Hanrahan v Ansell
[2012] VCC 783
•21 June 2012
| IN THE COUNTY COURT OF VICTORIA | Revised Not Restricted |
AT MELBOURNE
CIVIL DIVISION
DAMAGES AND COMPENSATION
FAMILY PROPERTY DIVISION
Case No. CI-11-04265
IN THE MATTER of the Will and Estate of DOROTHY ANSELL
-and-
IN THE MATTER of Order 54 of the County Court Civil Procedure Rules 2008
BETWEEN:
| JOAN MARY HANRAHAN (who sues as Administrator of the Estate of VERNON GRANTHAM ANSELL deceased) | Plaintiff |
| v | |
| PETER ANSELL (as the Executor of the Will and Estate of DOROTHY ANSELL, deceased) | Defendant |
JUDGE: | HIS HONOUR JUDGE MISSO | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 15 June 2012 | |
DATE OF JUDGMENT: | 21 June 2012 | |
CASE MAY BE CITED AS: | Hanrahan v Ansell | |
MEDIUM NEUTRAL CITATION: | [2012] VCC 783 | |
REASONS FOR JUDGMENT
SUBJECT: EXECUTORS AND TRUSTEES
CATCHWORDS: Plaintiff the domestic partner of a son of the deceased – son left one third of the deceased’s estate by her Will - defendant the executor of the deceased’s estate – partial distribution to the plaintiff’s domestic partner – whether balance to be distributed put on trust – undistributed entitlement an equitable interest in the deceased estate – no assignment of the equitable interest to the trustee pursuant to s 134 of the Property Law Act 1958 – no disposition of the equitable interest in writing pursuant to s 53(1)(a) – administration of the estate pursuant to Order 54 of the County Court Civil Procedure Rules 2008
LEGISLATION: Property Law Act 1958, s 53(1)(a) and 134 and County Court Civil Procedure Rules 2008, Order 54
CASES CITED: Ford and Lee ‘Principles of the Law of Trusts’, Thomson, Law Book Co 2011; Commissioner of State Revenue (Vic) v Lam and Kym Pty Ltd (2004) 10 VR 420; Re Armstrong [1960] VR 202
RULING: the defendant pay the plaintiff the sum of $100,000 with compound interest at the rate of 12 per cent from 9 December 2010 until the date of payment, and the costs of the plaintiff on a solicitor/client basis.
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms L Engelfield | Davis & Marks |
| For the Defendant | Mr G Baker | Ansell, Lawyers |
HIS HONOUR:
Introduction
1 By an Amended Originating Motion filed on 20 April 2012,[1] the plaintiff seeks orders that the defendant pay to her the sum of $100,000 plus costs, and administration of the estate of Dorothy Ansell ("the deceased") pursuant to Order 54 of the County Court Civil Procedure Rules 2008.
[1]The first Originating Motion was filed on 6 September 2011
2 Ms L Englefield of counsel appeared for the plaintiff. Mr G Baker of counsel appeared for the defendant.
3 The plaintiff prepared a Court Book which the parties agreed should be tendered in whole, save for the Originating Motion and the Amended Originating Motion. The parties considered that the Court Book should be treated as a joint Court Book. It comprised pages 9-144, which I marked Exhibit "A".
4 The only witness who was required for cross-examination was Mr Peter Hartley Ansell, who is the executor and trustee of the estate of the deceased.
The Background Facts
5 The deceased is the mother of Peter, Ross and Vernon Ansell. Vernon was known as "Grant". The deceased died on 11 March 2010. She left an estate of approximately $600,000 to be divided equally between her three surviving sons. Peter was appointed the deceased's executor and trustee of her estate. The sum of approximately $600,000 represented the net proceeds of sale of the deceased's property at 781 Hampton Street, Brighton.
6 The plaintiff, Joan Mary Hanrahan, was the domestic partner of Grant, and had been for approximately twenty five years prior to August 2010.
7 On 6 August 2010, Peter, Ross and Grant met for lunch at a restaurant in South Yarra. In his affidavit sworn 20 to December 2011, Peter said that there was at least $591,191.28 available for distribution. Prior to the lunch on 6 August 2010, he said that he, Ross and Grant had two conversations, which he described as follows:
"However, prior to that meeting, Ross and I had two conversations with Grant whereby he said he wished to resettle part of the monies that would otherwise pass to him forthwith in favour of his two grandchildren, Timothy Donnelly and Courtney Donnelly, aged respectively 15 and 17 years, being the children of his daughter, Lisa Donnelly."[2]
[2]CB 44-45
8 He then described the lunch as a meeting. What transpired at the lunch he described as follows:
"I assented to his request at the meeting, confirmed his instructions and gave Grant a cheque in the sum of $93,653.76 and $1000 in cash, and set aside the sum of $100,000 that would otherwise pass to Grant and have, since that day, the same has been held on the trust created."[3]
[3]CB 45
9 Peter prepared a final statement of the estate of the deceased.[4] He handed a copy to Ross and Grant at the lunch. The estate comprised a gross sum of $647,689.22, made up of the net proceeds of sale of the property and two amounts of cash monies in the possession of the deceased at the date of her death. A schedule of expenses disclosed that from the gross, a sum of $53,235.71 was to be deducted, leaving $594,453.51 net to be distributed to Peter, Ross and Grant. Three columns at the bottom of the final statement bear the initials of Peter, Ross and Grant. Under their initials is a breakdown of the monies which they were each to receive.
[4]CB 65
10 Under the expenses is a sum of $500 which was incurred for the lunch on 6 August 2010. Peter said in his evidence that it was probable that not all of that amount was actually spent on the lunch. I gained the impression that it was a long lunch, during which Peter, Ross and Grant ate and drank heartily, not particularly caring how much the lunch cost.
11 Grant died suddenly on 13 August 2010. He did not leave a will. His death was entirely unexpected. Before he died he endorsed the cheque for $93,563.17 so that it could be paid to Joan and could be deposited by her in her banking account.
12 Joan applied for Letters of Administration of the estate of Grant. She obtained the same on 3 March 2011.
13 Both Grant and Joan were in debt. Grant consulted his accountant, William Duncan Hall, by telephone on 11 August 2010. He informed him how he had disposed of the cheque for $93,563.17. They spoke about whether Grant should leave the balance of $100,000 with Peter. Peter was a director of an investment vehicle known as Morris Finance Ltd. Peter intended to invest that sum with Morris Finance Ltd. Mr Hall advised him against investing that sum in that way. He advised him to deposit it in a bank because it would be more secure. Mr Hall understood that Grant wanted him to negotiate with the Australian Taxation Office and with Centrelink, which were the two major creditors of Grant, to see whether his debts could be settled.
14 Despite engaging in quite a deal of correspondence with Joan’s solicitors, Peter held onto the balance of the money until 23 September 2011, when he paid the whole of the sum of $100,000 to Lisa Donnelly. He made the payment despite the fact that it must have been clear to him that Joan maintained that she had an entitlement to that sum, and despite the fact that the Originating Motion had been served upon him personally on 22 September 2011 in which the claim by Joan was crystallised in the most obvious and patent terms.
15 Mr Baker informed me that if I found that the sum of $100,000 should have been paid to Joan, and any other monies owing under the administration of Grant's estate, that Peter would accept personal responsibility for meeting such an order. Ms Englefield submitted that Joan was content to have the proceeding heard on that basis. I must say that I consider that is the least that Peter could do given that his conduct, to say the least, is very disquieting.
A Trust?
16 In Ford and Lee, ‘Principles of the Law of Trusts’,[5] the learned authors commented on the issue of the intention of a person who intends to create a trust as follows:
[5]Thomson, Law Book Co 2011
"A trust by an individual may be a trust inter vivos intended to operate in the settlor’s lifetime or a testamentary trust created by will, or other testamentary instrument, that is not to operate until his death.
In terms of method of creation, there can be two types of non-testamentary trust:
§a trust arising from a transfer of property by a person having power to transfer it (whether as an owner, donee of a power or otherwise) to another person to hold the property on trust; or
§a declaration of trust in which a person declares that he holds on trust certain property and thereby assume the obligations of the trustee."[6]
[6]paragraph [2010]
17 The learned authors referred to Commissioner of State Revenue (Vic) v Lam and Kym Pty Ltd [7] as authority for the foregoing statement of principle. In that case, Nettle JA was referred to a large number of reputable textbooks on the law of trusts, including Ford and Lee. Before referring to Ford and Lee, Nettle JA summarised the essence of what the textbook writers said relevant to the intention of a person who intends to create a trust:
“… Each of the texts records that a non-testamentary trust may be created by transferring property to the proposed trustee to hold upon trust for the proposed beneficiary or, without transfer of property, by declaration of trust. Those methods of creation are mutually exclusive in the sense that one cannot effectually transfer property to another to hold upon trust and at the same time declare that one holds it oneself on trust. They are also exhaustive because, as the texts make clear, they are the only methods for the inter vivos creation of trusts.” [8]
[7](2004) 10 VR 420
[8]at page 431
18 Ms Englefield submitted, therefore, that for a trust to have been created at the lunch on 6 August 2010, Grant needed to either have transferred his equitable interest in the sum of $100,000 to another person to hold that sum of money on trust for his grandchildren, or made a declaration of trust declaring that he held the sum of $100,000 on trust for his grandchildren and to have assumed the obligation of trustee.
19 Once the estate of the deceased had been administered and Peter was in a position to distribute the estate in accordance with the Will of the deceased, he stood in the position of trustee of the estate. Grant then had an equitable interest in the deceased's estate and an enforceable right to have Peter administer the deceased’s estate.
20 Ms Englefield submitted that the evidence cannot support a conclusion that Grant made a declaration of trust, declared that he held that equitable interest in the sum of $100,000 on trust for his grandchildren, and assumed the obligations of trustee. Mr Baker did not argue otherwise.
21 Therefore, Ms Englefield submitted that the only basis remaining upon which Peter can argue that there was a trust is if Grant transferred that equitable interest in the sum of $100,000 to another person to hold it on trust for his grandchildren.
22 On the facts, all that occurred in the two conversations, which were a prelude to the lunch on 6 August 2010, were statements made by Grant to Ross and Peter of an intention to treat the sum of $100,000 in a particular way. On Peter’s evidence, Grant expressed that intention on those two occasions and at the lunch, but there was no declaration of trust nor the transfer of his equitable interest in the sum of $100,000 to Peter, and for Peter to act as trustee. Peter refers to assenting to Grant’s request, but he does not specify what he was assenting to, nor what the request was, save that it was in connection with an intention by Grant to treat the sum of $100,000 in a particular way.
23 Ms Englefield submitted that on the footing that Peter had administered the deceased’s estate, and was then the trustee of the deceased’s estate, then Grant had an equitable interest in the deceased's estate to the extent of $100,000. To establish that a relevant transfer by Grant to Peter had occurred, Peter needed to meet the requirements of section 134 of the Property Law Act 1958. The section requires an absolute assignment to be in writing; express notice in writing needs to be given to the person from whom Grant was entitled to claim the equitable interest (in this case, Peter, as trustee of the estate of the deceased), and upon that being achieved, such an assignment would then be effective in law to pass and transfer Grant’s equitable interest to Peter.
24 If Grant intended to set up a trust then he needed to transfer the sum of $100,000 to another person (in this case, Peter, as trustee), so that Peter could hold the sum of $100,000 in trust for Grant’s grandchildren.
25 Ms Englefield also submitted that Grant had not met the requirements of section 53(1)(c) Property Law Act 1958 which requires the disposition of an equitable interest subsisting at the time of the disposition to be in writing signed by the person disposing of the same.
26 So, one or both of the mandatory requirements of these sections should have been met in order to give efficacy to the trust by having an effective transfer at law of the sum of $100,000 to Peter, as trustee of the trust. Peter's defence to Joan’s proceeding fails for these reasons.
27 Although it is unnecessary for me to deal with the other submissions made by Ms Englefield and Mr Baker, I should say that even if compliance with the requirements of sections 134 and 53(1)(a) was not an issue, I am not satisfied that a trust was established. Where the matter was left at the end of the lunch on 6 August 2010 was an intention on the part of Grant to benefit his grandchildren.
28 The evidence of Peter demonstrates serious uncertainty as to what Grant ultimately intended. Firstly, Grant did not identify whether it was to be the whole of the $100,000 or a part of it which was to be held in trust for his grandchildren. All that Peter was able to say is that it was Grant’s intention “to resettle part of the monies”. Secondly, there were no terms upon which the monies were to be held on trust. Thirdly, when the monies were to be paid to the beneficiaries.[9]
[9]Re Armstrong [1960] VR 202
Administration
29 Both Ms Englefield and Mr Baker submitted that if I found in favour of the plaintiff, I should undertake the administration of the estate pursuant to Order 54 of the County Court Civil Procedure Rules 2008. The powers which Order 54 permits me to exercise are broad, but in the context of this proceeding, the powers which Ms Englefield submitted I should exercise are relevant to the loss to the plaintiff by being deprived of the sum of $100,000 and the capacity to invest it and earn interest.
30 Ms Englefield cross-examined Peter about the potential earnings on investment with Morris Finance Ltd. Peter said that he could have achieved 11 to 12 per cent under “mates’ rates” on the sum of $100,000 if it was invested with Morris Finance Ltd. I understood that the “mates’ rates” were available to members of the Ansell family, including Grant.
31 Mr Baker did not argue that if I found in favour of the plaintiff, that it was not open to me to award interest on the sum of $100,000. However, he submitted that it should not be at 11 to 12 per cent, but should be at a rate consistent with the Supreme Court Act 1958. He also submitted that an executor and trustee of an estate is, by convention, permitted up to twelve months to administer the estate without running the risk of being ordered to pay interest if the money should have been distributed to the beneficiaries at an earlier time. He did not refer me to any authority for that proposition.
32 By 6 August 2010, the net assets of the estate of the deceased were capable of identification and capable of distribution to Peter, Ross and Grant. I am satisfied that Peter, as trustee, should have invested the sum of $100,000 to which Grant was entitled from that time. It would appear, in any event, that he did so by depositing the same with Morris Finance Ltd. The only statement produced by Peter is dated 27 April 2012, which shows that on 9 December 2010, a sum of $80,000 stood to the credit of Grant. The statement ends at 26 May 2011. The interest rate applicable to that sum was 12 per cent throughout that period.[10]
[10]CB 94
33 The reason why the investment was $80,000 during that period, and not $100,000, was because Peter distributed $20,000 to Lisa Donnelly. She repaid it when requested by Peter. However, it does not appear in the accounts of Morris Finance Ltd.
34 The statement relevant to the entry dated 9 December 2012 is described as “investment injury” which I assume means that the sum of $80,000 was invested on that date.
35 I think the fair result is to return to about August 2010 and assume that Grant decided not to establish a trust for the benefit of his grandchildren. There would have been some time needed for Peter to wind up the whole of the deceased’s estate. Whilst that probably could have been undertaken expeditiously, I consider that interest should be payable at 12 per cent compound from 9 December 2010 on $100,000.
Orders
36 I propose to make the following orders on the footing that Ms Englefield and Mr Baker informed me that depending on the findings I made, that efforts would be made to administer the estate of the deceased by the parties without the necessity for extensive orders.
37 However, I propose to make the following orders, subject to any further submissions to be made by Counsel:
· Peter Hartley Ansell pay the plaintiff the sum of $100,000 forthwith with compound interest at the rate of 12 per cent from 9 December 2010 until the date of payment.
· Peter Hartley Ansell pay the plaintiff’s costs to be assessed by the Costs Court on a solicitor/client basis, in default of agreement.
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