Nagle v Lavender - [2002] NSWSC 611

No judgment structure available for this case.

CITATION: Nagle & Anor - as Executors, Estate Late Marie Jewell Lodge v Lavender [2002] NSWSC 611

CURRENT JURISDICTION: Equity

FILE NUMBER(S): SC 4475/99

HEARING DATE(S): 24/6/02-28/6/02

JUDGMENT DATE: 16 July 2002

PARTIES :

Patricia Nagle & Richard Patrick Nagle as Executors of the Estate Late Marie Jewell Lodge (Plaintiffs/Cross Defendants)
Geoffrey Lavender (Defendant/Cross Claimant)

JUDGMENT OF: Campbell J

COUNSEL : M Ashhurst (Plaintiffs/Cross Defendants)
R Lovas (Defendant/Cross Claimant)

SOLICITORS: Blackshaw Lindsay (Plaintiffs/Cross Defendants)
George Loupos & Associates (Defendant/Cross Claimant)

CATCHWORDS: EQUITY - fiduciary obligations - misappropriation of money by fiduciary agent - no question of principle decided - EVIDENCE - burden of proof, presumptions and weight and sufficiency of evidence - claims against deceased's estate - EVIDENCE - burden of proof, presumptions and weight and sufficiency of evidence - effect of destruction of documents - EQUITY - fiduciary obligations - claim for "damages for breach of fiduciary duty" - meaning and availability

LEGISLATION CITED: Evidence Act 1995
Supreme Court Act 1970

CASES CITED: Allen v Tobias (1958) 98 CLR 367
Briginshaw v Briginshaw (1938) 60 CLR 336
Clive Eggins & 2 Ors v Allan Robinson [2000] NSWCA 61
Hunt v Barlow [2000] NSWSC 324
Seager v Copydex (No2) [1969] 1 WLR 809
Simon v NRMA Insurance Ltd (NSW Court of Appeal, 22 October 1991, unreported)

DECISION: Misappropriated money to be repaid with interest

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
EQUITY LIST

CAMPBELL J

16 JULY 2002

4475/99 PATRICIA NAGLE – AS EXECUTOR OF THE ESTATE OF MARIE JEWELL LODGE - & ANOR v GEOFFREY LAVENDER

JUDGMENT

1 HIS HONOUR: Miss Marie Jewell Lodge (“Miss Lodge”) died on 3 June 1998, aged 97. The defendant in this case, Mr Lavender, says he had been her trusted accountant and financial adviser for over 30 years. He had authority to operate on two of her bank accounts. On the day she died, he closed one of those accounts by withdrawing all money from it. Three weeks after she died, he withdrew all the money from the other account of which he was a signatory. He had, over a period beginning in August 1994, regularly withdrawn money from one of these accounts.

2 The plaintiffs in this litigation are the executors of the Estate of Miss Lodge. They seek to recover from Mr Lavender all the money which he withdrew from Miss Lodge’s bank accounts, plus interest. They say that Mr Lavender’s actions in withdrawing this money amounted to a breach of fiduciary duty.

3 There is no dispute about the amounts of money which were withdrawn. Mr Lavender defends the action by contending that each and every one of the withdrawals which he made, was one which he was authorised to make. He says that, for many years, Miss Lodge did not pay the amounts of fees which were due to him. Rather, by arrangement between them, Mr Lavender was given authority to operate on two of her bank accounts, on the basis that he could withdraw amounts from those bank accounts from time to time, as he chose, in reduction of the amount owing to him for fees. As well as this general authority, he says Miss Lodge was informed of, and approved, the specific withdrawals which he made.

4 Mr Lavender contends that the withdrawals which he made from Miss Lodge’s account during her lifetime, and shortly after her death, did not completely extinguish the debt he was owed. He brings a cross-claim against the executors of Miss Lodge’s estate to recover the amount of fees which had accrued to him, and which remain unpaid.

The Two Relevant Accounts

5 Miss Lodge had an Advance Bank Savings Account number 144993208 (the “Savings Account”).

The following withdrawals were made from the account:

Date	Cash?	Cheque payee/transferee	Amount
8 September 1993	Deputy Commissioner of Taxation	2340.00
9 December 1993	Deputy Commissioner of Taxation	2340.00
5 August 1994	Yes	1500.00
11 August 1994	Yes	1000.00
24 August 1994	Yes	2000.00
24 August 1994	Transferred to account 335036069	25,000.00
7 October 1994	Yes	2500.00
10 September 1994	Yes	2000.00
15 October 1994	Yes	2000.00
26 October 1994	Yes	2000.00
23 November 1994	Yes	2000.00
23 December 1994	Yes	2000.00
27 January 1995	Yes	2000.00
10 March 1995	Yes	2000.00
10 March 1995	Deputy Commissioner	3088.00
29 March 1995	Yes	2000.00
13 April 1995	Yes	2000.00
2 May 1995	Yes	2000.00
23 May 1995	G. Lavender	1050.00
1 June 1995	Yes	2000.00
22 June 1995	Yes	2000.00
7 July 1995	Yes	500.00
14 July 1995	Yes	2000.00
28 July 1995	Yes	2000.00
2 August 1995 (?)	Yes	2000.00
12 September 1995	Yes	2000.00
23 October 1995	Transferred to account 0414 36231	2500.00
23 October 1995	Yes	2000.00
16 November 1995	Yes	2000.00
16 November 1995	GD Lavender	5000.00
16 November 1995	Transferred to account 041436231	1500.00
23 December 1995	Yes	2000.00
15 January 1996	Yes	2000.00
2 February 1996	Yes	2000.00
15 February 1996	Transferred to account 041436231	6000.00
15 February 1996	Yes	2000.00
15 March 1996	Yes	2000.00
29 March 1996	Yes	2000.00
22 April 1996	Yes	2000.00
22 April 1996	M Bloom	1800.00
24 May 1996	Yes	2000.00
5 June 1996	Deputy Commissioner	5339.60
5 June 1996	Yes	2000.00
22 June 1996	Yes	2000.00
12 July 1996	Deputy Commissioner	1167.35
12 July 1996	Yes	2000.00
19 July 1996	Yes	2000.00
16 August 1996	Yes	2000.00
6 September 1996 (?)	Yes	2000.00
28 September 1996	Yes	2000.00
4 October 1996	G. Lavender	980.00
4 October 1996	Yes	1500.00
12 October 1996	Yes	2000.00
25 October 1996	Yes	2000.00
23 November 1996	Yes	2000.00
13 December 1996	Yes	2000.00
? December 1996	Yes	2000.00
24 January 1997	Yes	2000.00
7 February 1997	Yes	2000.00
18 February 1997	E Lavender	1800.00
18 February 1997	Yes	2000.00
21 March 1997	Yes	2000.00
3 April 1997	Yes	2000.00
3 April 1997	Transferred to account 041436231	4000.00
? May 1997	Yes	2000.00
10 May 1997	Yes	2000.00
24 May 1997	Yes	2000.00
12 June 1997	G. Lavender	985.00
12 June 1997	Yes	2000.00
5 July 1997	Yes	2000.00
19 July 1997	Yes	2000.00
9 August 1997	Yes	2000.00
22 August 1997	Yes	2000.00
30 August 1997	Yes	2000.00
19 September 1997	Yes	2000.00
11 October 1997	Yes	2000.00
25 October 1997	Yes	2000.00
20 November 1997	Yes	2000.00
5 December 1997	Yes	2000.00
? December 1997	Yes	2000.00
2 January 1998	Yes	2000.00
10 January 1998	Yes	2000.00
31 January 1998	Yes	2000.00
28 February 1998	Yes	2000.00
28 February 1998	Deputy Commissioner	2968.00
14 March 1998	Yes	2000.00
? April 1998	Yes	1000.00
9 May 1998	Yes	2000.00
3 June 1998	Yes	2000.00
3 June 1998	GD Lavender	10,000.00
3 June 1998	Yes	GD Lavender in trust for MJL	12,244.65
TOTAL	$230,102.60

6 All of these withdrawals, except for the first two, were made pursuant to bank forms signed by Mr Lavender. There was only one signatory for each form. Some of these withdrawals – for instance, at least some of the cheques payable to the Deputy Commissioner of Taxation, and at least one of the transfers between bank accounts – were for Miss Lodge’s benefit. It is admitted that the total amount withdrawn or transferred by Mr Lavender from the Savings Account during the period 5 August 1994 to 3 June 1998 (inclusive), and kept by himself or applied for his purposes, was $208,093. The withdrawals made on 3 June – that is, the day of Miss Lodge’s death – removed all money from that account.

7 On or about 24 August 1994 Miss Lodge deposited approximately $60,000 into a St George Bank Term Deposit Account number 335036072 (the “Term Deposit”). On 24 June 1998 – that is, three weeks after Miss Lodge’s death - Mr Lavender withdrew from the Term Deposit the sum of $59,718.64, being the total amount standing to its credit that day. The withdrawal took the form of a bank cheque in favour of “Lavender Business Enterprises”.

Mr Lavender’s Evidence About Tasks Performed

8 Mr Lavender says he was first engaged by Miss Lodge in early 1964 when she had the following conversation with him:

LODGE: “Can you be my Accountant, and help generally with my investments and affairs?”

LAVENDER: “Yes, I am happy to act for you and work for you in any way possible.”

LODGE: “How much would you charge?”

LAVENDER: “Well I have hourly rates and charge for all out of pocket disbursements in addition, but just for looking after your general investments, accounts, and Banking, and business advices generally, it would just be charged at the usual applicable rates for Accountants/advisors from time to time”.

LODGE: “That’s fine, you just charge me what ever you think is a fair thing, and you can just keep a tally of your time spent, and the money for your fees will always be available.”

LAVENDER: “That’s fine, I’ll do that.”

9 Mr Lavender says that he had a conversation to that general effect with Miss Lodge on countless separate occasions between 1964 and 1998. He says she would always say:

“Thank you for looking after (some specific project/instruction, or generally) Geoff, make sure you have kept a tally of your time, and just charge me for the amounts due when ever you want”.

10 Mr Lavender says that he provided extensive accounting services, business advice and management services to Miss Lodge, from the time he was first engaged. The nature of the tasks which Mr Lavender says he performed can best be appreciated from invoices which Mr Lavender produced after Miss Lodge’s death. Those invoices are in substantially the same form for each year. An invoice for the half year ended 31 December 1964 lists the following tasks:

“MANAGEMENT OF BANKING INVESTMENT PORTFOLIO:

· Monitoring of the various accounts held with Commercial Banking Company of Sydney

- continual review of interest rate levels

- calculation of interest rate gains & effects, if any, of fluctuations

- discussions with you of any desirable changes to said accounts.

· Liaison with the Bank

(Commercial Banking Company of Sydney)

- quarterly visits to the Bank, where approaches were made to gain any available advantage in increased interest rates to accounts, where applicable.

Sub-Total:

£ 5

MANAGEMENT OF SHARE PORTFOLIO:

· Visits to the Stock Exchange

- two visits per week to observe and note share activity, approximately ½ hour duration each time (inclusive of travel).

· Research of share market activity

- daily examination of share market activity in press reports of the Stock Exchange, and associated articles, where applicable: approximately 1 hour duration each time for 21 days per month.

· Review of share holdings

- regular monitoring of stocks/shares to ensure portfolio is meeting appropriate performance benchmarks.

- discussions with you to ascertain whether any holdings should be sold, and where there were any poor performers whether they should be further reviewed and/or replaced with better prospects.

- continual market surveillance to observe changing economics or market conditions.

- regular monitoring of stocks/shares and discussions with you to ascertain whether any new stocks/shares should be purchased.

- regular monitoring of any share bonus offers and discussions with you to ascertain whether offers should be taken up (ie accepted) or rejected.

- regular monitoring of any share rights issues and discussions with you to ascertain whether offers should be taken up (ie accepted) or rejected.

· Perusal of annual company shareholder information

- annual reports – examinations of all annual reports and accompanying information, advising you of relevant matters contained in such documentation and discussion of pertinent matters contained therein

- annual meetings – examination of all agenda and accompanying information, advising you of relevant matters contained in such documentation and discussion of pertinent matters contained therein.

Sub-Total: £ 900

INCIDENTAL EXPENSES ASSOCIATED WITH MANAGEMENT OF PORTFOLIOS

· Telephone calls etc Sub-Total: £ 2

Grand Total:

£ 907”

11 Invoices for later years differed slightly, by recording a change in the identity of the bank with which Miss Lodge dealt, and, from 1991 onwards, adding to the entry “Research of share market activity” an additional item, “weekly calculation of fluctuations in the following shares: - BHP – National Australia Bank – Colonial Sugar Refinery – Westpac – Burns Phillip [sic]”.

12 The fees shown in those invoices are as follows:

Year ended December	Incidentals	Total including incidentals
1964 from June only	£ 2	£ 907
1965	£ 2	£ 1,812
TOTAL £	£ 4	£ 2,719
Convert 1964 & 1965 total to $	$ 8	$ 5,438
1966	$ 5	$ 3,625
1967	$ 5	$ 6,055
1968	$ 5	$ 6,055
1969	$ 5	$ 6,055
1970	$ 5	$ 6,055
1971	$ 5	$ 6,055
1972	$ 5	$ 6,055
1973	$ 5	$ 6,044
1974	$ 5	$ 6,055
1975	$ 5	$ 6,055
1976	$ 5	$ 6,055
1977	$ 5	$ 6,055
1978	$ 6	$ 8,506
1979	$ 6	$ 8,506
1980	$ 6	$ 8,506
1981	$ 10	$ 8,510
1982	$ 10	$ 8,510
1983	$ 10	$ 8,510
1984	$ 10	$ 8,510
1985	$ 10	$ 8,510
1986	$ 12	$ 8,512
1987	$ 12	$ 8,512
1988	$ 12	$ 8,512
1989	$ 12	$ 14,522
1990	$ 4	$ 14,514
1991	$ 185	$ 14,695
1992	$ 185	$ 14,695
1993	$ 185	$ 14,695
1994 1st half year	$ 175	$ 7,430
1994 2nd half year	$ 185	$ 7,440
1995	$ 185	$ 14,695
1996	$ 185	$ 14,695
1997	$ 185	$ 14,695
1998 y/e 3 June ‘98	$ -	$ 6,500
Total 1964 to 1998	$ 1,658	$ 307,848

13 Miss Lodge lived at Burwood, in her own home, until 1 February 1991. She then moved to a serviced apartment at Springwood, in an aged care complex. After Miss Lodge moved to Springwood, Mr Lavender says that he visited her about every three weeks to deal with her business affairs. On such visits he says that:

“Quite often I would arrive there sometimes 9.30, 10.00am in the morning and I would never very rarely leave before 3.30, sometimes it got to 5.00 before I left.” (T64)

14 Mr Lavender was, at the time he first started working for Miss Lodge, employed in the Australian Taxation Office. He became a Chief Taxation Inspector in about 1980. He retired from the Australian Taxation Office on 31 January 1990. Prior to his retirement from the Australian Taxation Office, it had not been possible for him to act as a tax agent, but he assisted Miss Lodge to prepare taxation returns which she signed and lodged herself. Fairly soon after his retirement, he became registered as a tax agent, and also undertook all of the preparation and lodgement of Miss Lodge’s income tax returns. For preparing and lodging the income tax returns, he charged her a separate fee. For the year ended 30 June 1993 the precise amount of that fee cannot be established from the evidence, but it is not more than $850, being the amount shown in Miss Lodge’s tax return for that year under the heading, “Other Deductions”. For the year ended 30 June 1996 he charged $985. This was paid by a cheque written by Miss Lodge on 25 November 1996. Her notation on the cheque butt is, “Mr Lavender accountant for submitting tax return”. For the year ended 30 June 1997 Mr Lavender also charged $985. This also was paid by a cheque which Miss Lodge wrote on 27 October 1997. The notation which Miss Lodge wrote on the cheque butt of that cheque, is “To Mr Lavender accountant for tax return expenses”.

Issues, Onus, and Principles About How the Evidence is to be Evaluated

15 That the defendant made the various withdrawals from Miss Lodge’s account was admitted. It was also admitted that at all material times Miss Lodge relied on the advice, expertise and financial assistance of Mr Lavender, and that Mr Lavender owed Miss Lodge a fiduciary duty. The only allegations in the Amended Statement of Claim which were denied were allegations in paragraphs 11 and 12, that the monies withdrawn were not paid for the benefit of Miss Lodge, and that the withdrawals constituted a breach of fiduciary duty on the part of the defendant. On the first day of the hearing, after some discussion about which of the parties should appropriately go first, the Court made the following note:

“The Defendant stated, subject to the matters and allegations raised in his Defence, which was the Further Amended Grounds of Defence, the defendant admitted paragraphs 11 and 12 of the Amended Statement of Claim.”

16 The trial then proceeded with the defendant going first.

17 The allegations made by the defendant, in his Further Amended Grounds of Defence, included the following:

“3 …

a. those funds were withdrawn by the defendant with the full agreement and understanding of (Miss Lodge), and in accordance with her written authority and explicit instructions …

b. the funds were used for purposes fully agreed to and approved by her, and were made out to payees in accordance with those agreements and approvals. The defendant denies having benefited by the withdrawals of funds referred to OTHER THAN in strict accordance with the contractual Agreements for Services rendered, and his said entitlement to be paid, how and when in his complete discretion, from the said Accounts, and

c. the funds were withdrawn pursuant to the terms of an explicit Contractual arrangement(s) between the Deceased and the Defendant, WHICH THE defendant was at all material times performing: particulars of which are set out in paragraphs 2 to 14 inclusive of the Further Amended Cross Claim …”

18 That Further Amended Cross Claim pleaded an agreement under which Mr Lavender was entitled to charge for all of his professional time, expertise and disbursements at his usual rates. It alleged that, throughout the period June 1964 to June 1998 charge rates were discussed and explicitly agreed between the parties from time to time. It was pleaded that it was an explicit term of the agreement that the fees were to be assessed and charged at fair and reasonable rates, and that Mr Lavender could draw on the accounts of which he was a joint signatory in his complete discretion to reduce the total indebtedness at any time. It was also alleged to be a further explicit term that Mr Lavender,

“was to be entitled to all and any monies in the ‘joint accounts’, to ensure that his accrued fees and charges were fully paid, in his complete discretion, and at such time and manner of withdrawal as he deemed appropriate.”

19 Mr Ashhurst, counsel for the plaintiffs, submitted that this defence was far more narrow and precise than a defence of consent to the withdrawal of the money; rather, he submitted, it was a defence which required Mr Lavender to prove a very particular contract if he was to succeed. I do not read the defence so narrowly. It seems to me that the various matters pleaded in paragraph 3 of the Further Amended Notice of Grounds of Defence ought fairly be taken as alternatives, rather than as being cumulative.

20 Counsel did not agree about who bore the onus of proof. In my view, it is an essential element of the plaintiffs’ claim that they establish that the withdrawals were made without authority. If the plaintiffs were to raise a case from which an inference of a lack of authority could be drawn, an onus of adducing evidence might well shift to Mr Lavender, but the legal onus of proof remains with the plaintiffs throughout. I do not regard the Defendant’s statement, that I have referred to in paragraph 15 above, as effecting a change in what would otherwise be the onus of proof. It was a statement made for the specific purpose of deciding which party should go first, and with comparatively little opportunity for reflection.

21 The allegation that Mr Lavender has, regularly and over many years, taken Miss Lodge’s money without authority, is an allegation of very serious wrongful conduct on his part. When the plaintiffs’ allegation is of that type of conduct, the standard of proof remains the ordinary civil standard of balance of probabilities; however, if a court is to be satisfied on the balance of probabilities about such a serious matter, it must also take into account the seriousness of the allegation which has been made. As Dixon J expressed it in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-362:

“The truth is that, when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality. No doubt an opinion that a state of facts exists may be held according to indefinite graduations of certainty; and this has led to attempts to define exactly the certainty required by the law for various purposes. Fortunately, however, at common law no third standard of persuasion was definitely developed. Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequences of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters “reasonable satisfaction” should not be produced by inexact proofs, indefinite testimony, or indirect inferences.”

22 Mr Ashhurst submitted that the present case was one like Simon v NRMA Insurance Ltd (NSW Court of Appeal, 22 October 1991, unreported). That was a case where the plaintiff sued his insurer, alleging that the insurer had not paid a claim which the plaintiff had made following the theft of his vehicle. The insurer called evidence which gave reason to believe that the plaintiff himself had been implicated in the disappearance of the vehicle. The trial judge had found for the insurer, holding that the plaintiff had failed to prove that the vehicle was stolen, but refraining from making any finding of fraud against the plaintiff. From that decision the insured appealed. Samuels AP said, at 7-8:

Briginshaw v Briginshaw

Briginshaw

23 That was a case where, to make out his claim, it was necessary for the plaintiff to prove that the vehicle had been stolen. Satisfying the tribunal of that element of his claim did not involve satisfying the tribunal that anyone (other than the thief) had engaged in any wrongful conduct. Nor did it involve the plaintiff in proving that he was not the thief. Likewise, for the insurer to succeed in raising enough doubt about whether the vehicle had been stolen to prevent the plaintiff from discharging his onus of proof did not require the defendant to convince the court that the vehicle actually had been stolen by the insured.

24 The present case is different. Here, the plaintiffs need to persuade the court that the taking of the money by Mr Lavender was indeed without authority. It is an intrinsic part of their claim that the court needs to be satisfied that there has been conduct which is seriously wrongful. Thus, in the present case, the court needs to take into account the requirements of Briginshaw v Briginshaw in deciding whether the plaintiffs have made out their case.

25 There is another factor which also needs to be taken into account in evaluating the evidence in the present case. In Hunt v Barlow [2000] NSWSC 324 Bryson J summarised it as follows:

Plunket v Bull

prima facie

Lachmi Parshad v Maharajah Narendro Kishore Singh Bahadur

Morris

'In an action brought to recover money against an executor, or, as in this case, the heir, of a deceased person, it has always been considered necessary to establish as reasonably clear a case as the facts will admit of, to guard against the danger of false claims being brought against a person who is dead and thus is not able to come forward and give an account for himself.’

Other members of the High Court did not refer to this subject and the authorities cited by counsel (at 545) do not appear to relate to it.

Birmingham v Renfrew

In Re Cummins (dec'd); Cummins v Thompson

Grundel v The Registrar General

Lachmi v Maharaja

26 In Clive Eggins & 2 Ors v Allan Robinson [2000] NSWCA 61 Sheller JA (with whom Powell JA agreed) said, at 26:

Plunkett v Bull

Eyota Pty Ltd v Hanave Pty Ltd

"...in a claim based on communications with a deceased person, the court will treat uncorroborated evidence of such communications with considerable caution, and will regard as of particular significance any failure of the claimant to bring forward corroborative evidence which was, or ought to have been, available." “

27 This approach to evaluation of the evidence, when a claim is made against a deceased’s estate, arises from the fact that the deceased is not able to give his or her account of the transaction; the other party to the transaction therefore has an opportunity, often not available in litigation, to give evidence knowing it cannot be checked or contradicted by the deceased. The approach to the evaluation of evidence is not connected with who, in any particular piece of litigation, bears the legal onus of proof. Thus, even though in the present litigation Mr Lavender is, in one sense of the expression, “making a claim” against a deceased’s estate only insofar as he brings a Cross-Claim for unpaid fees, these principles for evaluation of facts apply also to the scrutiny of the evidence which he brings in defence of the claim which the plaintiffs bring against him, to recover the money he has already received.

Miss Lodge’s Estate, and Will

28 Miss Lodge’s Estate was disclosed for probate purposes as follows:

Money in bank accounts	$178,657.69
Monies due from Endeavour Retirement Villages	$175,000.00
Shares in Burns Philp & Co Limited	$2,668.50
Shares in National Australia Bank	$481,296.00
Shares in Westpac Banking Corporation	$79,079.00
Shares in CSR Limited	$13,672.39
Shares in BHP Limited	$245,087.10
$1,175,460.68

29 Miss Lodge’s Will had been made on 16 April 1991. She appointed her niece Patricia Nagle, and Patricia Nagle’s son Richard Nagle, as executors and trustees. She gave her furniture and household items to Mrs Nagle. She left $28,000, in the form of 11 legacies, for various charitable institutions and purposes. A further $4,500 was left in legacies to three members of her extended family. The residue was divided equally between nine people, one of whom was Mrs Nagle. She recorded the desire, “that my stockbrokers Dickson Limited be employed in relation to the disposal of my stock and shareholdings.” She directed her executors to use the services of Mr Hogan, should he still be a practicing solicitor at the time of her death, in proving the Will and implementing the trusts created by it. She made no mention of Mr Lavender.

Correspondence After Miss Lodge’s Death

30 On 6 August 1998 Mr Hogan, who was then the solicitor for the executors of Miss Lodge, wrote to Mr Lavender saying:

“Mr Nagle Snr recently spoke to one of my secretaries demanding to know what had happened to the proceeds of two accounts numbers 144993208 and 335036072. I understand my secretary then spoke to yourself before returning a call to Mr Nagle Snr who expressed dissatisfaction with the explanation which she passed on to him and he was quite unpleasant to her.

Before I speak to the Executors would you mind putting to me in writing the explanation which you gave to my secretary. I feel I am going to have difficulty with them and I want to be very careful that I do not give them any inaccurate information.”

31 Soon after Miss Lodge’s death, Mr Lavender had been asked to prepare Miss Lodge’s taxation return to the date of death. Mr Lavender wrote to Mr Hogan on 11 August 1998 enclosing some documents relating to Miss Lodge’s affairs, but not answering the request made in Mr Hogan’s letter of 6 August 1998.

32 On 20 August 1998 Mr Hogan wrote to Mr Lavender saying:

“I have your letter of the 11th August, 1998 enclosing the dividend cheque from BHP and also the Taxation Refund. However you did not mention my letter of the 6th August, 1998.

I have now received Probate in the Estate and am in the process of collecting in the assets. The Executors will be wanting an answer in relation to the two Advance accounts mentioned in my letter to you of the 6th instant and I would be grateful if you could let me have a reply.”

33 Mr Hogan wrote to Mr Lavender again on 27 August 1998, and 11 September 1998, on each occasion dealing with matters concerning Miss Lodge’s estate, but making no further mention of the request for an explanation of what happened to the proceeds of the two bank accounts. Mr Lavender did not provide the explanation.

34 By 11 December 1998 the Executors had changed solicitors, and Mr Lindsay was acting for them. Mr Lavender had not prepared the Estate tax return. At some time – the evidence does not establish precisely when, but I gather it was before the end of 1998 – the executors took the task of preparing that return out of Mr Lavender’s hands, and gave it to another accountant. Mr Lindsay wrote to Mr Lavender on 11 December 1998, saying:

“We refer to the writer’s telephone conversation with you on 3 December 1998 and would be pleased to receive your letter setting out the details of the withdrawals from the bank accounts.”

35 On 18 December 1998 Mr Lavender replied to that letter, saying:

“The bank accounts that you referred to, that were closed by me, were in respect of loans made to the late Marie Lodge by myself.

These funds were not on a fixed time period for repayment to myself and were to be repaid at any time chosen by me and at my discretion.

Please be advised that this information has previously been given to both Mrs P Nagel and her husband along with the Secretary of Mr J Hogan, Solicitor, on his behalf.”

36 It is to be observed that this letter says nothing about how it came about that Mr Lavender had made loans to Miss Lodge. It may be, however, that he had told Mr Hogan’s secretary that the loans arose from unpaid fees.

37 On 14 January 1999 Mr Lindsay wrote to Mr Lavender, saying:

“We thank you for your letter of 18 December 1998 and have now been instructed by the executors to request that you forward to the estate the monies that were withdrawn from the deceased’s bank account.

Would you kindly confirm that this will be done to save any proceedings being taken.”

38 On 10 February 1999 Mr Lavender wrote to Mr Lindsay saying:

“In response to your letter dated 14 January 1999 I wish to advise that all monies withdrawn from the respective accounts were done so, with the full prior knowledge, and consent of Miss M Lodge.

The monies concerned were rightfully funds correctly due to me.”

39 On 19 February 1999 Mr Lindsay wrote to Mr Lavender saying:

“We thank you for your letter of 10 February 1999 and would advise that the executors have requested evidence that the monies that you withdrew from the deceased’s accounts were in fact your monies.

If you are not able to produce this evidence we understand that the executors will be commencing court proceedings.”

40 On 27 October 1999 the Statement of Claim in the present matter was filed. It claimed relief concerning $24,229.65 which had been withdrawn from the Savings Account on 3 June 1998, and $59,718.64 withdrawn from the Term Deposit on 24 June 1998. Mr Lavender filed a Notice of Grounds of Defence on 19 January 2000, which articulated the claim that at the time of the withdrawals he was owed a total of “approximately, and not less than, $255,835” by Miss Lodge, which arose from accrued fees and charges due and payable by Miss Lodge to him, which had accumulated since 1964, and which he was entitled to draw upon to repay his loan to her. The amount of fees owed was quantified by reference to a document called the Defendant’s Exhibit 1. This was a bundle of invoices of the type which I have earlier described, containing the amounts which I have shown in paragraph 12 above, down as far as the entry for “1994 first half year”. At the same time, a Notice of Cross-Claim was filed in which Mr Lavender made a claim for $171,886.71 plus interest, being the amount outstanding.

41 An Amended Statement of Claim was filed by the plaintiffs on 29 March 2001, which expanded the claim to cover the various sums of money which had been drawn out of the Savings Account prior to 3 June 1998. Following the filing of that Statement of Claim, Mr Lavender filed a Notice of Further Amended Cross-Claim, which asserted that by June 1998 the accrued fees which Miss Lodge owed him had totalled $313,860, and that the various withdrawals had been by way of him reimbursing himself, in part, for those outstanding fees. The amount of $313,860 in fees was said to be shown by reference to Defendant’s Exhibit 1 and Defendant’s Exhibit 2. Defendant’s Exhibit 2 was an additional set of invoices, which contained the entries for the period “1994 second half year” to the end of the list which I have set out in paragraph 12. The invoices in Defendant’s Exhibit 1 and Defendant’s Exhibit 2 in fact total $307,848, rather than $313,860, but no one has suggested that this difference arises from anything other than a simple mathematical error. He accepted that he had been paid $267,811.64 during Miss Lodge’s lifetime, and made a claim against the Executors to be paid the unpaid balance of $46,048.36. The invoices in Defendant’s Exhibit 1 and Defendant’s Exhibit 2 were not, however, documents composed and delivered to Miss Lodge around the time of the date each bears, but rather were documents which Mr Lavender had put together after Miss Lodge’s death. I will examine those invoices in more detail later in this judgment.

Some Unusual Features of Mr Lavender’s Case

42 There are some aspects of Mr Lavender’s case which attribute unusual behaviour to himself and Miss Lodge. The first of these is that, on Mr Lavender’s case, he allowed fees to accrue without being paid over a period from 1964 to when he made the first of the deductions from Miss Lodge’s bank account, in August 1994. It is odd for a man with experience of financial matters, as Mr Lavender was, to allow this debt to remain outstanding for such a long period, without any provision for the payment of interest, and over a time when inflation was significantly eroding the value of money.

43 The second is that it is unusual that Mr Lavender should have been paid for the work he did in preparing Miss Lodge’s tax returns in 1996 and 1997, by cheques written within a few months of the end of the financial year to which the tax return related, yet he was not paid for his general advisory and professional work.

44 The third arises from evidence, which both parties accepted, that Miss Lodge was a frugal woman who was meticulous about financial matters. It seems inconsistent with her meticulousness that she should allow an arrangement of the kind Mr Lavender asserts to go on for such a long period of time when she had no documentary record of it. It also seems inconsistent with her frugality that she should have Mr Lavender perform the extensive tasks which he claims to have performed for her, given the income she had. The memoranda of fees, on which Mr Lavender has based his case, show the fees set out in the following table as due to him. The Notices of Assessment of Miss Lodge for the years 30 June 1991 and following show that her taxable income was as set out in the fourth column of this table:

Year ended December	Incidentals	Total fees claimed by Mr Lavender including incidentals	Taxable income of Miss Lodge y/e 30 June	Percentage of taxable income paid to Mr Lavender
1991	$185	$14,695	$72,125	20.37%
1992	$185	$14,695	$60,978	24.09%
1993	$185	$14,695	$50,957	28.83%
1994	$360	$14,870	$50,148	29.65%
1995	$185	$14,695	$57,210	25.68%
1996	$185	$14,695	$74,940	19.60%
1997	$185	$14,695	$69,508	21.14%
1998	-	$6,500	$64,619

45 The percentage figure in the fifth column of this table can be used as providing only a very rough indication of the proportion of Miss Lodge’s available income which was spent on Mr Lavender’s services, because Mr Lavender’s memoranda were calculated on the basis of calendar years, and the taxable incomes are calculated on the basis of financial years. Even bearing that imprecision in mind, Miss Lodge was, on Mr Lavender’s case, spending a very large proportion of her taxable income on his fees as they accrued due.

46 A further oddity, is that Miss Lodge did not claim any tax deduction for the amount which she spent on Mr Lavender’s services of a general accounting and advisory nature. She claimed a deduction for the expenses of preparing and lodging a tax return, but not for the general accounting advice and services which Mr Lavender provided. Mr Lavender agreed in cross-examination that the cost of accounting services to assist her in the production of her income would be a tax deduction. Mr Lavender was asked in cross-examination how it came about that the taxation returns which he had prepared for Miss Lodge did not make a claim for a deduction for these services which he had provided:

(“Fees”, where last occurring in this extract, is clearly a mistake for “deductions”). No reason was suggested in submission why Miss Lodge would decline to claim a substantial tax deduction she was entitled to.

47 I have already set out the share portfolio which Miss Lodge had at the time of her death (see paragraph 28 above). This share portfolio is one which remained unchanged from, at least, the time that Miss Lodge moved to Springwood in 1991. It seems odd that, given this inactivity in her portfolio, she would have insisted that Mr Lavender visit the Stock Exchange twice a week to observe and note share activity, and perform daily examination of share market activity. It is odd that she would have required Mr Lavender to read press reports of the Stock Exchange and associated articles, and engage in regular monitoring of her portfolio, and weekly calculation of fluctuations in the shares which made up the portfolio, when the portfolio was so simple, and so stable.

48 Mr Lavender was asked, in cross-examination, about how the fees he had claimed for the 1993 calendar year related to Miss Lodge’s income for the year ended 30 June 1993, and it was pointed out that he was claiming almost a third of her taxable income in fees. His first reaction was to say, “I think that there’s been a mistake with due respect in that invoice because I certainly would not have claimed $14,400.” Once he had been satisfied that he had indeed claimed roughly that amount, he said

“The intention was to claim what was the fair market value and at the same time give some apportionment discount but at a later date when all these matters were all resolved and paid to me I was then going to reduce the debt again in the form of a substantial discount. So that meant those amounts would never have worked out to those amounts. Probably would have worked out to about 50%.” (T124)

49 I have set out, (in paragraph 0 above) all of the withdrawals which Mr Lavender made from the Savings Account of Miss Lodge. It can be seen that, by and large, the pattern is that amounts are withdrawn in cash, usually in amounts of $2,000, with considerable regularity. It is unusual for a large debt to be repaid in this fashion. Mr Lavender was asked about this.

50 It is most unusual for Mr Lavender to go to the trouble of making these repeated small withdrawals, for no particular reason.

51 One of the withdrawals was a cheque drawn on 22 April 1996 to M Bloom for $1,800. “M Bloom” was Mr Lavender’s dentist. The payment to Mr Bloom had been treated, in the way that Mr Lavender quantified his case prior to the commencement of the hearing, as a payment made on account of fees. Mr Lavender gave some supplementary oral evidence in chief on this topic, as follows:

52 It is unusual for Miss Lodge to offer to pay the dentist’s bill of her accountant at all, and even odder that she should offer to pay it without knowing how much it was. (I recognise that Mr Lavender says he showed her the account before he actually paid it.) It is also strange that there should have been any uncertainty in Mr Lavender’s mind about whether it was really a gift, or really a payment to reduce his outstanding fees.

Miss Lodge’s Access to Financial Records

53 Mr Lavender gives evidence that Miss Lodge never kept any documents or records at her residence. He says she did have a small notebook/diary in which she made notes,

“but she never maintained or recorded her own financial matters, which she left entirely to me. As she feared that her private business documents might be found by those who visited her, she always insisted I take with me all documents after a visit, and she never kept any accounts or financial records of any kind at her home.”

54 Mrs Nagle can recollect one incident when she was present when Miss Lodge received a dividend cheque in the mail, and she saw Miss Lodge write down something which she took to be related to that dividend cheque, in a small book. There is no evidence to show that the bank statements relating to the Savings Account (which inevitably would have shown the withdrawals which were being made by Mr Lavender from time to time) were sent by post to Miss Lodge’s home address, and the only evidence that any such bank statements were brought to Miss Lodge’s attention in any way is the evidence of Mr Lavender.

The Invoices

55 I have earlier mentioned (paragraph 41 above) that Mr Lavender had produced to the executors a set of invoices, covering the entire period during which he had worked for Miss Lodge. He said, in an affidavit, concerning those invoices:

“Neither myself nor my solicitors have ever suggested that the invoices … were issued to the deceased at the time the work was done. Those exhibits are documents which I have drawn up from my recollection of work completed and which now set out a break down of item particulars for the fees I paid to myself … from the two accounts.”

56 He also gave evidence, by affidavit, in which he swore to the truth of a statement of facts which an accountant had adopted as the basis for an expert report which was prepared and served for the purpose of these proceedings. That statement of facts included the following:

“3.7 During the course of Lodge’s lifetime, Lavender did not prepare memoranda of fee for his services for Lodge … After Lodge’s death and after destroying his workpapers relating to Lodge and after commencement of these proceedings, Lavender prepared a memorandum of fee for each year of his service. Lavender particularised those services in his defence and cross claim.

(a) Those memoranda were based upon his overall assessment of an appropriate fee reflecting the time provided in each year at a reasonable, but low, charge rate.

(b) Detailed calculations of estimated hours and hourly charge rates were not performed by Lavender.

(c) Lavender considered the proportion of his work week usually devoted to Lodge and, in so doing, arrived at a fee for the year that he considered to be consistent with applicable market conditions and that covered his costs and overheads and provided a level of personal income consistent with his skills, responsibility and time involved.

(d) Having arrived at a fee that he considered reasonable for the first year of service, Lavender kept that fee constant (subject to minor variations) over a number of further years, before then increasing the annual fee to allow for a rate adjustment to apply for a further block of years. Thus, there are several blocks or bands of years, whereby the annual fee within the one band is approximately the same. The bands are as follows: 1964 to 1966 inclusive, 1967 to 1977 inclusive, 1978 to 1988 inclusive, and 1989 to 1998 inclusive.

57 In oral evidence in chief Mr Lavender was asked about the process by which the invoices were prepared. He said:

· whether or not the invoices were derived from an overall assessment without reference to documents, or by drawing upon contemporaneous records;

· whether any contemporaneous records were still in existence at the time the invoices were prepared;

· whether the invoices were the result of application of an hourly rate to a number of hours worked.

58 Mr Lavender gave evidence in chief that he always showed Miss Lodge, when he went to visit her, an accounting statement which showed the amount of fees outstanding from time to time. That accounting statement is one which Mr Lavender said he destroyed along with his work papers relating to Miss Lodge between February 1999 and October 1999. His account in chief as to why he destroyed them was:

“Well sometime after a communication from the then estate solicitor, I hadn’t heard for some time in reply back to the last letter I wrote about the reasons why I had taken these various monies from Marie Lodge’s accounts, and I presumed that those explanations that I had given had been accepted by the executors of the estate and also the estate solicitor and I felt I had no need to keep any of those. The final tax return as far as I was concerned had been completed. I understand later from Mr Hogan’s associates that her date of death had been completed by then under instructions from the executors of the estate, and I was informed by the Tax Office I would not have to keep any of those records.

59 In cross-examination, Mr Lavender was asked about the differing accounts he had given of the preparation of the invoices. He said that, while the invoices themselves were prepared after the commencement of these proceedings, he had prepared rough memoranda of fees prior to the commencement of these proceedings, from the notes that he had shown to Miss Lodge from time to time. He had destroyed the notes he showed Miss Lodge from time to time between February and October 1999 but not destroyed the rough memoranda, and it was from those that he had drawn up the invoices. This strikes me as being another aspect of Mr Lavender’s evidence which is unusual.

60 Mr Lavender was, later in the cross-examination, asked about how his evidence that the invoices had been prepared from rough memoranda of fees squared with his affidavit evidence that the invoices had been drawn up “from my recollection of the work completed”. His response to that was, “No. Recollection means, infers, that they were drawn up from some type of records, and they were drawn up from those records that I have already informed you.” I cannot accept that answer as truthful.

61 Later in his cross-examination, Mr Lavender said that the draft memoranda were:

“A. …not prepared specifically for the Australian Taxation Office. They were prepared for the estate. Not for the Australian Taxation Office because they made no request.

Q. Prepared for the estate?
A. That's right, for their benefit.

Q. When did you send them to the estate?
A. They were not prepared at the time. If they requested -- there was no request for these documents until this court proceedings came about. There was only a request for the return of money and the reason why the money had been taken.

62 For Mr Lavender to prepare the invoices for the Estate, but not make them available to the Estate when the executors were asking for an explanation of his taking of the money, and evidence to support his story, strikes me as another strange aspect of his evidence, notwithstanding that the Estate solicitors had not specifically requested those particular draft memoranda.

The Withdrawals on 3 June 1998

63 Mr Lavender says that he was not aware of Miss Lodge’s death until he was informed of it on 5 June 1998 by Mr Nagle. He says it was just a coincidence that he made three withdrawals from the Savings Account, which completely emptied that account, on the very day that Miss Lodge died. I do not accept that evidence. The amounts withdrawn on 3 June 1998, totalling $24,244.65, well exceeded the usual run of withdrawals made on one day from the account. Mr Lavender would have the court accept that the withdrawals that were made on that day were in payment of fees due to him – yet one of the withdrawals was by a cheque payable to, “GD Lavender in trust for MJL”. Such a trust for Miss Lodge would be completely inappropriate if the money belonged beneficially to Mr Lavender.

The Withdrawal of 24 June 1998

64 Mr Lavender gave oral evidence in chief that, on the occasion of this withdrawal,

“I presented a statement to the bank of why the reason I was making this withdrawal, and with Miss Lodge’s approval. I notified the bank that Miss Lodge had passed away and was there any restriction on taking these funds out. I said I had the approval of the Estate solicitor …”.

65 In cross-examination this topic was opened up further. Mr Lavender said that the withdrawals,

“… on 24 June, 1998 having been aware Miss Lodge had passed away, it was relevant I obtain fees after I spoke to Mr Hogan and told him what I was doing, and I went to the bank and closed that. I even presented an account to the Advance Bank. I had prepared an account especially for them, and they said, that didn't matter to them because I was still authorised to operate the account. I had already told them Miss Lodge had died and I told them there was an estate solicitor then Mr Hogan they could phone. I do not know if they phoned him or not, or they may not have, but they said, you are still the authorised signatory on this account and still entitled to withdraw funds, and even though Miss Lodge had died, you still have authority to operate on those accounts.”

66 Mr Lavender gave an even more elaborate account in re-examination:

Q. And each of those two in part at least concerned itself with permission to make withdrawals, is that right?
A. Most definitely.

I went to the Advance Bank and asked them was I entitled to withdraw moneys. They said yes, they had not been notified by the estate’s solicitor, or the executor of the estate, the accounts had not been frozen, I was still entitled to withdraw in accordance with the authorities. I then phoned Mr Hogan. I told him what I wished to do. I told him I had went to the Advance Bank and what they told me, and he said, “I have been thinking about freezing the account concerned, but because the moneys are owing to you and you wish to withdraw those, I won’t freeze them – I was considering freezing them – until you take the moneys that you consider are necessary to take from those accounts”.”

67 Mr Hogan, called to rebut this, gave succinct evidence in chief:

68 Mr Hogan was cross-examined to the following effect:

“Q. I suggest to you that Mr Lavender indicated his desire to withdraw those monies out of that account and be able to do so before the bank accounts were frozen as a result of the administration of the estate commencing. Do you recall any of that?
A. No.

69 I accept the evidence of Mr Hogan on this topic. Mr Hogan is an independent witness, with no motive to misrepresent the truth in any way. Further, the evidence which he gives is in accord with what one would expect from a solicitor administering the Estate. The probate was not granted until 10 August 1998. The idea that an estate solicitor would, prior to the grant of probate, authorise someone who telephoned him and said he was a creditor of the Estate to withdraw money from the estate bank account involves a degree of irresponsibility that I would not readily attribute to a solicitor.

Failure to Provide an Explanation for the Missing Money

70 I have set out, at paragraphs 30 and following, the requests which were made by Estate solicitors for explanations of the missing money. Mr Lavender’s failure to provide a prompt explanation in writing, when requested, arouses suspicion. One explanation which he gave in oral evidence for that failure was that he had explained the situation to Mrs Nagle on the telephone, that she said, “I don’t know. It seems alright”, and that he took this as being a retraction of the request which the executors had made for a written explanation. Mrs Nagle denies that she said any such thing on the telephone. I accept Mrs Nagle’s evidence in this respect.

71 In oral evidence, Mr Lavender said at one stage that he did not receive the letter of 19 February 1999 (set out in paragraph 39 above). That letter had been annexed to an affidavit sworn by Mr Lindsay (solicitor for the plaintiffs) on 22 September 2000. In none of his subsequent affidavits did Mr Lavender deny having received that letter. As well, before he gave oral evidence saying he had not received the letter, he had had the text of the letter placed in front of him, whereupon the following exchange occurred.

72 I draw two things from this passage in evidence. The first is that the answer which Mr Lavender gave to the first question is consistent only with his having received the letter. The second is that the explanation which he gave for not providing any documents which he had to the solicitors for the Estate is not one which I can accept.

The General Authority

73 Miss Lodge executed a document which reads:

“ To Whom It May Concern

I, Marie J. Lodge hereby authorise Mr G Lavender my Accountant and Financial Advisor to re-invest or withdraw funds held in investment accounts in my name, and to apply such funds at his absolute discretion.

Signed:

[Marie J Lodge]”

74 In his affidavit evidence, Mr Lavender said that he typed this document up and gave it to her. In oral evidence he said, concerning it:

“A. … I didn’t make the document out. I don’t know who made it out. She put the document in front of me and she told me what that document really meant.

…

75 While not at the core of the case, it is seriously damaging to a witness’s credit when he denies his own affidavit evidence in this fashion, and gives an elaborate account, complete with direct speech conversation, which is inconsistent with his own earlier testimony.

76 I mention that the topic of how it happened that Mr Lavender had retained this general authority from Miss Lodge, when his work papers had been destroyed, was not explored in the evidence.

77 I also mention here another example of evidence, on a matter not at the core of the case, where Mr Lavender gave differing accounts. There was an occasion, on 27 October 1997, when Mrs Nagle and Mr Lavender met for the first time. Mrs Nagle came to Miss Lodge’s apartment, and found Mr Lavender and Miss Lodge both there. There was an emotional scene, the precise details of which do not matter. Mr Lavender gave affidavit evidence that:

“When I left that day she cried as she said goodbye, and for the first time EVER she gave me a spontaneous hug with both arms.”

“She spoke to me quietly when they were in another part of the room. She always wanted to be confidential, and while they were there she threw her arms around me and kissed me. That was sometimes a term of affection, she had done that before. She at one time said that I was like a son to her.”

The Destruction of Documents

78 Mr Lavender says that he destroyed his work papers relating to Miss Lodge. While some of the work papers he had accumulated over the years had been destroyed in the ordinary way in which old files are regularly destroyed, he says that, when he destroyed his working papers in 1999 he still had 8 or 10 years of working papers. In Allen v Tobias (1958) 98 CLR 367 at 375 a joint judgment of the High Court (Dixon CJ, McTiernan and Williams JJ) held that the court should conclude that a document, all copies of which had been destroyed by the defendant, had been executed by the defendant. One basis on which that conclusion was reached was that:

omnia praesumuntur contra spoliatorem

The Ophelia

79 This is not a case in which the intention to destroy evidence may fairly be considered to have been rebutted. Thus, I approach the fact-finding on the basis that the strongest possible presumption arises that if the work papers had been produced they would have told against Mr Lavender. That presumption having arisen, I see nothing in the evidence to displace it.

Mr Lavender’s Tax Returns

80 Mr Lavender did not tender his tax returns in evidence. His tax returns would have been business records of his business as an accountant and tax agent. If his tax returns had included, year by year, the income he was receiving from Miss Lodge, that could have provided some contemporaneous documentary corroboration of his account of the relationship between them. (The evidence did not go into whether Mr Lavender prepared his accounts for taxation purposes on an accruals basis, or was somehow able to have the benefit of a cash basis, but, on his account, fees accrued due from Miss Lodge each year of her lifetime from 1964 onwards, and also amounts in payment of fees were actually received during the period from late 1994 onwards, so on either method of tax accounting, fees from Miss Lodge ought have been included as income in his taxation returns for the years ended 30 June 1995 to 30 June 1998.)

81 In cross-examination Mr Lavender was asked whether he had paid tax on the income which he had received from Miss Lodge. He claimed a privilege against self-incrimination. I expressed the view that it seemed that there were reasonable grounds for the objection, and enquired whether counsel sought that I should do anything further. The requirements of section 128 of the Evidence Act were present to the minds of both counsel at that time, because there had been some discussion between counsel and myself concerning section 128 earlier that day, in relation to another question concerning which Mr Lavender had raised a privilege against self-incrimination. Upon my expressing the preliminary view that the question of whether Mr Lavender had paid tax on the funds received from Miss Lodge was one where there would be reasonable grounds for the objection, counsel did not take the matter any further.

82 Mr Ashhurst invited me to draw inferences unfavourable to Mr Lavender from the fact that he had claimed the privilege. I decline to do so (Cross on Evidence, current electronic version, paragraph [25040]). The fact remains, however, that by not making his tax returns available, Mr Lavender is without corroborative evidence, that in the ordinary course of events would have been available, for his version of the facts.

Conclusion

83 Mr Lavender’s evidence about the circumstances which led to his withdrawal of the money contains numerous elements which, when each is considered alone, is unusual. When the combined effects of those unusual elements is considered, his account is a very unusual one indeed. His own evidence contains internal contradictions. The one concerning the circumstances of the preparation of the invoices is a particularly significant one. There are some instances where I have already said that I do not accept his evidence.

84 Taking all these matters together, I come to the conclusion that I cannot accept Mr Lavender’s evidence on any point of significance in this case.

85 Apart from the general authority document, Mr Lavender’s evidence depends entirely on the acceptability of his own testimony. The general authority document is one which would not justify Mr Lavender in removing money from the bank accounts in circumstances where Miss Lodge had not authorised it, or it was not for her benefit. Whether these particular withdrawals were authorised by Miss Lodge, or for her benefit, comes back to whether Mr Lavender’s word is accepted. When I am not able to accept Mr Lavender’s evidence, it follows that he has not made out any of the defences which I have set out in paragraph 17 above, nor has he made out his Cross-Claim.

86 It remains to consider whether the plaintiffs have made out their case. The taking of the money is admitted, and once I have rejected Mr Lavender’s evidence, it follows that it was a taking without authority, and without any other entitlement to take it. Recognising fully the seriousness of the finding which I am making, I am persuaded that Mr Lavender, systematically and over a period of years, removed money from Miss Lodge’s Savings Account without her authority, and also took the proceeds of her Term Deposit after her death, without authority.

87 There remains one argument to be considered. The remedy which the plaintiffs claimed was, “Damages for breach of fiduciary duty”, together with interest and costs. Mr Lovas, counsel for Mr Lavender, submits that the remedy which has been claimed is one which cannot be granted. Section 68 Supreme Court Act 1970 provides:

88 However, the submission goes, section 68 cannot apply in the present circumstances, because there is no question here of damages being awarded in lieu of, or as well as, an injunction or specific performance. Further, the submission goes, the remedy which is granted in equity’s exclusive jurisdiction for breach of a fiduciary duty is a remedy called “Equitable Compensation”.

89 It is true enough that a distinction is often drawn between damages, and equitable compensation. Meagher, Gummow & Lehane, Equity Doctrines & Remedies, 3rd edition, paragraph 2301 say:

“Damages is the term used to describe the monetary compensation awarded for invasion of the plaintiff’s common law rights or failure to perform obligations owed him at common law by the defendant. The term is used throughout this work with that meaning; damages was never an equitable remedy for breach of purely equitable obligations.”

90 While it is correct that equity awards monetary compensation for breach of different obligations to those for which the common law awards damages, and assesses that compensation using different principles to those which the common law uses to assess damages, it is still a common enough, although loose, use of language to talk about damages being awarded in equity when one is talking about equitable compensation being granted. In In Re Leeds and Hanley Theatres of Varieties, Limited [1902] 2 Ch 809 the English Court of Appeal considered a breach of fiduciary duty by a company promoter. At 833, after the Court had given judgment explaining why there had been a breach of the fiduciary duty, Vaughan Williams LJ said, “We are all of opinion that the true measure of the damages is the amount of the profit which was made by the promoting company.” In Seager v Copydex (No2) [1969] 1 WLR 809 the English Court of Appeal held it was appropriate for damages to be awarded for breach of an equitable obligation of confidence. I give these examples, not with any wish to blur the conceptual distinction which undoubtedly exists between equitable compensation and common law damages, but to show that, in a loose sense, the notion of damages being awarded for breach of an obligation arising in equity’s exclusive jurisdiction is not unheard of.

91 Here, the real question is one of construction of the prayer for relief in the Amended Statement of Claim. There can be no real doubt that what was asked for was payment of money, by reason of breach of the fiduciary duty. There can likewise be no real doubt that the defendant so understood it.

92 It follows that the plaintiffs are entitled to an order that Mr Lavender pay them money to make good his breach of fiduciary duty. The plaintiffs are entitle to recover back the amount which Mr Lavender admits taking, namely $267,811.64.

93 The plaintiffs are also entitled to interest on that amount. Interest will be payable on each wrongful withdrawal, from the date of withdrawal, to the date of repayment, at the rates in Schedule J to the Supreme Court Rules. It will be necessary for those amounts of interest to be calculated before a judgment can be entered.

94 The only order I shall make is to direct the plaintiff, within 28 days of the handing down of these reasons for judgment, to bring in Short Minutes of Order to give effect to these reasons for judgment. If the parties are able to agree on the amount of interest, I will act on their agreement. If they are not able to agree, the plaintiffs should produce an affidavit containing worked calculations of the interest payable, and serve that affidavit on the solicitors for the defendant in sufficient time before the matter is brought back before me again.

95 When the matter is brought back, I will deal with any outstanding questions concerning costs.

(1) Direct the plaintiff to bring in Short Minutes of Order to give effect to these reasons for judgment, within 28 days of the date of these reasons for judgment.

**********

Last Modified: 07/22/2002

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Citations

Nagle v Lavender [2002] NSWSC 611

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CITATION:	Nagle & Anor - as Executors, Estate Late Marie Jewell Lodge v Lavender [2002] NSWSC 611
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 4475/99
HEARING DATE(S):	24/6/02-28/6/02
JUDGMENT DATE:	16 July 2002
PARTIES :	Patricia Nagle & Richard Patrick Nagle as Executors of the Estate Late Marie Jewell Lodge (Plaintiffs/Cross Defendants) Geoffrey Lavender (Defendant/Cross Claimant)
JUDGMENT OF:	Campbell J

COUNSEL :	M Ashhurst (Plaintiffs/Cross Defendants) R Lovas (Defendant/Cross Claimant)
SOLICITORS:	Blackshaw Lindsay (Plaintiffs/Cross Defendants) George Loupos & Associates (Defendant/Cross Claimant)
CATCHWORDS:	EQUITY - fiduciary obligations - misappropriation of money by fiduciary agent - no question of principle decided - EVIDENCE - burden of proof, presumptions and weight and sufficiency of evidence - claims against deceased's estate - EVIDENCE - burden of proof, presumptions and weight and sufficiency of evidence - effect of destruction of documents - EQUITY - fiduciary obligations - claim for "damages for breach of fiduciary duty" - meaning and availability
LEGISLATION CITED:	Evidence Act 1995 Supreme Court Act 1970
CASES CITED:	Allen v Tobias (1958) 98 CLR 367 Briginshaw v Briginshaw (1938) 60 CLR 336 Clive Eggins & 2 Ors v Allan Robinson [2000] NSWCA 61 Hunt v Barlow [2000] NSWSC 324 Seager v Copydex (No2) [1969] 1 WLR 809 Simon v NRMA Insurance Ltd (NSW Court of Appeal, 22 October 1991, unreported)
DECISION:	Misappropriated money to be repaid with interest