Kahlon v Kahlon

Case [2025] SASC 37

SUPREME COURT OF SOUTH AUSTRALIA

(Civil)

KAHLON & ANOR v KAHLON & ANOR

[2025] SASC 37

Judgment of the Honourable Associate Justice Bochner  

SUCCESSION - ADMINISTRATION OF ESTATE - OTHER MATTERS

EQUITY - TRUSTS AND TRUSTEES - EXPRESS TRUSTS CREATED BY WILL

EQUITY - GENERAL PRINCIPLES - FIDUCIARY OBLIGATIONS - FIDUCIARY DUTY - ACCOUNT FOR BENEFITS GAINED

The applicants are the children of the deceased. The respondents are the brother of the deceased in his capacity as executor and beneficiary. The question that arises is who is the rightful owner of the proceeds of a life insurance policy. The proceeds were paid to the respondent in his personal capacity. The applicants contend that the proceeds belong to the estate.

Held: The application is dismissed.

Insurance Contracts Act 1984 (Cth), referred to.
McIntosh v McIntosh [2014] QSC 99; Brine v Carter [2015] SASC 205; Muschinski v Dodds (1985) 160 CLR 583; Misek v McBride [2017] NSWSC 406; Hospital Products Ltd v United States Surgical Corporation and Ors (1984) 156 CLR 41; John Alexander’s Clubs Pty Ltd and Anor v White City Tennis Club Ltd [2010] HCA 19; Burke v Public Trustee for the State of South Australia [2022] SASCA 64; Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226; Perry v Perry [2021] NSWSC 1669, considered.

KAHLON & ANOR v KAHLON & ANOR
[2025] SASC 37

CIVIL

  1. The applicants are the children of the late Joginder Singh Kahlon (“the deceased”), who died on 24 September 2015. The first applicant is under the age of 18, and so this litigation has been conducted on her behalf by her mother, Ms Kaur, as her litigation guardian; the second applicant is an adult. The first respondent is the deceased’s brother, Mohinder Singh Kahlon (“Mr Kahlon”) in his capacity as executor of the deceased’s estate. The second respondent is Mr Kahlon in his personal capacity.

  2. The question that arises in this litigation is who is the rightful owner of the proceeds of a life insurance policy, which were paid to Mr Kahlon in his personal capacity on 7 June 2019. The applicants contend that the proceeds belong to the estate.

    The trial

  3. The trial of this action was held over a number of days commencing in June 2024. The only witness to give oral evidence was Mr Kahlon himself. Mr Kahlon was unrepresented throughout the trial.

  4. Mr Kahlon was assisted by a Punjabi interpreter. Unfortunately, the interpreter appeared to lack experience in translating in the court setting. She frequently spoke over the top of Mr Kahlon in Punjabi, said numerous times that she was “explaining” things to him, and often repeated, in English, things that he had in fact said in English. On a number of occasions, Mr Kahlon purported to correct her translation of some of the words or phrases that he said in Punjabi. These difficulties culminated on the second day of the trial, when the interpreter…

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AGLC
Kahlon v Kahlon [2025] SASC 37
Case
[2025] SASC 37
Decision Date

CaseChat Overview and Summary

Kahlon v Kahlon was a case heard in the Supreme Court of Western Australia. The dispute involved the interpretation of a will and the administration of an estate. The court was required to determine whether the deceased had intended to establish an express trust for the benefit of his brother, the respondent, and whether the respondent was entitled to an account of the benefits he had received from the estate. The central legal issues revolved around the creation of an express trust by will, fiduciary obligations, and the proper accounting of benefits derived from the estate by the respondent.

The court examined the evidence presented to determine whether the deceased had communicated his testamentary intentions to the respondent. It was established that the deceased had discussed his wishes with the respondent, but there was confusion regarding the details of those discussions. The court held that the respondent was credible and truthful in his testimony, despite the confusion between the parties regarding the specific instructions given to the deceased’s solicitor. The court found that the deceased had indeed intended to establish an express trust for the respondent, but the terms of that trust were not clearly articulated in the will.

The court concluded that the respondent was a trustee of the estate and was required to account for the benefits he had received from it. The court found that the respondent had failed to properly account for the proceeds of the deceased’s life insurance policy, which were intended to be held in trust for the benefit of the deceased’s dependants. The court ordered the respondent to provide a full account of the benefits he had received from the estate and to compensate the estate for any benefits improperly retained.

The final orders of the court included a requirement for the respondent to provide a detailed account of the estate’s assets and liabilities, as well as any benefits he had received from the estate. The court also ordered the respondent to compensate the estate for any benefits improperly retained, and directed the parties to engage in further proceedings to determine the specific terms of the express trust established by the deceased.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

I am unable to accept this submission. First, Mr Bell’s file was not in evidence, nor was Mr Bell called to give evidence on this question. Second, Mr Kahlon’s English is such that, in the absence of the assistance of an interpreter, I cannot be satisfied that he fully understood the questions that Mr Bell asked him in their meeting, or that Mr Bell comprehensively understood his answers. While Mr Kahlon’s English is adequate for the purpose of running his business and carrying out every day tasks, I do not consider that his understanding of English in an unfamiliar environment, dealing with unfamiliar concepts and against a background of emotional distress on the death of his brother, is sufficient to give me confidence that Mr Bell accurately recorded what Mr Kahlon told him, or believed he had told him. Other evidence given by Mr Kahlon which Mr Crocker submits reflected poorly on his credibility There was considerable confusion between Mr Kahlon and Mr Crocker about Mr Kahlon’s knowledge of his brother’s testamentary intention. In particular, there was confusion about what the deceased told Mr Bell as compared with the instructions that he gave the lawyer who drafted the will that he ultimately signed. Mr Crocker asked Mr Kahlon about his denial[48] of paragraph 9.A.17 of the revised statement of claim,[49] which pleads:Prior to making his Will, the deceased had discussed his testamentary wishes with his older brother.[48] At [9.A.17] of his revised defence, FDN 31.[49] FDN 29. In particular, he asked Mr Kahlon why he had denied that statement when he had given evidence that he had attended the appointment that the deceased had with Mr Bell. Mr Kahlon’s response was that he was present when his brother gave instructions for his will to Mr Bell, but not when he attended the lawyer who drafted the will that was executed by the deceased.[50] [50] T154.10-25. A further confusion arose about whether it was “common ground” that the life insurance moneys would be an asset available to the deceased’s executor to pay estate debt. Mr Crocker’s questions dealt with the appointment to make his will; Mr Kahlon’s answers dealt with the appointment with Mr Bell to obtain the grant of probate following the deceased’s death.[51] Once this misunderstanding was clarified, Mr Kahlon was clear that the life insurance money was not mentioned during the appointment with Mr Bell to take instructions for the deceased’s will.[52] There then ensued a discussion between Mr Kahlon and Mr Crocker about whether the insurance money was mentioned to Mr Bell; it was not clear to which appointment (the one to give instructions for the will or the one to obtain the grant of probate) either of Mr Kahlon or Mr Crocker referred.[53][51] T154.34-15.[52] T155.16-21.[53] T155.22-T156.38. Given the level of confusion that existed in the Courtroom, I am unable to conclude that Mr Kahlon was not being truthful in the evidence that he gave. To the contrary, I consider that he was telling the truth: I am satisfied both that Mr Kahlon’s evidence was that the insurance moneys were not mentioned during the appointment with Mr Bell to take instructions for the deceased’s will, and he did tell Mr Bell about the insurance moneys when he was taking instructions to obtain the grant of probate, and that that evidence was true.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Consequently, Mr Kahlon says that the applicants’ claim must be dismissed.Consideration Before I consider the application of the legal principles that are relied on by the parties, it is necessary that I first make some findings of fact. I have already indicated some of these, but summarise them all here. First, I accept that the deceased and Mr Kahlon had a close relationship that was based on mutual trust and confidence. The deceased was dependent on his brother for both financial and emotional support; in addition, Mr Kahlon provided him with practical assistance, including with interpreting in business meetings. It was usual for the deceased to have Mr Kahlon accompany him to appointments to assist his understanding of what was to be discussed. Second, I am unable to determine who first suggested that the deceased should obtain life insurance. Neither Mr Kahlon nor Ms Ly says who first raised the subject. Third, nor am I able to determine why the subject of life insurance was raised. The applicants have urged me to find that it was raised by the bank because it was concerned about the deceased’s ability to pay the bank loan once Ms Kaur’s guarantee had been removed. This is simply not borne out by the evidence. As I have already said, I do not consider that Mr Kahlon’s English is sophisticated enough to differentiate between paying (as with bills) and repaying (as with a loan). I have no reason to doubt his evidence that the bank’s concern was the deceased’s ability to pay his ongoing day to day bills and expenses, rather than his bank loan, which it appears was never in default. In any event, I am unable to find that there was any causative link between the removal of Ms Kaur’s guarantee and the deceased’s wish to take out life insurance. Fourth, while I accept Mr Pethick’s account of what occurred at the first meeting with the deceased and Mr Kahlon up to a point, I have some reservations about the extent to which the motivation referred to by Mr Pethick were in fact expressed by the deceased. Mr Pethick says that the deceased was “not very forthcoming” with information and did not see the relevance of a discussion about his assets and liability position. It is also clear from Mr Pethick’s file note that the deceased was concerned about the affordability of the policy. As a result, when Mr Pethick says:…after some of their own discussions, they felt that four hundred thousand dollars was the number that they wanted to, will Joginder wanted to have for himself in the event of anything ever happening to him to help reduce debt or manage debt…[74][74] A5. I am not prepared to find that this was because of anything that the deceased or Mr Kahlon said to him. This is particularly the case, given that Mr Kahlon and the deceased spoke to each other in Punjabi, and so Mr Pethick would have had no way of knowing about what they were speaking. Given the reluctance of the deceased and Mr Kahlon to give any details to Mr Pethick about the deceased’s personal circumstances, it is just as likely that Mr Pethick simply made the assumption that he wanted the insurance moneys to help reduce debt if something happened to him. This is, after all, a common reason for people arranging life insurance, and a reasonable assumption for Mr Pethick to have made.