Lindsay v Arnison

[2017] NSWSC 41

Supreme Court

New South Wales

Medium Neutral Citation:

Lindsay v Arnison [2017] NSWSC 41

Hearing dates:

27 October 2016 and 15 November 2016

Decision date:

10 February 2017

Jurisdiction:

Equity

Before:

Robb J

Decision:

Defendants required to provide a proper accounting of their dealings with the deceased’s bank and building society accounts.

 Parties to consider these reasons with appropriate orders to be determined at a directions hearing.

Catchwords:

EQUITY – General principles – Fiduciary relationships – Whether defendants were fiduciaries of the deceased – Where first defendant was the daughter of the deceased – Where second defendant was the son in law of the deceased – Where both defendants were duly appointed attorneys and agents of the deceased – Where deceased was elderly and in a nursing home – Where first defendant had access to deceased’s bank and building society accounts

 

EQUITY – Equitable remedies – Accounts and inquiries – Orders sought by beneficiary under deceased estate – Orders sought that defendants account for dealings with accounts of the deceased

  SUCCESSION – Administration of estate – Other matters – Where defendants were executors of deceased’s will but had not sought a grant of probate – Whether defendants guilty of wilful default or as executors de son tort

Legislation Cited:

Powers of Attorney Act 2003 (NSW)

Cases Cited:

Meehan v Glazier Holdings Pty Ltd (2002) 54 NSWLR 146; [2002] NSWCA 22

Category:

Principal judgment

Parties:

Christine Lindsay (plaintiff)
Deborah Gail Arnison (first defendant)
Murray Arnison (second defendant)

Representation:

Counsel: M Tibbey (plaintiff)
M Pringle (defendants)

  Solicitors: Brazel Moore Lawyers (plaintiff)
Michael Daley (defendants)

File Number(s):

2015/356788

Publication restriction:

None

Judgment

Introduction

1. The plaintiff, Christine Lindsay, commenced these proceedings against the defendants, Deborah Gail Arnison and her husband Murray Arnison, by statement of claim filed on 4 December 2015.

2. Ms Lindsay is the sister of Ms Arnison, and the sister-in-law of Mr Arnison.

3. Ms Lindsay and Ms Arnison were two of the children of the late Ruth Eileen Seddon, who died on 8 September 2013. Ms Seddon also had a son, called Peter Seddon. Mr Seddon is not a party to the proceedings.

Ms Seddon’s will

4. Ms Seddon made a will dated 1 September 2011. By that will she appointed Mr and Ms Arnison as her joint executors.

5. Ms Seddon stated in cl 5, by reference to her previous will wherein she had made provision for a bequest to her grandchildren as they turned 18 years of age, that those funds had already been distributed to the grandchildren or to their parents as trustees.

6. She also said in cl 6(i) that when she moved from her unit at 935 Friarbird Close (sic), Wyoming, to the nursing home, all her assets, other than the unit itself and her jewellery, had been distributed amongst her children and grandchildren or sold. A debt owed by Mr Arnison had been repaid.

7. In relation to her unit, she said in cl 6(ii) that it was her intention to leave the unit unsold until such time as she was forced to sell in accordance with legal or financial requirements. If she was forced to sell the unit, the funds would be invested for her to use as she wished.

8. By cl 7 Ms Seddon gave the whole of her estate, after payment of all of her debts, funeral and testamentary expenses, to such of her three children as survived her in equal shares. Ms Seddon was survived by all of her children.

9. Following Ms Seddon’s death, Mr and Ms Arnison did not obtain a grant of probate. That was apparently because Ms Seddon’s estate was small, it was represented by liquid assets, and relatively significant costs would have been incurred in obtaining a formal grant of probate. Mr and Ms Arnison took control of the estate, paid various debts, and made an equal distribution of what they said was the balance of the estate to the three beneficiaries.

Claim based upon agency and fiduciary relationship

10. By her statement of claim, Ms Lindsay seeks the following orders:

1   An order that the First Defendant account for all money and assets received or receivable and all money and assets disbursed by the First Defendant and of the dealings and transactions of the First Defendant as the duly appointed attorney or fiduciary of the late Ruth Eileen Seddon (“the Deceased”) during the period from August 2011 until the Deceased’s death on 8 September 2013.

2.   An order that the First and Second Defendants account on the grounds of wilful default for all money and assets received or receivable and all money and assets disbursed by them and of the dealings and transactions of the First and Second Defendants therein, in respect of the property comprised in the Estate of the Deceased.

3.   An order that an inquiry be held as to whether any, and if so what, property being part of the Estate of the Deceased has been lost or misappropriated by the First and Second Defendants and when, by whom and under what circumstances.

4.   An order that the First and Second Defendants pay to the Plaintiff the amount which shall be found to be due to them (sic) upon the taking of account.

5.   Compensation in equity.

6.   Interest at such rates for such periods as the Court thinks fit.

11. Ms Lindsay alleged against Ms Arnison that she had been duly appointed as the attorney for Ms Seddon by a power of attorney dated 12 December 2007, and that from August 2011 onwards, she enjoyed the trust and confidence of Ms Seddon, and assisted Ms Seddon in her dealings with her income and property such that there existed a fiduciary relationship between Ms Arnison and Ms Seddon.

12. Ms Lindsay alleged that “as the deceased’s duly appointed attorney or as her fiduciary”, Ms Arnison owed a duty to Ms Seddon to exercise the power of attorney and her fiduciary obligations in the interests of Ms Seddon and not to personally benefit from the exercise of her office as attorney or fiduciary (par 6).

13. By par 7, Ms Lindsay alleged that, in or about February 2012, Ms Seddon by her duly appointed attorney, Ms Arnison, sold her villa situated at Henry Kendall Village, Wyoming, for the sum of approximately $330,000.

14. Finally, Ms Lindsay alleged in par 8 that, despite requests, Ms Arnison “has failed to account to the Plaintiff for all assets received and disbursed by her as the Deceased’s attorney or fiduciary” during the period August 2011 up until the date of Ms Seddon’s death.

15. In their defence, Mr and Ms Arnison responded to this aspect of Ms Lindsay’s claim, by admitting that they were both appointed as Ms Seddon’s attorney by a power of attorney executed on 12 December 2007 (par 2(a)).

16. It is not clear why Ms Lindsay only alleged that Ms Arnison had been appointed as her mother’s attorney.

17. Mr and Ms Arnison admitted that Ms Arnison enjoyed the trust and confidence of Ms Seddon in her capacity as a child of Ms Seddon (par 2(b)). They denied that any fiduciary relationship existed between either defendant and Ms Seddon. They denied that any fiduciary relationship was or could be created by the parent and child relationship.

18. Mr and Ms Arnison denied that Ms Arnison acted as Ms Seddon’s attorney or fiduciary at any time ((par 6).

19. They admitted that Ms Seddon sold her villa at Henry Kendall Village, but denied that either of them had any role in the sale of the property or the disbursement of the proceeds of that sale (par 7).

20. Finally, Mr and Ms Arnison denied that Ms Arnison received assets from Ms Seddon in any fiduciary capacity, including as an attorney pursuant to the power of attorney dated 12 December 2007 (par 8).

21. They admitted that Ms Arnison borrowed the sum of $40,000 from Ms Seddon, but they said that that amount was repaid to the estate by way of a distribution to the beneficiaries under Ms Seddon’s will after her death (par 8).

22. Mr and Ms Arnison alleged that they provided Ms Lindsay with a form of accounting of Ms Seddon’s estate prior to the commencement of the proceedings (par 8). They said that, on about 20 July 2014, they distributed to each beneficiary by cheque the sum of $20,155, and that each distribution cheque was accompanied by a schedule of expenses paid or to be paid from the estate prior to distribution. They said that on 20 July 2014 they also provided to Ms Lindsay copies of Ms Seddon’s bank statement and accounts.

23. In relation to the first part of Ms Lindsay’s claim, Mr and Ms Arnison admitted that they were both appointed as the attorney of Ms Seddon, but they denied that either of them was involved with the sale of the villa, denied that Ms Arnison owed a fiduciary duty to Ms Seddon otherwise than under the power of attorney, and said that Ms Arnison had not been involved in the sale of the property or the distribution of the proceeds of sale, or received any other assets of Ms Seddon, in a fiduciary capacity. They also said that they had properly distributed Ms Seddon’s estate, and at the time provided a proper account to Ms Lindsay.

24. It is convenient at this point to note the following matters in relation to this aspect of Ms Lindsay’s claim.

25. The power of attorney dated 12 December 2007 was made in conformity with the Powers of Attorney Act2003 (NSW), and it gave the attorneys the authority conferred by Part 2 of the Act.

26. By cl 3, the power of attorney was expressed to operate when the attorneys accepted the appointment.

27. By cl 5, Ms Seddon authorised her attorneys to give reasonable gifts as provided by s 11 (2) of the Act.

28. Note (6) in the statement called “Important information for principals and attorneys” at the end of the power of attorney:

An attorney should keep the attorney’s own money and property separate from the principal’s money and property, unless they are joint owners, or operate joint bank accounts. An attorney should keep reasonable accounts and records about the principal’s money and property.

29. For completeness it may be noted that Ms Seddon appointed Ms Arnison as her enduring guardian by appointment made on 25 August 2010.

Claim based on administration of estate

30. The second aspect of Ms Lindsay’s claim in her statement of claim relates to the period after the death of Ms Seddon.

31. By par 9, Ms Lindsay alleged that, as executors of the will of Ms Seddon, Mr and Ms Arnison were under a duty to properly account for all assets received and disbursed by them, and to administer the estate according to law and to distribute it according to the terms of Ms Seddon’s will.

32. Ms Lindsay alleged in par 10 that Mr and Ms Arnison have been guilty of wilful default in failing to properly account for Ms Seddon’s estate. Ms Lindsay provided unusual particulars of this allegation. First in sub-par (a), she alleged that they had purported to get in the estate, pay the just debts and testamentary expenses and to distribute the net estate, as to $20,155 to each of the three beneficiaries without having obtained a grant of administration. While the activities of Mr and Ms Arnison may have made them executors de son tort, the matter alleged has nothing to do with the question of whether Mr and Ms Arnison were guilty of wilful default in relation to the property of the estate.

33. Secondly, in sub-par (b), Ms Lindsay gave as a particular of wilful default that, despite representing that they had done so, Mr and Ms Arnison had failed to pay debts of the estate totalling $12,930.58. If that were true, depending upon what steps the creditors took to enforce their debts, the non-payment of the debts would not necessarily lead to any reduction in the amount of the estate.

34. Ms Lindsay then alleged in par 11 that, despite requests, Mr and Ms Arnison have failed to account to Ms Lindsay for the receipts and disbursements and their dealings in respect of the estate of Ms Seddon.

35. Mr and Ms Arnison responded by denying that they have failed to account to Ms Lindsay for receipts and disbursements and their dealings with respect to the estate (par 12). They denied that they have knowledge of any assets of Ms Seddon which might be available for distribution to the beneficiaries other than the assets over which they had control and subsequently distributed to the beneficiaries on about 20 July 2014 (par 14).

Distribution of Estate - spreadsheet

36. It will be convenient at this point to refer to the various accounting documents that were apparently prepared by, or on behalf of, Mr and Ms Arnison, to document the affairs of Ms Seddon and her estate.

37. Mr and Ms Arnison purported to distribute the balance of Ms Seddon’s estate to the beneficiaries, and they asked the beneficiaries to sign a release to the effect that they accepted the validity of the distribution. Peter Seddon signed the release, but Ms Lindsay declined to do so.

38. Mr and Ms Arnison justified the amount distributed to the beneficiaries with a one page spreadsheet.

39. The spreadsheet brought to account assets to the value of $322,304.64, the principal component being the proceeds of sale of the villa on 30 April 2012 of $262,816.64.

40. The spreadsheet then listed categories of expenditure for the period October 2010 to 2013, such as catering meals for unit, bills for nursing services, carpet replacement, various other services and requirements of Ms Seddon, and also gifts totalling $61,000 (including $40,000 to the three children and Mr Arnison).

41. An entry for July 2014, in the amount of $120,000, is described as “Estate figures supplied”.

42. As I understand it, the amount of $120,000 is said to be the gross amount available for distribution to the beneficiaries, subject to the payment of debts and expenses. On that basis, the total expenses are given at $318,471.48.

43. Ms Lindsay said in her affidavit that Mr and Ms Arnison advised the beneficiaries that the estate had a gross value of $120,000, and the net value of $60,465.69. Neither defendant responded to this evidence directly in their affidavits.

44. As I understand the evidence, the spreadsheet was not supported by vouchers, and nor were the debts and expenses of the estate.

Defendants’ account for estate

45. Ms Arnison gave evidence of what she and her husband did with the assets in Ms Seddon’s estate after her death. That was in the form of Annexure F to her affidavit, which is a spreadsheet.

46. It shows that the assets in the estate were an amount in a National Australia Bank (NAB) account of $2,304.12 plus an “Investment/loan account” containing $94,268.08, giving a total of $96,572.20.

47. The $94,268.08 is stated as being made up of: debt $40,000, savings $42,000, MLC overpayment $7,741, and interest $4,527.08.

48. The reference to “debt $40,000” is a reference to an amount of $40,000 that Mr and Ms Arnison acknowledge that they borrowed from Ms Seddon, and which they say they repaid as part of the distribution of Ms Seddon’s estate.

49. The spreadsheet lists 14 payments made out of the estate’s funds in the total amount of $96,572.20. All but three of those payments appear to be debts of the estate. The final three payments are amounts of $20,155.23 to each of the three beneficiaries, representing the distribution of the net amount of the estate under the will.

Accounts concerning Ms Seddon’s affairs

50. The evidence included a set of documents apparently prepared by Mr Tony Canavan, an accountant, who was retained by Mr and Ms Arnison. Mr Canavan was not called to give evidence to explain the documents.

51. The first page of the documents concerns the “Estate of Ruth Seddon”, and is addressed “To whom it may concern”. The document is undated, and states:

We have reviewed the entries in the Reckon ledger system for this Estate for the period from 1st November 2010 to date.

In our view the ledger entries show an accurate position of the cash receipts and payments for the Estate for that period.

52. The document is simply signed “Regards, Tony Canavan”.

53. The single page introductory document is followed by a four page profit and loss for the period November 2010 to August 2016, and then a series of printouts called “Transaction detail by account”. One of the accounts is called “Loan – Arnison”.

54. Various unexplained documents are included at various places within the printout, which appear to contain brief explanations of various entries. There is some correspondence from solicitors interspersed throughout the documents, correspondence from various Australian Government instrumentalities, bank statements, and sundry invoices.

55. The significance of these documents, which were admitted into evidence by consent as part of Exhibit B (and which comprise the documents behind Tab 11 of the Court Book) was not explained. They are not documents of sufficient clarity for the court to act upon them without explanation, except perhaps in relation to certain isolated parts.

56. The profit and loss document appears to have been intended to account for what were described as Ms Seddon’s income and expenses for the period November 2010 to August 2016. This period straddles Ms Seddon’s death on 8 September 2013.

57. It appears that some proprietary accounting system (probably what Mr Canavan described as “the Reckon ledger system”) has been used to provide an account in relation to Ms Seddon’s affairs for the period from November 2010. A profit and loss computer program, apparently prepared for the purpose of accounting for the operations of a business, does not appear to be suitable for transparently explaining the individual affairs of a person while alive, as well as the affairs of their estate after death.

58. For the present it is sufficient to note that, on pages 2 and 3 of the profit and loss statement, there is an expenditure heading called “Shopping”, which lists total expenditures of $51,505.19. For reasons that will become apparent later, I will merely note at this stage that one of the expenditures is $13,264.75, attributed to “MYER”, and $498.83 attributed to Bunnings.

59. Also, on page 3 of the profit and loss statement is an expenditure heading called “Gifts and Donations”. The total of that expenditure is $48,400.92.

60. As mentioned, one of the individual accounts was called “Loan-Arnison”. The printout of that account is three pages long.

61. The account appears to list payments out of various accounts as if they were required to be treated as debts due by Mr and Ms Arnison to Ms Seddon. The total amount of the debits is $109,852.04. Credits of $109,942.63 are recorded, giving a balance of $90.59.

62. The largest credit is an amount of $61,962.02, dated 30 June 2014. It appears that that amount is intended to represent the total amount distributed by Mr and Ms Arnison to the three beneficiaries of the estate (although, if that is so, the difference from the $60,465.69 net value of the estate is not explained).

63. According to my calculations, the loan account shows credits, apparently being payments to creditors of the estate, in the total amount of $24,490.62 ($4,417.75 + $572.00 + $836.00 + $7,739.71 + $7,741.00 + $451.16 + $1,100.00 + $33.00 + $1,600.00), after Ms Seddon’s death. The relationship between this $24,490.62 and the $59,534.31 total debts and expenses of the estate (calculated by deducting $60,465.69 from the supposed gross value of $120,000) is not explained.

64. I do not understand whether, and if so how, the statement of the Arnison loan account can be reconciled with the profit and loss statement.

65. It is self-evident that neither the spreadsheet given by Mr and Ms Arnison to the other beneficiaries, nor the accounts apparently prepared by Mr Canavan are adequate, as a matter of substance, to provide a proper accounting of Ms Seddon’s affairs during her lifetime, or after her death. Both sets of documents are not transparent. They have not been prepared in a form that would allow a reader to be satisfied that they completely reflect all relevant transactions. The documents are not supported by proper vouchers, and such vouchers as have been provided are not readily related to individual transactions.

Background

66. Ms Seddon was born on 7 February 1930, and accordingly was 83 years old at the time of her death on 8 September 2013.

67. She married Roy Frederick Seddon, and lived with him at their home in Belrose until November 2007, when the home was sold for a price of $735,000.

68. In December 2007, the couple, using part of the sale proceeds of the Belrose property, purchased a retirement villa, being Unit 935 Friarbird Street, Henry Kendall Gardens at Wyoming, for the sum of $340,000.

69. Ms Lindsay made statements in her primary affidavit concerning how the balance of the purchase price of the Belrose property was disbursed, and asserted that a balance of approximately $240,000 was unaccounted for by the defendants. This allegation is immaterial, as Ms Lindsay did not plead a claim against the defendants in relation to any part of the proceeds of sale of the Belrose property. The evidence shows, in any case, that, for most of the balance of Mr Seddon’s life, he managed his own affairs, and when he made a power of attorney, it was not in favour of one of the defendants.

70. In August 2010, Mr and Ms Seddon moved from the villa at Henry Kendall Gardens into the Allity Care Nursing Home, which was also part of the Henry Kendall Retirement Village.

71. Mr Seddon died on 16 August 2011. Under his will dated 12 December 2007, the whole of his estate was left to Ms Seddon.

72. As I have said above, Ms Seddon made her last will on 1 September 2011, by which she left her estate, after payment of debts and testamentary expenses, to her three children equally.

73. Ms Seddon sold the villa in February 2012 for the sum of $275,000.

Management of Ms Seddon’s affairs

74. Ms Lindsay asserted in her affidavit that, between August 2011 and Ms Seddon’s death on 8 September 2013, Mr and Ms Arnison managed all of Ms Seddon’s legal and financial affairs, pursuant to the power of attorney dated 12 December 2007.

75. Ms Lindsay acknowledged that some payments were made out of the proceeds of sale of villa with Ms Seddon’s authority, or for her benefit, but she asserted that the sum of approximately $241,000 has not been accounted for by Mr and Ms Arnison.

76. Ms Lindsay submitted that Ms Seddon was a vulnerable person who had schizophrenia during her adult life, and was being treated for the same at the end of her life, as indicated by the anti-psychotic medication ‘risperidone’ noted in her medical records and seroquel.

77. She also submitted that Ms Seddon was apparently not mobile, or not very mobile, from 2007 until her death. At age 81, she was also reported to have had cataracts, poor hearing, heart disease, hypertension, osteoporosis, laminectomy, and an old fracture of her shoulder.

78. Ms Lindsay submitted that it was highly likely that the financial transactions undertaken by Ms Seddon were carried out by Mr and Ms Arnison on her behalf.

79. In her affidavit, Ms Arnison accepted that for 20 years her mother had been overweight and had suffered from arthritis, following a major fall as a younger woman. Movement became more difficult for Ms Seddon as she aged, but it was not impossible. While in the nursing home, Ms Seddon was on a walking program, and ventured out of the nursing home with Mr and Ms Arnison at least once weekly. Ms Seddon was not bedridden, and went into banks or used automatic teller machines during the later period of her life. Ms Arnison said that, up to the date of her death, her mother was intellectually alert.

80. Mr and Ms Arnison tender documents produced in November 2011 concerning Ms Seddon’s medical record.

81. Those records appear to establish that, up until that time, Ms Seddon’s schizophrenia was well controlled by her medication. There was no evidence of psychomotor retardation. Ms Seddon was not agitated or disturbed. She denied feeling depressed. Her thought form was logical and sequential.

82. The medical records recorded that on 12 October 2011 ACAT had administered a Mini-mental State Examination (MMSE) to Ms Seddon, and she scored 29/30. According to the records, a score above 27 is considered to be normal.

83. While Ms Lindsay asserted that Mr and Ms Arnison managed all of the financial affairs of Ms Seddon by exercising their power of attorney, that assertion was denied by Mr and Ms Arnison.

84. The thrust of much of the argument between the parties went to the question of whether or not Mr and Ms Arnison in fact exercised their authority under the power of attorney, and were thereby bound by a fiduciary duty that they owed to Ms Seddon, which included an obligation not to exercise the power of attorney in their own interests rather than the interests of Ms Seddon.

85. However, documents produced by the NAB and Newcastle Permanent Building Society on subpoena were tendered into evidence.

86. As part of her final submissions, Ms Lindsay provided to the court an analysis of the bank statements, which was marked for identification as MFI 1.

87. The primary function of MFI 1 was to analyse the transactions recorded in the bank statements, to identify transactions which appeared to have no apparent link to any benefit to Ms Seddon.

88. Four bank accounts were established with NAB be in the joint names of Ms Seddon and Ms Arnison.

89. It will be convenient to identify the accounts by referring only to the last four digits of the account numbers.

90. $130,000 was deposited into account No. 7195 on 13 August 2012. By 31 May 2013, that sum had been depleted to $0.17. The depletion occurred by means of a long series of internet transfers.

91. Account No. 3929 was a retirement account, and was operated between 10 August 2012 and about 16 December 2013, by means of a series of regular relatively small debits and credits, measured in the hundreds of dollars. At all times the account had a relatively small balance.

92. Another retirement account was account No. 7923, which was operated in substantially the same manner as the other retirement account, between 27 July 2012 and about the 10 December 2012.

93. I note that the sake of completeness that account No. 3523 was opened on 13 August 2012 and closed on 27 August 2012.

94. Four accounts were opened with the Newcastle Permanent Building Society, being accounts No. 1005, 8206, 0218 and 4318. MFI 1 described account No. 1005 as being a joint account between Ms Seddon and Ms Arnison, but according to the statements, only account No. 0218 was a joint account, and the other three accounts were solely in the name of Ms Seddon.

95. On 1 May 2012, $262,816.64 was paid into account No. 4318. That was apparently the net sale price for the villa. $230,000 was paid out of that account on 2 June 2012.

96. Of that sum $50,000 was paid on 2 June 2012 into account No. 1005

97. Account No. 0218 was opened on 2 June 2012, when $180,000 was paid into the account. $180,170.14 was paid out on 10 August 2012, when the account was closed.

98. On 10 August 2012, $180,170.14 was paid into account No. 1005. An amount of $130,000 was paid out of that account on 13 August 2012.

99. Speaking broadly, the statements show a long series of transfers from one account to another, primarily to account No. 4318.

100. Apart from account No. 0218, which was closed on 10 August 2012, the other three accounts were closed on 22 July 2014, with nil balances.

101. The account for which the greatest number of transactions is recorded is account No. 4318, for which there are 27 pages of statements for the period between 1 August 2011 and 22 July 2014.

102. Before I analyse the statements for account No. 4318, it will be appropriate to note some of the evidence given by Ms Arnison in cross-examination.

103. Ms Arnison said that her mother did not stay in the nursing home all the time. She went out shopping a lot, and she visited her and Mr Arnison’s house on a weekly or fortnightly basis on the weekends. Ms Arnison took her mother out through the week at times (T 19.45) she said: “My mum loved to shop” (T 49.30). She used her credit card when she went shopping.

104. Ms Arnison said that her mother had access to an internet banking function (T 21.33). Ms Arnison had access to her mother’s internet banking passwords. Both Ms Arnison and her mother could carry out internet banking transactions on Ms Seddon’s accounts.

105. Ms Arnison specifically acknowledged that she knew the PIN number on Ms Seddon’s ATM card on the Newcastle Permanent Building Society account (T 22.12).

106. Ms Arnison said that she and her mother would go banking and shopping, and when Ms Seddon visited her house, they would sit down and Ms Arnison would say: “What do you want paid?”, and they would pay Ms Seddon’s bills while they were together (T 22.30). They would print off statements, and Mr Arnison would take them to Ms Seddon.

107. Ms Arnison did not suggest that her mother ever conducted internet banking transactions while she was by herself at the nursing home.

108. In her affidavit, Ms Arnison acknowledged that she was present when Ms Seddon opened the NAB retirement account No. 3929, and that Ms Arnison was made an authorised signatory to that account.

109. It is in the light of these facts that I will return to a consideration of the Newcastle Permanent Building Society account No. 4318.

110. Ms Arnison was cross-examined about many individual items in the various statements for the different accounts, which appeared to record expenditure for the benefit of Ms Arnison’s family, and not for the benefit of Ms Seddon. Ms Arnison was not cross-examined minutely about all of the transactions recorded in the statements, and in particular the statements for account No. 4318. That observation is not made with any criticism of the cross examiner, as plainly counsel for the parties were justified in taking an economical approach to the conduct of the hearing, given the relatively small sums involved, and in particular the small amount that was distributed to the beneficiaries. I only make this observation in order to explain that I have had to rely upon my own analysis of the statements, but I have stopped short of drawing conclusions that are too definite, given the manner in which the hearing was conducted.

111. It is appropriate to start by making a number of general statements based upon a holistic view of the statements for account No. 4318.

112. First, in my view, the number of transactions, seen in terms of the number of transactions on many individual days, and the number of days in each month on which transactions were recorded, is quite inconsistent with Ms Arnison’s claims that the transactions were always effected on occasions when Ms Arnison took her mother out shopping, or her mother was visiting the family home on a weekend.

113. Secondly, if one glances through the descriptions of the payments, a very substantial proportion of the payments are of a description that one would expect to see as part of the day to day transactions of an ordinary family including children. It is only necessary to list some of the descriptions, being Myer Erina, Big W, Veda ISS Auto North Sydney, Supercheap Auto, Coles Wyoming, Tickertek Sydney, AGL Retail Energy North Sydney, Jetstar Melbourne, Seek Online Australia, Bunnings Gosford, and the list goes on. The list that I have given is only a small proportion of randomly chosen descriptions of transactions that are unlikely to relate to the requirements of an 80-year-old lady in a nursing home.

114. Thirdly, the statements show a very substantial number of ATM withdrawals of significant amounts of cash. For example, on 9 May 2012, there were three cash withdrawals of $500 each, and two payments of $500 and $2,000 by BPAY to Gosford City Council.

115. The statements show a substantial number of transfers from other Newcastle Permanent Building Society accounts in the name of Ms Seddon, often on a top up basis to ensure that the account did not go into deficit.

116. In short, the statements for account No. 4318 paint a clear and consistent picture of frequent transactions that would be expected for the working account of an ordinary family.

117. Taking one relatively obvious example, on 30 July 2012, there were 11 transactions: ATM withdrawals of $100 (at Sydney Airport), $500, $300 (at Hornsby Westfield) and $60; four ATM direct charges for withdrawals; a payment of $125.99 to IKEA Homebush; a payment of $112.33 to Coles Wyoming; and a payment of $1250 to Primelife (Henry Kendall) Pty Ltd, which was probably a payment for the benefit of Ms Seddon.

118. Taking just one more example, on 27 August 2012, there were seven transactions: four transactions at Coles Wyoming, two at Officeworks West Gosford, and one at Macron Music Erina.

119. I do not by these observations rule out the possibility that a significant number of these transactions were undertaken for the benefit of Ms Seddon, but without much more specific evidence, I would not be satisfied that all of the transactions were for her benefit.

120. In the course of the cross-examination of Ms Arnison it became apparent that she acknowledged that many of these transactions were for the benefit of herself and her family. She responded to a number of questions by referring to what she called the gift register and the loan register (see for example T 48.37 and .41). It may be, and I say this without any criticism, that it came as some surprise to cross-examining counsel that Ms Arnison referred to these registers. Further pursuit of this issue revealed that Ms Arnison was referring to parts of the document that had apparently been prepared by Mr Canavan, to which I have referred above. In particular, it appears that what Ms Arnison referred to as the “loan register” was the loan account.

121. It is not entirely clear, but it may be that her reference to the gift register was the entry in the profit and loss account under the heading “Gifts and Donations”.

122. Ms Arnison gave responses to some questions in cross-examination to the effect that Ms Seddon of her own free will decided to spend some of her money by way of making gifts to members of her family.

123. For example, in relation to payments of $2,000 and $1,752 on 15 and 16 August 2012 out of account No. 1005 to Simon Fraser African Drumming, Ms Arnison said that her son went to Africa when he was working near Ghana “and mum helped him towards it” (T 43.27); and “it was her request for her grandchildren, the kids that she saw nearly every day. She was very proud of them” (T 43.35).

124. Ms Arnison also said in relation to a significant number of payments out of account No. 4318 (that are set out on pages 24 and 25 of 27 of the statements for that account) that Ms Seddon volunteered to pay for an extra week in Honolulu for Mr and Ms Arnison after they attended the Pan Pacific National Championships for school bands, for a school band managed by Ms Arnison (T 49.37).

125. It gradually emerged that, in relation to all of the accounts into which Ms Seddon’s money was paid, and all of the transactions on those accounts, some attempt had been made to distinguish between transactions that should be treated as loans to Mr and Ms Arnison, and transactions that were gifts to members of the Arnison family. The basis upon which that exercise was carried out has not been explained by the evidence.

126. Moreover, the limited attempt that I have made to cross reference between the account statements and the documents prepared by Mr Canavan have not established that the documents can readily be reconciled. As a limited test, I added the total transactions referred to in the statements for account No. 4318 that appeared to relate to Myer. The total was $3,302.85; whereas the amount set out under the “shopping” heading in the profit and loss statement is $13,264.75. The total I calculated for Bunnings transactions was$4,738.72, while the entry in the profit and loss statement was $498.83.

127. I should record that I have not identified in these reasons all of the transactions that appear, from the account statements and other evidence, to have been for the benefit of the Arnison family. Nor have I attempted to distinguish between transactions which were apparent gifts, or which should be treated as loans.

Conclusion

128. All of these considerations lead to the conclusion that Ms Arnison mixed her own family’s affairs with those of her mother, by using several of her mother’s bank accounts for her own family’s purposes, as well as the purposes of Ms Seddon. Not only does that strongly appear to be the case from the review of the statements that I have described above, but it is directly conceded by the preparation of what has been described as the “loan account”.

129. Unfortunately, all of the various spreadsheets and accounting documents that have been prepared have not been prepared in a clear and professional manner, supported by appropriate vouchers. In cases where appropriate vouchers may not exist, the entries have not been supported by direct evidence capable of establishing which transactions were for the account of Ms Seddon, and which were for the Arnison family.

130. The dispute between the parties as to whether or not Mr and Ms Arnison exercised their authority under the power of attorney granted to them by Ms Seddon, in relation to some or all of these transactions, must be considered in the light of the foregoing considerations.

131. It may well be that Mr and Ms Arnison rarely, if ever, entered into a transaction on behalf of Ms Seddon in reliance on the power of attorney.

132. Be that as it may, in relation to a number of the bank accounts, the accounts were in the name of Ms Seddon and Ms Arnison jointly, and Ms Arnison was an authorised signatory on the accounts. In relation to the Newcastle Permanent Building Society accounts, one of those accounts was a joint account. In relation to the other three accounts, particularly account No. 4318, Ms Arnison had the PIN number for the accounts and was able to conduct internet transactions, without reference to her mother. She had an ATM card for the account, which apparently allowed her to make ATM withdrawals, conduct EFTPOS transactions, and also pay for goods and services.

133. Although the evidence does not deal in detail with the circumstances in which Ms Seddon gave Ms Arnison the information and cards necessary to enable the latter to operate the former’s accounts, the court must infer from all of the circumstances that Ms Seddon made Ms Arnison her agent for the purposes of operating her accounts.

134. When Ms Arnison operated Ms Seddon’s accounts, she did it as the agent of Ms Seddon, whether she was acting as the formally appointed attorney of Ms Seddon, or her informally appointed agent.

135. In either case Ms Arnison was subject to a fiduciary duty to act in accordance with the instructions of Ms Seddon, and to not engage in transactions on Ms Seddon’s accounts for her own interests, or the interests of her family, rather than the interests of Ms Seddon, except with the freely given and fully informed consent of Ms Seddon.

136. On the state of the evidence, and the various forms of spreadsheet and accounts that have been prepared to date, it is necessary that Mr and Ms Arnison be required to provide a proper accounting of their dealings with Ms Seddon’s accounts. That may be an unfortunate necessity given the costs that may be involved, but it is required because Ms Arnison has mixed her own affairs with those of her mother, and apparently has not kept complete and adequate vouchers to support the transactions.

137. Towards the end of the hearing it became apparent that there may have been some misunderstanding between the parties concerning what the position of each was in relation to the attempts by Mr and Ms Arnison to account for all relevant use of Ms Seddon’s funds. Counsel for Mr and Ms Arnison, in particular, informed the court that it may be possible for her clients to provide additional information on a line by line basis that may support the accounting position taken by the clients.

138. I have decided that the desirable course for the court to take is to publish these reasons, give the parties an opportunity to consider them, and to appoint a directions hearing in order to determine the appropriate orders to be made for the further conduct of these proceedings, in what might be hoped to be a cost-effective manner, given the amount of money that is in dispute.

128. As I have said, in principle, and without regard to technicalities, at this stage Ms Lindsay is entitled to a much more accurate, and independently verified, accounting in relation to her mother’s affairs, both during the final period of her life and in respect of her estate, than she has received to date.

129. The parties must address, however, the fact that Mr and Ms Arnison have not obtained a grant of probate, and it will be necessary for the court to hear from the parties concerning whether, or not, it is necessary for some formal grant of administration to be made to an appropriate party to act on behalf of Ms Seddon’s estate.

130. That is an important consideration, because if Mr and Ms Arnison have used Ms Seddon’s funds for their own purposes, in a manner that was not properly authorised by Ms Seddon, and they have not made adequate allowance for the debt that they owe to the estate, then the relevant amount will be a debt recoverable by the estate. Technically, Mr and Ms Arnison, as Ms Seddon’s agents, are accounting parties who are liable to account to Ms Seddon’s estate. The difficulty is that they are also the named executors, but have not taken out a grant of probate. If an accounting is to take place, the order should be made in favour of some person who has the authority of the court to administer the estate.

131. The parties exchanged submissions on the issue of whether any accounting that is ordered should be in common form or on the wilful default basis.

132. This dispute raises technical problems that have not been addressed by the parties. If Mr and Ms Arnison had received a grant of probate as executors of Ms Seddon’s will, they would have had a duty to get in the assets of the estate, which would include any amount owed by themselves as Ms Seddon’s agents for using Ms Seddon’s money for their own purposes. Their failure as executors to seek to recover the amount from themselves might satisfy the test for a wilful default that would justify an order that they account as executors on a wilful default basis. See for example Meehan v Glazier Holdings Pty Ltd (2002) 54 NSWLR 146; [2002] NSWCA 22 at [14] and [65].

133. However, Mr and Ms Arnison have not sought a grant of probate, and the most that can be said is that they have intermeddled in Ms Seddon’s estate in a manner that would make them executors de son tort. While executors de son tort may be required to account in respect of the property in the estate that is the subject of their intermeddling, they have no obligation to gather in the estate.

134. The real issue does not, however, appear to concern Mr and Ms Arnison being required to give an account as executors de son tort, but as agents in respect of Ms Arnison’s dealings with Ms Seddon’s accounts during, and shortly after, her lifetime.

135. In considering the possible future course of these proceedings, it would be in the interests of Mr and Ms Arnison to review carefully the statements for the various accounts to determine whether they are likely to be able to provide evidence that each of the various transactions was either for Ms Seddon’s benefit and on her instructions, or was authorised by Ms Seddon in circumstances where she freely consented with full knowledge of the circumstances of the transaction.

136. On Ms Lindsay’s part, she will need to take into account the fact that, as an equal one third beneficiary of Ms Seddon’s estate, Ms Lindsay will only be entitled to receive one third of any amount of compensation that Mr and Ms Arnison may ultimately be ordered to pay to the estate.

137. It will also be appropriate for Ms Lindsay to give further consideration to her attempt to establish that Mr and Ms Arnison have not paid all of the debts of the estate. It is not clear what standing Ms Lindsay has to seek that relief as a beneficiary, if the supposed creditors have not taken any steps to recover the alleged debts.

138. There was some dispute on the evidence as to whether the alleged debts, in any event, remained owing, and it does not appear to me that in final submissions the parties addressed this issue in detail. In particular, I am not sure whether Ms Lindsay pursues her claim in relation to some or all of the debts that she originally said had not been paid.

139. Finally, it must be recognised that Ms Lindsay, as a beneficiary, and Mr and Ms Arnison, as nominated executors who have not obtained a grant of probate, are in practical terms trying to obtain orders for the proper administration of the estate by an informal process. One aspect of that informality is that one of the beneficiaries, Peter Seddon, has not been joined as a party.

140. The parties should be prepared at the proposed directions hearing to deal with the question of whether Mr Seddon should be joined as a party, or otherwise given notice of the proceedings, and what is proposed in relation to their resolution.

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Decision last updated: 10 February 2017