Good Samaritan Donkey Sanctuary Inc v Berry
[2006] NSWSC 1218
•12 October 2006
CITATION: Good Samaritan Donkey Sanctuary Inc v Berry [2006] NSWSC 1218 HEARING DATE(S): 4/7/05;5/7/05;6/7/05;7/7/05; 8/7/05;11/7/05;12/7/05;13/7/05;14/7/05; 12/10/06; 14/11/06
JUDGMENT DATE :
12 October 2006JUDGMENT OF: Smart AJ at 1 DECISION: Inquiry Ordered - see Orders of 14/11/06 CATCHWORDS: Detailed examination of accounts - mixing of moneys of plaintiff's predecessor with those of administrator over many years - sources of money for purchase of assets - application of moneys received - loose accounting and banking practices - no question of principle involved. LEGISLATION CITED: Associations Incorporation Act 1984 CASES CITED: Nil PARTIES: Good Samaritan Donkey Sanctuary Inc (GSDSI) v C E & S P Berry FILE NUMBER(S): SC 1461/02 COUNSEL: (P) Mr M K Rollinson
(D) Mr B J MurphySOLICITORS: (P) Mr S J Friend
(D) Mr R Makin
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
SMART AJ
Thursday, 12 October 2006
[Cross-claim C E Berry v GSDSI & Joanne Kokas]
History
1. In about 1976 Mrs C E Berry (CB) and her husband Mr S P Berry (SB) built their home on a 25 acre lot at Bishop’s Bridge (near Maitland). CB started to care for donkeys at those premises. Over the ensuing years she worked hard in caring for and advancing the welfare of donkeys. In about 1980 they purchased and moved to another property at Duns Creek. Mrs Joanne Kokas (JK) was also active in supporting the care and welfare of donkeys.
2. While there was some dispute as to some details, it was not in dispute at the hearing that by about January 1991 an unincorporated Association called Good Samaritan Donkey Sanctuary (GSDS) came into existence and that CB, JK and various other people from about 1990 until 2001 co-operated in substantial work related to the welfare of donkeys and collected and spent a large amount of money on that welfare.
3. In a letter dated 5 May 1992 signed by CB as Administrator of GSDS, it offered to purchase some land at Glen Oak. At the top of the letter it was stated that CB was the Honorary Administrator and JK was the Honorary Deputy Administrator. That reflected their roles. In 1995 the business name of Good Samaritan Donkey Sanctuary was registered, the three proprietors being CB, Elizabeth Harris and JK.
4. There was a body of evidence which established that CB was not in favour of incorporating the Association for some years under the Associations Incorporation Act 1984 and then actively promoted such incorporation which occurred on 28 March 2001 under the name Good Samaritan Donkey Supporters Incorporated. Subsequently, it changed its name to that of the plaintiff.
5. Initially and until the hearing the defendants had contended that there was not an unincorporated association at any material time prior to 28 March 2001. That stance was abandoned. There were some last minute amendments to the Defence and to the Cross-Claim.
6. It was not in dispute at the hearing that the result of the provisions of the Associations Incorporation Act 1984 was that GSDSI had the title to sue and that as from at least January 1991 CB was liable for any wrongful conduct on her part to GSDSI, subject of course to the facts found.
7. During 1999 Ms K L Stapleton, an experienced and qualified bookkeeper assisted JK with some accounting work, including how to make better use of a computer relating to GSDS and raised some questions as to its finances and their management. Ms Stapleton spoke with CB.
8. In about July 2000 Ms L Everett was appointed as the Association’s bookkeeper. Subsequently she undertook a financial investigation, prepared a report and was very critical of CB’s financial management and application of funds. Ms Everett was not in good health at the time and has since died.
9. At a Committee Meeting of GSDSI on 3 November 2001 CB was confronted with allegations of impropriety which she denied. CB reported that she had done everything for the donkeys and that she was willing to put things right in accordance with Ms L Everett’s recommendations to the Committee. CB agreed to transfer to GSDSI land known as Pine Brush and her share of the land known as Largs as well as a sum of cash, being restitution for the balance of any moneys which may be found to be owed by her to GSDSI.
10. On 10 November 2001 CB paid $15,000 to GSDSI. The receipt issued by Ms Everett on its behalf described the moneys received as “Being part Restitution of Debt”. This was said to represent nearly half the cost of printing the books known as Donkey Business 3.
11. On 30 November 2001 CB paid a further $264,388 to GSDSI.
12. On 30 November 2001 CB’s solicitors forwarded transfers signed by her as transferor to the predecessor of GSDSI as transferee of the land at Pine Brush and Largs. Those transfers have been registered. In her solicitors’ letter it is stated that CB holds moneys in accounts with the Newcastle Permanent Building Society on trust for GSDSI and that she was prepared to discuss the details of these accounts and make appropriate arrangements for the transfer of funds held on trust with Ms Everett or JK direct.
13. CB’s solicitors also advised that her current state of health made her unable to continue to actively participate in the day to day care of animals or to participate actively in the administration of the Sanctuary. Effectively, CB resigned from her position as Administrator of GSDSI.
14. Up to 1999 JK lived at Crescent Head and cared for donkeys rescued or surrendered on the mid North Coast, but there was a greater number of donkeys in need in the Hunter Region. JK visited the Hunter Region Sanctuary about every two months. In 1999 JK relocated. From about mid-September 1999 she lived at Glen William, a short distance from the Donkey Sanctuary at Pine Brush. There were some irregular practices, for example, for many years JK signed many cheques in blank on the accounts of GSDS where she was a joint signatory and left them with CB. Until at least late March 2001 GSDS and its predecessors were effectively run by CB. By signing cheques in blank JK gave CB what was tantamount to a free hand. There was no evidence suggesting that this undesirable practice ceased when JK moved to Glen William.
15. GSDSI claims that CB has only made part restitution of the assets acquired by her on behalf of its predecessors before its incorporation.
The Pleadings
16. In its statement of claim the plaintiff sought wide ranging relief. In essence the plaintiff sought judgment against CB where the Court was satisfied that moneys were due by her to the plaintiff or that there be full accounting by CB.
17. By CB’s Second Amended Cross-Claim she asserted that she “mixed her personal moneys, which had accumulated from other sources with money she used in caring for donkeys and did not do any separate accounting. By the words “from other sources” it was probably intended to convey from sources other than those associated with GSDSI, its supporters, donors and patrons. It was asserted that:
(a) about 1992 or 1993 JK offered assistance by way of keeping records, both financial and documentary on a computer system for CB and she accepted JK’s offer;
(b) CB received some bequests directed to the Sanctuary and made acquisitions of property partly with that money and partly with CB’s own money;
(d) JK utilised CB’s moneys personally including payment for erecting buildings on JK’s own lands without accounting to the cross-claimant.(c) Some gifts and donations received by CB were paid to JK and CB is not aware of how those moneys were dealt with as all pertinent financial records were being kept by JK, and
18. CB alleged that:
(a) About November 2001 GSDSI at a meeting demanded that CB hand over all the money she had in her possession and/or control to it;
(b) threats of legal action and police action were made against her to induce her to transfer such moneys to GSDSI and she felt duress to transfer these moneys;
(d) such documents were executed by mistake and/or under duress.(c) she believed that legally she must transfer these moneys to GSDSI and executed the necessary bank documents to do so, and
19. CB sought the following relief:
(a) A declaration that the amount contributed by CB to the acquisition of Lot 3, Old Pine Brush Road and the amount that CB contributed to the amount of $264,388 paid to GSDSI be held in trust by GSDSI for CB .
(b) An order that GSDSI pay CB $151,893.
(The meaning of the last mentioned relief sought is not clear)(c) A declaration that JK had used moneys of CB “mixed with moneys of the cross-defendant referred to in 18 [para 18 of the cross-claim] to build sheds on her property [CB] is entitled to an order that [JK] pay to her any of her monies so sourced”.
Some Problems
20. CB and JK were friends and worked closely together for many years. Broadly, CB was very active in the physical care of the donkeys and was the public face of GSDS but she did the banking and received donations and correspondence. She issued receipts while JK attended to much of the office work and acted as the bookkeeper. CB and JK are now bitter enemies and have been for a number of years.
21. The financial affairs of GSDS were in a large mess and trying to sort them out has been a daunting task. Many of the primary source records no longer exist. The moneys of CB and GSDS were mixed. It has often been necessary to trace moneys through a number of accounts. That is a continuing task. As mentioned, there were irregular practices. More details will emerge.
22. JK claimed that she was only aware of five bank accounts or financial institution accounts, the first of which was opened about 30 June 1992 and closed about 2 November 2003. These accounts were all in the name of GSD Sanctuary with Greater Building Society Limited and the cheques drawn on these accounts required the signatures of both CB and JK.. These five accounts are listed in the top box of Schedule B to the report of Mr Rosetto, the investigating accountant. CB said that she had no knowledge of a further 22 accounts, which were opened with building societies and a bank. 21 of these accounts were under the sole control of CB and one of them was in the name of SB. Those accounts are listed in the bottom or lower box on Schedule B. CB denied that JK was not aware of other accounts being opened. Over the years real property was purchased and sold, donations were received and large sums were expended on maintaining, accommodating, feeding and caring for many donkeys.
23. While the evidence of JK, CB and the other witnesses was of importance, the examination of the summary of the transactions (unfortunately, more than 5000) was of prime importance.
24. I propose to refer to the evidence of the various witnesses to assist with understanding the background and then to examine the financial evidence. After that I will deal with the cross-claim.
Some More of the Background
JK’s Evidence
25. JK said that she was only aware of three of the five GSDS accounts with the Greater Building Society. From 1991 until 1999 JK said that she mostly took instructions from CB by telephone. JK stated that during that period CB insisted on managing all banking and monetary affairs and that she (JK) regularly sent correspondence, and in particular, money orders and cheques from donors and sponsors, to CB for attention and banking. JK said that she gave CB the cash donations to bank when she saw CB in person. JK said that this financial arrangement continued after she moved to Glen William (September 1999).
26. JK said that she was aware of the domestic circumstances of CB and that:
(b) her husband is a carpenter and quite frequently arrived home early in the day and did not appear to have worked at all since 1999(a) since the establishment of GSDS CB has had no apparent employment with the exception of working one evening per month as a minute secretary
I interpolate that CB worked more extensively in the non-donkey work than JK stated. SB was a sub-contract carpenter and apparently had some profitable sub-contracts prior to mid 1999 wen he suffered major heart problems. On any view the combined income of CB and SB was not such as to enable them to make major financial contributions to GSDS. CB primarily provided extensive personal and physical labour to GSDS and engaged in fund raising activities.
27. JK stated that on many occasions since 1997 CB told her that she and/or her husband had received inheritances and these were the source of the money used to purchase property. “Many” is probably an exaggeration.
28. JK stated that CB told her that the land at Pine Brush (which was used to accommodate the donkeys and became the site of the Donkey Sanctuary) was purchased from inheritances she received from the estates of her relatives. I am not satisfied that this was said. That land was purchased, but not out of the sources suggested and the Pine Brush land has been transferred to the plaintiff. JK further stated that when the Largs land and the Pine Brush lands were transferred to GSDSI , both she and CB acknowledged that those lands were always owned beneficially by the plaintiff and that they were trustees of such lands. JK stated that when the Largs land was purchased CB said that the land would be in their names as the Sanctuary was unincorporated, that CB told her that a Mary McDonnell had , when asked, given her some money to do so. JK said that on the purchase of the Largs land CB remarked, “the donkeys can’t own land.” JK agreed with the proposal to put the Largs land in the joint names of herself and CB.
29. JK thought that at the end of 1995 she did some accounting or financial record keeping work. She said that she was visiting CB’s property at the end of 1995, that they caught up on office work then and that she did some receipting work. They were both in the office. JK said that in 1996 she took the office work home (then at Crescent Head) and that they changed the postal address of GSDS.
30. JK denied that when she first started looking after the books Mrs Berry handed over to her some ledger cards on which she had recorded various financial transactions. I do not know what is the true position. I am unable to make a finding. JK said that when she started looking after the books CB gave her the finished deposit books from the Building Society. JK then used her computer, which she could only operate at a low level of proficiency, to prepare a spreadsheet incorporating the material supplied. She said that she used her computer as a word processor. JK denied that from about 1990 CB handed over to her a lot of cards on which financial transactions were entered. Again, I am unable to make a finding as to the true position. JK said that CB gave her lot of text to type. JK agreed that the computer she had and used in 1990 was upgraded by the (unincorporated) association in 1995 and, it seems by January 1995.
31. JK agreed that she went with CB to the Greater Building Society to open the four accounts nominated in paragraph 4 of her affidavit of 7 June 2004. They also obtained cheque books and deposit books. JK was not sure of the date. She said it was around the beginning of 1996; it might have been 1995. When JK’s attention was drawn to the details shown on Schedule B to Mr Rossetto’s report, she agreed that the first account was opened on 30 June 1992; she stated “but I didn’t do the books then. We just had the money in, opened the accounts” (with JK and CB both having to sign the cheques). JK stated that she was not doing the receipting or the books and that all the money went to CB then. JK initially said that as the chequebooks and deposit books were finished CB sent them to her and agreed that it was about 1992 when they started “filling” those books up. JK corrected her answer immediately and said that it was about 1995 as prior to that time she had spent most of her time writing and typing forms and there were hundreds of them.
32. In a Newsletter of the unincorporated association prepared around 1991-1992, with no greater precision as to date being possible, it is stated that CB and JK are co-editors of the GSDS Newsletter and that it was designed and written on computer.
33. The Newsletter (p2) describes CB as the Administrator, Spokeswoman and Public Officer and her role. She had overall control JK is described as Deputy Administrator – Book & Record Keeper. This description of her role follows:
“{JK] controls the office side of all GSDS matters, seeing to the book keeping which is all kept on computer. [JK] and [CB] confer on all general business dealings.
[JK] handles all mail orders. [JK] keeps all records of the GSDS donkeys as well as maintaining records, the number systems for the volunteers, donkeys and registration of donkeys on computer.”[JK] is an artist and designed the official logo, she also designs prints and produces, or organises all of our official artwork for our T-Shirts, cards, forms, stickers, labels, advertising and promotion etc.
34. Nothing is said about the handling of the financial affairs of GSDS except to the extent that matter is covered in the first quoted paragraph. JK regarded that description of her role as flamboyant, that is, used for publicity and public relations purposes. What is written corresponds with the evidence of CB.
35. The Newsletter describes GSDS as a non-profit organisation. It sets out the terms of the GSDS constitution. That specifies that any income, or property, grant or legacy which may come under the control of GSDS shall be applied solely towards the aims and objects of the Sanctuary. It also specifies that the administrators (CB and JK) and all volunteers provide their services at their own risk and do so without expecting any remuneration.
36. Another Newsletter (p2 and bearing the dates of events in 1991) repeats the description of JK and her duties. It adds “[JK] is the treasurer and handles all accounts and general business dealings.”
37. The second mentioned Newsletter, which also sets out the constitution may be a draft of the Newsletter first mentioned. It seems that the description of JK as treasurer and handling all accounts was dropped, perhaps by JK. The evidence does not disclose this.
38. JK agreed that she described herself as at 1991-1992 as a bookkeeper and as keeping the records on computer. JK described what she did as basic; she prepared a spreadsheet. JK stated that in 1995 the material from the early years was transferred to the upgraded computer which was further updated in 1997. All the early data was retained but there were different programs. JK stated that in 1999, although Ms Stapleton tried to teach her how to use the computer for accounting work, JK was restricted to spreadsheets.
39. While JK seemed to agree in cross-examination that she had done some spreadsheets since about 1992, she said there were no books to do. She thought that it was 1995 before she placed material from the books on spreadsheets. She said that she was poor at remembering dates. In her affidavit of 9 July 2004 (para 18) JK said that from about 1995 she also kept some financial data and other records and information regarding rhe financial and statutory affairs of the plaintiff. This was in the spreadsheets, as she did not understand how to use an accounting system. JK said that she recorded the information of which she was made aware by CB.
40. JK said in her affidavit that from the beginning until 1996 CB received and processed mail and correspondence, including money or cheques received and that from 1995 to 1996 CB sent donors’ mail to JK on which CB wrote how much they sent. CB also sent the letters of the donors to JK for her to process on the computer. CB did the receipting and banking. Up to September 1999 JK did the banking on but two occasions. I am wary about relying on JK’s statements as to the dates and periods of activity.
41. In cross-examination JK agreed that after CB finished using the cheque books CB sent her the cheque butts, receipts for moneys she had expended and completed passbooks, from which she entered the amounts of all the deposits. She also became familiar with the withdrawals and the balances shown. Any deposits received by JK were sent to CB, as she was nearest the Building Society. Up to about May 1999 the records of the amounts that had been deposited and withdrawn from the Building Society accounts were up to date.
42. Apparently, Ms Stapleton told JK that she could not keep the accounts adequately on spreadsheets and transferred the data to Microsoft Money, a system which JK said she tried unsuccessfully to learn. Ms Stapleton put in a lot of the data and a little later Ms Everett took over when she began her employment and transferred the data on to a program known as MYOB. JK was unsure of the dates. Ms Everett eventually transferred the material on JK’s computer to the computer she (Ms Everett) used.
43. JK said that in 1995 the members of the Committee of GSDS selected Mr Chris Voase to be its accountant and auditor and that he continued in this capacity until April 2001. I will come to his evidence later, but he does not seem to have been engaged until April 1997. JK approached Mr Voase. He was her personal accountant.
44. In cross-examination JK agreed that between 1995 and 1999 she had all of the financial records of the Association up to date on the computer. This could only refer to the matters of which she was aware, and it was only up to May 1999. There was evidence elicited by the cross-examiner as to the various computers JK had and the transfer of material from one computer to another by the computer technician. At one stage she had the Excel program and she was able to print out with Excel. She said that she gave Mr Voase the printout to do the accounts for the year ended 30 June 1996 and subsequent years.
45. She said that she gave Mr Voase hard copies of the Excel spreadsheets containing receipts and outgoings. She said that she gave Mr Voase the receipts for what she had spent and what CB had spent, all the cheque butts, all the receipt books (presumably containing copies of the receipts issued) all the petty cash vouchers and records of all deposits in the form of Building Society passbooks. Mrs Kokas said she took the documents to Mr Voase every year to do the accounts for GSDS. Mr Voase puts it a little differently. She had no idea how Mr Voase came to write in his reports of 2 May 2000 that less than 25 per cent of substantiating records could be located. She gave Mr Voase everything she had. She agreed (T72) that she had earlier said she was given everything.
46. JK agreed that she could have been given the last four to six cheques in a cheque book pre-signed by CB. JK was not sure of the precise number. She had donkey expenses to meet, for example, for the farrier and for feed. She returned any unused cheques to CB and got fresh cheques from the new book. CB drew a lot of cheques.
47. JK agreed that CB would tell her from the cheque butts how CB had spent the money. JK said she did likewise. Normally, any of the unused cheques were used during her visit, as she took the cheque books (butts) back with her.
48. JK said that she had to balance the withdrawals and the deposits and if details of the purpose of a withdrawal were missing, she telephoned CB and asked her what the cheque was for. She had all the cheque butts for each year.
49. JK agreed that sometimes CB would obtain petrol. CB also bought hay, sometimes paying in cash. When CB went to people’s houses to tend their donkeys money was spent on supplies. GSDS paid for the supplies in cash. This meant CB had to have cash with her.
50. When JK received money orders for donations she forwarded them to CB who cashed them at the Post Office and used the proceeds for petty cash. JK denied that she suggested this. The money orders were not put in the bank (Building Society). JK never entered them in the records as a deposit. JK said that details of these money orders were just in the data base. JK said that she did not enter up the details of the money orders and put them in the bank because CB needed to cash them so she would have money on her person. JK said that she received a lot of money (or postal) orders. Mostly they ranged from $10 to $50, but some were up to a few hundred dollars. Mostly cheques were received. They were made out to GSDS and not to CB. JK sent them down to CB for banking. She did not check that all the cheques were banked. She had details of each donation on the data base she kept. The data base was not part of an accounting system, it did not tally up totals. There was just a data base for every person.
51. JK said that when she received the yearly accounts from Mr Voase she did not open them but filed them away. She was not aware of the terms of his reports that less than 25 per cent of substantiating records could be located.
52. JK said that she did not total the amounts of the cheques or money orders which she had received. She sent cheques etc periodically to CB without knowing the total of what she sent.
53. JK said she never checked how much had been expended by the cheques or how much CB had spent in cash. I would have expected the bookkeeper to have done so. JK said that over a period of five years she did not have any idea of how much she sent down to CB when she sent money (cheques and money orders). That is surprising. JK stated that she tried to improve her skills, especially on the computer, but failed.
54. JK said that she did not know why the four separate accounts were opened. JK said that she knew of an account that was an investment account. JK thought that once or twice CB told her that she was putting money into an investment account, but she really could not remember. She just remembered the Grogan one. Some money was placed with Mr Grogan, JK’s solicitor. JK was there when that happened.
55. In cross-examination it was suggested that there was no real committee. It was difficult to get people to serve on the Committee of GSDS. People were asked to serve on the Committee by CB and also by JK. There were no elections or formal meetings. In essence GSDS was run by CB and JK with voluntary assistance.
56. JK said that she had no formal bookkeeping training or clerical experience and fulfilled the function of bookkeeping work because no-one else wanted to do it and CB insisted that she (JK) should do it because CB had far more donkey care work than JK. JK felt that she was just fumbling about.
57. JK agreed that from 1996 to 1998 the money (for GSDS) was going to herself and from 1998 it was going to PO Box 4 at Clarence Town and being picked up by CB, because she lived nearby. After September 1999 her husband collected the mail occasionally.
58. JK said that from time to time she received part reimbursement for out of pocket expenses, that CB would often tell her there was no money and that she (JK) made extra contributions. JK said that this happened occasionally.
59. JK agreed that GSDS had big bills to pay and needed to keep money coming in.
60. JK agreed that after the Open Days (and perhaps also the Field Days – the evidence is not clear) sometimes she and CB would either that evening or next morning tally up the takings or proceeds at CB’s place. JK said that the cash stayed with CB.
61. I propose to suspend this summary of JK’s evidence and to interpolate a summary of Mr Voase’s evidence as to his preparation of the accounts of the unincorporated association and the steps he took after his audit in about April 2001 and then return to the summary of JK’s evidence.
Accountancy Evidence of Mr Voase
62. Mr Voase said that in April 1997 he was engaged to do the accounts for GSDS and he prepared accounts for 1995/1996. He did not recall any serious anomalies in that audit. There was not a lot of material to look at for the year ending 30 June 1996, but it must have been satisfactory from his point of view. Mr Voase had been in public practice as an accountant since May 1983. There was no challenge to his qualifications or competency.
63. Mr Voase said that in March or April 2000 he was engaged to audit accounts from the financial year 1997 to the financial year 2000. His main contact was with JK. She was the bookkeeper. Mr Voase requested JK to supply the bank records, vouchers pertaining to expenses and income. This is usual. The main focus on the audit was to verify that the expenses of GSDS were bona fide. JK provided, “Mostly Building Society Books, with notations on them for what the income and expenditure related to”. Mr Voase recalled JK provided some spreadsheets. He entered the information into his own computer independently. Mr Voase was not certain whether JK provided any cheque butts. He could not recall if he was missing cheque butts. He recalled that he looked at vouchers for petty cash items. He did not recall any petty cash books. Mr Voase said that for the purpose of the audit he worked mainly from the records of the Greater Building Society account 016 045 52903/3. To his knowledge that was the operating account for GSDS. It was a cheque account.
In his reports of 2 May 2000 on the accounts for GSDS for the years ended 30 June 1997, 1998 and 1999 he wrote:
“I am unable to reach a conclusion as to the accuracy of amounts as shown in the accounts. This is because I was unable to verify on a test basis the relationship between the indicated values and substantiating records due to the partial absence of receipts invoices and other vouchers with which to prove them. According to my tests less than 25% of substantiating records could be located.”
Mr Voase said that when he only had 25 per cent of the primary source material he asked if there were any more records and that he probably spoke to JK about this.
64. In his report of 19 April 2001 dealing with the accounts for GSDS for the year ended 30 June 2000 Mr Voase wrote:
“Although the accounts reconcile with the bank statements I am unable to provide an unqualified audit opinion for their accuracy. This is mainly due to the absence of about 2/3rds of substantiating records for expenditure incurred. This does not necessarily indicate that there has been any deliberate intention to mislead by anyone maintaining the records of the Sanctuary. It just indicated that the accounts cannot be considered reliable.”
65. Mr Voase said that after his reports of 2 May 2000 he had a meeting with CB and JK. It is not clear when this meeting was held. He could not recall whether he had had any personal or telephone contact with CB before that.
66. Mr Voase said that on the materials he had seen he formed the view that $130,000 would cover any shortfall that he could see in the books of GSDS. He believed that he would have conveyed that to the Committee. He did not recall a conversation specifically with CB to that effect.
67. Mr Voase said that JK told him she was not a very good record keeper and the records were not intact, in response to his request for the records.
68. Mr Voase impressed me as an honest witness. I would not expect him to be able to recall accurately what records he had seen. The comments in his audit reports are accepted as correct. He was concerned that there appeared to be a shortfall. While he believed that he discussed this with members of the Committee of GSDS, I think he may have mentioned the matters to some members of the Committee.
69. Mr Voase’s evidence revealed an unsatisfactory state of affairs. JK was not a good keeper of records, but she depended on the records CB gave her. CB probably did not give to JK any of the records relating to the 22 accounts listed in the lower box of Schedule B and described as “Accounts Held Solely by C Berry”.
70. In her affidavit of 9 July 2004 (para 35) JK said that after Mr Voase had finished auditing the accounts of GSDS for the year ending 30 June 2000 he telephoned her with some queries about the accounts and she referred him to CB. JK said that CB told her, “It concerns the amount of $10,000” and instructed her, “do not speak to him anymore”. JK said she believed some relatively minor technicality had arisen which CB wished to sort out with Mr Voase and that it was over her level of understanding. As Mr Voase was JK’s accountant to CB’s knowledge it is hard to accept that CB would have issued the instruction suggested.
71. In para 38 of that affidavit JK said that she was not assigned the task of keeping records of receipts and letters received from donors until after she moved to Glen William (Sept 1999).
72. JK continued that in about July/August 2001 CB came into JK’s office at her home and demanded all the Sanctuary paperwork, saying “Jo, you keep too many details and records.” CB said words to the effect of “How many times have I told you, I do not keep all these records,” CB had often said words to this effect over the years. JK said she had no idea of what records CB wanted and that she [JK] gave CB access to all the records. JK said CB took what she wanted and left. JK spoke to a few people and then telephoned CB and told her that she wanted some of the paperwork back. She went down to where CB was living and asked for the paperwork. CB replied, “I have burnt everything.” CB and Elizabeth Harris gave a different account of what happened when CB attended upon JK at her home. I am not persuaded that the version given by CB is correct. Elizabeth Harris did not see materials being removed from JK’s house.
CB’s Evidence
73. CB said that she met JK about 1978 or 1979, that in January 1991 she contacted a number of her friends, that she held a meeting on 19 January 1991 and that JK was not included in her list of those attending. CB said that at the meeting a number of her friends agreed to assist her in caring for donkeys on two days each week. CB said that at the meeting Mr S M Baber agreed to make his land at Glen Oak available for the accommodation of welfare donkeys in return for CB agreeing to continue looking after the donkeys. Mr Baker died on 18 December 1991. CB had to move the donkeys back to her property at Duns Creek together with the donkeys he left her under his will.
74. CB said that in or about 1992-1993, JK, having recently completed a computer course, agreed to help her in producing newsletters that CB sent out to friends of donkeys. JK, who lived at Crescent Head, took no active part in the daily care and welfare of the donkeys.
75. CB said that from 1992 to 2000 she organised fund raising activities in the form of open days etc, and that those activities raised small amounts of money, all of which were used for the day to day care of donkeys. CB said she kept no records of these moneys, as she considered she was merely carrying on her activity in caring for the donkeys. JK did not attend all the open days and functions but attended once or twice per year.
76. CB agreed that the Committee of GSDS was constituted informally. There was no formal process for appointing a committee member and formal committee meetings were not held. There were informal meetings. CB said that she was the Hon. Administrator. The other roles were attributed to her by JK. CB accepted that she was the person in charge of GSDS. CB said that she discussed everything she did with JK.
77. CB said that she and JK opened five accounts with the Greater Building Society in Maitland to which CB went quite frequently. CB said that she did the banking. She received cheques in the mail, usually accompanied by a letter, wrote a receipt and sent the letter and advised JK of the amount (often with the receipt to go with the next newsletter) for JK to enter the details on the computer.
78. CB said that in 1996 there was a change. GSDS was receiving a lot more income and she went overseas, so mail went to JK’s address at Crescent Head. That continued after CB returned. JK posted the cheques down to CB to be banked
79. Money orders were posted by JK to CB who cashed them. CB said she believed that these were recorded. The cash received was her petty cash which was used for the purchase of hay, feed for the donkeys and to buy items and supplies to meet the needs of donkeys who were at homes away from the Sanctuary. CB said the cash was primarily spent on hay and wormer. She listed other items purchased (T215, lns 15-129). When she spent the cash she sent the dockets and/or receipts to JK or handed them to her. CB agreed that both she and JK had a number of cheques signed by the other which could be completed to pay bills.
80. CB said that the explanation for the other accounts opened in the name of GSDS was that she withdrew an accumulated sum of money out of the general account and invested it to gain interest and that the interest and the capital would be put back into the donkeys (T216). By “put back into the donkeys” CB meant applied towards the cost of feeding, housing and caring for the donkeys. There were many welfare donkeys. At the time she did not know she was dealing with an unincorporated association and that she should not be mixing her funds and the association’s funds. (T216)
81. CB said that JK kept all the records, that she posted the used cheque books and passbooks to JK for keeping. CB said that JK had about a dozen donkeys at the most at anyone time but they were her donkeys, not welfare donkeys.
82. CB said that she did contract work as a secretary, mainly at night for 20 hours per week. She looked after the donkeys during the day. She also ran a farm. Before her husband had his heart attacks in June 1999 he worked as a subcontractor carpenter. CB said that as a result of her husband’s severe heart attack on 19 June 1999 her husband was hospitalised and she stayed with him for eleven days during which time JK and her husband stayed at the home of CB and SB. CB said that at that time she left blank signed cheques and blank signed withdrawal slips with JK to enable her to operate the accounts CB was using for donkey activities. CB said that initially after her husband and she returned home a considerable amount of her time was taken up caring for him and she gave blank withdrawal slips to JK.
83. In cross-examination CB agreed that on an income tax return estimate document, under the heading “Averaging Primary Producers” the taxable income for each of the years 94/95, 95/96, 96/97 and 97/98 was shown as less than $10,000. For the year ended June 1998 her taxable income was shown as $5249 and the taxable income as $153.
84. CB agreed that the document was drawn up by her accountant on the basis of his examination of her farm records for the year and all other records relevant to her taxable income. She did not believe that contributions people gave her towards her travel costs etc to do donkey hooves or attend to the ill health of donkeys was taxable income.
85. CB did not have a substantial income in the years up to 1998. For the 2000/2001 financial year the figures are higher but they were not readily explicable. Perhaps there was a capital gains tax component.
86. CB said that she received a bequest from Mr S Baber and her husband received a bequest from his mother. She denied that she told untruths about inheritances.
87. CB said that before the Pine Brush property was purchased she and JK drove around it and looked at it and she discussed how its purchase might be financed. The donkeys were to go there because she (CB) and her husband were selling Lot 101 Limeburners Creek Road, Clarence Town. The Pine Brush land was vacant land but good for keeping animals.
88. CB said she did some farriering work at the properties of other people. She did charge for it, but the amounts were more of a contribution to her towards travelling to these properties and maintaining tools etc.
89. After the Association was incorporated she was paid for farriering work after the Committee authorised it.
90. CB denied that prior to the Association’s incorporation she ever told JK that there was no money to reimburse her expenses. There was one occasion after incorporation when there was a shortfall.
91. CB said that JK would take home cash money after open days (presumably those JK attended) for her expenses. CB denied that on open days etc she would take any money that was collected and lock it in her car
92. CB agreed that Mr Voase telephoned at one stage. CB denied that afterwards she told JK that it concerned about $10,000. CB also denied telling JK not to speak to him any more.
93. CB said that in April 2001 she, Elizabeth Harris, a hard worker in the cause of donkey welfare and friend of CB, and Mrs Harris’ granddaughter went to JK’s house. CB wanted to ask JK particular questions relating to her conversation with Mr Voase. CB said that JK would not let her in her house and that she spoke to JK through a small opening in her office window. CB stated that she said, “I’ll need a printout from the computer of the financial situation of GSDS.” They argued. CB said that if she remembered correctly JK telephoned Ms Everett “who supposedly talked her though how to print out a copy.” CB saw JK talking on the telephone to someone. After that JK produced some spreadsheets and handed them to CB.
94. CB denied ever taking any boxes from JK’s house. CB denied telling JK that she (CB) had burnt paperwork. CB stated that on the day she obtained the printout she demanded to see all the dockets and receipt books JK had stored in her house but JK said she had burnt them all (T234).
95. By “receipts” CB included all the dockets she had to back up what she spent money on and the receipt books from which she would issue receipts to people for a donation or contribution. (I assume those would be the books containing the duplicates).
96. CB said that in November 2001 JK came to her house to have a look at CB’s computer to remove Mr Kokas’ CV which was on that computer which had previously been with JK. CB said JK asked for a drink of water and that while CB was getting that JK was alone in the room with what was then CB’s computer. CB said that Microsoft Works and Word programs were on that computer but that she only worked in Word. CB said she did not open up Works. She said that when she checked her computer, probably that night, she discovered that Microsoft Works, the CV of JK’s husband and a lot of documents CB had prepared had gone, that is, had been deleted.
97. CB said that JK used Microsoft Works and Word. CB said that prior to JK moving to the Hunter Region she used CB’s computer. CB said that JK placed a disk into Microsoft Works and backed up the financial records and the subscribers list of names that was in Works. CB said that JK told her not to open up Works because JK knew that CB would lose it. CB described herself as hopeless.
98. CB believed the deletions were effected by JK. CB attributed to JK greater computer skills than JK admitted.
99. CB’s evidence suggesting that JK had deleted extensive material from CB’s computer while CB was absent from the computer room fetching a glass of water struck me as probably incorrect.
100. CB said that by early 2001 she became concerned that JK may have been appropriating funds of CB for property improvement on JK’s land. CB, without mentioning the reason, advocated and worked for the incorporation of the Association, with JK’s agreement. CB said that at no time did she intend to give her money or her property to the new Association and that her intent was that the new Association carry on the work with her services and help, but not take over all of her assets.
101. In her affidavit of 11 June 2004 CB made a response to the report of Mr Rossetto. It is convenient to deal with that later. In para 6 of that affidavit CB asserted that from the early 1990’s all mail addressed to GSDS was sent to Box 5, Crescent Head, the address on the Newsletters and that of JK. CB stated that JK was to open the mail and make the appropriate accounting records on her computer. CB said that cheques were then forwarded to her by mail at Duns Creek to bank in the Greater Building Society account in Maitland. CB said that she received no cash from JK and had no knowledge or record of what was done with cash handed to her (excepting cash handed to JK on open days). CB said she kept no record of any cheques she received until JK moved to Clarence Town from which time she completed the deposit book in her office for the purpose of depositing these cheques. CB stated that she understood the books of account of GSDS were being kept by JK and that as early as 1997 she was aware that there were certain difficulties with them and she approached Jacqueline Frick. That lady confirmed that in early 1997 CB had asked her to be the bookkeeper for GSDS, but she (Frick) declined.
102. CB was cross-examined at length, the cross-examination occupying about 120 pages of the transcript.
103. CB said that as to her employment as a secretary, her recollection was that that was over the period 1986-1995. She claimed she had more than one secretarial position. She could not remember into which account or accounts she banked her wages.
104. CB accepted that different accounts were opened to obtain interest. CB said that when JK visited her they discussed finances and bookkeeping as they understood them. JK would close off the books “for whatever period and we would go and close the bank account.”
105. CB said that she was not referring to financial years and that she did “not know what period she was referring to, whatever JK told her.” Such a situation seems improbable. No accounts (even imperfect accounts) were produced for any year prior to the financial accounts for the year 30 June 1996.
106. CB agreed that during the years she was involved in the Association and the Sanctuary decisions about donkey wellbeing would ultimately be her decisions and not anyone else’s. CB also agreed that during those years decisions about financial matters in the Association and the Sanctuary would ultimately be made by her and not by anybody else (T249). Although CB had some good volunteer helpers who worked hard for the welfare of the donkeys, CB was on the job virtually fulltime and worked harder than anyone else. CB had a detailed knowledge of what was needed and the volunteers and Committee members accepted what she said and her assessments.
107. CB stated that she always discussed everything with JK with regard to the finances because she did not understand them (T249). CB said she sought out the interest rates paid on deposits. There was no Greater Building Society branch at Crescent Head. The closest branch was at Port Macquarie. However, there was a branch at Maitland and CB often went to Maitland.
108. CB could not remember what was done with some of the moneys withdrawn from GSDS accounts. CB could not remember whether certain accounts, where she was the sole signatory, were opened by her alone without reference to JK. CB said that she would have spoken to JK about moving any money (T255-6). CB also said that she would have spoken to JK about opening a new building society account relating to the Sanctuary account.
109. CB proffered this explanation [at T255]:
“If [JK] was never a signatory, it was for a particular reason that she could not come down, could not be present or whatever.”
110. At T255, on being pressed as to why she opened an account entitled GSDS with herself alone as the signatory, CB said “It was my donkey Sanctuary.”
111. That was a revealing reply. She said that perhaps at the time, in her opinion there was no such thing as an Association. She could not give a reason for what she did but she believed that the donkeys would have been benefiting from whatever transactions happened.
112. At T260 CB agreed that until JK moved to the Hunter Region in 1999 the finances were left, practically, in her hands. CB added that she was the person who looked after the animals and had to have access to the bank so she could feed and care for them. CB said that she discussed major transactions with JK and all the transactions of moving money around, CB said that JK devised the title of one of the accounts, namely “Good Samaritan Donkey Sanctuary, Braymart”. This was an account where the sole signatory was CB (T274).
113. CB said that she did not know until 2001 when Mr Voase telephoned her that he had drawn up accounts for the financial years ended 30 June 1996 and onwards up to 30 June 2000. While this is possible it seems improbable. During her cross-examination and not in response to the question asked, CB volunteered that JK would always assure her, “books balanced beautifully”. I am sceptical about that. It was JK who wanted the accounts audited. At T302 CB said that she did not recall having spoken to Mr Voase but she did recall going to his office with JK, probably twice. This may not have been on GSDS business. At T320 CB said she had not previously seen Mr Voase’s letter of 19 April 2001 and that she had only ever spoken with him on one occasion on the telephone about issues. That was in 2001.
114. While the Building Society passbooks were in use CB retained them. They were sent to JK when full. CB said that she agreed that the greatest expenditure of GSDS funds was by her. She estimated probably more than 80 or 90 per cent.
115. It was put to CB that she had not told JK of the existence of any of the accounts listed in the lower box of Schedule B to Mr Rossetto’s report, with the possible exception of the Braymart account. CB denied that that was the position.
116. CB was cross-examined (T299-300) on paragraphs 15 and 16 of her affidavit of 27 June 2002, which read:
15. “In or about 1996, I was instrumental in a substantial pro motional drive including TV publicity for my activities. As a result of this drive, contributions to me for the care of the donkeys increased dramatically. At that time, not being an experienced “money manager” I asked Joanne to be involved with the money management of my activities. As a result I opened a bank account and included Joanne and Elizabeth on that bank account as co-signatories. Joanne at this time also agreed to keep my financial records for my donkey work which I understand she maintained on her computer.
16. From about that time, most of the mail relating to my donkey work at her request was directed to Joanne Kokas. Any cheques received were to be recorded by Joanne and forwarded to myself to deposit in the bank account. Joanne Kokas did not request from me details of expenditure nor were any details provided to her. Some cash donations were handed to Joanne for the purpose of safekeeping in her safe.”
Upon objection being taken by the plaintiff these paragraphs were rejected but leave was granted to lead oral evidence as to these matters.
117. The account mentioned in para 15 was probably that opened with the Greater Building Society on 26 June 1996 in the name of GSDS with CB and JK as joint signatories. That is the fourth account listed in the top box of Schedule B to Mr Rossetto’s report.
118. CB (at T301) said that the third sentence in para 16 did not mean that CB did not send JK dockets. CB said that she did send dockets to JK. CB said that the new account was opened “because there was a whole new era in the donkey world.”
119. The agenda for the Committee meeting of 27 March 2001 contained this item numbered 4:
“To approve that any financial contribution and advancement to Christine Berry be accepted as waived by the committee of the Good Samaritan Donkey Supporters in appreciation for all her work and countless and incalculable known and unknown financial contributions for Donkeys in need in the past."
120. CB asserted that this item on the agenda was taken from what JK had written. CB agreed that the agenda contained her handwriting and had her name at the bottom. She and JK had a discussion.
121. The minutes of that meeting record:
“It was agreed to approve that any financial contribution and advancement made to Christine Berry as agreed by the committee of the Good Samaritan Donkey Supporters be accepted as waived in view of her work done for the donkeys and the free use of her vehicles and floats of transporting donkeys and feed etc. over many years.”
CB said that this resolution was put forward by JK.
122. Referring to open days and their proceeds CB said that not a great deal of money left her place and went to JK.
123. CB said that she believed that until 28 March 2001 there was no unincorporated Association. She said that she was confused.
Elizabeth Harris
124. Mrs Harris, who worked very hard assisting with the care of donkeys over the years, said that JK never had a lot to do with the practical side of caring for the donkeys, but was involved in the administration of GSDS. Mrs Harris said that on the open days JK attended she always collected any moneys GSDS made. Mrs Harris said that GSDS operated a small gift shop at Clarence Town and that JK always received the moneys from that shop.
125. Mrs Harris said that she and her granddaughter went with CB to JK’s Glen William property in April 2001. Mrs Harris played with her granddaughter in the backyard and although she heard the voices of CB and JK Mrs Harris could not determine what they said. Mrs Harris said that CB at no time entered JK’s house. When Mrs Harris, her granddaughter and CB returned to the car, CB did not have any documents or items that could contain documents.
126. Mrs Harris attended a meeting on 3 November 2001 at Leigh Everett’s house at Glen William. That meeting was also attended by JK, CB, Margaret Howard and Yvonne Cooper. I did not admit Mrs Harris’ account of that meeting set out in paragraphs 18 and 19 of her affidavit of 11 July 2005. That had not been previously notified and it was sought to adduce that material close to the end of the evidence.
127. Mr A G Taylor gave evidence that he gave CB $10,000 in early 1995 and another $10,000 in about September 1995 and that both sums were for CB’s use as she wanted to spend it. The money was not given to GSDS nor was it intended for its use.
128. Mrs Joan Pollard of Kempsey said that about 1992-1993 she and her husband became volunteers for GSDS. She knew both CB and JK. During 1993-1994 she was the proprietor of a shop at Kempsey and allowed GSDS, at JK’s request, to place a tin for donations towards the Sanctuary in her store. JK collected the moneys and never gave her a receipt. Mrs Pollard attended one open day about August 1993 or 1994 and saw that JK collected all the money received on that day.
129. Mrs J Frick was interested in the welfare of donkeys for some years prior to 1997. As from the beginning of 1997 and at CB’s request she became a volunteer for GSDS. Moneys received on open days and from various functions were ultimately handed to CB. Mrs Frick said that sometime after she had declined the position of bookkeeper with GSDS, CB asked her if she would help JK with the bookkeeping; CB also asked if she would help JK in the office. Mrs Frick said that at the request of JK she assisted Ms L Everett in the audit she was conducting by going through the primary documents.
130. Ms K L Stapleton said that although she told (and showed) JK how to use the program Microsoft Money JK was not using that program very well; she could not “comprehend bank reconciliations and things like that.” Ms Stapleton added that even today she still went to JK’s place to do her accounts because JK could not do her own on Microsoft.
131. Ms Stapleton produced the end of year summary for the financial year ended 30 June 2000 and told her to give it to Mr Voase. Ms Stapleton said she used as much of the material in JK’s spreadsheets as she could put in, cross-referencing those with bank statements, cheque butts and passbooks that she could actually get hold of. There were some petty cash records. Because of the time lapse she had difficulty in saying what records she had.
132. While I thought that JK tended to understate abilities she was not good at keeping the books and accounts of GSDS. She was not efficient in using the computer to handle its accounts. JK was able to produce newsletters and forms by using the computer as a word processor. Her record keeping was poor.
133. CB was primarily interested in physically caring for the donkeys and worked very hard to advance their welfare. While she attended to the banking, raising money and some administration her record keeping was also poor.
134. JK felt very strongly about CB and at the hearing these ladies displayed much ill will toward each other. I thought that in each case the ill will was of such an order as to affect the reliability of their evidence. I was very sceptical about many of the verbal statements alleged to have been made by one to the other. I approach the evidence of each of them with reserve. I am not satisfied that CB removed documents from JK’s premises and burnt them. Nor am I satisfied that JK, in the underhand ploy suggested, deleted material from the computer CB then had in her home. I am satisfied that in respect of many years, source documents cannot now be located. Each of JK and CB sought to blame the other for the mess into which the record keeping degenerated.
135. While in 1991-1992-1993 JK was primarily occupied in producing forms and preparing newsletters and other documents she probably did a small amount of bookkeeping and work with the accounts, and received some financial records from CB and entered them. From 1995 JK assumed a much greater role in bookkeeping and handling the financial records and affairs of GSDS. The volume further increased after the fund raising drive in 1996. The first year in respect of which Mr Voase was asked to carry out an audit was the financial year ended 30 June 1996. He gave the impression that there was not a lot of material to be considered for that period and that the audit was uneventful.
136. I am satisfied that both JK and CB received and retained cash from open days, with JK receiving and generally retaining the cash (or most of it) from the open days which she attended. The exact amounts are not known but not a great deal of money is involved and it is probable that both ladies used the cash received on legitimate expenditure for and in connection with the GSDS and the advancement of the welfare of donkeys. The legitimate expenditure would have included incidental expenses such as petrol for necessary travelling. An inquiry into these matters would be pointless. It would get nowhere and reach the same general conclusions which I have reached.
137. There was no dispute that CB cashed the money orders and retained the cash. CB probably used that cash to make cash purchases on behalf of GSDS for the welfare of the donkeys. This would include feed, hay and other items. An inquiry into these matters would also be pointless. Detail is lacking and the same general conclusions would be reached.
138. In the instances just mentioned the cash receipts and the expenditure occurred over 5 years ago and probably stretch back for 10-12 years, if not longer.
The Financial Evidence
139. At the hearing the plaintiff relied on the verified report of Mr M F Rossetto, the investigating accountant retained on its behalf.
140. Accompanying that report were Schedules A to F, some Attachments and an Appendix. In his report (para 3.1) Mr Rossetto wrote that the main source of documents available for investigation were the records of the bank accounts of both the Sanctuary and the defendants. (‘bank’ includes any type of financial institution).
141. Schedule B sets out details of all five bank accounts of which JK said she was aware. They are listed in the top box on the Schedule. These accounts were in the name of GSD Sanctuary with the signatures of both CB and JK being required for withdrawals.
142. Schedule B, in the lower box lists a further 22 accounts under the heading “Accounts Held Solely by C Berry.” These accounts had various names. One of them bore the name GSD Sanctuary. Six of them were in the name of SB and CB; one was in the name of SB. Abbreviations were used to describe the accounts.
249. Undue pressure was not placed on CB. I do not think that she was intimidated. She withdrew the sum of $264,388 and paid it to the plaintiff because she believed those moneys belonged to the plaintiff and to regularise, at least in part, the financial affairs of GSDS and GSDSI which she had been handling. CB’s claim that she executed the documents as to the payment of $264,388 to GSDSI and made that payment under duress/or mistake is rejected.
250. I decline to make the declaration sought in para 18 of the Second Amended Cross Claim as to the sum of $264,388. That money belongs to the plaintiff legally and beneficially.
251. The relief sought in para 19 of the Second Amended Cross Claim, namely an order that GSDSI pay CB $151,893.67 is based upon Mr Bell’s report of 20 February 2003. Mr Bell wrote:
Limeburners $52,334.67“Based on the information provided and the assumptions herein the amount Berry has contributed which is currently held in assets of the Association are as follows:
Pinebrush 99,559.00
$151,893.67”
252. Mr Bell accepted CB’s assertion that $52,000 were her personal funds, verifying that that sum was withdrawn from an account in the name of CB trading as DBII on 20 June 1996. I have earlier set out why such a claim appears to be unsustainable and directed an enquiry
253. The claim for $99,559 was based on two withdrawals, one for $47,334.09 on 26 April 2000 from an account in the name of CB, known as Sunberry, which CB asserted went to the purchase of Pine Brush. Mr Bell assumed this to be correct. I would need to be satisfied on an analysis of the Sunberry account that the sum of $47,334.09 was in truth the property of CB. I would also need to be satisfied that that sum was used in the purchase of the Pine Brush property. The summary handed up by counsel for CB asserted that it was so used. That may be so.
254. The second withdrawal was one for $52,225 on 22 June 2000 from an account at Newcastle Permanent Building Society Ltd in the name of GDS Sanctuary under the sole control of CB (Item 4579).
255. I would need to be satisfied that this sum was in truth the property of CB. It was said that this sum originally came from the sale of the first Lot at Duns Creek . The summary handed up by counsel for CB asserted that this sum was used in the purchase of Lot 3, Pine Brush.
256. There is one further hurdle for CB to overcome. Both the amounts were claimed to be used in the purchase of the Pine Brush property. However, that property was transferred to the plaintiff about 30 November 2001 without any reservations. That concluded the matter. It is too late to now be making a claim for moneys alleged to have been advanced to assist with the purchase of the property.
257. The plaintiff submitted that in any event it was not enough for CB to demonstrate that she put money into the Sanctuary out of her own pocket either before or after the incorporation date. The plaintiff submitted that CB would have to go further and demonstrate that she had a contract with the Association at the relevant time that she would be reimbursed or recoup by her own efforts or “something of the sort” in each of these cases and it does not appear from the evidence. There does not seem to have been a loan, but I do not think that there was any intention to make a gift at the time moneys were advanced. As a matter of evidence JK, when the transfer of the Largs land was being canvassed remarked that she had contributed $3000 to the purchase of that land and she did not know whether she was prepared to forego her claim Subsequently she did when she signed the transfer.
258. Counsel for CB handed up a five page summary in which were listed a series of transactions and claimed on balance the sum of $173,836 was due from GSDS to CB. At T450 counsel stated that CB’s claim was for the amount specified on the final page of Mr Bell’s report namely $151,893. Counsel submitted that this figure was probably very conservative.
259. The five page summary did not purport to be a complete summary of all the dealings between CB and GSDS but it referred to certain real estate transactions, namely, Clarence Town Purchase, Lots 34 and 36 Duns Creek, Largs and included a section headed “Other Transactions of Significance Explained.”
260. CB’s counsel handed up a further two page summary headed “Summary of Transactions Involving Intermixing of Funds”. This showed the “net amount payable to the cross-claimant by the plaintiff” as $173,836.
261. The Largs property was transferred to the plaintiff on 30 November 2001 without reservation. The Clarence Town property was transferred about 2 February 2001 when settlement seems to have taken place. The plaintiff has an outstanding claim for the balance of the sale moneys.
262. I am not persuaded that the methodology employed in either summary is sound.
263. In my opinion the claim for $151,893 fails.
264. As earlier mentioned the last section of the cross-claim (para 23) seeks declaratory relief which is not entirely clear. CB cannot maintain proceedings against JK in respect of any moneys which she may owe to the plaintiff. It seems that CB is alleging that JK utilised CB’s moneys personally including payment for erecting buildings on JK’s own land without accounting to CB.
265. JK said that at CB’s demand she (JK) agreed to allow the Sanctuary to erect a tri-steel stable complex on her property at Glen William. The stable is used by the Sanctuary as the Donkey intensive care facility and hospital. JK said that asset belongs to the Sanctuary and that it is able to be readily dismantled and relocated. There is also a relocatable office building. There was a payment of $800 for labour for erecting a carport which was paid for by the Sanctuary. This was offset against the sum of over $2,000 for reimbursement of expenses incurred on behalf of the Sanctuary. The Committee was aware of and approved what was done.
266. JK said that she never managed the personal money of CB and SB.
267. CB said in para 20 of her affidavit of 27 June 2002 that by early 2001 she became concerned that JK “may have been appropriating funds of mine for property improvements on her own land.” No supporting details were given.
268. The evidence does not justify the making of the declaration requested in paragraph 23.
269. In my opinion the cross-claim should be dismissed.
270. Neither CB nor JK had the qualifications and experience or was otherwise equipped to handle the substantial sums of money received and expended and to keep adequate financial records of income and expenditure. The problems grew worse with the influx of funds after the 1996 fund raising drive. Both ladies were out of their depth. The large number of donkeys and the welfare of the donkeys added to CB’s burdens. Substantial expenditure was involved in accommodating, feeding and caring for the donkeys. CB’s prime focus and interest was on ensuring that the donkeys received adequate care and she did a lot of the physical work. CB was also fully aware of the need to raise funds. It is a great pity that CB did not keep her funds and those of the Sanctuary separate.
271. I propose to order some limited enquiries and accounting:
5 May 1992 $ 25,526.00
(b) to require SB and CB to account for each of the deposits of $5000 or more listed under Transactions 3(a) of Schedule E to the report of Mr M F Rossetto of 6 November 2003, except the following:(a) to determine the amount, if any, contributed by CB or CB and SB out of her or their property to the purchase of the property known as Limeburners Creek Road, Clarence Town about May-June 1996
24 February 1995 $ 10,000.00
19 September 1995 $ 10,000.00
17 January 2000 $130,135.90
23 March 2000 $ 20,000.00
6 November 2000 $ 5,359.50
(c) to require SB and CB, on the basis of my finding that $27,148.53 (or $27,100.53) was the property of GSDS (the unincorporated Association), insofar as it is claimed that the whole or any part of the sum was properly expended on behalf of the plaintiff or GSDS , to advise the detailed basis for such claim with adequate particulars of it including adequate particulars of any authorisation of such expenditure. Any overlapping with Transaction 1(a) will need to be taken into account
In respect of each deposit for which an account is required SB and CB are directed to supply full particulars of the sources of those deposits which are claimed to be their or her property. That may involve going back through several accounts. Insofar as it is claimed that the whole or any part of the deposits the subject of the accounts were properly expended on behalf of the plaintiff or GSDS (the unincorporated Association) SB and CB are directed to advise the detailed basis for such claims with adequate particulars including adequate particulars of any authorisation of such expenditure
(d) to require SB and CB to account for the deposit of $100,000 about 26 May 2000 being the legacy from the Estate of Rosemary Ware and placed into an account called GDS Sanctuary under the sole control of CB . Insofar as it is claimed that the whole or any part of this sum was properly expended on behalf of the plaintiff or GSDS (the unincorporated Association) SB and CB are required to advise the detailed basis of such claim with adequate particulars of it including adequate particulars of any authorisation of such expenditure
(e) to require SB and CB, on the basis of my finding that $11,495 was the property of GSDS (the unincorporated Association), insofar as it is claimed that the whole or any part of this sum was properly expended on behalf of the plaintiff or GSDS to advise the detailed basis of such claim with adequate particulars of it including adequate particulars of any authorisation of such expenditure
(g) to require CB to account for $8000 being the approximate proceeds of sale received by her from the sale of DBIII books.(f) to require CB to account for the withdrawal of $41,832.30 on 2 November 1993 and $8900 on 11 February 1993 from the account in the name of GSD Sanctuary known as CB & JK1. Insofar as it is claimed that the whole or any part of these sums was properly expended on behalf of GSDS the unincorporated Association) CB is required to advise the detailed basis of such claim with adequate particulars of it including adequate particulars of any authorisation of such expenditure.
272. Each of the claims of SB and CB will have to be proved by the appropriate evidence. I anticipate that CB will have to go back through the available documents and over the events which occurred, for example, land purchases, and endeavour to match the deposits and withdrawals with those events and that there will be a considerable amount of tracing and accounting.
273. A volume of copy bank statements was admitted in evidence and Ms Alexandra Kokas produced a plastic bag and box containing financial records. All this material should be made available to CB.
274. CB should appreciate that because she mixed her moneys with those of the unincorporated Association and put legacies and donations intended for the unincorporated Association into accounts controlled by her that she is required to account and that statements to the effect that all the moneys were applied for the benefit of the donkeys will not suffice, nor will statements that she contributed more money from her funds or those of herself and her husband than she received by way of donations, legacies and fund raising activities. The evidence points to CB and SB being in relatively modest financial circumstances and in later years being the beneficiaries of increasing land values.
275. I have not ordered a general account from January 1991. It would be impossible to conduct such an account with the limited records which are available, and oppressive. Many of the transactions occurred a long time ago. I am not unmindful that JK contributed, by poor book and record keeping, to the situation which exists. I have been guided in part by the matters to which Mr Rossetto drew attention and allowed for those instances where Mr Rossetto was either not told of relevant facts or was not supplied with relevant documentary material.
276. There are a number of ways to approach the accounting required. That is primarily a matter for the parties.
277. I direct the plaintiff within seven days to submit draft short minutes to give effect to this judgment to the solicitors for the defendant and my Associate. Within a further seven days the defendants are to notify the plaintiff’s solicitors and my Associate of any objections to the proposed short minutes or submit an amended draft. The short minutes should provide for the dismissal of the second amended cross-claim. This is not an opportunity to re-argue matters,
278. As the plaintiff has enjoyed substantial success in its action and succeeded on the cross-claim, my provisional view is that the defendants should pay the costs of the plaintiff to date of the proceedings. This would include the costs of JK of the cross-claim. I am prepared to hear argument as to costs.
279. I will re-list the matter on 14 November 2006 or on such other date as may be arranged by the parties with my Associate to settle the short minutes, deal with costs and attend to any outstanding matters. By this time I would hope that the dispute as to Transaction 2 ($78,476) or the method of dealing with it would have been resolved.
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Tuesday, 14 November 2006
Orders pursuant to judgment of 12 October 2006 made on 14 November 2006
1 The First Defendant [CB] serve on the plaintiff on or before 31 January 2007 affidavit verifying the amount of her moneys and those of her and her husband [SB] contributed to the purchase in or about 1996 of land at Lot 101 Limeburners Creek Road, Clarence Town (Folio Identifier 14/7/86382) and showing the source of such moneys and the dates on which such moneys were received and paid towards such purchase.
[On the materials to date this will involve showing where the moneys in the account DBII came from other than $27,148.53 from J P Grogan and where the sum of $94,807 in account SB & CB1 came from if, in either case, it is alleged that any of these moneys were those of CB or CB and SB].
2 CB serve on the plaintiff on or before 31 January 2007 an affidavit or affidavits verifying, as to each of the items described under the heading “Transactions” below:
(a) the source of the funds deposited or withdrawn;
(b) the person or persons who are claimed to be beneficially entitled to the funds deposited or withdrawn;
(c) the reasons for each such claim, including particulars of any documentary evidence for such claim, annexing copies of any such documents as are available;
(d) whether it is claimed that CB or SB ore both expended the funds on behalf of GSDS, and if so the reasons for each such claim, including so far as possible name of payee, date of payment, purpose, and particulars of any claimed authorization by GSDS of the payment, annexing copies of any documentary evidence for such claims.
[This includes affidavits justifying or explaining amounts spent on feeding, maintaining, housing and caring for donkeys]
Transactions
A. Each deposit into a financial institution account listed under the heading “Money banked into accounts controlled by CB” on pages 3 and 4 of schedule E, except any deposit of a sum less than $5,000.00, and except the following deposits:
In the report by Mariano Rosetto dated 6 November 2003, being Exhibit ‘A’ in these proceedings:
- 5 May 1992 $25,526.00
- 24 Feb 1995 10,000.00
- 17 Jan 2000 130,135.90
23 March 2000 20,000.00
6 Nov 2000 5,000.00
B. The deposit of $27.148.33 numbered ‘3b’ on page 4 of schedule E.
C. The deposit on 26 May 2000 of a cheque for $100,000 drawn by Prpetual Trustee Company Limited on behalf of the Estate of the late Rosemary Lillian Wares, being item No. 4528 on p 71 of Schedule C.
- [The affidavit should show, if this be the fact, that this sum was used in the purchase of the Pine Brush land]
E. The withdrawals from accounts of:
The affidavit should show that, if this be the fact, $41,832.30 was used in the purchase of the Largs land.(i) $41,832.30 on 2 Nov 1993, being item No 1097 on page 18 of Schedule C; and
(ii) $8,000.00 on 11 Feb 1993, being item No 769 on page 12 of Schedule C.
[This direction applies to the extent that CB wishes to contend that such moneys were used for the benefit of the GSDS and the donkeys].
3. CB serve on the plaintiff an affidavit verifying:
(b) whether it is claimed that any such proceeds were expended on behalf of GSDS, and the reasons for any such claim, including name of payee, date of payment and the purpose.(a) how the proceeds of sale of Donkey Business III of $8000 were disposed of by her, including the name of each person to, and title and number of each account into which such proceeds were paid, and the dates of payment;
4. CB serve on the plaintiff on or before 21 December 2006 an affidavit verifying whether any documents and records of the affairs of GSDS or goods the property of GSDS are within the possession, custody or control of either or both CB and SB and providing a full description of each such item and its location.
5. In these Orders, “GSDS” means the plaintiff, formerly named “Good Samaritan Donkey Supporters Inc”, and includes the unincorporated association named “Good Samaritan Donkey Sanctuary” that existed from about 1990 until the incorporation of the plaintiff.
6. List the matter for further directions before me on 12 February 2007 at 9.30am.
7. The claims of the plaintiff in these proceedings are otherwise dismissed.
8. The second Amended Cross-Claim is dismissed.
9. The defendants are to pay the plaintiff’s costs of the proceedings relating to the claims against the defendants, to and including the date of these orders, including reserved costs.
10. The cross-claimant [CB] is to pay the costs of each of the cross-defendants relating to the cross-claims.
11. Direct that service of the orders upon the defendants may be effected by the plaintiff’s solicitors by prepaid post addressed to Mrs C E Berry, 600 Wollombi Road, Bishops Bridge, NSW 2326 and that the solicitors for the plaintiff advise Mrs C E Berry by letter by prepaid post that she should appear at this Court, Queen’s Square, Sydney on 12 February 2007 at 9.30am (See the notices in the Court foyer to ascertain the Court in which the matter is being heard).
12. Note that Mr R Makin, the solicitor on the record for Mrs C E Berry has advised that his instructions have been withdrawn and that he has ceased to act for her.
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