Lafferty v Waterton
[2015] WASC 235
•2 JULY 2015
LAFFERTY -v- WATERTON [2015] WASC 235
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WASC 235 | |
| Case No: | CIV:1855/2013 | 11 JUNE 2015 | |
| Coram: | MASTER SANDERSON | 2/07/15 | |
| 10 | Judgment Part: | 1 of 1 | |
| Result: | Separate trial ordered | ||
| B | |||
| PDF Version |
| Parties: | SUSAN JUANITA LAFFERTY PEGGY JUANITA WATERTON WILLIAM FRANK WATERTON MADELAINE PEGGY JUNGSTEDT |
Catchwords: | Practice and procedure Application for trial of separate issues Turns on own facts |
Legislation: | Nil |
Case References: | Landsdale Pty Ltd v Moore [2009] WASCA 176 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
PEGGY JUANITA WATERTON
First Defendant
WILLIAM FRANK WATERTON
Second Defendant
MADELAINE PEGGY JUNGSTEDT
Third Defendant
Catchwords:
Practice and procedure - Application for trial of separate issues - Turns on own facts
Legislation:
Nil
Result:
Separate trial ordered
Category: B
Representation:
Counsel:
Plaintiff : Mr G M G McIntyre SC
First Defendant : Mr D A Lenhoff
Second Defendant : Mr M N Solomon SC
Third Defendant : Mr M W Fatharly
Solicitors:
Plaintiff : Kings Park Corporate Lawyers
First Defendant : Holborn Lenhoff Massey
Second Defendant : Lavan Legal
Third Defendant : Kott Gunning
Case(s) referred to in judgment(s):
Landsdale Pty Ltd v Moore [2009] WASCA 176
1 MASTER SANDERSON: This was the return of two applications. The first in time was the plaintiff's application for further and better discovery. The second application was the second defendant's application under O 32 r 4 of the Rules of the Supreme Court 1971 (WA) for a separate trial of certain issues. It is convenient to deal first with the second defendant's application for the separate trial. If that application succeeds then the plaintiff's application for further discovery probably falls away.
2 In advancing the argument in favour of a trial of separate issues senior counsel for the second defendant in his written submissions set out in some detail the issues in the case as disclosed by the pleadings. Paragraphs 3 - 76 provide what is in my view a fair summary of the matters in issue. During the course of argument I asked senior counsel for the plaintiff whether he agreed with the second defendant's assessment of the position. With some minor reservations he said he did. Of course that is not to say he agreed with the arguments advanced by the second defendant - the paragraphs do contain some matters which are argumentative. But overall the outline is fair and what follows is largely taken from that outline.
3 The parties are all members of one family. I will refer to them by their first names intending no disrespect by that course. The parents are the first defendant (Peggy) and her late husband William Waterton (the late William Snr). The children of the marriage are the plaintiff (Susan), the second defendant (William Jnr), and the third defendant (Madelaine). William Snr made a will before he died. That will left his estate to his wife Peggy. William Snr died on 3 December 2003. The other members of the family are still alive.
4 The plaintiff's claim may be broken down into six parts. Firstly, the late William Snr's assets. The claim first sets out items that Susan asserts comprise the assets of William Snr's estate.
5 Secondly, the representation. The claim alleges a representation on the part of Peggy which allegedly induced an assumption in Susan as to how Peggy's assets (which included assets Peggy inherited from her late husband's estate) would be dealt with upon Peggy's eventual death.
6 Thirdly, the detrimental reliance. The claim alleges that by reason of her reliance on that representation Susan did not challenge the will of the late William Snr seeking provision from his estate under the relevant testator's family maintenance legislation in Victoria.
7 Fourthly, resiling from the representation. The claim alleges Peggy has acted inconsistently with the representation thus evincing an intention not to be bound by it. It is said this was done by Peggy transferring a property she owned (Unit 3 Victoria Avenue, Claremont) to Madelaine and William Jnr as trustees of a trust in favour of Peggy's grandson (Madelaine's son). Further, it is evidenced by making substantial inter vivos monetary gifts to Madelaine and William Jnr.
8 Fifthly, Madelaine and William Jnr's knowledge. The claim alleges that Madelaine and William Jnr knew of Peggy's representation to Susan and knew that the transfer of the property to a trust and the inter vivos gifts would defeat the fulfilment of Peggy's representation.
9 Sixthly, a constructive trust. On the basis of these circumstances Susan claims that one-third of the full proceeds of the sale of certain properties known as Turanga Road and Mulgutherie, one-third of the full value of Unit 3 and 9 Victoria Avenue, Claremont and one-third of all the monetary gifts to William Jnr and Madelaine are held on constructive trust for her benefit.
10 On that basis Susan makes a number of claims. First, she seeks declarations reflecting her alleged one-third interest in the specified assets. Second, she seeks an account of profits in respect of the development of two properties which Susan alleges were assets of the estate of the late William Snr. As an alternative to the second claim she seeks equitable compensation. The equitable compensation is in turn sought on two alternative basis. First, one-third of the value of the assets derived from the estate of the late William Snr and Peggy's assets that Peggy held or was entitled to at the date she made the representation to Susan or, alternatively, the sum Susan would have received from an application for the testator's family maintenance in respect of the late William Snr's estate.
11 For the purposes of this application it is necessary to examine each of these claims in some detail. Probate of the late William Snr's will was granted to William Jnr by the Supreme Court of Victoria in July 2004. The late William Snr's estate was said to contain the Turanga Road property, the Mulgutherie property (also referred to as 85 Hamilton Street, Gisborne), a quantity of antique furniture and objects including silverware and two aeroplanes. The defendants admit the two properties and the two aeroplanes but deny that the antiques furniture and objects form part of the estate of the late William Snr.
12 In the schedule attached to the plaintiff's submissions Susan attributes values to these items in support of a contention that the late William Snr's estate was 'likely to have been in the region of $4 million'. The four items identified in the statement of claim have a total value of $3,031,000. The items that are admitted on the pleadings comprise $2,781,000 - almost 92% of the total value of the four items.
13 The only item in the schedule to the plaintiff's submissions which is disputed is the antique furniture and objects. The defendants' position is that these objects were jointly owned by the late William Snr and his wife as part of their household effects and they passed by survivorship to Peggy upon the late William Snr's death. Further, it is said that no inventories were kept of these household effects and they were items which may have had some resale value but nothing in the order of the $250,000 attributed to them by Susan.
14 The claim alleges that the real property comprising the late William Snr's estate, that is Turanga Road and Mulgutherie, were the subject of subdivisional development approvals and were sold for substantial sums. This allegation is in substance admitted.
15 As I understand the claim it proceeds on the basis that William Jnr held the legal title to and retained the proceeds from Turanga Road. The defendants say that these funds (less the reimbursement of expenses to William Jnr) were paid to Peggy in accordance with the late William Snr's will. It is unlikely that this matter will be one of great controversy.
16 The claim then deals with the two units at Victoria Avenue, Claremont. Susan alleges Peggy became the owner of Unit 3 by reason of an inheritance from her mother and a subsequent gift from her sister. The defendants admit this is the case. It is alleged the late William Snr paid $360,000 for Unit 9 in 1999 at which time it was transferred to the name of William Jnr. The claim makes the assertion that William Jnr always held and continues to hold Unit 9 on trust for the late William Snr. As an alternative it is said he holds the property on trust for Peggy. As a further alternative it is said he holds it on trust for both the late William Snr and Peggy jointly. Unsurprisingly this allegation is not admitted.
17 In the claim Susan alleges that Unit 9 was part of the estate of the late William Snr. In the schedule to the plaintiff's submissions Susan attributes a value of $925,000 to the unit. That would appear to be its current value.
18 The alleged trust in respect of Unit 9 is denied by the defendants. They say that William Jnr is and always was the legal and beneficial owner of Unit 9 and it did not form part of the estate of the late William Snr.
19 That means the substantive matters in issue on the pleadings in respect of the assets of the estate of the late William Snr are whether:
(a) the household antiques form part of the estate of the late William Snr or were jointly owned and passed to Peggy by survivorship; and
(b) Unit 9 is held beneficially by William Jnr or was beneficially held in whole or in part by the estate of the late William Snr by reason of one or more of the alleged trusts (and thereafter passed to Peggy), but was otherwise available in respect of any claim brought by Susan in respect of the estate of the late William Snr.
20 In terms of the value of $4 million attributed to the estate of the late William Snr by Susan, the defendants accept that the assets of the estate ultimately realised approximately $2,781,000. The balance of $1,175,000 representing the current value of Unit 9 and the value of household antiques is in issue.
21 Paragraph 6 of the statement of claim deals with the representation. It is alleged Peggy sent Susan a letter, a copy of which appears as annexure DEM3 to the affidavit of Damian Eugene Molony sworn 18 February 2015 and filed in support of the application for further and better discovery from the defendants. The letter was undated but sent in March 2004. The assurances in the letter related to Peggy's then estate which included the future proceeds of sale of the Turanga Road and Mulgutherie properties, Units 3 and 9 Victoria Avenue and various other chattels comprising the estate of the late William Snr which had passed to Peggy. It said the assurances induced an expectation in Susan that she would left a full third of all combined assets of Peggy and the estate of the late William Snr including all the assets (or their realised value) that existed as at March 2004 when Peggy dies. The letter speaks for itself.
22 The defendants deny the letter was sent in March 2004. They say further even if the letter was sent at the time alleged the assurance in the letter plainly relates only to the assets Peggy 'may leave' and applies 'if there is anything left'. The defendants also dispute that in the context and prevailing circumstances Susan could reasonably have been induced into any relevant expectation or assumption such that it was objectively reasonable to rely upon the representation in the manner alleged.
23 The second defendant says, and I think it must be accepted, there are only two issues in respect of the representation. The first is the scope of any assurance or representation and in particular whether it encompassed all the real and personal assets of the late William Snr's estate (including proceeds from the future realisation of those assets) and Peggy's estate or whether it was limited to those assets (if any) that may be left when Peggy died having had the full and unencumbered enjoyment of those assets to do with as she pleased during her lifetime. Second, whether in the circumstances Susan could reasonably have adopted the alleged expectation or assumption on the basis of the letter and reasonably relied upon it in the manner alleged.
24 Moving then to the detrimental reliance the second defendant notes Susan does not allege a contract. There is no evidentiary basis for her to do so. Susan must therefore establish some 'detriment' upon which she relied in respect of Peggy's alleged assurances so as to provide the foundation for an actionable estoppel. Susan does so by alleging that she relied upon the alleged assurances in foregoing a claim for testator's family maintenance against the late William Snr's estate.
25 The second defendant makes two points about the plaintiff's claim. First and obviously, without the alleged detrimental reliance Susan has no actionable rights in respect of Peggy's alleged assurances. Secondly, the second defendant says Susan has failed to plead any circumstances or provide any evidence of her consideration of such a challenge at the time, less still her entitlement to such a challenge to her father's estate, other than the fact that she is a daughter. The second defendant goes on to point to the alleged weaknesses in any claim Susan may have against her father's estate. With respect it seems to me an assessment of those prospects is unhelpful in the context of this application. In my view it would not be proper to approach Susan's claim 'with some degree of scepticism' as was submitted by the second defendant.
26 The defendants deny the alleged detrimental reliance. That will mean at trial there will be three issues. First, whether Susan seriously considered a testator's family maintenance claim against the late William Snr's estate. Second, whether there was in any event any realistic prospect of such a claim or whether such a claim was merely fanciful. Thirdly, whether there was in reality any detrimental reliance in the circumstances; or put another way, whether Susan in truth forwent anything of substance in reliance upon Peggy's alleged assurances.
27 As to resiling from the representation the defendants admit the fact relied upon by Susan to allege that Peggy has resiled from the representations. There is no issue between the parties on this question.
28 Turning to Madelaine and William Jnr's knowledge Susan alleges that each of Madelaine and William Jnr knew, first, of the representation allegedly made by Peggy in the letter, second, of Peggy's intention not to be bound by the representation, and third, that by receiving Unit 3 as trustee of the monetary gifts that Peggy would be unable to fulfil that representation. The second defendant says, and I think correctly, that Susan must establish that Madelaine and William Jnr not only knew of the letter but knew of its construction and scope as contended by Susan at par 6 of the claim.
29 This element of Susan's claim is essential to her claim for a constructive trust over assets held by Madelaine and William Jnr. At present that knowledge is pleaded as a bare assertion. It is denied by the defendants. Particulars of the facts on which Susan relies to allege that knowledge have been sought but have not as yet been provided. In due course they will have to be provided and it is clear this alleged knowledge will be a major aspect of the case.
30 Finally there is the relief claimed by Susan. Counsel in his written submissions spent some time analysing the difficulties faced by Susan on this aspect of her case. While the analysis is of interest and the problems confronting Susan's claim are highlighted it does not seem to me in an application of this kind there is anything to be gained by examining the relief sought in detail. It is sufficient if I say Susan does face significant difficulties in each aspect of the relief claimed. But equity has always crafted relief to fit the circumstances. If Susan establishes her claim then some form of relief can doubtless be crafted to see that justice is done.
31 The legal principles governing the application when a trial of separate issues should be ordered was set out by the Court of Appeal in Landsdale Pty Ltd v Moore [2009] WASCA 176. The court said [22] - [23]:
It is impossible to provide a comprehensive description of the circumstances in which it is appropriate for there to be separate trials of liability and damages. The exercise of the discretion to make such an order will depend upon what is in the interests of justice in the particular case. However, the separate trial of issues will generally only be appropriate in cases where there is a clear line of demarcation between those issues, and the determination of one in isolation from the other is likely to result in a substantial saving in time, inconvenience and expense: Allen v Gulf Oil Refining Ltd [1981] AC 1001; Smith v Maloney (1998) 19 WAR 209, 223. Particular caution needs to be exercised in cases in tort. As Owen and Steytler JJ explained in Chenery v Conti [1999] WASCA 258:
'The practice of splitting issues often leads to unforseen and unfortunate results. It is trite to say that a tort is not complete until damage has ensued. Matters of liability will, therefore, almost inevitably involve a consideration of damage. The question usually arises as to the wrong that a plaintiff says it has suffered (liability in the strictest sense), whether damage has ensued and whether the damage found to have been suffered was caused by the wrong done by the defendant (liability in an extended sense). The question that then follows is whether the damage found to have been suffered and to have been caused by the defendant can be quantified and compensated for in monetary terms. That is a question of remedy, not liability [64].'
Similar views were expressed by Hayne and Callinan JJ in Dovuro Pty Ltd v Wilkins [2003] HCA 51; (2003) 215 CLR 317 as follows:
'The difficulties of separating questions of liability for negligence from questions of damages are evident. Damage is an essential element of the tort of negligence. Proof of damage is essential to establishing liability. Further, assessing the standard of care to be met, by reference to the degree of probability of damage occurring, and the expense, difficulty and inconvenience of taking alleviating action, will often be assisted by knowing what happened as a result of the alleged negligence. In a case like the present, where the negligence is said to have had financial consequences, knowing the extent of those consequences may be particularly important. Splitting trial of the issues of liability and damage may, therefore, achieve little real saving in time or expense. More significantly, by truncating or abbreviating the evidence led about, and attention given to, questions of damage at the trial of questions of liability, separation of the trial of the issues may distort the determination of questions of liability [142]. (footnotes omitted)'
33 But even with the Landsdale decision firmly in mind I am satisfied that in this case a trial of separate issues is warranted. I have reached that conclusion largely for the reasons advanced by the second defendant. First, I accept the analysis provided above demonstrates that the inquiry relating to quantum of the equitable compensation is entirely distinct from the matters in issue in respect of the balance of the proceedings. Second, the matters likely to be agitated in the inquiry relating to quantum of the equitable compensation will be distinct from what might be called the issue of liability. There are issues raised by the valuation of real and personal property at historical points. These will not be easy matters. Thirdly, this is not a tort case or a case in misleading and deceptive conduct where damage is part of the cause of action. The determination of liability and quantum stand separate and apart.
34 There was one further matter raised by the second defendant which I do not accept justifies a trial of separate issues. The second defendant says the plaintiff's case is so weak it would be unreasonable to inflict a trial of both liability and quantum on the parties when a shorter trial just dealing with liability would dispose of the matter. While the plaintiff may face significant difficulties both legal and evidentiary in establishing her case it is not possible as the evidence stands at present to reach even a tentative conclusion as to the strength of that case. My assessment of the strengths and weaknesses of the respective parties position has not played a part in determining there should be a trial of separate issues.
35 During the course of argument I did ask counsel if they could provide a guide - even a rough guide - as to how long the trial might take if there was a trial of separate issues as against a trial of all matters. As might be expected their assessments differed widely. In my view however it is clear significant time would need to be devoted to valuation issues if all matters were to be tried together. The valuation evidence in particular would be contentious. It is possible, as was submitted by counsel for the plaintiff, that if further discovery was given by the defendants some issues as to valuation might fall away. However it seems to me there would be still left considerable evidence as to the value of real estate which would take up some considerable time.
36 For these reasons I am satisfied there should be a trial of separate issues. The defendants should now frame these issues and provide a minute of directions which would allow this matter to be brought to an early trial. I will hear the parties as to costs.
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