Goldie v Getley [No 3]
[2011] WASC 132
•26 MAY 2011
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: GOLDIE -v- GETLEY [No 3] [2011] WASC 132
CORAM: SIMMONDS J
HEARD: 6 & 7 OCTOBER 2008, 12-15 APRIL 2010 & ON THE PAPERS
DELIVERED : 26 MAY 2011
FILE NO/S: CIV 2109 of 2006
BETWEEN: JOHN GOLDIE
Plaintiff
AND
GORDON THEODORE HOTHERSHALL GETLEY As Executor of the Estate of JANET MAY GOLDIE
First DefendantGORDON THEODORE HOTHERSHALL GETLEY As Trustee for CHRISTOPHER GOLDIE and EMMA GOLDIE TRUST
Second Defendant
Catchwords:
Trusts - Trust on which shares derived from property of deceased bequeathed under the will held by executor for the benefit of the person to whom bequest made - Whether breach of trust in executor transferring shares to himself as trustee of trust established under the will of the deceased
Property - Perfected gifts - Whether gift of shares directed by person for whose benefit they were held had been perfected
Equity - Claim in respect of undue influence - Whether relationship of trust and confidence between executor and person for whose benefit shares held such that transfer should be presumed to have been procured by undue influence
Equity - Breach of fiduciary duty - Whether breach of fiduciary duty in failure to inform person for whose benefit shares held of consequences of transfer of shares
Limitation of actions - Whether claims by person for whose benefit shares held of breach of trust, knowing receipt of trust property, undue influence and breach of fiduciary duty barred by period of time before claims made
Estoppel - Estoppel by convention - Whether requirements for such estoppel made out
Equity - Laches and acquiescence - Whether requirements for laches or acquiescence made out
Equity - Doctrine of clean hands - Whether lack of clean hands shown
Equity - Equitable compensation for breach of trust, undue influence and breach of fiduciary duty - Whether loss contended for made out
Trusts - Relief from personal liability for breach of trust - Whether requirements for such relief made out
Equity - Equitable set-off - Whether requirement for such set-off that defendant possess some equitable right to be protected from the plaintiff’s claim made out
Legislation:
Administration Act 1903 (WA) s 7
Life Insurance Act 1995 (Cth) s 213
Limitation Act 1935 (WA) s 32, s 38, s 47
Limitation Act 2005 (WA) s 13
Property Law Act 1969 (WA) s 34
Trustees Act 1962 (WA) s 6, s 75
Result:
Plaintiff's claims for relief not made out
Category: B
Representation:
Counsel:
Plaintiff: Ms K J Levy
First Defendant : Mr G D Cobby
Second Defendant : Mr G D Cobby
Solicitors:
Plaintiff: Kroon Legal
First Defendant : Brickhills
Second Defendant : Brickhills
Case(s) referred to in judgment(s):
Beckford v Wade (1805) 17 Ves Jr 87; 34 ER 34
Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239; (2008) 39 WAR 1
Bullock v Lloyd's Bank Ltd [1955] Ch 317
Cartledge v E Jopling & Sons Ltd [1963] AC 758
Cia de Seguros Imperio v Heath (REBX) Ltd [2001] 1 WLR 112
Commonwealth Bank of Australia v Smith (1991) 42 FCR 390
Comptroller of Stamps (Vic) v Howard-Smith [1936] ALR 198; (1936) 54 CLR 614
Cotton v Dempster (1918) 20 WALR 14
Craven‑Sands v Koch (2000) 34 ACSR 341
Crichton v Crichton [1930] HCA 14; (1930) 43 CLR 536
Dering v Earl of Winchelsea (1787) 1 Cox Eq Cas 318; 29 ER 1184
Fouche v Superannuation Fund Board (1952) 88 CLR 609
Glasson v Fuller [1922] SASR 148
GM & AM Pearce & Co Pty Ltd v Australian Tallow Producers [2005] VSCA 113
Green v Wilden Pty Ltd [2005] WASC 83
Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 641
Hewitt v Henderson [2006] WASCA 233
How v Earl Winterton [1896] 2 Ch 626
In De Braekt v Powell [2007] WASCA 55; (2007) 33 WAR 389
JJ Harrison (Properties) Ltd v Harrison [2002] 1 BCLC 162
Karl Suleman Enterprizes Pty Ltd (in liq) v Babanour [2004] NSWCA 214
Kettles and Gas Appliances Ltd v Anthony Hordern & Sons Ltd (1934) 35 SR (NSW) 108
Lindsay Petroleum Co v Hurd (1874) 5 PC 221
Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449
Marshall Futures Ltd v Marshall [1992] 1 NZLR 316
McGee v Yeomans [1977] 1 NSWLR 273
Metcalf & Kerr v Permanent Building Society (in liq) (1993) 10 WAR 145
Milroy v Lord (1862) 4 De GF & J 264; 45 ER 1185
Moratic Pty Ltd v Gordon [2007] NSWSC 5
Morgan v Banning (1999) 20 WAR 474
Paragon Finance plc v D B Thakerar & Co [1999] 1 All ER 400
Parker & Parker v Ledsham [1988] WAR 32
Permanent Mortgages Pty Ltd v Vandenbergh [2010] WASC 10
Re Oliver; Theobald v Oliver [1927] 2 Ch 323
Rhodes v Badenach [2000] TASSC 160
Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; (2007) 69 NSWLR 603
Stephenson v Barclays Bank Trust Co Ltd [1975] 1 WLR 882
Taylor v Davies [1920] AC 636
Union Fidelity Trustee Co of Australia Ltd v Gibson [1971] VR 573
Vandervell v Inland Revenue Commissioners [1967] 2 AC 291
Walker v Melham [2007] NSWSC 264
Watson v Ebsworth & Ebsworth (a firm) [2008] VSC 510
Watson v Ebsworth & Ebsworth (a firm) [2010] VSCA 335
Wilden Pty Ltd v Green [2009] WASCA 38
Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd (No 9) [2010] WASC 44
SIMMONDS J:
Introduction
This is the trial of an action commenced by writ of summons which was amended several times, including pursuant to the order of Newnes J of this Court on 26 September 2008, whose orders also allowed for leave to re-amend the statement of claim and to re-amend the defence. The matter first came before me for trial commencing 6 October 2008. As a result of an application then by the plaintiff for leave to amend his further amended reply in terms of a minute provided on the business day immediately previous to the commencement of the trial, I granted leave to so amend except in one respect, on terms that the trial be adjourned while providing for the parties to come back before me for further orders for the adjourned trial. At that time I provided extemporaneous reasons for so deciding.
The action is for relief is on two bases.
One basis is breaches of trust on which certain shares were allegedly held for the plaintiff by the first defendant who was the executor of the estate of the plaintiff's deceased wife under which the plaintiff was a beneficiary, and of breach of the fiduciary duty owed by the first defendant to the plaintiff by reason of that trust relationship. Those breaches of trust consisted in the failure of the first defendant to transfer those shares to the plaintiff; and in the transfer of the shares by the first defendant without the fully informed consent of the plaintiff to the second defendant as the trustee of a trust established for the maintenance, advancement, education or support of the children of the plaintiff and the plaintiff's deceased wife (the children's trust). The breach of fiduciary duty consisted in the transfer of the shares to the second defendant where the first defendant had used his fiduciary position as an unauthorised source of profit for another principal to whom a fiduciary duty was owed. It is further alleged that the second defendant was at all material times aware the shares were held on trust for the plaintiff and of the breaches of trust.
The other basis for the plaintiff's claim for relief is that the plaintiff was subject to the influence and dominion of the first and/or the second defendant such that, if which is denied, the plaintiff gifted the shares to the children's trust, the transfer of them by the first defendant to the second defendant was not the independently made and well understood act of a person in a position to exercise free judgement based on information as full as that of the first and/or the second defendant; was not made with the fully informed consent of the plaintiff; was not made with the benefit of independent advice; and was improvident in so far as it was substantial and there was no power to recall the gift.
The relief claimed is orders for the transfer of the shares to the plaintiff; alternatively that the first and second defendant account to the plaintiff for them; for tracing of the proceeds of the shares; further or alternatively as against the first defendant damages for breach of trust and as against the second defendant damages 'as a result of his knowing receipt of trust property'; and interest before judgment, costs and such other relief as the Court thinks fit.
There was also a counterclaim. However, this was settled prior to the commencement of the resumed trial.
Background
The following matters are not in contest between the parties except as I indicate.
The plaintiff, John Goldie, entered the car industry in or about 1969 and left it in 1999. During that period he owned or managed a number of dealerships. During this period Gordon Getley became John Goldie's AMP agent: there is a difference on the evidence of the parties as to when that relationship commenced, but it is not in contest it had been on foot for some years before and continued at least during the events of 1995 to 1998 I will describe. As will be seen there is a sharp contest between the parties as to what the professional relationship between the two men extended to. However, it is not in contest that at least it comprised insurance advice.
On 29 August 1975 John Goldie married Janet May Goldie (Janet). He and Janet had two children, Christopher David Goldie (Christopher), born 23 June 1980 and Emma Louise Goldie (Emma), born 22 July 1983.
In May 1994 Janet was diagnosed with cancer, and in September or October 1994 she and John Goldie were advised that her cancer was terminal. She made her last will in hospital on 10 February 1995. By that will (exhibit 1.15: the Will), cl 2, she appointed Gordon Getley to be the executor and trustee of the Will.
By the Will cl 3, Janet provided for specific gifts to certain companies of certain shareholdings or her beneficial interest in certain companies; a gift to Emma and Christopher on trust for their maintenance, advancement, education or support until they attained the age of 25 years of the proceeds of three insurance policies, together with the proceeds of the sale of 'my Toyota Cressida motor vehicle', specifying a registration number; a gift to each of the children of certain personal effects; and the gift to them in equal shares upon them both attaining the age of 25 of the remainder of the children's trust so provided for. By the same clause, after the payment of just debts and funeral and testamentary expenses, Janet gave John Goldie the residue of her estate (cl 3(j)).
One of the three insurance policies the proceeds of which were by the Will to be the property of the children's trust was AMP insurance policy V5176541‑X. That policy was identified in the records of the AMP in terms that the life insured was that of Janet and the nominated beneficiary was John Goldie (the cl 3 AMP policy on Janet's life). It was not in contest that, notwithstanding the provision for the cl 3 AMP policy on Janet's life in that clause, the owner of that policy was John Goldie, not Janet.
The other two insurance policies the proceeds of which were to be the property of the children's trust were of other insurers.
In addition, the Will cl 4 provided as follows:
I DIRECT that my husband pay his beneficial interest in my AMP insurance policies numbers WO182629-X and WO473265 upon them vesting in him to the Trust established for the maintenance advancement education or support of my said children in return for me relinquishing all my rights and entitlements to his insurance policies numbers WO473266-G, WO118873-X, WOO79892-S, WO427302-W and WO103330-C.
It appears to be common ground that the provisions for the gifts to Emma and Christopher on trust (cl 3), and for the payments to the Trust (cl 4), were intended to establish the children's trust.
As at or about the date of Janet's death, the two policies in cl 4 were shown in the records of the AMP (with what it appears it was common ground were immaterial differences in numbers) in terms that the life insured was Janet, the nominated beneficiary was John Goldie and the policies were 'owned' by John Goldie (the two cl 4 AMP policies on Janet's life). The five last‑mentioned policies were so shown (with what it appears it was common ground before me were immaterial differences in numbers and letters in some cases) in terms that the life insured was that of John Goldie and the 'owner' was Janet (the five cl 4 AMP policies on John Goldie's life). It will shortly be seen that the shares the focus of these proceedings were in respect of the holding of the five cl 4 AMP policies on John Goldie's life.
It will be seen that, pursuant to the direction in the Will's cl 4, John Goldie's 'beneficial interest' in the two cl 4 AMP policies on Janet's life was to form property of the children's trust, in addition to the property identified for that purpose in the Will's cl 3.
It is convenient for me to note the difference in the language of gift in the Will cl 3 and of relinquishment in cl 4 at this point. Counsel for the defendants drew my attention to Life Insurance Act 1995 (Cth) (Life Insurance Act) s 213, which reads as follows:
213 Death of policy owner who is not the life insured
(1)This section applies:
(a)if the owner of a life policy dies before the person whose life is insured by the policy; and
(b)either:
(i)the adjusted surrender value of the policy is less than the prescribed amount; or
(ii)the policy is one of 2 or more policies owned by the deceased owner and issued by the same company the total adjusted surrender values of which are less than the prescribed amount.
(2)If a person (the 'applicant') satisfies the company that issued the policy:
(a)that he or she is entitled, under the Will or on the intestacy of the deceased owner, to the benefit of the policy; or
(b)that he or she is entitled to obtain probate of the Will or to take out letters of administration of the estate of the deceased owner;
the company may endorse on the policy a declaration that the applicant has so satisfied the company and is the owner of the policy.
(3)The company may endorse the policy without requiring the production of any probate or letters of administration.
(4)If subsection (2) applies, the applicant becomes, subject to subsection (5), the owner of the policy.
(5)Subsection (4) does not:
(a)confer on the applicant any beneficial interest in the policy that he or she would not otherwise have had; or
(b)affect any right or interest of a person other than the applicant in relation to the policy.
(6)For the purposes of this section, the adjusted surrender value of a policy is the surrender value of the policy as at the day on which the owner died, less any debt due to the company under, or secured by, the policy.
(7)In this section, 'prescribed amount' means $25,000 or such other amount as is prescribed by the regulations for the purposes of this section.
Counsel for the defendants submitted, first, that this provision explained the language of relinquishment in the Will cl 4; and, second, it had the effect of removing the five cl 4 AMP policies on John Goldie's life from the gift of residue in cl 3(j) while not representing a gift of those policies. As will be seen, these submissions may have significance to a point of limitation of actions raised for the defendants. However, the first submission is difficult to square with the fact the Life Insurance Act did not come into effect until 1 July 1995, after the date of the Will. In any event the provision's only application in the present context, given that John Goldie, who was not the executor appointed by Janet and was not the person entitled to obtain probate of the Will (see Administration Act 1903 (WA) (Administration Act) s 7), would be, on the basis in Life Insurance Act s 213(2)(a), that John Goldie would be a person entitled under the Will to the benefit of the five AMP polices on John Goldie's life. While as a matter of logic I accept the second submission, I conclude that on the proper construction of cl 4 it was a provision for John Goldie on providing the return cl 4 called for to take Janet's rights and entitlements to the five cl 4 AMP policies on John Goldie's life. I so conclude for the following reasons.
It was not suggested any other person was to take them, nor was it suggested that when that return was provided the plaintiff was not to take those rights and entitlements in equity, subject to the administration of the estate, so that the first defendant would acquire the legal ownership of the property. It is a different question, as counsel for the defendants may have been meaning to submit, what the duties of the first defendant were with respect to the five cl 4 AMP policies on John Goldie's life, and in particular whether or not he was under any duty as executor to transfer those policies and the rights arising out of them to the plaintiff, and, if so, whether he was in breach of that duty. As will be seen, the plaintiff's action concerns the entitlement to shares on the conversion of the AMP Society to AMP Limited where that entitlement arose out of ownership of the five cl 4 AMP policies on John Goldie's life.
On 6 April 1995 Janet died.
Not long after Janet's death, John Goldie read the Will.
By a letter dated 19 April 1995 to 'Mr G Getley c/- Getley Paulson [sic]' from the AMP referencing the two cl 4 AMP policies on Janet's life and the cl 3 AMP policy on Janet's life the letter's author states '[w]e understand you will be handling matters for the above Estate', and provides the details I previously set out on the records of the AMP as to the two cl 4 AMP policies on Janet's life and the cl 3 AMP policy on Janet's life, as well as the five cl 4 AMP policies on John Goldie's life. It also provides details as to a policy on the life of Emma and shown on the records of the AMP as owned by Janet (the AMP policy on Emma's life). The AMP policy on Emma's life was not specifically provided for in the Will. It was not in contest that this letter was in response to information Gordon Getley provided to the AMP that the five cl 4 AMP policies on John Goldie's life and the AMP policy on Emma's life were to be 'transferred' to John Goldie. The letter dated 19 April 1995 from the AMP stated that
'[o]wnership of [the five cl 4 AMP policies on John Goldie's life and the AMP policy on Emma's life] now lies with the Estate of [Janet] and it may be dealt with only after evidence of death and proof of the right to act on behalf of the Estate have been produced to the Society'
The letter stated that the 'requirements' of the Society were a 'full death certificate' and 'probate parchment … A copy certified by a Solicitor as correct and complete would be acceptable'. The letter went on to say that:
[o]n receipt of these requirements instructions for transferring policy ownership from the Estate will be forwarded.
There was no evidence before me as to what if any such instructions were ultimately forwarded, except for evidence from Gordon Getley, which was unchallenged, that he took no action in relation to that transfer, and John Goldie made application for it to take place (cross‑examination, ts 695). It was also not in contest, as will appear, that by 13 February 2008 the records of AMP showed John Goldie as owner of the AMP policy on Emma's life. It was the evidence of Gordon Getley, which was also not challenged, that his ownership, like that of Janet before him, was as 'guardian in trust' for Emma who took ownership at the age of 21 (cross‑examination ts 692 (source of quotation), 693).
On 14 June 1995 the two cl 4 AMP policies on Janet's life 'vested' in John Goldie. It is common ground that by this was meant that on that date John Goldie became entitled to the beneficial interest in the form of the proceeds under the two cl 4 AMP policies on Janet's life. On 19 June 1995 he 'paid the beneficial interest resulting from the vesting of [the two cl 4 AMP policies on Janet's life]' to Gordon Getley as trustee of the children's trust. It appeared to be common ground that by this was meant that John Goldie transferred to the second defendant the 'beneficial interest', being his entitlement to the proceeds under the two cl 4 AMP policies on Janet's life that had 'vested' in him. It was also common ground that this payment was the return provided for in cl 4 of the Will for the relinquishment of Janet's rights and entitlements to the five cl 4 AMP policies on John Goldie's life. However, it was also common ground that it was not until 13 February 1998 that the records of the AMP were changed to show him as owner of those policies.
On 20 June 1997 probate of the Will was granted to the first defendant.
By letter dated 20 October 1997 to 'Janet May Goldie c/- Mr J Goldie 4A Mosman Terrace MOSMAN PARK WA 6012', and addressing her as 'Member', the Chairman of the AMP stated he was sending her 'information that will help you make an informed decision about how to vote on the Proposal to Demutualise' (the AMP letter of 20 October 2007). It was common ground this was a reference to the proposal to members of the AMP to convert it from a mutual society to AMP Limited, a company limited by shares, which it was common ground was a proposal for the demutualisation of the AMP. It was not in contest that the address on Mosman Terrace was that of the property on which there was the family home in which John Goldie and Janet had lived with Emma and Christopher and where John Goldie then lived with the two children (the Mosman Terrace Property).
The AMP letter dated 20 October 1997 went on to say, inter alia, that
You will receive Shares in AMP Limited in exchange for your membership rights in AMP. You will not have to pay any money for your Shares. The number of Shares you will receive is shown on the back of this letter.
Forming part of the AMP letter dated 20 October 1997 were two pages, both headed 'Share Allocation', and showing 'Your individual Share allocation'.
One of those pages, for 'Janet May Goldie', showed '577 Shares'. It was common ground those shares were in respect the AMP policy on Emma's life (the shares in respect of the AMP policy on Emma's life).
The other of those pages, for 'Estate of Janet May Goldie', showed '18,964 Shares'. It was not in contest that those shares (the subject AMP shares) were in respect of the five cl 4 AMP policies on John Goldie's life. It is the subject AMP Shares that are the focus of these proceedings.
It will be seen that the AMP letter dated 20 October 1997 reflected the fact that as at its date the records of the AMP showed Janet's estate as the owner of the five cl 4 AMP policies on John Goldie's life and the AMP policy on Emma's life. It was not in contest that ownership of those policies was so far as the AMP was concerned membership for the purposes of the future allocation of shares on the conversion of the AMP to AMP Limited (the demutualisation), including the subject AMP shares. It was also not in contest that the subject AMP shares on such allocation at least would become the property in equity of the plaintiff.
On 1 January 1998 the AMP was converted to AMP Limited. It was common ground that the plaintiff was aware at all material times that, as a result of that conversion, persons who had been members of the AMP would receive shares in that company in exchange for their memberships. The conversion of the AMP to AMP Limited was the demutualisation referred to in the AMP letter dated 20 October 1997.
Some time on or after 3 February 1998, but before the date of the letter from AMP Life Limited concerning the ownership of the five cl 4 AMP policies on John Goldie's life I reach below, a copy of the certificate of probate dated 20 June 1997, endorsed with a certification of that date that it was a true copy, was marked by a member of the staff of AMP Limited with the words inter alia 'I trust things can now start moving'. It appeared not to be in contest before me that, as indicated by that copy, it had been sent by Getley Paulsen & Associates. That was a business that Gordon Getley had set up in 1976 and that traded as insurance agents for the AMP Society. It will be recalled that receipt of a certified copy of the certificate of probate was one of the ways of satisfying the 'requirements' for transfer of the five cl 4 AMP policies on John Goldie's life that was referred to in the letter dated 19 April 1995 from the AMP.
By letter dated 13 February 1998 to 'Mr J Goldie c/- Getley Paulsen & Assoc. Pty Ltd', on letterhead of AMP Life Limited, a Mrs Anne Brunt, 'Life Claims Officer', after referring to the five cl 4 AMP policies on the life of John Goldie, stated in part:
The ownership of this policy is now established in the name of JOHN GOLDIE, and our records have been noted.
Memorandum of Alteration is enclosed for attachment to the Policy document.
With that letter dated 13 February 1998 (the 13 February 1998 letter relating to the five cl 4 AMP policies on John Goldie's life) was inter alia a document headed 'MEMORANDUM OF ALTERATION' which stated it was for 'attachment to and forming part of [the five cl 4 AMP policies on John Goldie's life]' and which also stated in part:
JOHN GOLDIE has satisfied the Society that he/she is entitled to obtain Probate of the Will of JANET MAY GOLDIE and is hereby declared to be the owner of the within Policy.
It was common ground that it was the first defendant, not John Goldie, who had been granted probate of the Will, as indicated on the copy of the certificate of probate received by the AMP earlier in February 1998. I have previously indicated that John Goldie was not entitled to apply for probate of the Will. The significance of the inconsistent reference in the 13 February 1998 letter relating to the five cl 4 AMP policies on John Goldie's life was not explored in argument or evidence before me. I consider the likeliest explanation on the evidence before me is that the Memorandum simply uses the name of the addressee of the letter. It may be that the letter indicates that the AMP recognised ownership of the five cl 4 AMP policies on John Goldie's life pursuant to Life Insurance Act s 213: see s 213(2)(b). However, the relevant provision would of course have been s 213(2)(a). Further, it is not clear how this construction is to be reconciled with the letter of 19 April 1995 previously referred to, which indicates as one of the 'requirements' for transfer the production of proof of probate. I further note that it was not in contest that, while none of the five cl 4 AMP policies on John Goldie's life had a surrender value higher than the prescribed amount referred to in s 213(7), their total surrender value, as set out in the letter from the AMP dated 19 April 2005, was significantly in excess of that amount. See s 213(1)(b)(ii), which may be a cumulative, not an alternative, requirement.
In any event, it is not in contest that on 13 February 1998 John Goldie became the owner of the five cl 4 AMP policies on John Goldie's life.
There was also a further letter dated 13 February 1998, in a similar form to the 13 February 1998 letter relating to the five cl 4 AMP policies on John Goldie's life, stating that ownership of the AMP policy on Emma's life was established in John Goldie's name and attaching a 'Memorandum of Alteration in respect of that policy (the 13 February 1998 letter relating to the AMP policy on Emma's life). That Memorandum, unlike the corresponding one attached to the 13 February 1998 letter relating to the five cl 4 AMP policies on John Goldie's life, stated in part:
Probate of the Will of JANET MAY GOLDIE who died on 6 April 1994 has been produced to AMP Life Limited appointing JOHN GOLDIE as legal personal representatives.
It will be seen the date of Janet's death is incorrect, as is the reference to John Goldie as her legal personal representative. The significance of these errors was not explored in argument or evidence before me. I consider the likeliest explanation on the evidence before me is that '1994' is a typographical error, and that, as with the Memorandum attached to the 13 February 1998 letter relating to the five cl 4 AMP policies on John Goldie's life, the Memorandum attached to the 13 February 1998 letter relating to the AMP policy on Emma's life simply uses the name of the addressee of that letter, John Goldie.
In March 1998 John Goldie and Gordon Getley had a meeting in which Gordon Getley said that the subject AMP shares would be issued to Janet's estate because the AMP had demutualised on 1 January 1998 and the transfer of the five cl 4 AMP policies on John Goldie's life into his name had only occurred in February 1998.
However, while so much is common ground, there is a sharp contest between the parties as to other features of this exchange. The plaintiff contends Gordon Getley informed him of these matters as a matter of courtesy as to that issue of shares and that he proposed to transfer the shares into the children's trust. The plaintiff did not object as he believed he did not have any grounds to do so. The defendants contend that Gordon Getley asked John Goldie if he wanted Janet's estate to transfer the shares into his name, and he replied that he wished to have all the shares on all of the policies that Janet had owned transferred into the children's trust. As I have previously indicated, the policies that Janet had owned comprised the five cl 4 AMP policies on John Goldie's life and the AMP policy on Emma's life, although in respect of the latter policy it was Gordon Getley's evidence that the ownership was in trust for Emma. On this contention the shares comprised at least the subject AMP shares. I will return to this contest below as it is central to the claim that the plaintiff did not gift the subject AMP shares to the children's trust. For now, I note it is not in contest that in March 1998 John Goldie was aware that the subject AMP shares were to be transferred into the children's trust.
It was not in contest that by letters dated 7 May 1998 to the addresses for the persons to whom shares had been allocated at the date of the conversion of the AMP to AMP Limited the Chairman of that company stated in part:
On behalf of the Board of AMP Limited, I am pleased to send you our Prospectus. It contains information that is important to you as a Shareholder.
As a result of the AMP Society demutualisation, you became a Shareholder on 1 January 1998. To complete the demutualisation process, AMP Limited will apply to be listed on the Australian and New Zealand stock exchanges.
I consider it is not in contest that such a letter or letters in respect of both the subject AMP shares and the shares in respect of the AMP policy on Emma's life would have been sent addressed in the same way as the AMP letter of 20 October 2007.
In May or June 1998 there was a further conversation between John Goldie and Gordon Getley about a transfer of the subject AMP shares to the children's trust. There is the same contest, mutatis mutandis, over other features of this exchange as over the other features of the conversation of March 1998 to which I referred
In or about late July 1998 or early August 1998 Gordon Getley received forms for the transfer of AMP shares to Janet's estate as well as a share transfer form and the AMP's probate requirements.
At about the same time, on Gordon Getley's evidence there was a still further conversation between him and John Goldie about a transfer of the subject AMP shares and the shares in respect of the AMP policy on Emma's life to the children's trust. However, on John Goldie's evidence he had no recollection of such a meeting.
By a form, Pre-Listing Transmission Application – AMP Limited, dated 31 August 1998 the first defendant applied to be registered as the holder of 18,964 fully paid ordinary shares in the company. By a further form, Standard Transfer Form – Pre-Listing Transfers, dated the same date the first defendant applied to transfer that number of shares to himself. It is not in contest that transfer was intended to be from Janet's estate to the children's trust. On Gordon Getley's evidence, as a result of an 'oversight' he did not include in the forms the shares in respect of the AMP policy on Emma's life.
As a result of certain concerns the AMP had with the forms and the first defendant's realisation he had not included in the transfer form the shares in respect of the AMP policy on Emma's life, he executed a new form of transfer of all of those shares, had the form stamped by the New South Wales Office of State Revenue and, under cover of letter to the AMP, sent it to them in or about late October or early November 1998.
On 6 November 1998 by off market transfer the subject AMP shares were transferred from Janet's estate to the children's trust. However, on Gordon Getley's evidence the shares in respect of the AMP policy on Emma's life were not transferred at that time, as through the first defendant's continuing 'oversight' he had failed to include them in the transmission application. At the same time, the only evidence with respect to what finally happened to the shares in respect of the AMP policy on Emma's life is his further cross‑examination, in which he testified that it was his belief that John Goldie 'kept' those shares (ts 697). The matter was not otherwise explored in evidence before me.
In December 1998, following requests made by the plaintiff of the second defendant, it was agreed between them that the children's trust would lend funds the plaintiff had asked for to permit construction of a larger home at the Mosman Property (the First Loan). The plaintiff had in mid‑1998 met and in March 1999 was to marry Julie Anderson (Julie) who had three children, two of whom would, with Emma and Christopher, be accommodated there. This required a larger home. The funds provided by the children's trust came from sales from time to time of the larger portion of the subject AMP shares. The plaintiff was aware of this. He and Julie signed an acknowledgement dated 12 January 2000 of their 'liability to purchase 14,500 AMP shares to replace them sold from [the children's trust] used to fund progress claim payments on [the new home on the Mosman Terrace Property]'. By 14 February 2001 the second defendant had sold 18,500 of the subject AMP shares and lent the proceeds to the plaintiff principally for the purposes of the First Loan.
Construction of the new home took about two years with the first advance from the children's trust in March 1999 and the last advance in May 2001. The plaintiff also received some loans for other purposes from the children's trust, and a loan against a life insurance policy of Christopher's. A one‑half interest in the Mosman Terrace Property was transferred to Julie in July 2001. In September 2001 the Mosman Terrace Property was sold and not long afterwards the First Loan, together with smaller loans from the children's trust for other purposes and a loan made on a life insurance policy of Christopher's, were paid back by payment to Gordon Getley. The total repayment was $350,000, in terms of principal representing $334,100, of which that for the First Loan was $283,013 and that for the other loans totalled $51,087. The balance of the $350,000, of $15,900, was thus interest. Gordon Getley invested the proceeds of the repayment in debentures issued by Kareelya Capital Pty Ltd. As will be seen shortly, the second defendant called in part of the amount so invested to fund another major loan requested by the plaintiff. The balance of the investment in Kareelya debentures later became units of interest in a managed investment scheme which were transferred to Emma and Christopher.
As will be seen there is a contest over the initial terms of the First Loan. However, it is not in contest the transaction by which the funds were made available was by way of loan, nor that it was repaid with interest as indicated.
After the sale of the Mosman Terrace Property, John Goldie and Julie Goldie bought a block of land on Faulkner Circle in Mosman Park (the Faulkner Circle Property). They contracted to build a new home there (the Second Home). At about this time a housing loan for the purpose of that construction was entered into with John Goldie and Julie as the borrower parties.
In December 2001, Emma left for the United Kingdom.
Also in December 2001, the plaintiff sought a loan from the children's trust to finance an investment in a business in which he and Julie would be involved, a Cartridge World franchise in Cottesloe, and the second defendant agreed, with the loan of $90,000 commencing in January 2002 (the Second Loan). The $90,000 was advanced at that time by the second defendant making a call on the investment in Kareelya Capital in that amount. There was a written loan agreement subsequently produced and it was executed by the plaintiff and the second defendant on 21 January 2003. In that agreement the loan was made repayable on the earlier of 'the sale of business interest in Cartridge world Cottesloe' and 'the retirement of John Goldie from the workforce', while he could 'elect' to repay any amount owing in respect of the loan at any time. Interest was payable under the agreement and it appears not to be in contest that interest was paid by John Goldie for January and February 2002.
In or about March 2004, while Emma was visiting from the United Kingdom, John Goldie met with her and Christopher and asked if they would forgive the Second Loan. There is a contest over what else was said on this occasion that I will return to. It is not in contest that the Second Loan was not forgiven.
In or about April 2005, after a request from the plaintiff, the children's trust lent him a further $15,000 repayable with interest (the Third Loan).
In April 2005, following the making of this loan, by contract of sale by offer and acceptance John Goldie and Julie Goldie agreed to sell the Faulkner Circle Property. It is a part of the plaintiff's case that had it not been for the conduct of the defendants of which the plaintiff complains, he would have had the benefit of the subject AMP shares and would not have had to sell the Faulkner Circle Property then. Rather he would have sold the Faulkner Circle Property no earlier than June 2006, and only if an offer at a greater sum were obtained.
On 20 April 2006 following correspondence between the second defendant and the plaintiff concerning repayment of the Second Loan and the Third Loan and letters of demand from the second defendant's solicitor, responded to by the then solicitors for the plaintiff, proceedings in the Magistrates Court of Western Australia were commenced by the second defendant against the plaintiff for payment of unpaid interest on the Second Loan and for repayment of the Third Loan with interest (the Magistrate's Court Proceedings). The responses from the then solicitors for the plaintiff included a letter dated 17 November 2005 in which those solicitors raised with the solicitor for the second defendant the matter of John Goldie's entitlement to the subject AMP shares (the letter of 17 November 2005).
In August 2006, after judgment had been obtained in the Magistrate's Court proceedings, solicitors for the second defendant issued a bankruptcy notice against the plaintiff in respect of the judgment sum.
In November 2006 the bankruptcy notice was set aside following the plaintiff's payment of the sum claimed in that notice. It may be noted that this payment was made after the plaintiff had provided evidence in the proceedings relating to that notice in the Federal Magistrates Court that he had a claim as to the subject AMP shares,
It appears to have been common ground that as at the trial the second defendant had by sale disposed of all of the subject AMP shares except for a relatively small number of them, and the proceeds of the sales in the hands of either of the defendants were represented only by a claim for the amount due under the Second Loan, while the balance of those proceeds that had at any time been in the hands of either of the defendants as well as shares taken up by the second defendant in rights issues and the balance of the subject AMP shares had been transferred by the second defendant to Emma and Christopher. However, I note that I do not appear to have any evidence that there had been a transfer to them of the proceeds represented by the plaintiff's payment of the sum claimed in the bankruptcy notice.
The issues
As these emerged from the pleadings as amended and at the trial, these were the following:
1.Did the plaintiff in or about March 1998 or at any other time orally direct the first defendant as executor of the Will to cause the AMP shares to be transferred to the children's trust by way of a gift by the plaintiff? If so, was there a perfected gift?
2.If there was a perfected gift, was it liable to be set aside as a gift made to a person, the first or the second defendant or both, to whose influence or dominion the plaintiff was subject, such that the gift was not independently made and was not the well understood act of a person in a position to exercise free judgment based on information as full as that of the first or second defendant or both, or not made with the fully informed consent of the plaintiff, or not made with the benefit of independent advice or improvident in so far as it was substantial and there was no power to recall the gift?
3.Did the transfer of the AMP shares by the first defendant to the second defendant represent a breach of fiduciary duty to the plaintiff by which the plaintiff suffered loss as a result of a use of the first defendant's fiduciary position as an unauthorised source of profit for another principal to whom a fiduciary duty was also owed?
4.Is any cause of action by the plaintiff against the first defendant or the second defendant barred by the expiry of any applicable limitation period?
5.Is the plaintiff estopped from making any claim in relation to the subject AMP shares?
6.Is the plaintiff barred from making any claim in respect of the transfer of the subject AMP shares from the first defendant to the second defendant by reason of acquiescence or laches?
7.Is the plaintiff barred from making any claim in equity because of the doctrine of clean hands?
8.Has the plaintiff established the loss the plaintiff claims?
9.If the first or the second defendant is liable to the plaintiff, ought he to be excused from liability under Trustees Act 1962 (WA) (Trustees Act) s 75?
There is a further matter of a plea by the defendants of set off in equity. No argument was addressed to me on this issue. However, I will return to it at the end of these reasons.
There is a preliminary issue. It is that of the effective date of the amendments to the amended writ of summons made by leave of Newnes J on 26 September 2008. Its resolution is of course significant for the purpose of issue 4 above in respect of the relevant cause or causes of action.
I deal with this preliminary issue first, beginning with an account of the history of the pleadings in this matter up to the amendments referred to. For reasons which will become apparent, it will be necessary to provide a fairly detailed such history.
History of the pleadings
The action was commenced by writ of summons with statement of claim both dated 12 October 2006 and filed 16 October 2006.
The action was commenced against Gordon Theodore Hothershall Getley (without specification of any capacity in which he was being sued).
In the statement of claim, the following paragraphs appear, all of which are contained with no significant change in the subsequent forms of the statement of claim:
•the death of the deceased (par 1);
•probate of the Will (par 2);
•cl 4 of the Will (par 3);
•the vesting of the two cl 3 AMP policies on the life of Jane Goldie policies in the plaintiff (par 4);
•the payment by the plaintiff to the children's trust of 'the beneficial interest' resulting from the those policies (par 5);
•the holding of the five cl 4 AMP policies on the life of John Goldie by Gordon Getley on trust for the plaintiff (par 6);
•the conversion of the AMP to AMP Limited (par 7);
•the consequential entitlement of the holder of the five cl 4 AMP policies on the life of John Goldie to the subject AMP shares (par 8);
•the holding of the subject AMP shares by Gordon Getley on trust for the plaintiff (par 9);
•the transfer by Mr Getley of the five cl 4 AMP policies on the life of John Goldie policies to the plaintiff (par 10);
•the failure by Mr Getley to transfer the subject AMP shares to the plaintiff (par 11);
•the failure by Gordon Getley to inform the plaintiff that he held the subject AMP shares (par 12);
•the plaintiff's demand by his solicitors by letter dated 6 April 2006 on Gordon Getley to account for and to transfer the subject AMP shares to the plaintiff (par 13); and
•the refusal of Gordon Getley to account for or to transfer the subject AMP shares to the plaintiff (par 14).
The prayer for relief in the statement of claim contains the following, all of which are contained with no significant change in the subsequent forms of the statement of claim:
•an order Gordon Getley transfer the subject AMP shares to the plaintiff (par 1);
•further or alternatively an order that Gordon Getley account for the subject AMP shares (par 2); and
•an order for the tracing of the proceeds of the subject AMP shares (par 3).
The writ of summons and the statement of claim were amended by documents (respectively, the amended writ of summons and the amended statement of claim) dated 30 November 2006 and filed 4 December 2006.
By the amended writ of summons, Gordon Getley was named as defendant in his capacity as the executor of the estate of the deceased. By the amended statement of claim the only significant change made to the statement of claim was to add a paragraph (par 1A) to state that the plaintiff's claim was against Gordon Getley as that executor.
A defence dated and filed 21 December 2006 was entered. For my purposes the principal parts of the defence were three.
One principal part (par 13.1 and 13.2) was the pleaded denial of the amended statement of claim par 12 and the further statement that 'in or about May 1998' the plaintiff 'verbally directed' the defendant to cause the subject AMP shares to be transferred to the children's trust by way of gift, a direction which was 'verbally confirmed' on 'separate occasions over the period May 1998 to October 1998'.
Another principal part (par 13.6) was the pleading that 'in or about February 1999' the plaintiff approached the defendant in the latter's capacity as trustee of the children's trust and 'verbally requested' that the children's trust by selling down the AMP shares lend the plaintiff monies to meet progress payments relation to the construction of the plaintiff's house at the Mosman Terrace Property, which was followed by an agreement to that effect also 'in or about February 1999' between the defendant in his capacity as trustee of the children's trust and the plaintiff (the progress payments agreement). There is also a plea, as to the plea (par 16.2) in the statement of the claim of the refusal to account for and transfer the subject AMP shares, that 'the defendant informed the plaintiff as to the number of the AMP shares that were sold down by the [children's] trust under [the progress payments agreement]'.
For my purposes the third and final principal part of the defence (par 17) was that the 'cause of action' was barred pursuant to Limitation Act 1935 (WA) s 38(1)(c) or Limitation Act 2005 (WA) s 13(1).
A reply dated 4 April 2007 and filed 5 April 2007 was entered. The reply simply states that save insofar as the defence consists of admissions the plaintiff joins issue with the defendant, and further and in the alternative insofar as the defendant pleads a 'verbal gift' of the subject AMP shares 'by the plaintiff to the defendant (which is denied)' the plaintiff says that the alleged gift, as a disposition of an equitable interest in the AMP shares, would be ineffectual and unenforceable for want of writing by virtue of Property Law Act 1969 (WA) (Property Law Act) s 34(1)(c).
An amended reply dated 31 August 2007 and filed 4 September 2007 was entered pursuant to leave granted by Newnes J on 30 August 2007. The amended reply made only one change to the reply, by adding a further plea, to defence par 17, that the plaintiff's 'proceedings' were not 'time barred', referring to the 'relevant time period' as that in Limitation Act 1935 s 32(1).
An amended defence dated and filed 15 August 2008 was entered pursuant to orders of Newnes J of 6 September 2007. For my purposes the relevant changes to the defence were four.
One change was to the date (par 13.1) of the first 'verbal' direction by the plaintiff to the defendant (from May 1998 to March 1998) and the period (par 13.2) of the 'separate confirmations' of the direction (from the period May 1998 to October 1998 to the period May 1998 to August 1998).
Another change was the pleading (par 18.1, 18.2 and 18.3) that in reliance upon the first verbal direction and its confirmations the defendant in his capacity as executor of the Will requested 'AMP' to transfer the subject AMP shares to the children's trust so as to 'perfect the gift' the subject of the direction so confirmed, and in his capacity as trustee of the children's trust the defendant sold the subject AMP shares and lent the proceeds to the plaintiff pursuant to the progress payments agreement; that the plaintiff was aware of the arrangement for that transfer with that intention; and that the defendant in his capacity as trustee of the children's trust relying on the conversations leading up to the progress payments agreement sold 14,500 of the subject AMP shares and over the period March 1999 to May 2001 advanced $334,100 realised from such sales to the plaintiff.
Another change was the pleading (par 18.4) that the plaintiff made no complaint in relation to the subject AMP shares until 17 November 2005, and then only after the defendant had demanded repayment of further loans, of $90,000 and $15,000, made to the plaintiff by the defendant in his capacity as trustee of the children's trust.
For my purposes the fourth and final change made by the amended defence to the defence was the pleading that the plaintiff was estopped from making any claim in relation to (par 19), or barred by his laches from asserting any claim in respect of (par 20), the subject AMP shares by the plaintiff's direction to transfer the shares by way of gift; the progress payments agreement and the conversations leading up to it; the defendant's actions in selling the subject AMP shares and making the advances from the proceeds; and the plaintiff's failure to make a complaint in relation to the subject AMP shares.
A further amended reply to defence dated 27 August 2008 and filed 29 August 2008 was entered, presumably pursuant to Rules of the Supreme Court O 21 r 3(2). For my purposes no significant change was made to the amended reply.
A re‑amended writ of summons and re‑amended statement of claim dated and filed 26 September 2008 were entered pursuant to the orders of Newnes J of the same date, orders which I now reach.
Effective date of the amended writ
By the orders of Newnes J of 26 September 2008, the plaintiff had leave to amend 'in terms of the proposed amended writ of summons dated 23 September 2008 and to rely upon the substituted witness statement of John Goldie, subject to all just objections`'.
Further, by those orders, 'the date upon which the amendments to the writ take effect be reserved to the trial judge'.
The reference to the 'proposed amended writ of summons dated 23 September 2008' was to the Minute of Re‑amended Writ of Summons amended pursuant to the order of Registrar Johnson on 23 November 2006 Re‑amended pursuant to the order of Justice Newnes on [Date]' (the 23 September Minute). The 23 September Minute provided for the joinder of the second defendant, that is, Gordon Getley in his capacity as trustee of the children's trust; and added to the statement of claim, among other things, that the first defendant in breach of the trust on which he held the subject AMP shares caused them to be transferred to the second defendant to the detriment of the plaintiff as a beneficiary of the trust; and that as from the date of receipt of the AMP shares the second defendant knew the matters relied upon as the breach of the trust on which the estate of Janet held the subject AMP shares for the plaintiff. The 23 September Minute also provided for claims for relief against the second defendant, including for the transfer of 'the share' to the plaintiff, an accounting and damages as a result of knowing receipt of trust property.
It is apparent that Newnes J gave leave to amend by the 23 September Minute by reference to the situation contemplated by Wheeler J in Morgan v Banning (1999) 20 WAR 474, 486 (Ipp J agreeing), of 'circumstances where it is not clear how the amendments relate to the original cause of action and in such a case, it may be preferable that the issue be left for trial'.
In my view the effective date of the amendments to the writ by the 23 September Minute was that of the filing of the original writ, 16 October 2006. That is because the new cause of action against the second defendant, added by the amendments to the statement of claim, arose out of the same facts, or substantially the same facts, as a cause of action in respect of which relief had been claimed in the action: see O 21 r 5(5) and Morgan 486. The latter cause of action was the failure of Gordon Getley to transfer the subject AMP shares to the plaintiff and his refusal or failure to transfer them or to account for them when demand was made in that respect subsequently. The former cause of action was of receipt of trust property knowing that it was given in breach of trust. That degree of commonality of fact and legal categorisation (on the latter, see Morgan 485) is in my view sufficient to lead to the view I have described. I am fortified in that view by the way in which the issue of the transfer of the subject AMP shares to the second defendant emerged out of the changes to the pleadings I have described.
Counsel for the defendants in his closing submissions put to me that the amendment of a writ to sue the defendant in a different capacity is be disallowed, which I took to be a submission that there could not be the degree of commonality I have described in such a case. I was referred to McGee v Yeomans [1977] 1 NSWLR 273, 277 (Glass JA; Moffitt P agreeing in this respect). However, in my view the constraint on amendment contended for is not required by what was referred to as a principal purpose of the Limitation Act 1935 in Morgan 485, 'to enable a defendant to know with finality what fact or facts are said to give rise to the action against him, rather than what label may be conveniently applied to those facts'. In this case the degree of commonality of fact and legal categorisation in my view satisfies that purpose.
It is for these reasons that I have concluded that the effective date of the amendments to the writ by the 23 September Minute was that of the filing of the original writ, 16 October 2006.
I turn now to the issues 1 to 9, in that order.
Issue 1: was there a gift of the subject AMP shares?
It appeared to be common ground that if there was a gift (undue influence and breach of fiduciary duty aside) of the subject AMP shares then there was no claim for breach of trust against the first defendant. Nor was there a claim against the second defendant for knowing receipt of trust property.
The evidence as to this issue was principally that given by John Goldie and Gordon Getley. There is also evidence from Emma.
It is common ground there was no document brought into being to record this gift. In particular there was no writing within Property Law Act s 34(1)(c), which reads as follows:
(1) Subject to the provisions hereinafter contained in this Act with respect to the creation of interests in land by parol —
…
(c) a disposition of an equitable interest or trust subsisting at the time of the disposition shall be in writing signed by the person disposing of the interest, or by his agent thereunto lawfully authorised in writing or by will.
There was nothing in the closing submissions of either party directed to the application, if any, of this provision to the circumstances of this case, other than in the defendant's closing submissions, noting the issue and submitting that the plaintiff was estopped from relying upon the provision. The plaintiff's amended further amended reply to defence and defence to counterclaim includes that the gift alleged by the defence amounted to a disposition of an equitable interest in the subject AMP shares and would be ineffective for want of the writing within Property Law Act s 34(1)(c). That is indeed the result of non-compliance with that provision: see Meagher RP, Heydon JD and Leeming MJ, Meagher, Gummow & Lehane's Equity Doctrines and Remedies (4th ed) 2002 [7‑055]. I did not understand the plaintiff to resile from this plea, and so I consider I must deal with it.
In my view if the alleged gift was simply a transfer by the first defendant to the second defendant of the subject AMP shares in law which was the result of compliance with a direction by the plaintiff to the first defendant there would be no scope for the application of that provision. That is because the plaintiff did not intend to make an immediate disposition of the equitable interest in the subject AMP shares: see Parker & Parker v Ledsham [1988] WAR 32, 36 – 37 (Rowland J), referring to Vandervell v Inland Revenue Commissioners [1967] 2 AC 291, Crichton v Crichton [1930] HCA 14; (1930) 43 CLR 536, 562 (Dixon J), and Comptroller of Stamps (Vic) v Howard-Smith [1936] ALR 198; (1936) 54 CLR 614, 624 (Dixon J). This would also mean that there was no question of that gift being imperfect within the doctrine of Milroy v Lord (1862) 4 De GF & J 264; 45 ER 1185. It would be perfected by the transfer in compliance with the direction. It is not in contest there was a transfer of the subject AMP shares from the first defendant to the second defendant. Was there a direction by the plaintiff to the first defendant to effect that transfer?
The evidence of Gordon Getley was that in a conversation in March 1998 John Goldie directed him to transfer the subject AMP shares, together with the other shares Janet owned, to the children's trust. Gordon Getley's evidence was also that John Goldie confirmed this direction in two subsequent conversations, one in May or June 1998, and one in July or August 1998.
Gordon Getley's examination‑in‑chief as to the conversation of March 1998 in that respect was as follows (exhibit 5.5 [39] – [41]):
I recall meeting with John in or about March 1998. I believe the meeting occurred at John's house. I told John that Janet's Estate would be issued 18,964 shares by AMP under the 5 AMP policies that had been transferred to him. I asked John if he wanted the Estate to transfer the shares into his name.
John told me that the insurance policies were taken out by John in Jan's name as the owner to protect the Goldie family. He said that as he had received ownership of the policies under the Will, he wanted the shares on all policies that had been owned by Jan to go to Chris and Emma under the trust Jan set up in the Will. He told me he thought that had Jan been aware of the demutualization of the AMP at the time of her will, she would have probably vested the AMP shares into the Trust for the children's benefit.
I asked John if he was sure he wanted me to do this and John told me yes.
Gordon Getley's examination‑in‑chief as to the conversation of May or June 1998 was that in early May 1998 he had received correspondence from AMP relating to the allocation of AMP shares to a company and to John Goldie and in May or June he had provided this correspondence to John Goldie ([48]). His evidence was further as follows ([49] – [50]):
John told me that I was to transfer the shares to the Trust to assist Chris and Emma in their education and living costs and to give them a good start in life. He said that the policies had been taken to protect the Goldie family and he was content to have received the policies. John said that Jan would have wanted the AMP shares to go to the children's trust if she had known that the shares would be issued.
John then said to me that he had received a couple of thousand AMP shares from some other AMP policies he owned.
Gordon Getley's examination‑in‑chief as to the conversation in July or August 1998 was that in or about July or early August 1998 he received a letter from the AMP enclosing forms for a transfer of shares to Janet's estate, a share transfer form and AMP's probate requirements ([51]). His evidence was further as follows ([53], [54]):
Shortly thereafter I met with John. I said to John that I was about to transfer the AMP shares to the Trust and was he still of the same mind. John said to me that's ok, that's what I agreed.
I, in my capacity as executor of Jan's Estate, gave instructions to AMP on 31 August 1998 to have the AMP Shares transferred to me as the executor of Jan's Estate. …
It was common ground that by transmission application dated 31 August 1998 the first defendant applied to the AMP to be registered as the holder of the subject AMP shares, and by a transfer form of the same date he sent to the AMP he sought to have them transferred to the second defendant (see exhibit 5.5 [54]). The difference between the parties is as to whether or not Gordon Getley so acted pursuant to any request or direction from John Goldie in that respect.
Gordon Getley was cross‑examined on his evidence as to the direction and its confirmations (ts 704 ‑ 705, 708 ‑ 713), in the course of which he testified that in the March 1998 conversation he did not tell John Goldie that if he transferred the subject AMP shares to the children's trust he could not get them back (ts 710), and that as to the conversations of May or June 1998 and July or August 1998 he did not know or could not specifically recall saying that (ts 710). However, I do not consider his evidence that there had been the direction confirmed on two occasions was shaken.
For the plaintiff it was put to me that I should not believe Gordon Getley's evidence for two sets of reasons.
First, there was no evidence of any written record of a direction or its confirmations for a gift to be made of what it was not in contest were assets of significant total value, where there was evidence of 'meticulous' record-keeping by Gordon Getley in other respects and where he was subject to the duties both of executor of Janet's estate and of trustee of the children's trust. It was put to me that this tended to support the conclusion he was not concerned about the ownership of the subject AMP shares, considering it was all 'family money', which also tended to be shown by his failure to investigate the ownership of at least certain of the assets of which the Will purportedly disposed. As will appear, the evidence of John Goldie includes that it was his view the subject AMP shares were 'family money'.
However, I do not consider Gordon Getley's evidence in cross‑examination when he was questioned as to his record-keeping supports the proffered characterisation of his record‑keeping as 'meticulous', at least in relation to Janet's estate. Nor does his evidence support the conclusion he had otherwise consistently complied with the duties of executor of Janet's estate and of trustee of the children's estate. Further his evidence as to his failure to conduct investigations as to ownership of certain assets does not support the inference that he regarded the subject AMP shares as 'family money'.
He testified he kept records of matters relating to the estate (ts 644), and that in relation to AMP matters John Goldie relied 'very heavily' on him to take care of such matters (ts 647). However, he also testified that in relation to calling in the assets of the estate he 'wasn't as efficient as I should have been' (ts 644), and in particular in relation to the loss to burglary of jewellery of Janet's the claim to insurance on which he left to John Goldie he did not call on him for a share of the proceeds, saying 'I have to confess this is one part of detail that I fell down on and I didn't note it' (ts 645). He testified he kept records of income and expenses for the children's trust (ts 646) and testified as to records he kept of the investment of assets of the children's trust in a managed investment scheme (ts 653). However, there is no other evidence of his as to records he kept as trustee of the children's trust. Nor was he asked to explain why he had not kept a record of the reason for the transfer of the subject AMP shares to the children's trust or had it put to him he did not do so as he regarded them as 'family money'.
He testified that he had not investigated the matter of ownership of a number of the assets of which the Will purportedly disposed, being the Toyota Cressida cl 3 of the Will disposed of (ts 670), and he could not recall giving an instruction to those assisting him in the administration of Janet's estate to confirm that she was the legal owner of the three policies cl 3 of the Will also disposed of in favour of the children's trust (ts 697 ‑ 698), one of which was the cl 3 AMP policy on Janet's life. He thought that the proceeds had been paid to the estate but acknowledged he did not know whether in fact John Goldie had given the proceeds to the children's trust (ts 697). I have previously indicated that it was common ground the cl 3 AMP policy was a policy owned by John Goldie, not by Janet. However, it was not put to Gordon Getley he had not conducted those ownership investigations because he saw the subject-matter as 'family money'.
In my view of his evidence, Gordon Getley has not been shown to have treated any assets dealt with in the Will or arising out of them as 'family money'. In particular his evidence as to the loss of the jewellery does not show this where his evidence was that he acknowledged his shortcoming in relation to it, and the failure to conduct investigations as to ownership of certain assets does not of its nature indicate he treated those as 'family money'.
I consider I should not disbelieve Gordon Getley's evidence as to the direction and its confirmations because of the lack of a written record as to the direction and its confirmations or because of his evidence as to the manner in which he acted in relation to the estate to which my attention was drawn.
The second set of reasons related to evidence to which counsel for the plaintiff directed my attention of Gordon Getley's adverse assessment of John Goldie's capacities for financial management, in circumstances where Gordon Getley understood John Goldie faced additional demands on his resources. I understood this was put forward as sufficient to support the finding that Gordon Getley made the transfer of the subject AMP shares he did without any direction from John Goldie in order to carry out Janet's wish that children be educated and provided for in the financial best interests of the family. However, while I consider the evidence would indicate Gordon Getley had made such an adverse assessment in such circumstances, I am not satisfied it has been shown I should infer from that he made the transfer as contended.
The evidence to which my attention was drawn was the proximity of the meeting of John Goldie with Julie (Julie Anderson as she was then), in mid‑1998 with the transfer of the subject AMP shares by instrument dated 31 August 1998. That was to be viewed against the background of Gordon Getley having met Julie 'some time' in 1998 (ts 673); the fact Julie had three children of her own; and Gordon Getley's assessment of John Goldie as a 'fiscal vandal' (in the sense of some one 'just not that great handling money' (ts 691). Counsel also directed my attention to occasions on which Gordon Getley provided John Goldie with financial advice in 2000 and 2001. These were in or about October 2000 (as to the application of the proceeds of the sale of the Mosman Terrace Property: ts 673 – 675), a little later that year (as to the management of his finances in more detail: ts 675 ‑ 681), and in July 2001 (as to the management of his finances with account also for Julie's contributions: ts 681 ‑ 685). In the first and third cases Gordon Getley testified he considered his advice to be sensible or very sensible (ts 674 and ts 684, respectively); and in each case he testified John Goldie did not take the advice (ts 674, ts 681, ts 690, respectively).
However, I do not draw from this evidence that I should infer Gordon Getley made the transfer of the subject AMP shares without the direction he testified to. His evidence was that he was not concerned John Goldie did not take his advice, including the advice I have just referred to (ts 714). His evidence was that he gave advice of that kind 'as a friend' (ts 674). I consider this evidence, which I accept, does not support the conclusion he would remove from John Goldie the decision as to what to do with the subject AMP shares. I note that there was no challenge to Gordon Getley's evidence that he accepted the subject AMP shares were ones the disposition of which he regarded John Goldie as having the power to decide.
I accept that Gordon Getley presented as a man of strong opinions and these included his assessment of his financial management skills relative to those of John Goldie. However, I do not accept that this with the other evidence to which counsel for the plaintiff directed my attention should lead me to the conclusion I should disbelieve his evidence as to a direction to make a gift of the subject AMP shares confirmed on two other occasions.
However, there is further evidence I need to assess, before reaching a final view on this matter. That evidence is principally from John Goldie; I consider I also should take account of evidence from Emma and Christopher.
John Goldie's evidence in his examination‑in‑chief as to the exchanges Gordon Getley had with him concerning the transfer of the subject AMP shares was as follows (exhibit 5.1 [94] ‑ [116]):
Not long after AMP issued shares Getley said to me: 'the shares that were issued by AMP to Janet's estate have been transferred into the Children's Trust'.
From the words Getley said to me, I understood that AMP shares had been allocated in the name of Janet's estate and Getley was the executor so I had no power or authority to do anything with respect to them.
In any event, I had become accustomed to relying on Getley for financial advice and trusted that given my then close relationship with Getley and the Children it didn't matter where the money was, provided it was safe and invested wisely.
When I found that the shares were in the trust, I assumed it was because I had failed to take a necessary step. I recalled having the signed the transfer forms after Janet's death and thought that since the shares had not been issued to me I must have failed to transfer the policies properly.
I reassured myself that the money would be safer if I left it in the trust as I was, at that time, a director of several companies involved in the motor business and had given personal guarantees for company debts. The money in the Children's Trust, was, I thought, family money and would be available to the family if we needed it.
I didn't ask Getley how it happened that the shares ended up in the Children's Trust and I took no steps to transfer the shares back ot me after all, it seemed to me that it was clear that the shares were mine.
I believed that because it was clear that the shares (the value of which previously formed part of My Policies) were a gift to me me from Janet, when she died, that if I ever really needed them Getley would simply transfer them back to me or sell them and pay the proceeds to me.
Because of this, when Getley told me about the transfer, I said: 'Ok. Fair enough.'
Getley never said to me, words to the effect of: 'do you want the shares on the insurance policies transferred to you or to the Trust.'
I have never said to Getley words to the effect of: 'I am content to receive the 5 AMP insurance policies and not the shares.'
Getley has never asked me: 'do you want the AMP shares transferred into your name' or words to that effect.
I would speak with Getley on average at least once a fortnight and he never said to me that I was the rightful owner of the AMP shares.
The only discussions Getley had with me regarding the shares was to advise me that he was going to transfer them from the estate to the Trust.
At that time I did not know that I could challenge him regarding these shares. He was my financial advisor, insurance agent and close personal friend.
Getley controlled the estate and the Trust and I felt that I was not in a position to question him, or challenge his decisions.
I never provided Getley with oral or written instructions about what to do with the shares associated with My Policies.
I was never provided with a copy of the letter from Getley to AMP dated 30 October 1998 requesting transfer of the shares to the Children's Trust. …
The only written records that Getley ever provided to me related to three loans from the Trust to me which I describe in more detail below.
I did not gift the shares to the trust.
The money was always family money, for me and the children. It made no difference to me how it was held.
I did not in writing or verbally ever say to Getley that he could transfer the shares to the trust as a gift.
At no time from late 1998 to mid 1999, or at any other time, did I say to Emma or Chris words to the effect that: 'I had given the AMP shares to the Trust.'
At no time did I ever say to Emma or Chris words to the effect that 'I have given you a great start in life by giving the Trust the AMP shares.'
His evidence in chief in response to Gordon Getley's evidence (in exhibit 5.5 [39] above) as to the March 1998 conversation was as follows (exhibit 5.2 [11]):
I accept that a conversation like that referred to in paragraph 39 took place between myself and Getley with respect to the estate and the Trust. I believed that Getley spoke to me about these matters merely as a matter of courtesy. I was under the belief that I had no right to the AMP shares and so I never disagreed with the proposals put forward by Getley regarding the AMP shares. I did not believe I had any grounds to do so. I had discussions with Getley as regards financial matters, but at no time was there any verbal, written or other agreement in relation to the AMP shares.
John Goldie's evidence in chief in response to Gordon Getley's evidence (in exhibit 5.5 [48] - [50] above) as to the conversation of May/June 1998 was as follows (exhibit 5.2 [15], [16]):
In response to paragraph 48, I agree that there was a discussion in or around May or June 1998 at which time I recall that Getley advised me that he was going to transfer the AMP shares from Janet's estate to the Trust. At that time I believed that the AMP shares did not belong to me and therefore I did not have a right to them. I refer to paragraph 31 of my statement dated 13 May 2008 and confirm that I held that belief until approximately May 2005 when I re-read documents and obtained legal advice. I dispute that Getley ever told me in or about May or June of 1998, or at any other time, that the AMP shares from the five policies belonged to me.
In response to paragraph 49 and 50, I dispute that I ever advised Getley that I was content to receive the five AMP insurance policies only and not the shares. I agree that a discussion occurred between myself and Getley in or about May or June 1998, and I agree that I more than likely agreed with Getley's suggestion to transfer the AMP shares from Janet's estate to the Trust as at that time I did not believe that I had any right to these shares, so I could not and would not have suggested anything else. I believed that Getley was discussing the matter with me as a matter of courtesy.
John Goldie's evidence in chief in apparent response to Gordon Getley's evidence (in exhibit 5.5 [51], [53], [54] above) as to the conversation of July/August 1998 was as follows (exhibit 5.2 [17]):
In response to paragraph 54, I deny that I requested anything of Getley. I believed that he was consulting me as a matter of courtesy. I was aware that he was the executor and that he had to act in accordance with the Will.
I consider that this responsive evidence when taken with other evidence of his concerning his understanding as to the ownership of the subject AMP shares significantly reduces the credibility of his evidence concerning the matter of the directions I referred to initially.
I begin by stating my view that the responsive evidence does not, when closely read, deny that conversations between John Goldie and Gordon Getley occurred in March 1998, May/June 1998 and July/August 1998 in which the latter told the former of a future transfer of the subject AMP shares to the children's trust. However, John Goldie's evidence did not ever rise to an acceptance that Gordon Getley asked him whether he wanted the subject AMP shares transferred to him and that John Goldie told Gordon Getley to transfer the subject AMP shares to the children's trust. In these respects I disagree with the closing submissions for the defendants.
However, John Goldie's responsive evidence that Gordon Getley repeatedly told him of a future transfer of the subject AMP shares is difficult to square with his evidence that it was when he 'found out' the subject AMP shares were in the children's trust he 'assumed it was because I had failed to take a necessary step' (exhibit 5.1 [97]), and he 'didn't ask Getley how it happened that the shares end up in the Children's Trust' ([99]). Further the responsive evidence with his evidence as to the ownership of the subject AMP shares at those times and subsequently in my view makes it difficult to accept his evidence he never gave a direction to Gordon Getley to transfer those shares as the latter did.
The ownership evidence is principally exhibit 5.1 [99] and [100], above, and the following ([153], [154]):
I knew there was money in the Trust and I never considered that it would be viewed as anything other than 'family' money.
Getley always insisted that any dealings to do with the Trust were done very legally. I took this to mean that everything was above board. I never crossed my mind that there would ever be an issue as regards to my right to to have my money which was in the Trust.
John Goldie's evidence in cross‑examination as to what he meant by the shares being 'his' before their transfer into the children's trust was principally as follows (ts 337 ‑ 338):
But you knew that the shares were yours?---Yes.
And you always knew that?---Yes.
And they were always going to come to you under Janet's will?---They should have, yes.
So if they were yours why did you think you had no power to deal with them?---Well, I had explained in the witness statement about the transfer of the policies and it was my mistaken belief that whilst I had signed transfer forms that Mr Getley had given me at some stage, when the shares hadn't been issued to me I thought perhaps, because my attention to detail sometimes is not good, that I hadn't followed through on doing things for Mr Getley that I should have, and if I can refer you to my witness statement where I go in more detail about that - and it was a mistaken belief.
You didn't ask Mr Getley whether there had been some error on your part, had you?---No.
John Goldie's evidence as to why he did not make such an inquiry was that Gordon Getley was that he was 'a very powerful man and has certain views and I sometimes didn't really want to confront him' (ts 338).
John Goldie's evidence as to what he meant by his evidence that the property in the children's trust was 'family money' which included 'his' money was explained in cross‑examination as follows (ts 364 ‑ 365):
COBBY, MR: Let's discuss this concept of family money, Mr Goldie. You had read your wife's will shortly after she died?---Yes.
You were aware of the trust that was created by the Will for the maintenance and advancement of your children?---Yes.
There was no reference to you in the Will in relation to that trust, was there?---No.
And you understood and in fact you planned on the fact that if you gave the shares to the trust there would be no legal right for you to recover them?---I don't fully understand that. The legal right, yes, that's correct. Yes, I understand that. If I'd gave to them, but I didn't give them to them. They finished up in the trust.
Having finished up in the trust, you left them there for that reason?---Yes, because of my concept of family money.
Explain to me the concept of family money, Mr Goldie?---Well, I believed I had a very close relationship with my children and Mr Getley was a dear friend and I didn't believe that there - if I ever needed the - just to the money that it would be advanced to me.
This time you were the sole controller - and I say 'this time' being 1997, say from January 1997 forward. You were the sole controller of companies which were trustees of something like eight or nine trusts?‑‑‑Yes, that's correct.
And they all had trust deeds?---Well, I'm sure they would've had to or else they wouldn't have been legal entities.
You understood the purpose of the trust deeds was to set out the trustee's powers?---Yes, I don't think most businessmen really understand the full ramifications of the legal things on trust
That wasn't my question?--- so therefore I'd
Firstly I'm not connected with most businessmen. I'm only concerned with what you knew?---Yes, okay. Would you mind repeating the question again?
You understood the purpose of the trust deeds was to set out, amongst other things, the powers of the trustee?
---Yes; yes.
You would understand that?---Yes, I do.
Was there anything that you thought gave Mr Getley power as trustee to give money to you?---Legally, no. Morally, yes.
Did you ever discuss that with Mr Getley?---No.
Did you hold that view because of anything Mr Getley said to you?---No. It was just my
That was your own assumption?---That was my own belief.
Whenever Mr Getley dealt with you he pointed out to you that he was the trustee on behalf of the children, didn't he?---Yes.
And you never contradicted him in that respect, did you?---No, because that was a fact.
And this moral right that you say that you had, you never raised that with him?---No.
In relation to the point of time from which the reasonableness of the delay is assessed I note the preceding paragraph in Bond Group (No 9) ([9306]):
The point of time from which the reasonableness of the delay is assessed is, prima facie, the time when the plaintiff became aware of facts that give rise to the availability of equitable relief. In Meagher, Gummow & Lehane at [36-085], the authors commented that where a plaintiff has knowledge of the relevant facts, he or she is presumed to have knowledge of his or her rights to a cause of action. They go on to say that the 'availability of the means of knowledge is as good as knowledge'. These propositions were confirmed in: Savage v Lunn [1998] NSWCA 204, 5 - 6; Savage v Lunn [1998] NSWCA 203, 59 – 60 (per Handley and Sheller JJA and Sheppard AJA).
In cases of undue influence the unreasonable delay is measured from the cessation of the influence: see Glasson 161.
At least for 'the kind of laches which really consists of waiver implied by conduct, the party against whom the defence is urged must know both the facts on which his rights depend and also what his rights are': Meagher, Gummow & Lehane [36‑085], referring to Re Howlett [1949] Ch 767. However, as the quotation from Bond Group (No 9) [9306] indicates there is a presumption of knowledge of rights from knowledge of the relevant facts, and the availability of the means of knowledge 'is as good as knowledge'.
Where laches in the first of the two senses from Bond Group (No 9) is relied upon, there is no requirement for the party relying on the doctrine to show the other party caused reasonable reliance by another or a situation to arise it would be unjust to disturb: see Meagher, Gummow & Lehane [36-015]. However, laches in the second of those two senses appears to require such reliance to have occurred or such a situation to have arisen. I consider that laches in both senses from Bond Group (No 9) [9307] above has been relied upon here.
Laches may apply to some of the equitable causes of action arising out of a set of facts, but not to others: Meagher, Gummow & Lehane [36-035], referring to authorities. This is relevant in particular to the plaintiff's claims for relief based on establishing a constructive trust, as there are cases 'which traditionally call for special promptitude', which include cases on establishing constructive trusts: [36-030], referring in that respect to Beckford v Wade (1805) 17 Ves Jr 87, 97; 34 ER 34, 38.
In my view the plaintiff is barred by laches in both senses from any of his equitable remedies, for the following reasons.
As to laches in the first sense, of delay with acquiescence, I would find that any undue influence had ceased by late 1999, when on John Goldie's evidence, previously quoted, it was no longer 'difficult' by reason of Janet's death looking after the children and trying to keep the business momentum (ts 325), and he had devised the transaction to cap and pay out a fluctuating bank debt by a business with which he had formerly been associated (see ts 384, 386 ‑ 387). At that time on his evidence he was aware that the subject AMP shares had been his. Further, on his evidence, during Janet's illness he had been involved in the preparation of the Will, including what became cl 4; he had read it not long after Janet's death; and he had a copy of it in his home office when in or about May 2005 he had come across it again and re‑read it. See exhibit 5.1 [40], [61] and [202]. This in my view represented the availability of means of knowledge sufficient to establish the knowledge required for this form of laches. Yet after that time John Goldie repaid the First Loan, entered into the Second Loan on which he made some payments of interest and entered into the Third Loan, in the period before the letter of 17 November 2005.
It seems to me that such a delay of six years with conduct of that sort would represent delay of a kind from which laches in the first sense should be seen to have been made out. Furthermore, it seems to me that this is delay sufficient to bar a remedy on any of the causes of action against either the first defendant or the second defendant.
As to laches in the second sense, of delay with prejudice to others, it seems to me that John Goldie's delay just described permitted a situation to arise it would be unjust to disturb. The situation arose because, on John Goldie's evidence, he no longer had direct access (that is, access other than through his accountant, who on his evidence might or might not still have the documents) to documentary records of his affairs that he had not discovered and that included both records of family companies that had been deregistered, and records of the various family trusts that had been established prior to Janet's death. This loss of such access had occurred before the present proceedings were commenced. See ts 284, 287. Those family trusts appeared on his evidence to be part of the background to the provisions for the children's trust in the Will. See ts 287. Those family trusts were also relevant to his concept of 'family money', through his understanding of the powers and duties of a trustee of trusts for family members, as I have indicated. The loss of such evidence would appear to me to make the delay in this case one within the second sense of laches. See Meagher, Gummow & Lehane [36‑020] and authorities on loss of evidence there.
In addition John Goldie had destroyed some at least of his financial records and no longer had direct access to others, including at least some destruction and loss of access which I understood had occurred before the commencement of the present proceedings. See ts 434. These financial records were undoubtedly relevant to his financial condition at a time when on his pleaded case he was forced by that condition to sell the Faulkner Circle Property prematurely.
As to acquiescence outside the doctrine of laches, I have concluded that this has not been made out. That is because such acquiescence must be in the form of a standing by while a violation of a plaintiff's right is in progress. See Glasson 161. Such violation in this case was the transfer of the subject AMP shares. However, on the plaintiff's case that transfer occurred while he was subject to the undue influence of the first defendant.
Issue 7: is the plaintiff barred by a lack of clean hands?
The defendant's case is that the plaintiff allowed the subject AMP shares to be transferred to the children's trust and after the transfer allowed them to remain there, registered in the name of the second defendant, to defeat the claims of present and future creditors. As I have concluded that the plaintiff has not made out his case for any of the claims I have previously referred to, it is not necessary for me to resolve the present issue. However, as substantial argument was directed to it, and in case I am in error in my resolution of any of those claims, I should indicate my conclusions as to that issue.
The following statement in my view reflects the principles (numbered 1 to 5) for the defence of lack of clean hands which appeared to be common ground between the parties:
1.As a defence, the burden of proof on this issue is on the defendants;
2.A party whose conduct has been improper in a transaction will be refused relief in equity: Meagher, Gummow & Lehane [3-110]; Dering v Earl of Winchelsea (1787) 1 Cox Eq Cas 318; 29 ER 1184;
3.By impropriety is meant impropriety in a legal sense which has an immediate and necessary relation to the equity sued for: Meagher, Gummow & Lehane [3-130]; Dering 319–320 (Cox), 1184–1185 (ER);
4.The legal impropriety is not limited to a breach of duty owed to the other party to the transaction, but can include a breach of duty owed to the public: Meagher, Gummow & Lehane [3-120]; Kettles and Gas Appliances Ltd v Anthony Hordern & Sons Ltd (1934) 35 SR (NSW) 108, 126–131 (Long Innes J); however,
5.The defence does not operate where the court finds the plaintiff has 'washed his hands', as by showing the misconduct ceased well before the suit, the misconduct occurred by accident or suitable terms may be imposed on the plaintiff: see Meagher, Gummow & Lehane [3-120]; Kettles and Gas Appliances 129 ‑ 130; and Rhodes v Badenach [2000] TASSC 160.
For the plaintiff it appeared there was reliance on the further proposition that the court has a discretion, even when the plaintiff has been shown to have unclean hands which it is not proposed to wash, whether to deny relief. There appears to be support for that proposition, which I accept: see Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd (No 9) [2010] WASC 44 [491] (Murray J); see also Marshall Futures Ltd v Marshall [1992] 1 NZLR 316, 330 – 331 (Tipping J), referred to with approval in Karl Suleman Enterprizes Pty Ltd (in liq) v Babanour [2004] NSWCA 214 [55] (Beazley JA, Spigelman CJ & Santow JA agreeing). However, Marshall Futures appears to indicate that the circumstances in which relief would not be denied in the exercise of the discretion would be unusual.
The defendants locate the legal impropriety they rely upon in the evidence of John Goldie that he was of the view it would be 'safer' to leave the subject AMP shares in the children's trust as he was at the time 'a director of several companies involved in the motor business and had given personal guarantees for company debts': exhibit 5.1 [98] above; see also ts 343). In that regard I note also John Goldie's evidence of his concern about the ability of his creditors to reach assets of his, presumably depriving his family of the benefit of them, evidence to which I have previously referred (see ts 339 ‑ 340). I consider that this body of evidence, considered with the case of the plaintiff that he considered the subject AMP shares 'family money' which he had the right to call for morally and ultimately (by these proceedings) legally, would show legal impropriety. That impropriety consisted in taking advantage of a transfer of property to which he considered himself entitled to shield the assets from his creditors. The impropriety is one which might be identified as a misrepresentation made to his creditors. The fact that there was no evidence any creditors had been misled, or had not been paid, would not prevent the defence from being raised. See Kettles and Gas Appliances.
That legal impropriety has an immediate and necessary connection with the claims of the plaintiff arising out of the transfer.
The legal impropriety did not cease well before the commencement of the present proceedings, nor in my view could it be said to have occurred by accident. In that last respect it is not contended that John Goldie's taking advantage of the effect of the transfer was the result of the undue influence of Gordon Getley. Nor is it evident what terms to any relief granted to the plaintiff could be imposed to overcome the legal impropriety, which might have had an effect on past creditors.
Finally, this does not seem to me to be an unusual case such that relief would not be denied.
Issue 8: has the plaintiff established the loss the plaintiff claims?
The plaintiff's pleaded loss is the amount ($350,000) which appears to be the total of the repayment in 2001 of the First Loan and other loans then plus interest; an amount for the loss on resale of the Faulkner Circle Property ($250,000); and interest paid by the plaintiff to the second defendant in respect of the Second Loan and Third Loan.
The plaintiff also claims the balance of the subject AMP shares in specie. In that respect, it appears to be common ground that the there were none of the subject AMP shares or their proceeds in the hands of the second defendant because of his transfers to Emma and Christopher, except for the outstanding balance of the Second Loan, as I have indicated. However, I note again I do not appear to have any evidence that there has been a transfer of the proceeds represented by the plaintiff's payment of the sum claimed in the bankruptcy notice to Emma and Christopher. That payment was of unpaid interest on the Second Loan and repayment of the Third Loan with interest. To the extent the advances constituting this Second Loan and the Third Loan were from proceeds of the subject AMP shares, that payment and that repayment with interest would appear to be, arguably at least, traceable proceeds of the subject AMP shares. I consider that in the circumstances of this case the plaintiff's claim for an order for the tracing of the proceeds of the subject AMP shares should be taken as one which might lead to a claim in respect of that outstanding balance, that payment and that repayment with interest, that their proceeds in the hands of the second defendants are the property of the plaintiff.
As I have concluded that the plaintiff has not made out his case for any of the claims I have previously referred to, it is not necessary for me to resolve the present issue. However, as argument for the defendants was directed to it, and in case I am in error in my resolution of any of those claims, I should indicate my conclusions as to the present issue.
I leave aside the possibility of a proprietary claim as I have described it.
In approaching the remaining matters as to loss, although I received no submissions on them, I consider I must follow the principles as to causation and remoteness for breach of equitable duties set out in Watson v Ebsworth & Ebsworth (a firm) [2008] VSC 510 [135] (Beach J), aff'd sub nom Watson v Ebsworth & Ebsworth(a firm) [2010] VSCA 335 (see esp [162], Neave, Mandie & Hansen JJA), referring to GM & AM Pearce & Co Pty Ltd v Australian Tallow Producers [2005] VSCA 113 as follows (footnotes deleted, except as to citations for authorities referred to in the text of the reasons):
As I have noted above, during the course of final submissions the plaintiffs did not pursue any claim for common law damages. No doubt this course was taken because equitable compensation (unlike damages at common law) is not subject to the constraints of foreseeability or remoteness …. The relevant principles concerning the awarding and assessment of equitable compensation were recently stated by Warren CJ (with whom Chernov JA and Dodds-Streeton AJA agreed) in GM & AM Pearce…. Warren CJ said: …
[65]The measure of equitable compensation is that sum which would restore the plaintiff to the position he or she would have been in had the breach not occurred…. Equitable compensation is not assessed with respect to the foreseeable value at the time the breach of fiduciary duty occurred. This principle is explained by McLachlin J in Canson Enterprises Ltd v Boughton & Co [(1991) 85 DLR (4th) 129] in reference to an earlier case, Guerin v The Queen [[1984) 13 DLR (4th) 321], where damages awarded at common law (compensation as assessed from the date of breach) from equitable compensation. With respect to equitable compensation, McLachlin J clearly stated that damages will be based on the trial date 'having regard to what actually happened', as is the case in an equitable award for restitution…. Her Ladyship moreover stated that it is essential that losses made good are only those which, 'on a common sense view of causation, were caused by the breach'.. The dicta of McLachlin J in Canson Enterprises has been followed in Australia,… and notably, by the House of Lords in Target Holdings Ltd v Redferns [[1996] 1 AC 421] In Target Holdings, Lord Browne-Wilkinson (with whom Lord Keith of Kinkel, Lord Ackner, Lord Jauncey of Tullichettle and Lord Lloyd of Berwick agreed) held that:
'Equitable compensation for breach of trust is designed to achieve exactly what the word compensation suggests, to make good a loss in fact suffered by the beneficiaries and which, using hindsight and commonsense, can be seen to have been caused by the breach.'…
[66]The court is also entitled, with the full benefit of hindsight, not to speculate against the interest of the plaintiff. ...
...
[71][O]ne must have regard to the principle that the court is entitled not to speculate against the interest of the plaintiff … or to make assumptions against the defendant on the issue of causation. … This allows the plaintiff to lead only a minimum of evidence to discharge the evidentiary burden of causation. Indeed, in this regard it has been said that '[e]quity must strive to repair the breach of fiduciary duty lest the fiduciary in default could be exonerated too easily... [and] the courts being seen to wink at wrong‑doing.'[Maguire v Makaronis (1997) 188 CLR 449 at 492 ‑ 493]
I do not consider a claim for the first amount ($350,000) or the amounts for interest can be sustained. There is no sufficient evidence, or no evidence, that but for the defendants' breaches or any of them the plaintiff would not have borrowed the relevant amounts, whether from the defendants or another source.
The only relevant evidence as to the First Loan appears to be that it was John Goldie's suggestion to Gordon Getley, when the former sought what became the First Loan, that the subject AMP shares or at least some of them be sold to produce the funds required: exhibit 5.5 [64], [65]. However, that evidence considered with evidence of Gordon Getley that was not in contest is not sufficient for that purpose.
Gordon Getley's evidence is that he informed John Goldie and Julie of the former's sell down of the subject AMP shares (exhibit 5.5, [77]), which it appears produced a letter of acknowledgement by John Goldie and Julie that they would purchase AMP shares to replace those sold ([79] and exhibit 2.41). John Goldie's responsive witness statement (exhibit 5.2) disputed Gordon Getley's evidence to the effect that the terms of the First Loan initially provided for a repayment of the loan with a 50% share of the profit on the resale (exhibit 5.2 [19], [21], [23]). However, he did not dispute the provision of the information and the letter of acknowledgement referred to. This evidence in my view represents reason to consider that John Goldie would not have sold the subject AMP shares to achieve the purposes achieved by the First Loan, but would rather have borrowed the funds.
There is no evidence that the plaintiff suggested the use of the subject AMP shares or their proceeds for the purposes of the Second Loan or the Third Loan. There appears to be no other relevant evidence.
As to the amount for loss on resale of the Faulkner Circle Property, there is valuation evidence as at June 2006 that it was worth $2,450,000 (exhibit 3.78, to which there was no challenge. However, there is no valuation evidence as at the date of the sale in April 2005, when as I have indicated the price obtained was $1,750,000. There is no other evidence than that price as to value at that time, and so, to the extent the claim is for loss on a re‑sale at an undervalue at that time, such a claim cannot be sustained.
However, the claim as pleaded is in my view more readily to be seen as one for loss of an opportunity to sell approximately one year later, in June 2006, the date to which the valuation evidence relates. To establish that loss, it seems to me the evidence must establish that but for the breaches founding the plaintiff's claim he would not have had to sell the Faulkner Circle Property when he did, and would have retained it, at least until June 2006, when he would have had an opportunity to sell the property then for a price above $2 million.
I begin by finding, from the valuation evidence I do have, that there would have been such an opportunity in June 2006.
As to whether or not the evidence establishes that John Goldie would not have been forced to sell the Faulkner Circle Property in April 2005, had he had the subject AMP shares or their value then, I note the following.
John Goldie's evidence was that in April 2005, when he received the Third Loan, he had been finding it difficult to service both the housing loan on the Faulkner Circle Property and the Second Loan (exhibit 5.1 [170]), and that the Third Loan was insufficient to relieve against those difficulties ([198]). Those difficulties, on his evidence were creating financial pressure on Julie and him to sell the Faulkner Circle Property then ([198]). His evidence of such financial difficulties is supported by the evidence of Julie that following the failure of a sale of the Faulkner Circle Property for $1,975,000 (exhibit 5.9 [75], [78]) both she and John Goldie found themselves in financial difficulty. On the best evidence before me, that failure occurred in May 2004 (see exhibit 3.14). Her further evidence was that 'the bank' was threatening to foreclose on the Faulkner Circle Property, at a time which I find was that of the Third Loan (exhibit 5.9 [79], [82]). There is also evidence, in an e-mail from Gordon Getley of 5 April 2005, of a 'problem with the bank' which what became the Third Loan might not avert (exhibit 3.17). Julie's evidence was not challenged in these respects and the evidence in the e-mail was not qualified in other evidence of Gordon Getley.
I find that John Goldie and Julie were at the time of the re‑sale of the Faulkner Circle Property labouring under financial difficulties that forced the re-sale of that property. I have noted that, as counsel for the defendants put to me in his closing submissions, evaluation of the evidence as to John Goldie's financial circumstances in April 2005 is made more difficult by his loss of direct access (in the sense above) or the destruction of his financial records for that period (see ts 434 on such destruction and loss of such access). However, no adjournment was sought for the non-discovery of such documents (see Civil Procedure in Western Australia [26.0.5]), and I consider that evaluation of that evidence was not made impossible by that loss or destruction.
As to whether or not the evidence establishes that the availability of the subject AMP shares or their proceeds would have relieved against the financial difficulties sufficiently so that John Goldie and Julie would not have had to sell the Faulkner Circle Property, I note the evidence of John Goldie that he had sought forgiveness of Second Loan in March 2004, and attributed the need to sell Faulkner Circle Property in April 2005 to his inability to 'secure any real help' (beyond the $15,000) from the children's trust (exhibit 5.1 [198]). This was help which on his evidence he had not asked for in view of the difficulty he had getting money from Gordon Getley (ts 421, ts 423, ts 424) and the fact the latter had said at the time of the Third Loan that he could not recommend to Emma and Christopher the children's trust lending John Goldie any more money (ts 429). I did not understand this evidence to be challenged as to John Goldie requiring the help additional funds from the children's trust might provide to relieve against his financial difficulties sufficiently to enable him to retain the Faulkner Circle Property. I so find, which in my view is sufficient to establish that if John Goldie had had access to those funds as his own they would have provided that relief.
As to whether or not the Faulkner Circle Property would not have been sold if John Goldie had such funds, but would have been retained at least until June 2006, I note the following. John Goldie gave evidence that, if his financial difficulties had not forced Julie and him to sell the Faulkner Circle Property in April 2005, they would have waited for at least a year before selling, and would not have sold unless they received offer at above $2,000,000 (exhibit 5.1 [199]). There did not appear to me to be any challenge to this evidence, and I so find.
There are, however, two further matters which must be addressed. One is whether the subject AMP shares or their proceeds would have been retained up until the time when, in April 2005, they would have been available to relieve against the financial difficulty referred to. The other is what loss John Goldie suffered from the loss of opportunity.
As to the first matter, there is no evidence from John Goldie as to what he would have been done with the AMP shares or their proceeds until that time. However, I consider I can take account of what it is common ground Gordon Getley did with them until that time. I do so in view of the case that John Goldie put forward that he used Gordon Getley as a source of advice in financial matters, which is evidence I consider I must accept for the purposes of the present issue. Leaving aside the Second Loan and the unsold small portion of the subject AMP shares, Gordon Getley, as I have indicated, had placed the proceeds of the sale of the bulk of the subject AMP shares in investments which he ultimately transferred to Emma and Christopher. There is no evidence of the value of those investments as at April 2005, but I consider I can take that value as not insignificant, in view of the proceeds of the repayment of the First Loan, $283,013 plus interest, used to make the largest part of those investments in 2001. I find that it is more likely than not that John Goldie, but for the breaches complained of, would have had access to value equivalent to that part of those investments in April 2005.
As to the second matter, it was not in contest that the Faulkner Circle Property was jointly owned with Julie (see John Goldie's cross‑examination, ts 421) and she was jointly liable with him on the housing loan in respect of it (ts 423). However, there is no evidence as to the parties' respective shares, and Julie is not a party to this action. Thus there is no evidence as to his share of loss claimed assuming such loss shown. In those circumstances, I am not in a position to find what proportion of the lost opportunity represents the loss the plaintiff can claim.
Finally, I note that on Watson there is no issue of remoteness I am required to address in this case. Nor did counsel for the defendants make any submissions to me on any such issues.
Issue 9: ought the defendants to be excused from liability?
The defendants plead that if they or either of them is liable for breach of trust they acted honestly and reasonably and ought fairly to be excused from liability for that breach by Trustees Act s 75. However, it is not necessary the section be pleaded, and a trustee may rely on it when the action comes to trial: see Jacobs' Law of Trusts in Australia [2224]. I consider the defendants have done so here.
As I have concluded that the plaintiff has not made out his case for any of the claims I have previously referred to, it is not necessary for me to resolve the present issue. However, as the defendants have relied upon the section and in case I am in error in my resolution of any of those claims, I should indicate my conclusions as to that issue. I do so even although none of the parties provided any substantive submissions as to the issue.
Trustees Act s 75 as it was at all material times reads as follows:
If it appears to the Court that a trustee, whether appointed by the Court or otherwise, is, or may be, personally liable for any breach of trust, whether the transaction alleged to be a breach of trust occurred before or after the commencement of this Act, but has acted honestly and reasonably, and ought fairly to be excused for the breach of trust and for omitting to obtain the directions of the Court in the matter in which he committed the breach, then the Court may relieve him either wholly or partly from personal liability for that breach.
I take the applicable principles to be the following:
1.Trustees Act s 75 applies to trustees as that term takes its meaning from s 6(1) 'trust', and includes personal representatives, express, implied and constructive trustees, but not mere fiduciaries, being persons in whom property is not vested subject to the beneficial interest of a cestui qui trust: Metcalf & Kerr v Permanent Building Society (in liq) (1993) 10 WAR 145, 167 (Murray J; Rowland & Seaman JJ agreeing);
2.The provision permits excuse from personal liability, but not it seems from proprietary liability, such as liability in respect of the trust property or its traceable proceeds: Hayton, David J, Underhill and Hayton Law Relating to Trusts and Trustees, 16th ed (2003) 920;
3.As to the matters of honesty and reasonableness, the basic propositions may be taken as these, from Green v Wilden Pty Ltd [2005] WASC 83 [508] (Hasluck J), noted as not challenged in Wilden Pty Ltd v Green [2009] WASCA 38 [160] (McLure JA; Newnes AJA agreeing):
It seems that the trustee allegedly in default bears the onus of proving that his or her conduct was honest and reasonable and that in all the circumstances of the case, he or she ought fairly to be excused. Craven‑Sands v Koch (2000) 34 ACSR 341. The criterion of 'honestly' means the trustees must have acted in good faith and for the welfare of the Trust. Cotton v Dempster (1918) 20 WALR 14. 'Reasonably' means reasonably in the interests of the estate, not in the interest of the trustees themselves. In Re Morish [1939] SASR 305 at 309. It also means acting with a degree of prudence that a person of ordinary intelligence and diligence can be expected to exhibit in the conduct of one's own affairs. Fouche v Superannuation Fund Board (1952) 88 CLR 609 at 641.
4.As to conduct which is not in good faith, Wilden [162] is authority for the proposition that it is not any failure to comply with an obligation enforced by a court of equity that is bad faith, rather
[b]ad faith connotes conscious wrongdoing that is knowingly or recklessly inconsistent with the interests of the beneficiaries.
5.As to conduct that is not reasonable, I take the following from Green [509], with which there is no indication of any disagreement in Wilden:
Conduct that has been held as unreasonable includes conduct that is negligent or careless, acting in an unauthorised manner without taking steps to ascertain whether the conduct was or was not authorised, doing nothing and simply accepting without enquiry what co-trustees have done and placing a co-trustee in a position to handle the Trust fund when he or she suspect that the co-trustee may misappropriate the Trust funds. Dalrymple v Melville (1932) 32 SR (NSW) 596.
6.As to conduct that ought fairly to be excused, I take the following from Green [510], with which there is an indication of agreement in Wilden [161]:
Relief from breach of trust does not follow as a matter of course simply because the trustee proves that he or she has acted honestly and reasonably. The Court must look at all the circumstances to ascertain whether the trustee ought fairly to be excused for the breach. The term 'ought fairly be excused' means in fairness to the trustee and to the other persons who may be affected. Marsden v Regan [1954] 1 All ER 475 at 481.
I do not consider Trustees Act s 75 would have any application here. I so consider on the assumption that the plaintiff's case is made out that he gave no direction to the first defendant to transfer the subject AMP shares to the children's trust, and the first defendant simply took it upon himself to do so. I am prepared to accept that he did that honestly, in view of the plaintiff's acceptance of the position subsequently, in accordance with his concept of 'family money'. However, I do not consider that the first defendant's conduct would have been reasonable, as he would have been acting 'in an unauthorised manner without taking steps to ascertain whether the conduct was or was not authorised' (Green [509]). The second defendant can be in no better position than the first defendant, assuming that s 75 applies to persons occupying the position of trustee under a remedial constructive trust. That is because the second defendant would have been aware of all of the relevant circumstances.
I note that it appears to have been common ground Gordon Getley was not remunerated for his services in relation to the Will or as trustee of the children's trust, and 'absence of remuneration is a factor to be taken into account in relation to the question whether a trustee ought fairly to be excused from the breach': Jacobs' Law of Trusts [2219]. However, I note that the requirement for conduct to be reasonable must also be met for relief to be granted: see [2214].
The defendants' plea of set-off in equity
The defendants plead that if they are or either of them is liable for breach of trust they are entitled to a set off in equity in the sum of $334,100. This is the amount which it is common ground the second defendant advanced, including by way of the First Loan to John Goldie, by paying his creditors on his behalf from moneys realised on the sale of the subject AMP shares. The defendants pleading is that the entitlement to set off that sum arises because the plaintiff knew the subject AMP shares would be issued to the owner of the five AMP policies on John Goldie's life; he knew as from February 1998 those policies had been transferred to him; and he knew as from March 1998 the first defendant intended to transfer the subject AMP shares to the children's trust. Nonetheless he took no action in respect of that transfer; he allowed the second defendant to sell a portion of the subject AMP shares and apply the proceeds to the payment of the plaintiff's creditors; and the plaintiff made no complaint and took no action in relation to the transfer of the subject AMP shares until November 2005.
As I have concluded that the plaintiff has not made out his case for any of the claims I have previously referred to, it is not necessary for me to resolve the present issue. However, in case I am in error in my resolution of any of those claims, I should indicate my conclusions as to that issue. I do so even although none of the parties provided any substantive submissions as to the issue.
I understood the plea as seeking to engage the fourth of the four kinds of equitable set‑off described in Meagher, Gummow & Lehane [37-035]. In my view it is unnecessary to canvass all of the principles that may be distilled from the account of the authorities in [37-045]. That is because of the necessary ingredient to that kind of equitable set‑off, for the defendant to possess 'some equitable right to be protected from the plaintiff's claim' (1057). I could not discern such a right here. In particular, it seems to me that the fact the second defendant had discharged certain debts owed by the plaintiff would not be sufficient, where the second defendant was thereby substituted as the plaintiff's creditor in respect of the debts discharged. Put another way, any equitable right the second defendant might have enjoyed by virtue of the discharges was satisfied by the substitution, following which the plaintiff repaid him.
Conclusions and orders
I have concluded that the plaintiff has not made out his case for any of the claims for relief he has made. Orders should be made accordingly. I will hear from the parties as to those orders.
10
19
6