totalling $550 and in May 2009 two cash withdrawals totalling $1,600 and two ATM withdrawals totalling $560. A monthly average for this period was $1,587, compared with a monthly average (counting the cash withdrawals in October) of $511 over 13 months. This is an increase in the monthly average of $1,076, which suggests that, apart from money being transferred to her account, the plaintiff was also getting significant cash from the defendant during the relevant period.
Defendant’s bank statements
On the defendant’s evidence there were a large number of occasions on which cash was withdrawn and handed over to the plaintiff: p 11, p 16-18. Part of the difficulty with analysing patterns in the parties’ bank statements is that I have been provided with very little in the way of statements before or after the relevant periods, so it is difficult to compare the pattern of transactions during the period when this arrangement was in force and before or after it operated. There are only five entries in Exhibit 7 prior to the first deposit in respect of the plaintiff’s work on 22 January 2007, but even these are not without some interest: on 13 January 2008 there were three withdrawals apparently from the same ATM between 10 am and 11 am of amounts of $100, $100 and $200, which must have been withdrawals for the defendant, yet during cross-examination the defendant said that she would never have taken three transactions out in a row from the same place for herself: p 34 line 34; p 35 line 25.
That was when she was being cross-examined about three withdrawals each of $100 made on 13 April 2008 at an ATM at the Karalee Tavern, which was near where the defendant lived: p 34. The defendant had provided the plaintiff’s solicitors with a copy of her bank statement where entries which were attributable to her had been blanked out (Exhibit 8), and in that the first of these had been blanked out, but in Exhibit 7 all three were shown as attributable to the plaintiff. The defendant’s explanation was that the plaintiff would at times ring up for money and then ring again and change the amount that she needed, but I think a more plausible explanation may be derived from the fact that 13 April 2008 was a Sunday (as was 13 January 2008). The first withdrawal was made between 2.10 pm and 2.20 pm, the second between 2.20 pm and 2.30 pm, and the third between 2.50 pm and 3 pm, as appears from the limited information about times printed on Exhibit 7. I think a more plausible explanation is that the defendant, possibly with another or others, was enjoying a Sunday afternoon at the local tavern.
These were not the only examples of successive withdrawals from the same ATM within a relatively short period of time. On 14 March 2008 there were three withdrawals each of $200 from a particular ATM between 2.30 pm and 3.10 pm; 14 March was a Friday.[19] On 15 March 2008 there were three withdrawals each of $200 between 2.30 pm and 4 pm from the same ATM, apparently the same one as on 14 March. On 25 March 2008, a Tuesday, there were four withdrawals of between $100 and $300 from what looks like the same ATM between 1.10 pm and 3.10 pm, all of which are attributed in Exhibit 7 to payments to the plaintiff. The plaintiff denied all of these: p 62. On 4 April 2008, a Friday, there were four withdrawals between $100 and $400 from what appear to have been the same ATM between 12.50 pm and 3.30 pm. Three of these were attributed in Exhibit 7 to the plaintiff but denied by her: p 62-3. On 19 April 2008, a Saturday, there were three withdrawals apparently from the same ATM of $400 or $300 between 11.30 am and 1 pm. On 18 May 2008, a Sunday, there were three withdrawals apparently from the same ATM for $200 or $420 between 11.50 am and 3 pm.
[19]The defendant usually worked Monday to Thursday: p 37.
There were a series of ATM withdrawals in late June 2008. Withdrawals of $800 on 25 June, $1,000 on 26 June, $1,000 on 27 June could plausibly have been required to fund a deposit of $2,500 on 27 June to the plaintiff’s account. However, there was a further ATM withdrawal of $530 on 28 June, followed by $300 and $170 later the same day, and $430 on 30 June, $270 and $300 on 1 July and a further $300 on 7 July. These could not have been withdrawn in order to pay the money over to the plaintiff, because Exhibit 1 shows that the plaintiff was in New South Wales or the ACT between 26 June and 8 July. It is possible I suppose that the withdrawal on 7 July was to have some cash available to hand over to her when she returned from her holiday.
On 5 October 2008, a Sunday, there were three withdrawals of $100 or $200 from the same ATM between 3.30 pm and 5 pm. These were marked in Exhibit 7 in pink indicating that the defendant accepted that they were for her. On 2 November 2008, a Sunday, there were four withdrawals from the same ATM between 11.20 am and 3.40 pm each of $100, and at about 4.20 pm there was a withdrawal of $600 from a different ATM. On 27 December 2008, a Saturday, there were three withdrawals from an ATM at Kenmore between 12.10 pm and 2 pm, of $200 or $400, while the following day there were four withdrawals from the same ATM between 2 pm and 3.50 pm;[20] in Exhibit 7 the first two, for $400 each, were attributed to the plaintiff and the second two, $120 each, to the defendant. Interestingly, the first two were included in Annexure A to the statement of claim, but the plaintiff denied that she had in fact received these amounts: p 87. Finally on 18 April 2009, a Saturday, there were three withdrawals from the same ATM of $200 or $300 (plus fees of $2) between 12.40 pm and 1.20 pm. In these circumstances, I cannot accept the defendant’s evidence on p 34.
[20]These may have been put towards a deposit of $2,000 on 2 January 2009 to the plaintiff’s account: Exhibit 1.
The defendant’s second account
Another feature which struck me as odd about the defendant’s evidence was that she said that she opened a second account so that she would not have the $40,000 sitting in the everyday account. The question and answer at p 17 were:
“So the two accounts, there’s the one that was your existing account and there was another one that was opened on 27 February 2008, was that opened up for a particular purpose?-- It was opened up for my benefit, purely, because I didn’t want the $40,000 sitting in our everyday account all the time, so I thought it was easier for me to be able to reconcile what money was going in and out by putting that across to the other account and then if Vicki needed it I could just transfer it between the two accounts. It just made it easier with my pays going in.”
It would have made it easier if all of the plaintiff’s money had been put in the second account. A statement for the second account was Exhibit 6. On 1 March 2008 an amount of $37,400 was transferred from the account Exhibit 7 to an account identified in that entry as 74400s50. References to that number appear from time to time thereafter. By the time this new account was opened the $40,000 was not still available in the existing account, $2,600 of it had already gone. After the $40,000 was deposited on 14 February, a relatively large amount of money began flowing out of ATMs from the account: $1,000 on 19 February, $1,000 on 21 February, $1,000 on 22 February, two withdrawals at different ATMs totalling $1,000 on 23 February, $1,000 on 25 February, and two withdrawals totalling $660 on 28 February 2008. Prior to the deposit of $40,000 there was only $138.06 in the account, and assuming all of that was the defendant’s and adding the wages that she received on 19 February of $1,256, and the payment of $407.14 she received on 29 February for a home stay student, the debits which she accepts as attributable to her in Exhibit 7 leave a balance for her money of only $81.20 prior to the next credit of her wages on 3 March 2008.
There are ATM withdrawals of $2,200 in Exhibit 7 which she does not attribute, but they must have been attributable to the plaintiff because there was no money of the defendant in the account to cover them. If they are treated in this way, it means that the plaintiff having deposited $40,000 on 15 February took back over $4,000 by 25 February, which strikes me as odd. When the money was transferred to the new account on 1 March it was effectively all the money that was available in the old account, and the same day $100 was transferred back to the Exhibit 7 account to fund a cash withdrawal from an ATM soon after 9 pm that night. The following day a further $300 was transferred back to fund an ATM withdrawal at about 9.30 am, and on 3 March $1,000 was transferred back to fund an ATM withdrawal at about 11.40 am.[21]
[21]Apparently $500 of this was deposited the same day to the plaintiff’s account: Exhibit 1.
Transfers between the defendant’s accounts
The pattern of transactions involving the second account is also interesting. There was a transfer of $9,500 just before the bank cheque for that amount was obtained on 2 May 2008 for the car, and there had been a transfer of $10,000 on 23 April 2008 which was reversed the same day, and which was explained as being an earlier occasion when it was thought that money was going to be needed for the car: p 19, p 37. There was a further transfer on 12 June 2008 of $9,700, reversed the same day, which the defendant explained as an occasion when the plaintiff was considering a payment for a car for someone else, but changed her mind: p 49. Otherwise, the pattern of transfers from the other account was that they were nearly always in amounts of $1,000 or less and usually occurred just before an ATM withdrawal was made, generally in the same amount.
Apart from the two reversed payments, money was on occasions transferred back into the second account. On 18 March 2008 $2,000 was transferred back into the account. Since prior to the direct credit of the defendant’s wages on 17 March 2008 the balance in the account was only $30.53, and only $1,737.37 had been deposited to the account on behalf of the plaintiff on 18 March 2008, it follows that at least $232.10 of this money was the defendant’s money. There was no reason for the defendant to be transferring her money into the second account if it had been opened only to hold the plaintiff’s money, unless there had previously been some money from that account which had been used for the benefit of the defendant, which this was replacing. But all of the previous transfers out from that account were attributed in Exhibit 7 to payments to the plaintiff.
Then on 20 March 2008 $500 was transferred out of the second account, which together with a deposit for a home stay student for the defendant funded an ATM withdrawal of $1,000 on 22 March, which left only $58.94 in the account. The withdrawal of $1,000 was attributed to the plaintiff in Exhibit 7, but not accepted by the plaintiff (p 62), and it is difficult to understand why the defendant would have withdrawn what was effectively her own money to fund a payment to the plaintiff when presumably the whole $1,000 could have been transferred from the second account. The defendant claimed that all transfers from and to the second account were at the direction of the plaintiff: p 40, p 48, p 50, p 56.
There were then a series of transfers to fund ATM withdrawals on 25 March, one for $400 which funded ATM withdrawals at 9 am and 1 pm, one for $500 which funded ATM withdrawals at 2 pm and 2.40 pm, a further $400 which funded an ATM withdrawal of $100 at 3 pm and an ATM withdrawal of $200 at 11.40 am the following day, followed by a further transfer of $400 that day to fund an ATM withdrawal of that amount at 12.10 pm. All of the ATM withdrawals were attributed by the defendant to the plaintiff in Exhibit 7, but were denied by the plaintiff: p 62. There were then four transactions which the defendant accepts were hers which come to $101.49, $72.55 more than the balance in the account before the first of the transfers from the second account on 25 March.
Something similar happened on 4 April 2008. There were transfers of $500, $800 and $200, and four separate ATM withdrawals totalling $1,000, followed by two more of $100 each on 5 April, a further transfer of $1,000 on 7 April followed by an ATM withdrawal that day soon after 7 am of $1,000, with all these ATM withdrawals attributed to the plaintiff.[22] There were also on 4, 5, and 6 April five transactions attributed to the defendant, after which there was only $6.72 left in the account. Even if all the money withdrawn at ATMs was handed over to the plaintiff, there was still $300 transferred over, virtually all of which the defendant on her own figures applied to her own benefit. The plaintiff denied that the cash from the ATMs was paid to her: pp 62-3.
[22]In Exhibit 7 a $40 ATM withdrawal on 6 April is attributed to the defendant: most of this must have been the plaintiff’s money, since before the first transfer the account held only $16.20.
The pattern does not fit the defendant’s account of the plaintiff’s repeatedly ringing up asking for additional money. If the plaintiff had asked for $400 at 2 pm and then asked for a further $100 at 3 pm that would explain the separate withdrawals, but it would not explain why $800 had been transferred prior to the first withdrawal in order to make it possible to withdraw both amounts. The pattern of transactions on these days simply does not fit the defendant’s account of different amounts being transferred and withdrawn at different times. The defendant said that there was a daily withdrawal limit of $1,000 on her account, and the ATM transactions on 4 April stop at $1,000, but that there was no limit on the amount that could be withdrawn from any particular machine (p 34-5), so the explanation cannot be that it was necessary to go to different machines, or have different transactions, in order to withdraw the amount the plaintiff required, unless perhaps something went wrong on the first occasion. There are instances in Exhibit 7 where a transaction at a particular machine failed, and then the transaction was completed successfully at a different ATM, but where that occurred it is obvious enough.[23]
[23]See 28 June 2008: $530 reversal; 30 June 2008: $430 reversal.
On 10 April there was a transfer of $138.07 necessary to make up a direct debit to MBF of $144.79 which the plaintiff accepted was paid for her (p 63), but the following day there was a transfer of $55.82 to fund a direct debit of that amount which Exhibit 7 accepts was the responsibility of the defendant. There was a transfer of $820 on 13 April to fund the three withdrawals at the Karalee Tavern that day, and a further transfer of $1,000 the same day, withdrawn from an ATM on the following day, on which there was a further transfer of $300 which does not appear to be attributable to anything in particular. On 23 April 2008 there was a transfer of $10,000 out of the No. 2 account and the same day it was transferred back into it.
On 13 May $2,400 was transferred into the second account just after the plaintiff’s earnings of $1,404.70 was deposited to the account, when most of the difference must have been the defendant’s money.[24] One thousand dollars was transferred back the next day and promptly withdrawn from an ATM, along with a further transfer of $550 to cover a payment to the Ipswich City Council which was attributed to the plaintiff and accepted by her: p 67. There was a transfer of $500 on 20 May followed by a series of payments which the defendant accepts related to her, and another transfer of $400 on 22 May, followed by two separate payments to Telstra, one for $157.63 which is attributed to the plaintiff and accepted in Annexure A and one of $396.53 which is accepted by the defendant in Exhibit 7, leaving less than $60 in the account. On 12 June 2008 $9,700 was transferred from the second account, and back the same day.
[24]Before this deposit and the defendant’s wages went in, there was only $40.93 in the account: Exhibit 7. The defendant’s explanation, that this was the plaintiff’s excess money, was wrong: p 48.
On 1 July 2008 there were three separate transfers from the second account of $300, $300, and $200; the first two are matched by ATM withdrawals, but the third appears to have been used for various shopping expenses which in Exhibit 7 are attributed to the defendant. On 8 July there was $1,200 transferred, and on 29 July $800 transferred, which was promptly withdrawn from an ATM. There had been a payment in respect of massages credited also on 8 July of $237, and on 23 July of $1,187.58, the only payments attributed to the plaintiff in this period were an MBF direct debit of $144.70 on 10 July and an Origin Energy bill of $320.50 on 23 July and a cash withdrawal of $1,000 on 28 July, yet the balance in the account was down to $4.57 immediately before the next credit of wages to the defendant on 30 July. There were numerous amounts attributed to the defendant during this period, which must have been paid in part using the plaintiff’s money.
After the defendant’s wages were credited, $1,000 was transferred back to the second account on 31 July. There was a further $2,000 transferred into the second account on 20 September 2008, and $850 transferred back from it on 23 September, after which there were no transactions attributed to the plaintiff in Exhibit 7 before a further transfer out of $500 on 29 September, followed by an ATM withdrawal of $1,000 that day which was attributed to the plaintiff. Some of the $850 transferred on 23 September therefore must have been used for transactions which the defendant accepts were hers.
Broadly speaking the pattern continued: there were two more transfers in on 15 October and 18 October; thereafter there were a string of transfers out. The last significant transfer in Exhibit 7 was on 28 December 2008 when the sum of $1,000 was transferred out, on the same day as there were two ATM withdrawals of $400 each. This left a balance in the second account of only $0.68; two days later interest of $7.72 was credited, the balance of $8.40 was transferred out on 15 January 2009, and on 31 January a further 2 cents interest was credited, which sat there until the account was closed on 3 August 2009. A total of $975.31 was paid as interest on this account while it was open: Exhibit 6.
Overall the pattern of transfers out of the second account is that they were generally made to fund ATM withdrawals the same day or very soon afterwards, frequently at weekends, although occasionally it is possible to identify a particular usually relatively small transfer which funds a particular payment which can be associated with the plaintiff, for example paying a Telstra bill or an MBF direct debit. There are many occasions when the money or at least part of the money seems to have been spent on things which the defendant accepted were her expenditure. The payments back into this account are also strange. They do not seem to relate to any particular deposits attributed to the plaintiff, though they usually occur after the plaintiff’s income has been paid in, because the defendant’s wages were paid in at about the same time and it was at that point that the account was healthiest. Overall the impression from my analysis of Exhibit 7 is that the defendant was often using the plaintiff’s money in the second account as a fund she could call on for her own purposes if required. All this is relevant to the credibility of the defendant.
Deposits to plaintiff’s account
The plaintiff had a home mortgage obligation, with payments made out of her bank account on a monthly basis: p 7. She said that when she did not have enough in her account she would get money from the defendant to top it up in order to make her loan payments (p 8), this usually happened towards the end of the month, that the amount varied from $200 to $1,600, but payment was required each month: p 9.[25]
[25]I found one of $2,500 (27-6-08) and one of $2,000 (2-1-09).
Exhibit 1 shows 21 deposits into the plaintiff’s account between 3 March 2008 and 30 April 2009. Most of these are late in a month or quite early in a month, just before two payments which appear to be mortgage payments are made; there are a couple which were made just after the mortgage payments were made, where those payments had put the account into overdraft. In most cases it is possible to identify an ATM withdrawal on the same day, or shortly before the day, which can be said to balance or match this deposit, though the situation is not always that simple; sometimes the amount of the ATM withdrawal is larger than the amount of a deposit, and sometimes the amount of the deposit was more than the $1,000 daily withdrawal limit, so that it is necessary to look at two or more ATM withdrawals.
There are a handful of deposits which do not seem to match this pattern. On 14 May there was a deposit of $175.05, but it is not shown as a cash deposit and I think a more plausible explanation is that this was the deposit of a cheque, and had nothing to do with the defendant. There was another entry just marked deposit on 20 January of $391, which I suspect is in the same category, as is an entry on 12 March for $908.05, which in addition does not appear to balance any particular ATM withdrawal shown in Exhibit 7.
The remaining 18 cash deposits, however, do appear to fit this pattern, and eight of them, including the last two, were identified on Exhibit 1 apparently by the plaintiff as being a payment from the defendant. The plaintiff admitted that matching ATM withdrawals on 30 May of $1,000 (p 62), 1 August of $1,000 (p 79), 12 December of $800 (p 87), 16 December of $200 (p 87), and 30 April 2009 of $402 (p 89) were for her benefit, as were ATM withdrawals on 2 April of $1,000 (p 62) and 1 August of $1,000 (p 79) which were on the same day as larger deposits to her account, although she did not admit any amount in respect of the balance of these deposits.
The plaintiff offered no alternative explanation for cash deposits to her account. In view of the plaintiff’s evidence, I am prepared to accept that all 18 of these cash deposits were made by the defendant from money held on behalf of the plaintiff, so that she is entitled to credit for them; they total $15,090.[26] A more difficult question is what to do with the difference between what appears to be a corresponding ATM withdrawal of a larger amount and the amount so deposited. Broadly speaking the defendant asserted that the whole of the amounts of these withdrawals were money paid to the plaintiff, whereas the plaintiff denied that she received any money in cash from the defendant: p 26, p 46, p 47.
[26]From Exhibit 1, deposits of $500 on 3 March, $1,600 on 12 April, $1,000 on 30 May, $2,500 on 27 June, $1,150 on 1 August, $400 on 25 August, $200 on 3 September, $850 on 29 September, $750 on 29 October, $1,600 on 28 November, $340 on 1 December, $800 on 12 December, $200 on 16 December, $2,000 on 2 January, $200 on 4 February, $200 on 2 March, $400 on 3 April, and $400 on 30 April.
ATM withdrawals in Exhibit 7
The monthly ATM transactions shown in Exhibit 7 are much greater than in Exhibit 1, reaching a high point of 24 in each of November and December 2008, though there were 23 in March 2008; they dropped to six per month in February and March 2009. A large number of transactions during the period when the scheme was in operation would be consistent with the defendant having to make transactions to provide money to the plaintiff, but would also be consistent with the defendant making additional transactions because she had the plaintiff’s money available to her. The defendant said that she did not withdraw cash a lot, and would live off the cash withdrawn by her partner: p 19-20. Yet on any view of the matter there must have been about five to 10 ATM transactions each month which were certainly attributable to the defendant, which was more than the plaintiff was making from her own account.
Money spent by the plaintiff from her account
The first deposit of the plaintiff’s income into the plaintiff’s account, Exhibit 1, occurred on 2 February 2009, when an amount of $527.90 was deposited;[27] $500 was deposited to the defendant’s account the following day: Exhibit 7. There was then another deposit to the defendant’s account on 16 February of $1,920.06, but it seems that things were sorted out by the following month and on 2 March there was a deposit of $1,603.20 to the plaintiff’s account, followed by similar deposits on 17 March, 30 March, 14 April, 27 April, and 11 May before the account was closed. Effectively then March, April, and May represent the period when the defendant was receiving her income from massages and spending it herself.
[27]The same day the defendant’s wages of $1,296 were also paid into the plaintiff’s account, presumably by mistake; the defendant is entitled to credit for that amount.
It may be of some significance that during those last three months the debits shown in Exhibit 1 totalled $22,767.72, whereas in the previous three-month period the debits were $11,438.18. In the quarter December 2007 to February 2008 the debits, excluding the $40,000 paid to the defendant, were $20,490.20. In March-May 2008 the debits were $35,009.33, but there was a payment of just over $25,000 from solicitors on 30 April followed by a withdrawal of almost that amount on 2 May, so that if that debit is disregarded the debits come to $10,270.93. In June-August the debits came to $14,548.55, though this covered the period of the holiday in New South Wales and there was a credit of $2,000 from ING Bank on 26 June which is marked “holiday Sydney” in Exhibit 1. In September-November 2008 the debits were $13,139.72.
Overall, it looks as though there was about an extra $3,000 a month, a very rough figure, being paid out of the plaintiff’s bank account during the period when the arrangement with the defendant was not in place compared with when it was. That would roughly balance the earnings of the plaintiff that were being deposited to the defendant’s account from February 2008, also about $3,000 per month.[28] The information available from Exhibit 1 for the period when the plaintiff was getting the money for the massages in that account shows that when she was getting that money she was spending it. It is possible that she spent less when the money was being paid to the defendant and she had to arrange to get it from the defendant to spend it, but I suspect that it is unlikely that the plaintiff was spending significantly less as a result of this arrangement being in force.
[28]An average of $2,936.94 over 13 months.
Payments the plaintiff accepted
Under cross-examination, the plaintiff accepted that some of the payments shown in Exhibit 7 as having been made on her behalf had been made, but rejected most of them; broadly speaking she accepted entries where a payment had been made to an identified payee,[29] but rejected entries where there was a withdrawal from an ATM which was attributed by the defendant to the plaintiff.[30] She accepted responsibility for 11 payments made to MBF, nine of $144.79 and one each of $315.41 and $138.34. She accepted payments to the Ipswich City Council of $515.55, $545.65 and $610.95, payments to Origin Energy of $268.40 and $320.50, payments to Optus of $198.83 and $185.16, payments to Windham Finance of $734.24 and $701.28, and payments of $262.05 to Energex, $172.21 to Health World Ltd, $228.59 to Aon Risk Insurance, $346.93 to Queensland Electricity, $346.45 to the Queensland Government, and one payment to Telstra of $360.50, a bill on 26 February initially disputed by the plaintiff (p 59) but subsequently accepted: p 60. These payments total $7,554.15.
[29]There were only three she denied, on 11 March 2008 of $812.55, 6 October 2008 of $100 and 10 November 2008 of $35, apart from the Telstra accounts.
[30]Plaintiff: pp 58-87,
There were a number of other payments to Telstra shown on Exhibit 7. There was one on 5 February for $187.29 which the defendant accepted was hers, and one the following day for $133.26 which the defendant attributed to the plaintiff. The plaintiff, however, denied that was hers though she accepted that the payment on 26 February of $360.50 was. The payment on 6 February had been accepted in Annexure A to the statement of claim, and I note that there was no prior Telstra payment shown in Exhibit 1, though it is possible that prior to this time the plaintiff paid the bill using a credit card.[31] I think it unlikely that the defendant would have been making two payments with respect to her own Telstra accounts on successive days, and bearing in mind that it was included in Annexure A, I think that it was the plaintiff’s Telstra bill of $133.26 that was paid. There were nine further payments, generally one each month, all of which the plaintiff was not prepared to accept, although they were all included in Annexure A.
[31]The plaintiff could not explain how she paid Telstra bills: p 91. She did have credit cards: p 91.
When speaking generally about what bills had been paid under this arrangement, the plaintiff nominated a short list including telephone, both home and mobile: p 7. Given that the whole purpose of this exercise was supposed to be for the defendant to pay the plaintiff’s bills, and that one particular problem had been in relation to the plaintiff’s telephone service, on balance I accept that the payments in respect of these Telstra bills were made by the defendant for the benefit of the plaintiff pursuant to this arrangement. The not admitted payments total $1,912.26.
The plaintiff also accepted a number of ATM withdrawals, $1,000 on 22 January 2008 (p 58), $1,000 on 2 April 2008 (p 62), $1,000 on 30 May 2008 (p 73), $1,000 on 1 August 2008 (p 79), $800 on 12 December 2008 (p 87), $200 on 16 December 2008 (p 87), and $402 on 30 April 2009 (p 89). Apart from the first, these are ATM withdrawals on the same day as payments in that amount, or of a larger amount, were deposited in cash into the plaintiff’s account according to Exhibit 1. However, the plaintiff did not admit that for example an ATM withdrawal on the previous day which would have been necessary to make up in part the amount of the deposit was attributable to her, and where the ATM withdrawal was for a larger amount than the amount of the deposit she simply denied it generally. Apart from the first therefore, they are already taken into account in my finding earlier that $15,090 was properly withdrawn and paid into the plaintiff’s account.
I do not accept that this recollection of the plaintiff is accurate; apart from anything else, it does not allow for the fact that on some occasions the amount of the cash deposit to her account was more than the $1,000 which was all that the defendant could withdraw from an ATM in the one day. For this reason I cannot accept as reliable all the plaintiff’s denials that ATM payments were attributable to her. This also reflects on her general credibility.
Analysis
Exhibit 1 shows in the period December 2007 to February 2008 income only from Centrelink and two payments for home stay students totalling $1,845.72, with total credits for the three month period of $4,886.23. Apart from the payment of $40,000 to the defendant and the two unexplained net bank transfers totalling $7,700, there were still debits of $12,790.20 during this period. From 22 January almost $4,000 was paid into the defendant’s account for the plaintiff’s earnings, but there is no indication of what was happening to any earnings from massage work prior to 20 January 2008; they never seem to have been paid into the plaintiff’s account Exhibit 1.[32] However, the plaintiff spent from this account almost $4,000 more than she earned during this period, counting was paid into both this account and the defendant’s account. That would be consistent with the plaintiff’s evidence that she was having trouble paying her bills prior to the arrangement with the defendant; the explanation would appear to be simply that she was living beyond her means.
[32]The plaintiff could not explain where they went: p 44. On the figures in Exhibit 4 the plaintiff earned $2,531.77 in 2007-8 apart from the money paid into the defendant’s account.
After the $40,000 transfer the balance in the account is nearly always below $3,000, and often below $1,000, except briefly following the large deposit on 30 April. There is no indication that the plaintiff was saving any money, and basically the money that came into this account was spent by her during this period; indeed the account had to be topped up from time to time with the deposits from the defendant’s account to prevent it from becoming overdrawn. From early March when the plaintiff’s massage money began to be paid into this account the money going through the account increased, but the position remained essentially the same: there was no indication the plaintiff was saving money, and when the account was closed the amount withdrawn to close the account was only $877.30. The only unusual transactions during that period of three months were a credit of $3,300 from “ING Bank” on 11 March, followed on 18 March by a BPay payment of $3,000 to “Wyndham SP”.[33] Leaving aside that payment as exceptional, during that period until that account was closed in late May the plaintiff spent from that account essentially everything that she earned.
[33]This was unexplained but the plaintiff admitted that payments made by the defendant to Wyndham Finance on 11 June 2008 had been made on her behalf.
Given the pattern of the plaintiff’s behaviour before and after the period when her earnings were being paid into the defendant’s bank account, it is difficult to believe that she was not continuing to spend the amount that she earned, if not more, during that period, and hence was calling on the defendant for about the amount paid in as earnings. I would therefore expect that the plaintiff was actually spending during the period of the arrangement at least at the same rate as the money was being paid into the defendant’s bank account, out of money from that account.
The analysis earlier of the plaintiff’s withdrawals of cash suggests that she was getting about $1,000 per month less cash from her own account during the period of the arrangement, so one would expect her to be getting at least this amount of cash from the defendant during that period. In these circumstances, I cannot accept the plaintiff’s evidence that she did not get cash directly from the defendant during that period. The analysis of the plaintiff’s expenditure pattern suggests that she was spending about $3,000 per month less from her account while the arrangement was in force, and as I have indicated I would expect that this would have been matched by equivalent spending from the defendant’s account.[34] Such spending would include the payments to the third parties admitted by the plaintiff or otherwise proved, but it would not include the amounts deposited to the plaintiff’s account, because those amounts are included in the debits from the plaintiff’s account; the plaintiff was spending from her account all the money that she got, including the amount deposited by the defendant, but the spending from the account still went down by about $3,000 per month during that period. The payments to third parties came to about $9,500 during the relevant period, but that leaves a large amount unaccounted for. The analysis just given suggests that the plaintiff obtained the benefit during the thirteen-month period of $39,000, which would mean cash payments of about $29,500 apart from the money deposited to her bank account.
[34]This is supported by the earlier versions of the claim, discussed above.
The difficulty with that analysis, however, is that it is largely a matter of inference, and involves making a number of assumptions about the plaintiff’s financial position. I am wary of doing this, largely because I suspect I do not know all there is to be known about the plaintiff’s financial position during this period. Whether this is because of a lack of frankness on the part of the plaintiff, or whether it was because she just cannot explain what was going on, I do not know, but I do not think that I know enough about the position to be able to act with confidence on such an analysis. There is also the difficulty that for the reasons I have given I cannot regard the plaintiff as a reliable witness. For other reasons I have also given, I cannot regard the defendant as a reliable witness either.
It appears that overall the ATM withdrawals attributed by the defendant to the plaintiff for the whole of the period in Exhibit 7 come to $49,480, of which $15,090 is balanced by deposits to the plaintiff’s account, leaving a difference of $34,390. For the reasons indicated, I am not prepared to accept that all of this money was paid over to the plaintiff, but on the other hand I am not prepared to accept that none of it was. The analysis of the plaintiff’s spending patterns suggests that on the average something over $2,000 per month was provided in cash by the defendant to the plaintiff over this period, but in view of the reservations that I have about that analysis and the caution appropriate for an account in these circumstances I think that that figure should be significantly discounted. I will therefore allow $1,500 per month as the average amount withdrawn by the defendant and actually paid to the plaintiff in cash. The plaintiff only admitted one withdrawal of $1,000, I allow an extra $18,500 under this head.
Summary of account
I therefore find that the amounts paid to the defendant by or on behalf of the plaintiff were $40,000 in the lump sum together with $38,186.23 as deposits of the plaintiff’s income, a total of $78,186.23. I find that the amounts properly paid out[35] by the defendant to or on behalf of the plaintiff were as follows:
[35]Whether or not the $40,000 was held in a trust to preserve it intact, the plaintiff as beneficiary was always entitled to require some of it to be paid to her or as she directed; what matters is what money has been returned or properly applied.
(a) paid to third parties (admitted) $7,554.15
(b) paid to Telstra (not admitted) $1,912.26
(c) deposited to the plaintiff’s bank (admitted) $4,400.00
(d) deposited to the plaintiff’s bank (not admitted) $10,690.00
(e) paid to the plaintiff (admitted) $1,000.00
(f) paid to the plaintiff (not admitted) $18,500.00
(g) bank cheque for car $9,500.00
TOTAL: $53,556.41
This leaves a balance in favour of the plaintiff of $24,629.82. The defendant is, however, entitled to credit for the wages incorrectly deposited to the plaintiff’s account in the sum of $1,296, leaving a balance of $23,333.82.
Interest
The plaintiff also claims interest. There was evidence that the defendant had in fact earned interest on the money in the second account, which came overall to $975.31: Exhibit 6. The defendant is liable to account to the plaintiff for that amount. The defendant was not earning interest on the original account, and in the circumstances there cannot have been an obligation on the defendant to invest at interest the money which was paid into her account as the plaintiff’s income, which was only ever expected to be in there for a relatively short time. On the other hand, there is a general obligation on a trustee to invest trust monies, for example by way of an interest paying account at a bank, and the balance is less than the amount of $40,000 which had been provided to the defendant to hold on a relatively long-term basis, in respect of which that obligation would attach.[36] Interest has been claimed in the statement of claim, but under the Supreme Court Act 1995, where the conventional rate of 10% is I think well above the return ordinarily available on the sort of investments available to a trustee.
[36]I do not accept that the defendant ever agreed to invest this money at any particular rate of interest, as claimed by the plaintiff: p 6.
The other question is as to the amount on which interest should be payable. Because of the way in which I have proceeded it is not possible to determine how much of the original amount of $40,000 is or should have been intact at any particular time. Most of it should have been there until the $9,500 came out; that amount should be characterised as a partial return of the original trust fund. The defendant should pay interest on the money which should have been in this account but was not, and to simplify the calculation I will allow interest on $23,333.82, the balance I have determined, for about half of the total period, from 1 September 2008. I will allow interest at 7% per annum, which is closer to a rate on a term deposit, for three and a quarter years. Accordingly the total amount allowed by way of interest comes to $5,308.44, plus the sum of $975.31.
There will therefore be judgment that the defendant pay to the plaintiff $29,617.57 including $5,308.44 by way of interest. I do not consider that there is any utility in making any declaration in circumstances where there is no longer any identifiable trust fund. I will hear submissions in relation to costs when these reasons are published, but unless another order is appropriate I will order that the defendant pay the plaintiff’s costs of and incidental to the proceeding to be assessed.
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