McColl JA at [1]; Leeming JA at [2]; Payne JA at [189]
Decision:
1. Extend the time within which to appeal to 13 December 2017.
2. Grant leave to the first and third respondents to the appeal (Joseph Reilly and Dennis McGroder) to cross-appeal.
3. Appeal allowed in part.
4. Set aside orders 8-12 as proposed in [409] of the reasons for judgment published as [2017] NSWSC 1419 and made (with a minor modification to order 11) on 9 November 2017.
5. Otherwise dismiss the appeal.
6. Dismiss Mr McGroder’s cross-appeal.
7. Subject to order 10 below, dismiss Joseph Reilly’s cross-appeal.
8. Subject to order 10 below, order that each of the appellants and Mr McGroder pay Joseph Reilly’s costs in this Court, on the basis that as between themselves, the appellants are liable to pay half of those costs and Mr McGroder is liable to pay the other half.
9. Note that the remaining issues for determination, pursuant to orders 21 and 22 of the orders made on 9 November 2017, extend to the time at which the value of Boronga is to be assessed.
10. In the event that any party wishes to be heard in relation to any further orders (including orders contrary to orders 7 and 8 above), grant leave to the parties to file and serve a notice of motion, any evidence, and short submissions in support within 28 days of today, with the other parties to respond within 14 days thereafter and with the notice of motion to be heard and determined on the papers and by a single Judge of Appeal unless submissions are made for some different course.
Catchwords:
APPEAL – challenges to findings of primary fact – whether adequate cross-examination to permit rejection of parties’ and witnesses’ evidence – whether primary judge grappled with competing evidence – challenges to findings of primary fact rejected
EQUITY – breach of fiduciary duty – enduring attorney instructed solicitor to make inter vivos gift of principal’s main asset to four of five children – attorney found to have done so on basis of what she considered to be “fair” – whether breach of duty – whether solicitor had knowledge of breach of fiduciary duty – whether solicitor’s knowledge imputed to four children – whether four children were knowing recipients of property – whether fraud exception to indefeasibility made out – whether children required to provide equitable compensation to estate – four children were knowing recipients of property for the value of which they had to account, but indefeasibility meant that the property was not held on constructive trust for estate
LEGAL PRACTITIONERS – solicitor – retainer – solicitor retained by enduring attorney on behalf of incapable principal – solicitor instructed to convey property to four of five children without consideration – whether solicitor…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Details
AGLC
McFee v Reilly [2018] NSWCA 322
Case
[2018] NSWCA 322
Decision Date
CaseChat Overview and Summary
The case of *McFee v Reilly* concerned an appeal to the New South Wales Court of Appeal concerning allegations of breach of fiduciary duty, negligence, and issues relating to the indefeasibility of title. The primary dispute involved an enduring attorney who instructed a solicitor to make an inter vivos gift of the principal's main asset to four of her five children, without consideration. The principal was found to be incapable at the time of this transaction. The appeal also involved challenges to findings of primary fact and the rectification of a will.
The Court of Appeal was required to determine several legal issues. These included whether the attorney breached her fiduciary duty by making the gift on the basis of what she considered "fair," whether the solicitor had knowledge of this breach and if such knowledge could be imputed to the four children as knowing recipients of the property. The court also considered whether the fraud exception to indefeasibility of title was made out and whether the solicitor owed a duty of care to a testamentary beneficiary who was disappointed by the inter vivos transaction, and if so, whether that duty was breached and caused loss. Finally, the court had to consider challenges to the primary judge's findings of fact and the rectification of the testator's will.
The Court of Appeal found that while the attorney's actions constituted a breach of fiduciary duty, and the solicitor owed a duty of care to the disappointed beneficiary which was breached and caused loss, the principle of indefeasibility of title meant the property was not held on a constructive trust for the estate. However, the four children were deemed to be knowing recipients of the property and were required to account for its value. The court rejected the challenges to the primary judge's findings of fact and the rectification of the will. The appeal was allowed in part, with certain orders of the primary judge being set aside, and the cross-appeal by one respondent was dismissed.
Orders
Orders of the court
1. Extend the time within which to appeal to 13 December 2017.
2. Grant leave to the first and third respondents to the appeal (Joseph Reilly and Dennis McGroder) to cross-appeal.
3. Appeal allowed in part.
4. Set aside orders 8-12 as proposed in [409] of the reasons for judgment published as [2017] NSWSC 1419 and made (with a minor modification to order 11) on 9 November 2017.
5. Otherwise dismiss the appeal.
6. Dismiss Mr McGroder’s cross-appeal.
7. Subject to order 10 below, dismiss Joseph Reilly’s cross-appeal.
8. Subject to order 10 below, order that each of the appellants and Mr McGroder pay Joseph Reilly’s costs in this Court, on the basis that as between themselves, the appellants are liable to pay half of those costs and Mr McGroder is liable to pay the other half.
9. Note that the remaining issues for determination, pursuant to orders 21 and 22 of the orders made on 9 November 2017, extend to the time at which the value of Boronga is to be assessed.
10. In the event that any party wishes to be heard in relation to any further orders (including orders contrary to orders 7 and 8 above), grant leave to the parties to file and serve a notice of motion, any evidence, and short submissions in support within 28 days of today, with the other parties to respond within 14 days thereafter and with the notice of motion to be heard and determined on the papers and by a single Judge of Appeal unless submissions are made for some different course.