Middleton v King
[2004] WASC 103
MIDDLETON & ANOR -v- KING [2004] WASC 103
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2004] WASC 103 | |
| Case No: | CIV:1200/2001 | 11-13, 19 & 20 FEBRUARY 2004 | |
| Coram: | LE MIERE J | 21/05/04 | |
| 24 | Judgment Part: | 1 of 1 | |
| Result: | Judgment for plaintiffs | ||
| B | |||
| PDF Version |
| Parties: | KAREN CHRISTINE MIDDLETON NATALIE JANE SHANNON BARRIE PETER KING |
Catchwords: | Wills Trusts Trust imposed upon executor Breach of trust "Benefits" "Superannuation scheme" Whether an insured benefit is a benefit of superannuation scheme Laches and acquiescence Whether plaintiff had knowledge of terms of Will Defence of laches Delay with prejudice Laches distinguished from estoppel Circumstances of the case Lack of reliance Defence of acquiescence Onus upon defendant to prove acquiescence Whether plaintiff had knowledge of circumstances in which rights arose Compound interest Whether trustee used trust funds for own benefit Whether circumstances justify imposition of compound interest |
Legislation: | Supreme Court Act (WA), s 142 |
Case References: | Hagan v Waterhouse (1992) 34 NSWLR 308 Re Dawson [1966] 2 NSWR 211 Anhaeusser v Anhaeusser and Roth [1930] St R Qd 55 Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337 Boyns v Lackey (1958) 58 SR(NSW) 395 Burdick v Garrick (1870) LR5ChApp 233 Clay v Clay (1999) 20 WAR 427 Cohen v Cohen (1929) 42 CLR 91 Dalton v Christofis [1978] WAR 42 Duke of Leeds v Earl of Amherst (1846) 41 ER 886 Durrant v Friend (1852) 64 ER 1145 Edmunds v Pickering (No 3) (1999) 75 SASR 407 Elliott v Campbell [1906] VLR 120 Erlanger v New Sombrero Phosphate Co (1878) 3 APP Case 1218 Fullwood v Fullwood (1878) 9 Ch D 176 Gordon v Gonda [1955] 1 WLR 885 Hardwick v Hardwick (1873) LR16Eq 168 Hill v Crook (1873) LR6HL 265 Hiscocks (Decd) v Hiscocks (1839) 151 ER 154 Hourigan v Trustees Executors and Agency Co Ltd (1934) 51 CLR 619 In re Diplock; Diplock v Wintle (Diplock's Case) [1948] Ch 465 In re Somerset; Somerset v Earl Poulett [1894] 1 Ch 231 Joliffe v Baker (1883) 11 QBD 255 Kitchen v Royal Air Force Association [1958] 1 WLR 563 Lindsay Petroleum Company v Hurd, Farewell & Kemp (1874) LR5PC 221 Orr v Ford (1989) 167 CLR 316 Re Howlett; Howlett v Howlett [1949] Ch 767 Re Warren; Sandhurst & Northern District Trustee's Executors and Agency Co v Warren [1918] VLR 209 Reader v Fried [2001] VSC 495 Sale Hotel and Botanical Gardens Co Ltd; Hesketh's Case (1897) 77 LT 681 Savage v Lunn, unreported; SCt of NSW; Library No 40564; 10 November 1998 Southern Cross Commodities Pty Ltd (In Liq) v Ewing (1988) 91 FLR 271 Trustees Executors and Agency Co Ltd v Scott (1898) 24 VLR 522 Walker v Stones [2001] QB 902 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- NATALIE JANE SHANNON
Plaintiffs
AND
BARRIE PETER KING
Defendant
Catchwords:
Wills - Trusts - Trust imposed upon executor - Breach of trust - "Benefits" - "Superannuation scheme" - Whether an insured benefit is a benefit of superannuation scheme - Laches and acquiescence - Whether plaintiff had knowledge of terms of Will - Defence of laches - Delay with prejudice - Laches distinguished from estoppel - Circumstances of the case - Lack of reliance - Defence of acquiescence - Onus upon defendant to prove acquiescence - Whether plaintiff had knowledge of circumstances in which rights arose - Compound interest - Whether trustee used trust funds for own benefit - Whether circumstances justify imposition of compound interest
Legislation:
Supreme Court Act (WA), s 142
(Page 2)
Result:
Judgment for plaintiffs
Category: B
Representation:
Counsel:
Plaintiffs : Mr G T Stubbs
Defendant : Mr P P McCann
Solicitors:
Plaintiffs : Dwyer Durack
Defendant : Phillips Fox
Case(s) referred to in judgment(s):
Hagan v Waterhouse (1992) 34 NSWLR 308
Re Dawson; Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd [1966] 2 NSWR 211
Case(s) also cited:
Anhaeusser v Anhaeusser and Roth [1930] St R Qd 55
Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337
Boyns v Lackey (1958) 58 SR(NSW) 395
Burdick v Garrick (1870) LR5ChApp 233
Clay v Clay (1999) 20 WAR 427
Cohen v Cohen (1929) 42 CLR 91
Dalton v Christofis [1978] WAR 42
Duke of Leeds v Earl of Amherst (1846) 41 ER 886
Durrant v Friend (1852) 64 ER 1145
Edmunds v Pickering (No 3) (1999) 75 SASR 407
Elliott v Campbell [1906] VLR 120
Erlanger v New Sombrero Phosphate Co (1878) 3 APP Case 1218
Fullwood v Fullwood (1878) 9 Ch D 176
(Page 3)
Gordon v Gonda [1955] 1 WLR 885
Hardwick v Hardwick (1873) LR16Eq 168
Hill v Crook (1873) LR6HL 265
Hiscocks (Decd) v Hiscocks (1839) 151 ER 154
Hourigan v Trustees Executors and Agency Co Ltd (1934) 51 CLR 619
In re Diplock; Diplock v Wintle (Diplock's Case) [1948] Ch 465
In re Somerset; Somerset v Earl Poulett [1894] 1 Ch 231
Joliffe v Baker (1883) 11 QBD 255
Kitchen v Royal Air Force Association [1958] 1 WLR 563
Lindsay Petroleum Company v Hurd, Farewell & Kemp (1874) LR5PC 221
Orr v Ford (1989) 167 CLR 316
Re Howlett; Howlett v Howlett [1949] Ch 767
Re Warren; Sandhurst & Northern District Trustee's Executors and Agency Co v Warren [1918] VLR 209
Reader v Fried [2001] VSC 495
Sale Hotel and Botanical Gardens Co Ltd; Hesketh's Case (1897) 77 LT 681
Savage v Lunn, unreported; SCt of NSW; Library No 40564; 10 November 1998
Southern Cross Commodities Pty Ltd (In Liq) v Ewing (1988) 91 FLR 271
Trustees Executors and Agency Co Ltd v Scott (1898) 24 VLR 522
Walker v Stones [2001] QB 902
(Page 4)
1 LE MIERE J: The plaintiffs, who I will refer to as Karen and Natalie, are the daughters of the defendant, Mr King, and his wife, Mrs King. Peter was the brother of the plaintiffs and the son of the defendant and Mrs King. On 12 April 1991, Peter, who I will also refer to as the deceased, died in a car accident. At the time of his death he was 28 years old, Karen was 24 years old and Natalie was 18 years old.
2 Peter’s last Will and Testament was dated 6 September 1983. Probate of the Will was granted on 12 July 2001. The defendant was the executor of the deceased's Will and the trustee of his estate. The defendant, as the legal personal representative of the deceased, received $133,294 from AMP Superannuation Ltd. The defendant paid that sum to or for the benefit of Mrs King. The plaintiffs claim that they were entitled to that sum under the deceased's Will and that by failing to pay the money to them, the defendant was in breach of the trust imposed upon him as the executor of the deceased's Will and the trustee of his estate. The plaintiffs claim from the defendant the sum of $133,294, together with compound interest from 1 September 1991.
The Will
3 The plaintiffs claim that they are entitled to the money from AMP Superannuation Ltd pursuant to clause 5 of the deceased's Will.
4 Clause 5 of the Will provides:
"I give and bequeath the benefits of any superannuation scheme in which I am a participant at the date of my death to my sisters, Natalie Jane King and Karen Christine King … in equal shares to the survivor of them absolutely."
5 I will briefly refer to the other provisions made under the Will.
6 The deceased bequeathed any motor vehicle he may have to his sister, Natalie, subject to certain qualifications that I will refer to later. The Will also made provision for the bequest of a rifle. The deceased left the rest of his estate to his mother, Mrs King, subject to conditions not now relevant.
The Superannuation Plan
7 At the date of the deceased's death, the defendant, Mrs King, the deceased and Karen were all employed by Pepperl & Fuchs (Aust) Pty Ltd. Pepperl & Fuchs was a company that sold electronic components or equipment. The defendant was the managing director. Mrs King was in
(Page 5)
- charge of the accounts department. Peter was manager of production. Karen worked in the accounts department.
8 At the date of his death, the deceased was a member of a superannuation plan called the Pepperl & Fuchs Superannuation Plan. AMP Superannuation Ltd was the trustee. The deceased joined the Pepperl & Fuchs Superannuation Plan in 1988.
Events After Peter’s Death
9 As I have said, Peter died on 12 April 1991. On or about 5 July 1991, the defendant, in his capacity as managing director of Pepperl & Fuchs, signed a letter dated 5 July 1991 and caused the letter to be posted to AMP Superannuation Ltd. The letter enclosed a form entitled "AMP Masterplan Request to Pay Benefit for Death". The form was addressed to “The Manager, AMP Superannuation Limited”. The form stated the member's name (the deceased), his date of birth, his date of death, the employee contributions since last review date and the employer contributions since the last review date. The form was completed in handwriting by the defendant. It was dated 22 April 1991 and signed by the defendant and Mr Ray Collett. Mr Collett, who is now deceased, was a friend of the defendant and had arranged the Pepperl & Fuchs Superannuation Plan. The letter of 5 July 1991 stated that according to the records of Pepperl & Fuchs the nominated beneficiary was the defendant.
10 The defendant tendered in evidence a document entitled "AMP Masterplan Application for Membership". The application is in the name of and signed by the deceased, but is not dated. The form nominates the defendant as the nominated beneficiary. The form states that each nominated beneficiary must be a dependant of the member as defined in the Trust Deed governing the Plan and defines dependant. It is common ground that the defendant was not at any time a dependant of the deceased within that definition.
11 On or about 21 August 1991 the defendant received a letter from AMP Superannuation Ltd in his capacity as managing director of Pepperl & Fuchs. The letter advised that the trustees had accepted liability for the claim and enclosed a cheque for $133,294 made payable to the estate of the deceased. The letter also stated that a “Statement of Termination Payment” was enclosed. The defendant does not recall seeing a statement of termination payment. He says that he received with the letter a document issued by AMP Superannuation Ltd bearing the description "Masterplan Pepperl & Fuchs Superannuation Plan Death Claim Peter
(Page 6)
- Michael King" which was dated 29 July 1991. That document became exhibit 15 in these proceedings. The document recorded the following:
"1. Retirement Account: $5,885.82
Insured Benefit: $127,195.00
Total Benefit: $133,080.82
2. The deceased was unmarried with no dependants.
3. A Nomination of Beneficiary form was completed by the deceased nominating his father, Barrie Peter King as sole beneficiary.
4. The father of the deceased was not financially dependant upon the deceased and therefore the nomination of beneficiary was invalid.
The trustee determines that the amount of $133,081 payable in terms of the Trust Deed, should be paid to the legal personal representative of the deceased on production of letters of administration."
12 The discrepancy between the $133,081 referred to in the document and the sum of $133,294 received by the defendant may be due to interest and is not material to any issue in these proceedings.
13 The defendant says that upon receipt of the cheque he formed the view that the money represented Peter's life insurance proceeds. He says he was of the view that the money did not fall within clause 5 of the Will and therefore fell within the residuary estate and was payable to Mrs King. The defendant says that with hindsight he realises that $5885 represented Peter's retirement account and did not represent life insurance proceeds.
14 The defendant caused the cheque for $133,294 to be banked into the bank account of Parbrook Holdings Pty Ltd as trustee for the Barrie King Family Trust. The deposit had the effect of repaying the Trust's overdraft in full. In his evidence-in-chief, by way of witness statement, the defendant said that in view of the fact that his wife was the residual beneficiary of Peter's estate, the payment of the AMP proceeds was credited to her loan account with the Barrie King Family Trust. In about
(Page 7)
- the week commencing 26 August 1991 the Trust paid into a bank account in the name of Mrs King the sum of $58,000. This represented all but $3948.37 of the balance of the proceeds of the AMP Superannuation Ltd cheque after the Trust's bank overdraft was repaid. The defendant said that overdraft arose in connection with the purchase on behalf of Natalie and her colleague Patrick Hamilton of a hair salon in Beldon. I will return later in these reasons to the purchase of the hair salon.
The Plaintiffs’ Claim
15 The plaintiffs plead that under the terms of the deceased's Will they were entitled to receive the amount paid by AMP Superannuation Ltd to the estate of their late brother. The defendant has refused to account to the plaintiffs for the amount received from AMP Superannuation Ltd and the plaintiffs say that the defendant is in breach of the trust imposed upon him by the Will as the legal personal representative of the deceased.
Other Claims and Counterclaims
16 By clause 6 of his will the deceased bequeathed to Natalie any motor vehicle he owned at the time of his death, provided that at the time of his death the vehicle was unencumbered and there was no debt owed as a result of the purchase of the motor vehicle, or if there was such a debt owed it was to be extinguished by a policy of loan insurances contingent on his death. The deceased owned the motor vehicle in which he died. The motor vehicle was written off and insurance proceeds were paid in the sum of $13,900. The defendant in his capacity as the legal representative of the estate of the deceased received the $13,900 from the insurance company.
17 Until the commencement of this trial it was the plaintiffs’ case that Natalie had demanded the payment of the $13,900 but the defendant had refused to make payment of that sum or any sum to her. It had been the defendant’s case that at the time of his death, the deceased owed a debt to the R & I Bank as a result of the purchase of the motor vehicle, and further that the debt had not been extinguished by a policy of loan insurance contingent upon the deceased's death as required by clause 6. Therefore, the defendant claimed, the motor vehicle and the motor vehicle insurance proceeds fell into and formed part of the deceased's residuary estate. The defendant then pleaded that he had in fact caused the sum of $13,900 to be paid to Natalie in the mistaken belief that the motor vehicle proceeds were payable to her. Thus the defendant counterclaimed that Natalie was indebted to the defendant as trustee of the estate in the sum of $13,900.
(Page 8)
18 At the commencement of the trial the plaintiffs abandoned their claims in relation to the motor vehicle, or to the proceeds of the insurance policy in relation to the motor vehicle. During the course of the trial the defendant abandoned his counterclaim. Accordingly, all of the issues concerning the motor vehicle fell away and it is not necessary to further consider them.
Construction of Clause 5 of the Will
19 The object of construing a Will is to ascertain the testator's intention as expressed in the Will. Words and phrases are generally given their ordinary meaning. If the words or phrases are clear and unambiguous, effect must be given to them irrespective of the result.
20 The key phrase to be interpreted is "the benefits of any superannuation scheme". In this context "benefits" refers to payments made by a superannuation scheme. A superannuation fund is a fund to which an employee or his employer contribute during the period of his employment, and which provides benefits to the employee, his dependants or his estate, during illness, after retirement or on his death. A superannuation scheme has a similar meaning to superannuation fund, although scheme has the additional connotation of being made up of correlated parts.
21 In this case it is necessary to identify "the benefits of any superannuation scheme in which [the deceased was] a participant at the date of [his] death". At the time of his death the deceased was a member of the Pepperl & Fuchs Superannuation Plan. That plan may properly be described as a superannuation scheme. The plan involved contributions being made by his employer to the plan. It is common ground that the Pepperl & Fuchs Superannuation Plan was governed by the AMP Masterplan Group Trust Deed, dated 1 February 1990, which became Exhibit 6. The trust deed provides for the payment of benefits to employees, or their dependants, upon the retirement, death or total and permanent disabling of the employee.
22 The death benefits payable to a member are funded by a life insurance policy taken out by the trustee with AMP Society. The contributions by or on behalf of the employee are allocated in part to pay the premium for the life insurance cover. The remainder of the contributions are allocated to the employee's retirement account. On the death of an employee whilst still employed by Pepperl & Fuchs, the benefits payable to the employee's dependants or estate include the amount standing to the credit of his retirement account and the amount
(Page 9)
- payable under the life insurance cover effected by the trustee with the AMP Society.
23 In my view, all of the amounts payable, and paid, by AMP Superannuation Ltd under the Pepperl & Fuchs Superannuation Plan are properly described as benefits of any superannuation scheme in which the deceased was a participant at the date of his death.
24 The defendant says that the amount paid by AMP Superannuation Ltd to the deceased's estate comprised the deceased's retirement account and the insured benefit. The defendant asserts that the term "insured benefit" refers to life insurance proceeds, and further, that life insurance and superannuation are quite different concepts and are ordinarily understood and/or used distinctly. The defendant says that in using the expression "benefits of any superannuation scheme" the deceased must be taken to have been using the words in their ordinary and natural sense so that the "benefits" referred to are specifically those that are in the nature of superannuation, that is, a pension payable to the deceased, or the funds created for that purpose. The logical conclusion to this line of reasoning, and that which the defendant wishes this Court to infer, is that it must have been the deceased’s intention that only that portion of the Death Claim entitled the “Retirement Account” was to go to the plaintiffs, and that the remainder, the “Insured Benefit”, was to fall to the residual estate.
25 I do not accept that argument. In my view, the description "the benefits of any superannuation scheme in which [the deceased was] a participant at the date of [his] death" is an accurate description of any benefit payable to the deceased or his estate under the Pepperl & Fuchs Superannuation Plan. The description fits the amount received by the defendant from AMP Superannuation Ltd. It was a benefit of, or payable under, the Pepperl & Fuchs Superannuation Plan. The Pepperl & Fuchs Superannuation Plan is properly described as a superannuation scheme. Any amount paid by the trustee under that plan to the member or his estate is properly described as a benefit of the superannuation scheme. It is not to the point that the benefit is made up of different components. It is not to the point that one of the components is an "insured benefit" or that it was obtained by the trustee from the proceeds of an insurance policy. It was a benefit payable under the Pepperl & Fuchs Superannuation Plan and hence is a benefit of a superannuation scheme. The benefit paid to the deceased's estate by the trustee of the Pepperl & Fuchs Superannuation Plan does not cease to have the character of a benefit of a superannuation scheme because part of the benefit was the result of life insurance cover maintained by the trustee of the scheme.
(Page 10)
26 For the reasons I have given, on the true construction of clause 5 of the Will, the amount paid to the defendant by AMP Superannuation Ltd comprised a legacy to the plaintiffs and the plaintiffs were entitled to payment of that amount.
Laches and Acquiescence
27 The defendant pleads that if the proceeds of the AMP Superannuation Ltd cheque were payable to the plaintiffs then their claim is barred by the doctrines of laches and acquiescence. The basis for the defendant's assertions is as follows.
28 The defendant says that at all material times subsequent to late April 1991 the plaintiffs were aware of clause 5 of the Will and were also aware that in his application for membership of the Pepperl & Fuchs Superannuation Plan the deceased had nominated the defendant as his beneficiary. The defendant says that in May and June 1991, to the plaintiffs' knowledge, an arrangement was entered into whereby the Barrie King Family Trust borrowed, and paid out, funds to enable Natalie to purchase a hairdressing salon on the basis that the nomination of the defendant as the beneficiary of the deceased's superannuation scheme would prevail over the Will. Further, the defendant says that on or about 23 August 1991 the plaintiffs became aware that AMP Superannuation Ltd had paid to the deceased's estate the benefits payable under the superannuation plan and that those proceeds would be used in part to repay the debt incurred by the Barrie King Family Trust to enable Natalie to purchase the hairdressing salon. The defendant says that the plaintiffs did not query or challenge this position or assert their rights under clause 5 of the Will until February 2000. The defendant says that significant events occurred in February 2000 and it was as a result of those events that the plaintiffs challenged the position to which they had earlier acquiesced.
29 I will briefly refer to what occurred in February 2000. At that time, the defendant, Karen and Mrs King were no longer employed by Pepperl & Fuchs. They were then employed by Transtech Electronic Controls Pty Ltd. The defendant was the managing director. On February 24 an incident occurred between Karen and Mrs King. The incident was acrimonious and involved a physical confrontation between them. It is not necessary to canvass the details of the confrontation or its cause. 24 February was a Thursday. Mr King was then interstate. He returned to Perth on Friday, 25 February. On the following Monday, he collected Karen's things from work and took them around to her home. He gave her
(Page 11)
- her things and asked for her keys. In effect, he summarily dismissed her from her employment. On 1 March 2000 the defendant received a faxed invoice from Karen demanding payment for work done between 1 February and 24 February 2000. There was a dispute between the defendant and Karen concerning the amount payable to Karen. That matter was eventually resolved. Relations between Karen and her parents have since been poor. The defendant says, in effect, that prior to 24 February 2000 the family, including Mr and Mrs King and Karen, were a normal functioning family, that the relationship between Karen and her parents broke down as a result of and subsequent to the February incident, and that it is those circumstances that caused Karen to take action to bring her present claim.
30 In the circumstances of this case, the defendant's defences of acquiescence and laches cannot succeed if he does not establish that in or about 1991 the plaintiffs knew the terms of clause 5 of the deceased's Will and knew that they were entitled to the amount payable by AMP Superannuation Ltd to the deceased's estate under the Pepperl & Fuchs superannuation scheme.
31 A second critical issue is whether the plaintiffs knew that in August 1991 the defendant received a cheque from AMP Superannuation in favour of the deceased’s estate rather than in favour of the defendant as the nominated beneficiary under the deceased’s superannuation plan.
The Plaintiffs' Knowledge of the Will
32 The defendant says that the plaintiffs knew the terms of the deceased's Will, and in particular clause 5, at all material times subsequent to late April 1991. The defendant does not claim to have shown the Will to the plaintiffs or to have informed them of its terms. The defendant’s case on this point rests on the evidence of Mrs King.
33 In her evidence-in-chief, given by way of witness statement, Mrs King said that within 1 or 2 weeks of Peter's death, Mr King gave her a photocopy of a piece of paper relating to Peter's insurance. She recognised Peter's signature on the bottom of the document. She later gave this document to both Natalie and Karen, together with Peter's Will, to read. She said this occurred in the study area of the family home at 1 Montessori Place, Kingsley. The context within which these events are alleged to have occurred is as follows.
34 Mrs King said that she had told the girls that she wanted to discuss with them the distribution of Peter's estate. She took them to the study,
(Page 12)
- where she retrieved a copy of the Will from a small black concertina-filing box in which Peter kept his things. She also took a copy of the AMP nomination form from Mr King's desk. She showed Natalie and Karen the Will and the AMP document and then handed both documents to the girls. They both read the Will and looked at the AMP document. One of the girls said, in the presence of the other, words to the effect that they were getting Peter's superannuation and Natalie was getting the insurance money for his car. Mrs King contends that she said to the girls, "Pete has changed his mind. He has made your father beneficiary of his insurance policy. This is not to be disputed because it is Pete's last wish". Nat was told that she would get the money for his car. Mrs King says that the plaintiffs both agreed. Thereupon she left the documents on Mr King's desk and they all went downstairs.
35 Mrs King’s evidence is corroborated by Mr King. It is a part of the defendant’s evidence-in-chief, that in or about late April 1991, his wife told him that the plaintiffs had read and discussed Peter's Will in her presence.
36 Karen and Natalie both deny that any such incident occurred. They both deny having seen the Will or learned of its contents before Karen saw the Will in December 1999.
37 Karen's evidence is that the first time she became aware of the details of Peter's Will was in December 1999 when she was helping her parents move. She was upstairs in her father's office and had begun to pack the contents of the drawers from his desk when she came across Peter's Will. She says she read the first page of the Will, but before she could read any more her mother interrupted her and told her not to pack the desk, and that she would do that herself. Karen says it was only after she had read the first page of Peter's Will that she realised she should find out more about its contents. In her witness statement Karen says that in March 2000 she went to the Public Trustee's office to see what she had to do to get a complete copy of the Will and was advised to search at the Probate Office. She subsequently made a search and made inquiries of the solicitors who had drawn Peter's Will. She also contacted her present solicitors.
38 In her oral evidence-in-chief, Karen elaborated upon what she says happened. She said that she went home and discussed the matter with her husband. After that she ‘stewed’ on it for a little while, and thought about what she should do. She then went away on holiday with her mother and father and the kids. When she came back to Perth she rang AMP to find
(Page 13)
- out more about the Will. She said that the woman who could have helped her at AMP was on holidays. She rang back again a couple of weeks later. The lady advised her to go to the Public Trustee's Office. It was after that that she commenced her inquiries at the Public Trustee's Office.
39 Counsel for the defendant submitted that the issue is whether the plaintiffs first learned of the Will in late April 1991 or December 1999 and that there is no alternative open on the evidence. There was much evidence concerning the layout of the King family home at Kingsley and the description and location of desks and other furniture at various times. Counsel for the defendant submitted that a finding as to the type of desk which was present when Karen first saw the Will provides an important aid to resolving this issue. I do not accept that argument. Karen's evidence was that she found the Will in December 1999. That was almost 4½ years prior to giving her evidence in this case. She might be confused as to which desk she found the Will in, and where the desk was located. Her evidence about those matters may be mistaken. It does not follow that she did not find the Will when she says she did. The important matter, and the matter likely to have stuck in her memory, is that she found the Will whilst helping to pack up things for her parents.
40 Karen's evidence that she found the Will in December 1999 is corroborated by Natalie. In her evidence-in-chief, Natalie said that she was not aware of the provisions of Peter's Will until Karen told her what she had read in December 1999. In cross-examination, Natalie said that in late December or early January, after Karen and her husband and children and her mother and father had come back from Kalbarri, Karen told her that she had read the first page of the Will.
The AMP Cheque
41 The defendant gave evidence that in August 1991 he took the AMP cheque home and told both of the plaintiffs that the cheque had arrived, and that he was going to make an appointment with the ANZ banking manager to bank the cheque and pay off the overdraft taken out to purchase the hair salon.
42 In her evidence-in-chief, Mrs King said she could recall the occasion in August 1991 upon which Mr King brought the AMP cheque home from work. She said Mr King put the cheque on a bench in the kitchen. Mr King said to her that he wanted to make an appointment with their bank manager to bank the cheque and pay off the loan which they had taken out to purchase Natalie’s hair salon. She says that the cheque stayed on the kitchen bench for 1 or 2 days. At that time Natalie lived at home and
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- Karen was always dropping in. Mrs King said she pointed out the cheque to Karen and told her that she would be away from work for the appointment with the bank manager. Mrs King said she also pointed out the cheque to Natalie and said that she would be going with the defendant to the ANZ bank to settle up the loan for the salon.
43 The plaintiffs both deny that they saw the cheque or that either the defendant or Mrs King drew their attention to the cheque and told them they were going to deposit it at the bank to pay off the overdraft taken out to purchase the hair dressing business.
Some Observations on the Witnesses
44 In general, I accept both of the plaintiffs to be truthful witnesses. Karen's evidence of how she came to make inquiries about the deceased's Will at the Public Trustee's Office in early March 2000 is not altogether satisfactory. I cannot exclude the possibility that she was influenced to take that step by the confrontation with her mother on 24 February and her subsequent dismissal from employment by the defendant. However even if the February 2000 altercation was a factor that caused Karen to make inquiries about the Will, it does not follow that she did not find the Will in December 1999, nor that she knew of its contents in April 1991. I accept Karen's evidence, and that of Natalie, that their mother did not show them the deceased's Will, or inform them of its terms, as she claims to have done, in April 1991. I also accept Karen’s evidence that she first became aware of clause 5 when she happened upon the Will whilst helping her parents move house in December 1999.
45 I do not accept the evidence of the defendant on some crucial issues. In cross-examination, the defendant said: "The girls were informed that it was a life policy payout and that it was, in my opinion, residual estate money and it went to the residual estate – to their mother". Mr King did not give any such evidence-in-chief. Counsel for the defendant did not put to either plaintiff in cross-examination that they had been told that the AMP proceeds were a life policy payout and that it was, in Mr King's opinion, residual estate money and that it went to the residual beneficiary, their mother. Mrs King made no such claim. In cross-examination she agreed that her evidence was that she had made it quite plain to the plaintiffs that the Will was subservient to the superannuation plan membership application, and that it was the application that counted and that would ultimately determine the distribution of the AMP cheque. Mrs King does not claim to have at any time told the plaintiffs that she,
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- rather than the defendant, was to receive the proceeds of the superannuation plan.
46 Indeed, Mrs King claimed that at other times Natalie, in reference to the AMP proceeds, had said that it was "Pete's money, not Dad's money". There was no suggestion that the plaintiffs had been told that it was their mother's money as the deceased's residual beneficiary. I reject the defendant's evidence that the plaintiffs were informed that the AMP proceeds went to their mother as the deceased's residual beneficiary.
47 I do not accept the defendant's evidence that when he received the AMP cheque he took it home and informed both of the plaintiffs that the cheque had arrived, and that he was going to make an appointment with the ANZ banking manager to bank the cheque and pay off the overdraft taken out to purchase the hair salon. I will refer to that evidence again later in these reasons.
48 I considered the defendant to be wilfully obtuse in answers to questions concerning the banking of the money in the Barrie King Family Trust account. He would not accept that banking the cheque into the trust account reduced its overdraft. His insistence that the cheque was paid into his wife's loan account and that she instructed that it was to reduce the overdraft were strained and unconvincing.
49 The defendant's evidence concerning the property owned by Transtech was lacking in frankness. In cross-examination, the defendant said Transtech did not own any property, including real property. Later in his cross-examination, the defendant was asked whether Transtech owned a unit. The defendant said no. He was then asked if the Barrie King Family Trust owned a unit. He said that it did not, but that it had formerly owned unit 1, 48 Della Marta Road, Wangara, and that the unit had been sold, though he did not know to whom. Later, in the course of Mrs King's cross-examination, counsel for the plaintiffs produced a copy of record of certificate of title that showed Transtech to be the registered proprietor of unit 2, 48 Della Marta Road, Wangara. The defendant was then recalled to be further cross-examined on the matter. In further cross-examination, the defendant said that Transtech was not the registered proprietor of the property, but that it acted as trustee for the King Superannuation Fund, which owns the property.
50 Mrs King was not an impressive witness. At times she was hostile and argumentative to counsel. I make allowance for the fact that both the trial and the events Mrs King was questioned about are likely to have
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- produced an emotional response. Nonetheless, Mrs King appeared more concerned to argue her husband's case than to assist the Court.
Findings of Fact
51 I am troubled by Mrs King's evidence concerning the alleged discussions with Natalie and Karen about the AMP cheque in August 1991. In cross-examination, Mrs King said that she had made two statements of evidence in relation to this matter. However the first statement that she signed contained no mention of the cheque coming home in August 1991.
52 The defendant also gave evidence that he took the AMP cheque home in August 1991. However in cross-examination, the defendant admitted that he had prepared and signed an earlier witness statement dated 6 February 2004 and that the earlier statement made no mention of the AMP cheque being taken home. The defendant also agreed that in preparing for this matter he had sworn a number of affidavits and in none of those affidavits did he make any mention of bringing the cheque home.
53 Mr and Mrs King offered no convincing explanation for their omission to make any reference in their earlier statements to the AMP cheque having been taken home in August 1991 and there having been the discussions with Karen and Natalie that they now say took place. Therefore I do not accept the evidence of either Mr King or Mrs King in relation to the AMP cheque being taken home in August 1991 and being discussed with Karen and Natalie.
54 Furthermore I do not accept the evidence of Mrs King that she showed the plaintiffs the deceased’s will and held the discussion of which she gave evidence. And neither do I accept the evidence of the defendant that Mrs King told him that the plaintiffs had read and discussed Peter’s Will in her presence. I prefer the evidence of the plaintiffs on this point for a number of reasons.
55 First, as I have said I reject the evidence of the defendant that the girls were informed that the money received from AMP Superannuation was a life policy pay out, and that it was in his opinion residual estate money that went to their mother as residual beneficiary. Furthermore, I reject the evidence of both the defendant and Mrs King that the cheque was brought home in August 1991, and that the plaintiffs were told it was to be banked and put towards payment of the overdraft used to purchase the hair dressing business. In my view that the defendant and Mrs King
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- were willing to give that evidence makes it difficult for me to accept their evidence on other matters where it conflicts with that of the plaintiffs.
56 Indeed, I have found both the defendant and Mrs King to be unsatisfactory witnesses. And whilst it would be true to say that such discomfort pervades these reasons generally, (as I have stated variously throughout this judgment); I found their evidence to be particularly unconvincing upon this issue.
57 Secondly, I find the version of events attested to by the defendant and Mrs King to be inherently less likely than that of the plaintiffs. In April 1991 Karen was 24 years old. Her husband had been injured in the motor vehicle accident in which the deceased had died and was consequently unable to work for some time. Karen and her husband were in a poor financial situation. It is not likely that she would forego any entitlement to her deceased brother’s superannuation benefits, whilst concurrently accepting that a part thereof would be used to discharge a loan incurred to purchase a business for her 18-year-old sister with the balance being retained by her father for his own benefit. It also seems unlikely that the plaintiffs would have foregone any entitlement to the superannuation benefits without anything being said between the defendant and either of the plaintiffs about it at the time.
58 Finally, the defendant has given no satisfactory explanation as to why he paid the $133,294 directly to his wife without first subtracting the “retirement account” component of $5885.52 which, by his own account, ought to have been paid to the plaintiffs.
59 Counsel for the defendant places some reliance on the letter of 5 July 1991 signed by the defendant as managing director of Pepperl & Fuchs to AMP Superannuation Ltd. The particular relevance of the letter upon which reliance was placed is that it was typed by Karen. Karen says that she typed the letter from a handwritten draft given to her by the defendant and that the defendant did not give her the enclosures referred to in the letter. The letter makes no reference to the deceased's Will nor to any entitlements under the Will. At most, if she had read the letter and seen the enclosures Karen would have known that the defendant had forwarded to AMP Superannuation Ltd a request that the benefits payable to the deceased's estate under the Pepperl & Fuchs superannuation scheme should be paid to the defendant as the deceased's nominated beneficiary. That is inconsistent with the defendant's contention that he paid the money to Mrs King as the residual beneficiary under the deceased's Will.
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The Hairdressing Salon
60 In May and June 1991, there were discussions and negotiations for the purchase of a hair salon for Natalie and her partner, Patrick Hamilton. As it turned out, the business was purchased by Parbrook Pty Ltd as Trustee for the Barry King Family Trust. The Trust paid in the order of $68,000 to purchase the business. That was financed by the Trust's overdraft facility with the ANZ Bank. The defendant says that he caused the Trust to enter into that transaction, relying upon the fact that he was to receive the proceeds of the deceased's superannuation plan. At that time, the defendant believed that he was entitled to receive the proceeds of the deceased's superannuation plan by reason of having been nominated by the deceased as his nominated beneficiary. Settlement of the purchase of the business occurred on 27 June 1991.
61 In August 1991, the defendant received the cheque for $133,294 from AMP Superannuation Ltd. The defendant banked the cheque into the bank account of Parbook Holdings Pty Ltd. The defendant credited the amount of the cheque to the loan account of Mrs King with Parbrook. Mr King says that the trust then paid into an ANZ account in the name of Mrs King the sum of $58,000. This represented all but $3498.37 of the balance of the AMP proceeds after the bank overdraft was repaid.
62 The defendant says that both of the plaintiffs knew that the Barrie King Family Trust borrowed, and paid out, funds to purchase the hairdressing salon for Natalie to manage on the basis that the nomination of the defendant as the deceased's beneficiary would prevail over the Will. The defendant says that the plaintiffs became aware, in August 1991, that AMP had paid the AMP proceeds to the defendant and/or the deceased's estate and that the proceeds would be used in part to repay the borrowings by the Barrie King Family Trust to purchase the hairdressing salon. The defendant says that at no time until December 2000 did the plaintiffs query or challenge those arrangements or assert their rights under clause 5 of the Will in any way.
Defences of Acquiescence and Laches
63 The terms "acquiescence" and "laches" are used in different senses. Meagher, Hayden and Leeming "Meagher, Gummow and Lehane's Equity, Doctrines and Remedies", at [36-090], refer to three senses in which the terms are used. The first is abstaining from interference while the violation of one's rights is in progress, which is referred to by Meagher, Hayden and Leeming as the primary meaning of acquiescence. The second sense refers to the action of a plaintiff over a long period of
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- time, with full knowledge of her rights, refraining from exercising her rights in circumstances where it can properly be inferred that she has abandoned them. The third sense refers to delay with prejudice to the defendant or a third party.
64 In this case, the defendant relies upon acquiescence or laches in the third sense of delay with prejudice and also acquiescence in either the first or second sense. I will first consider acquiescence in the first and second senses referred to above.
Acquiescence not Established
65 To make good the defence of acquiescence, the defendant must establish that the plaintiff fully and clearly appreciated the nature and the circumstances of the transaction out of which her rights arise.
66 The onus is on the defendant to establish the facts constituting acquiescence. I am not satisfied that the defendant has established the necessary facts. The defendant has not established that the plaintiffs knew the contents of the deceased's Will in April 1991 nor at any time before the defendant paid the proceeds of the AMP cheque into the bank account of Parbrook Holdings and credited the amount to Mrs King's loan account.
67 Even if I was satisfied that the plaintiffs knew the terms of the deceased's Will by August 1991, the defendant has still not made out the defence of acquiescence. Mrs King says that in April 1991, she told the plaintiffs that the AMP proceeds were to go to Mr King by reason of him being the deceased's nominated beneficiary under the superannuation plan. At no time did she tell the plaintiffs that the AMP proceeds were to be paid to her as the deceased's residual beneficiary. There is no evidence that the defendant told the plaintiffs that the AMP proceeds were to go, or had gone, to Mrs King as the deceased's residual beneficiary, except for the evidence to that effect given by Mr King in cross-examination, which I reject. In my view, that the AMP proceeds went to the defendant as the legal personal representative of the deceased, and were paid by him to Mrs King, as the deceased's residual beneficiary, rather than to himself as the nominated beneficiary of the deceased's superannuation plan were material facts. Without knowing these facts, the plaintiffs could not acquiesce in the funds being paid to their mother rather than to them.
Laches not Established
68 The defendant raises the defence of laches in the sense of delay with prejudice. The delay with prejudice defence operates where there has
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- been such a change in the position of the defendant or a third party during the plaintiffs' delay that it would be inequitable for the plaintiff to be granted relief. The defence will operate where the plaintiff has, by her conduct or neglect, put the other party or a third party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted: Laws of Australia 15.4:20. Where the relevant prejudice to the defendant has been caused by reliance upon the plaintiff's delay in circumstances such that the delay could also be treated as a representation that the plaintiff's accrued rights would not be enforced, estoppel may be available as well as laches. However, laches can be distinguished from estoppel on a number of important bases. One distinguishing feature is that whilst reliance is crucial in raising an estoppel, it is only one of the ways in which laches can be established.
69 I do not consider that there has been such a change in the position of the defendant or any third party during the plaintiffs’ delay such that it would be inequitable for the plaintiffs to be granted relief. The defendant caused the Barrie King Family Trust to borrow money, by way of overdraft, to purchase the hair dressing business at a time when he believed he would receive the money as the nominated beneficiary of the deceased’s superannuation benefits.
70 The defendant did not cause the Barrie King Family Trust to purchase the hairdressing salon in reliance upon Mrs King receiving the AMP proceeds as the residual beneficiary of the deceased's Will. That is, the Barrie King Family Trust had already purchased the business and spent the money to do so before anyone knew that the AMP money would be paid to and received by the deceased’s estate. In August 1991 the defendant learned that the AMP proceeds were to be paid to the deceased's estate and not to the defendant as the deceased's nominated beneficiary under the superannuation plan. In September, the defendant caused the hairdressing salon to be sold or transferred by the Barrie King Family Trust to a company, Austvogue Pty Ltd. The purchase price was recorded as a loan in the books of Austvogue and the Trust. There is no evidence that the defendant, or the Trust, would have taken some other steps if the plaintiffs had then claimed they were entitled to the AMP proceeds. In 1998 Austvogue sold the hair dressing business. It still owed a substantial debt to the Barrie King Family Trust. That debt has not been repaid. However only approximately $68,000 was expended by the Barrie King Family Trust in purchasing the hairdressing salon business in anticipation that the defendant would receive the AMP proceeds as the nominated beneficiary under the deceased's superannuation plan. Mrs King received the remaining money,
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- approximately $65,000. $58,000 was paid into a bank account in the name of Mrs King. There is no evidence of what she did with that money.
71 Between 1991 and the sale of the hairdressing salon in 1998 Austvogue made payments to the Barrie King Family Trust in reduction of the loan and on account of management fees. The management fees were paid substantially in consideration of work done by the defendant in relation to the company’s accounts. That work was not very extensive or highly skilled. The payments by Austvogue to the Barrie King Family Trust totalled $91,023 (see Exhibit 27). That is, the Barrie King Family Trust received approximately $23,000 more in interest payments and management fees than it had paid out to purchase the business.
72 Whether laches is operative as a defence depends upon the circumstances of the case. In my view, it would not be inequitable for the plaintiffs to be granted relief. The defendant was the executor and trustee of the deceased's Will. He was under a duty both to inform the plaintiffs of the terms of the deceased's Will and to pay to them the amount to which they were entitled under the Will. The defendant did neither. The defendant did not obtain a grant of probate of the Will until 12 July 2001. That is after the plaintiffs had made their present claim upon the defendant. The defendant had retained solicitors to advise him and assist him in the administration of the deceased's estate. The defendant refrained from seeking advice from the solicitors concerning the interpretation of clause 5 of the Will and who was entitled to the proceeds of the Pepperl & Fuchs Superannuation Plan.
73 The defence of laches is not made out.
Relief
74 By their statement of claim, the plaintiffs claim:
(a) the defendant pay to the plaintiffs the sum of $133,294;
(b) the defendant to account to the plaintiffs for the $133,294 and account and pay the plaintiffs any profits or interest or other moneys he may have received from the $133,294;
(c) the defendant pay to the plaintiffs interest on the sums described in (a) and (b) compounded from 1 September 1991 at the rate payable from time to time pursuant to s 32 of the Supreme Court Act until the date of payment.
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75 At trial the plaintiffs did not pursue their claim for an account against the defendant. The plaintiffs claim that the defendant pay to the plaintiffs the sum of $133,294 together with compound interest at the rate payable from time to time pursuant to s 32 of the Supreme Court Act.
76 The defendant did not submit that he should not be required to pay interest if he was found to have acted in breach of trust. The general principle is that where a trustee has, through his breach of trust, occasioned loss to the trust estate then he is liable to make good that loss, together with interest: Re Dawson; Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd [1966] 2 NSWR 211 at 218 per Street J. In this case it is appropriate that the defendant pay to the plaintiffs $133,294 together with interest.
77 There are two issues. First, whether interest should be computed on a simple or compound basis and secondly, the rate of interest which should be awarded.
Compound Interest
78 In certain circumstances, trustees will be charged with compound interest instead of simple interest. Meagher and Gummow "Jacob's Law of Trusts in Australia", 6th ed, say at [2209] that it is a matter entirely in the discretion of the Court.
79 One circumstance referred to by Meagher and Gummow where compound interest is allowed is where a trustee has employed the trust funds in trade or speculation for his own benefit. That is not this case. The defendant did not retain the funds himself. He paid them to his wife, the plaintiffs' mother. Part of the funds, in effect, replaced funds borrowed by the Barrie King Family Trust to facilitate the purchase of the hairdressing salon business at least partly for the benefit of Natalie. There is no evidence that the defendant made any profit from the use of the proceeds of the deceased's superannuation plan. Nor is there evidence as to the use made by Mrs King of the balance of the funds received by her.
80 Meagher and Gummow say that compound interest may be allowed in other cases where the Court considers the circumstances justify such interest. In my view, the circumstances of this case do not justify an award of compound interest. There are grounds for suspicion that the defendant knew that the plaintiffs were entitled to the AMP proceeds. The defendant has given no satisfactory explanation as to why he did not pay the retirement account component of the AMP payment to the plaintiffs. The defendant has given no satisfactory explanation as to why
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- he did not seek advice about the AMP cheque proceeds from Silbert and Silbert, the solicitors he engaged to assist him in relation to the administration of the estate. The defendant did not at any time discuss the Superannuation Plan proceeds directly with the plaintiffs. The defendant paid the AMP cheque proceeds into a bank account of Parbrook Holdings despite the fact that the cheque was made out to the Estate, and Silbert and Silbert had opened an Estate account through which assets were collected and debts paid.
81 However in the end I am not satisfied that the defendant paid the proceeds of the superannuation plan to his wife, knowing that to do so was contrary to his obligations as executor and trustee. I am not satisfied that the defendant knew that the whole of the funds were the benefits of the deceased's superannuation scheme, rather than of a life insurance policy and hence that the plaintiffs were entitled to the funds rather than being part of the residuary estate to which Mrs King was entitled.
82 I do not consider that the plaintiffs have established such misconduct by the defendant to justify an award of compound interest, and consequently I do not exercise my discretion to order the defendant to pay compound interest.
Rate of Interest
83 The attitude of courts of equity is to adopt a flexible approach to determining the proper rate of interest in a particular case: see Hagan v Waterhouse (1992) 34 NSWLR 308, per Kearney J at 391-93.
84 Order 61 r 24 of the Rules of the Supreme Court provides that where a judgment directs an account of legacies, then, subject to any direction contained in the Will or codicil in question, and to any other order made by the Court, interest shall be allowed on each legacy at the rate of 5 per cent per annum beginning at the expiration of one year after the death of the Testator.
85 The plaintiffs claim interest at the rate payable from time to time pursuant to s 32 of the Supreme Court Act. Section 32 of the Supreme Court Act does not prescribe a rate of interest. Order 36 r 20 provides that when computing interest for the purposes of s 32 of the Act, subject to any evidence adduced, the Court may use, as a guide, the rate of interest fixed from time to time under s 142 of the Act in relation to judgment debts. Neither the plaintiffs nor the defendant adduced any evidence concerning rates of interest. The rate of interest fixed under s 142 of the Act has varied since 1991 as follows:
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- 28 June 1991 to 18 May 1992, 12 per cent;
19 May 1992 to 30 July 1992, 8.5 per cent;
31 July 1992 to 11 September 1997, 8 per cent;
Since 12 September 1997, 6 per cent.
86 In times of historically high interest rates the rate of interest fixed under s 142 of the Act may not have adequately compensated a plaintiff for the loss of the use of her money. However, in more recent years the rate of interest fixed under s 142 has been higher than banks' fixed deposit rates. In all of the circumstances I consider that interest should be paid by the defendant at the rate of 6 per cent per annum beginning at 1 September 1991. It is approximately 12 years 8 months from that date to the date of judgment. Accordingly, I will allow interest at 6 per cent for 12 years 8 months on the sum of $133,294, that is approximately $101,000. There will be judgment for the plaintiffs in the sum of $234,294.
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