Pave Wealth Services Pty Ltd v Danielle Jones as executor of the estate of Michael Frederick Jones
[2021] WASC 206
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: PAVE WEALTH SERVICES PTY LTD -v- DANIELLE JONES as executor of the estate of MICHAEL FREDERICK JONES [2021] WASC 206
CORAM: MASTER SANDERSON
HEARD: 2 JUNE 2021
DELIVERED : 25 JUNE 2021
FILE NO/S: CIV 1092 of 2021
BETWEEN: PAVE WEALTH SERVICES PTY LTD
Plaintiff
AND
DANIELLE JONES as executor of the estate of MICHAEL FREDERICK JONES
First Defendant
DANIELLE JONES-BALLARD
Second Defendant
Catchwords:
Trustees Act – Statutory remedy of tracing – Time limited for taking action
Legislation:
Civil Judgments Enforcement Act 2004 (WA)
Fair Trading Act 1987 (WA)
Family Provision Act 1972 (WA)
Judiciary Act 1903 (Cth)
Trade Practices Act 1974 (Cth)
Result:
Application granted
Category: A
Representation:
Counsel:
| Plaintiff | : | G J Douglas |
| First Defendant | : | J P Cook |
| Second Defendant | : | J P Cook |
Solicitors:
| Plaintiff | : | Douglas Cheveralls Lawyers |
| First Defendant | : | Mendelawitz Morton Commercial Lawyers |
| Second Defendant | : | Mendelawitz Morton Commercial Lawyers |
Case(s) referred to in decision(s):
Nil
MASTER SANDERSON:
By originating summons filed 17 February 2021 the plaintiff sought, relevantly, the following order:
An order pursuant to section 65 of the Trustees Act 1962 (WA) that the second defendant shall pay to the plaintiff the sum of $693,453.15 plus interest and costs pursuant to the order of the Supreme Court of Western Australia made on 14 January 2021, being a sum not exceeding the value of 78 Philip Road, Dalkeith in the State of Western Australia, distributed to the second defendant by the first defendant on or about 3 October 2013 pursuant to the terms of the will of the late Michael Frederick Jones.
The application was supported by an affidavit of Paul Antony Stojanovic sworn 17 February 2021. This was the only evidence filed in the application and there was no dispute between the parties as to the accuracy of Mr Stojanovic's evidence. On that basis I will take the slightly unusual step of quoting the affidavit in full (omitting the attachments):
1.I make this affidavit in support of the plaintiff's application under section 65 of the Trustees Act 1962 (WA) ('Act') for an order that the second defendant shall pay to the plaintiff the sum of $693,453.15 plus interest and costs pursuant to the order of the Supreme Court of Western Australia made on 14 January 2021 (Application).
2.The facts in this affidavit are true and correct according to my own personal knowledge, except where I have specifically stated otherwise, in which case the facts are true and correct to the best of my information and belief, and I will state the source of my information and belief.
3.I am the sole director and the secretary of the plaintiff, and I am duly authorised to make this affidavit on behalf of the plaintiff.
4.In about 2009, I was a financial advisor with experience in financial planning.
5.At or around this time, I started discussions with Michael Frederick Jones (Mr Jones) about purchasing a financial planning business.
6.I had known Mr Jones for some years because we both worked in the financial services industry, and I was aware because of this that Mr Jones was the owner and managing director of a financial services business, Prosperity Partners.
7.Following these discussions and in or about 13 November 2009, the plaintiff was incorporated. The plaintiff was formerly called Headless Canary, which was changed to_ Pave Wealth Services in 2011. Attached and marked PAS1 is a copy of a current and historical company search of the plaintiff dated 5 February 2021.
8.After some discussions, in about the end of 2009, the plaintiff entered into an agreement whereby Wotif Pty Ltd would carve out clients from its client list and transfer them to the plaintiff for a fee.
9.A written agreement for the transfer and assignment of the client base was signed on 18 November 2009. It provided for the plaintiff to pay $525,000 for the client base. The transaction settled on 29 April 2010.
10After purchasing the business, it became apparent to me that the plaintiff had paid more than the business was worth because of misleading or deceptive representations made by Mr Jones and Wotif.
11.On 26 May 2013, Mr Jones passed away leaving a last will and testament dated l3 February 2012 (Will) appointing his wife, the second defendant, as sole executor, and giving $400,000 to his two daughters (to be held on trust) and the residue of his estate to the second defendant.
12.On 10 July 2013 a grant of probate was issued to the first defendant. Attached and marked PAS2 is a copy of the grant of probate for the estate of the late Michael Frederick Jones dated 10 July 2012 attaching the last will and testament.
13.At the date of his death, Mr Jones owned the property located at 78 Philip Road, Dalkeith in the State of Western Australia, more particularly described as Lot 321 on Plan 2668 and being the whole of the land in Certificate of Title Volume 1665 Folio 926 (Property). Attached and marked PAS3 is a copy of the transfer of land document J90473 for the transfer from Merle Mead to Michael Frederick Jones dated 10 November 2004.
14.On or about 3 October 2013, the Property was transferred to the first defendant by way of a transmission application. Attached and marked PAS4 is a copy of the transmission application dated 3 October 2013.
15.On or about 3 October 2013, being 2 months and 23 days after the grant of probate was issued to the first defendant, the Property was distributed from the first defendant to the second defendant pursuant to the Will. Attached and marked PASS is a copy of the transfer of land document M420859 for the transfer from the first defendant to the second defendant dated 3 October 2013.
16.To the best of my information and belief, the first defendant did not publish a notice pursuant to section 63 of the Act. I formed this belief because I instructed the plaintiff's lawyer, Douglas Cheveralls Lawyers, to undertake a search of the Government Gazette records between 2012 and 2021, and I am advised and believe that the search was undertaken and revealed that no notice was published in the Government Gazette in relation to Michael Frederick Jones. Attached and marked PAS6 is a copy of the Government Gazette search form undertaken on 5 February 2021.
17.I am informed by the plaintiff's previous lawyer, HHG Legal, and believe that, on or about 18 September 2014, HHG Legal notified the first defendant of the plaintiff's claim arising from the misleading or deceptive representations by Mr Jones and Wotif Pty Ltd in relation to the purchase of the business (Claim). Attached and marked PAS7 is a copy of the letter from HHG Legal to Danielle Jones dated 18 September 2014.
18.On 26 June 2015, the plaintiff commenced proceedings in relation to the Claim against the first defendant and Wotif Pty Ltd (Proceedings).
19.In or about early January 2019, it came to my attention that the Property was on the market for sale.
20.On or about 15 January 2019, I made an application under section 17 of the Restraint of Debtors Act 1984 (WA) to restrain the transfer of the Property by the second defendant, however, the application was not successful.
21.In or about the end of 2019, the second defendant sold the Property for an amount of $2,850,000, and the transfer was registered on 31 January 2020. Attached and marked PASS is a copy of the transfer of land document 0336061 for the transfer from the second defendant dated 31 January 2020.
22.On 12 February 2020, Her Honour Judge Braddock ordered judgment in the Proceedings against the second defendant in that action, Wotif Pty Ltd, in the sum of $437,000 plus interest in the sum of $256,453.15, but dismissed the Claim against the first defendant in that action (and in these proceedings), Danielle Jones as executrix of the estate of the late Michael Frederick Jones. The reasons for decision are published as Pave Wealth Services Pty Ltd v Jones [2020] WADC 16. Attached and marked PAS9 is a copy of the Order of Her Honour Judge Braddock dated 12 February 2020.
23.On or about 28 February 2020, I lodged an appeal against the decision of Her Honour Judge Braddock in respect of the first defendant in that action (and in these proceedings), Danielle Jones as executrix of the estate of the late Michael Frederick Jones.
24.The appeal was successful, and on 14 January 2021, the Court of Appeal ordered that judgment be entered for the plaintiff against Wotif Pty Ltd and the first defendant, Danielle Jones as executrix of the estate of the late Michael Frederick Jones, in the total sum of $713,002.84 (Judgment), comprised as follows:
(a)judgment in the sum of $437,000 plus interest in the sum of $256,453.15 up to 6 February 2020; and
(b)interest at the rate of 3% per annum on the judgment sum from 7 February 2020 to 14 January 2021, being $19,549.68.
The reasons for decision are published as Pave Wealth Services Pty Ltd v Jones [2021] WASCA 7. Attached and marked PASlO is a copy of the Order of the Supreme Court, Court of Appeal dated 14 January 2021.
(Paragraphs 25 ‑ 29 of the affidavit have been omitted. Paragraph 25 is in the nature of submissions and is irrelevant. Paragraphs 26 ‑ 29 detail the efforts of the plaintiff to obtain payment of the judgment debt and are not relevant to this application.)
This application is solely concerned with s 65 of the Trustees Act 1962. That section reads as follows:
65.Deceased estate, claims made after distribution of, tracing, following assets
(1)This section applies where a trustee has distributed any assets forming part of the estate of a deceased person or subject to a trust, and there is nothing in any Act to prevent the distribution from being disturbed.
(2)Where this section applies, the Court may make an order on a claim, being –
(a)an application under the Family Provision Act 1972; or
(b)a claim to which section 63 applies; or
(c)a claim by a person to be a beneficiary under the will, or to be entitled on the intestacy, of the deceased person, or to be beneficially interested under the trust;
any of which application or claims are, hereinafter in this section, called the claim.
(3)An order under subsection (2) may provide that –
(a)any person to whom any assets, to which the section applies, were distributed, or his personal representative, shall pay to the person making the claim or to the trustee a sum not exceeding the value of those assets; or
(b)any person, who has received, otherwise than in good faith and for valuable consideration, any interest in any assets, to which this section applies, from the person to whom they were distributed or his personal representative, shall pay to the person making the claim or to the trustee a sum not exceeding the value of that interest;
and for the purpose of giving effect to that order the Court may make such further order as it thinks fit.
(4)The remedies given to any person by this section are in addition to all other rights and remedies (if any) available to that person, and nothing, other than the provisions of subsection (7) and (8), restricts those other rights and remedies.
(5)Subject to the provisions of subsection (6), an order under this section shall not be made by the Court –
(a)where the claim is an application for an order under the Family Provision Act 1972, unless –
(i)the application is made within the period specified in section 7(2)(a) of that Act; or
(ii)leave to file out of time has been given under section 7(2)(b) of that Act;
or
(b)in the case of any other claim, unless the application for that order is made within the time within which the applicant could have enforced his claim in respect of the estate, without special leave of the Court, if the assets had not been distributed;
but, notwithstanding the foregoing provisions of this subsection, the order may be made, with the special leave of the Court, on application made within the time within which the applicant could have enforced his claim, in respect of the estate, with special leave of the Court, if the assets had not been distributed.
(6)Notwithstanding anything to the contrary in subsection (5), where a trustee has made a distribution of any assets forming part of the estate of a deceased person or subject to a trust, and any person who is entitled to apply for an order under this section has, within the time specified in that subsection, applied to the Court for an order on the claim and that person was not aware of the distribution at the time when he made that application, the Court may hear an application by that person under this section after the expiration of the period prescribed by subsection (5), if it is made within 6 months after the date on which the person first became aware of the distribution, and may make an order accordingly.
(7)Notwithstanding any rule of law to the contrary, where a trustee has made a distribution of any assets forming part of the estate of a deceased person or subject to a trust –
(a)a person may exercise the remedies (if any) given to him by this section and all other rights and remedies available to him (including all rights that he may have to follow assets and any money or property into which they have been converted) without first exercising the rights and remedies (if any) available to him against the trustee in consequence of the making of the distribution; and
(b)a person shall not exercise any remedy that may be available to him against the trustee in consequence of the making of the distribution, until he has exhausted all other remedies available to him, whether under this section or in equity or otherwise.
(8)Where a trustee has made a distribution of any assets forming part of the estate of a deceased person or subject to a trust, relief (whether under this section or in equity or otherwise) against any person other than the trustee or in respect of any interest of any such person in any assets so distributed and in any money or property into which they have been converted, shall be denied, wholly or in part, if the person from whom relief is sought received the assets or interest in good faith and has so altered his position in reliance on his having an indefeasible interest in the assets or interest, that, in the opinion of the Court, having regard to all possible implications in respect of the trustee and other persons, it is inequitable to grant relief or to grant relief in full.
(9)Without prejudice to the provisions of subsection (8), an order under this section may provide that any payment directed to be made by that order shall be made by periodic payments or by instalments, and the Court may fix the amount or rate thereof in the order, and may from time to time vary, suspend or discharge the order for cause shown, as the Court thinks fit.
There is no judicial authority which deals with s 65 in circumstances similar to this case. There are two cases which are of peripheral relevance, but I have not found them to be of assistance. The starting point is to actually look at what the section says and how it operates.
By way of general comment, it would seem this section is a statutory embodiment of the remedy of tracing. Both the common law and equity make available a remedy of tracing, each applying different rules. Each remedy has requirements which can make it difficult for a litigant to avail themselves of the remedy. There is nothing in s 65 which abolishes or limits the availability of the remedies at common law and in equity. Indeed s 65(4) would appear to preserve these remedies. Equally there is no warrant for imposing upon the section, the requirements of the common law or the equitable remedy. Effect must be given to the clear wording of the statute.
Subsection (1) gives the section broad operation subject only to enactments in particular statutes. It would seem, given the reference in subsection (2) to the Family Provision Act 1972 (WA) (FPA), the section was drafted with at least one eye on the FPA. There is nothing in the FPA which prevents an executor from distributing the estate of the deceased even when the executor is on notice a claim may be made under the FPA. That is so even before the expiry of the six month period within which an eligible person can bring a claim. There is a rule of practice, once an executor is on notice he or she should not distribute the estate before the claim is brought or before it is clear no claim will be made. That rule of practice will on occasions be enforced by injunction. But the section is clearly designed to operate when a distribution has been made. In this case it is worth noting there is nothing in the Civil Judgments Enforcement Act 2004 (WA) which would preclude the operation of s 65(1).
In this case, the plaintiff relies upon subsection (2)(b). It is said its claim is brought under s 63. In particular, s 63(9)(a) which relevantly reads as follows:
Except as provided in subsection (10), this section applies to claims, whether present or future, certain or contingent, against a trustee, being claims –
(a)against or in respect of the estate of the deceased person or the trust property, including (without limiting the generality of the foregoing) claims that survive or lie against or in respect of the estate or property under section 4 of the Law Reform (Miscellaneous Provisions) Act 1941;
Clearly the plaintiff is correct and it does fall within that subsection. The defendants did not suggest to the contrary. Accordingly, the standing of the plaintiff to bring this application is established.
Subsection (3) embodies a discretion. That discretion does not appear to be conditioned in any way by subsection (2). There is nothing in subsection (3) or any other subsection which indicates how the discretion is to be exercised. Each of subsections (3)(a) and (b) would appear to cover different circumstances. In this case the first defendant, as executor of the estate, distributed the assets to herself in her capacity as the beneficiary of the estate. She would fall under subsection (3)(a). Subsection (3)(b) would allow for what might be called deeper tracing. So, for instance, if the second defendant has passed away and pursuant to her will had passed property to beneficiaries, those beneficiaries could be the subject of an order provided they had not taken the asset in good faith and for valuable consideration. The subsection perhaps gives an insight into the extent of the remedy available under the section.
It is subsection (5)(b) which is at the heart of this application. Subsection (5)(a) is not relevant. In fact, this case turns on the meaning given to the phrase 'could have enforced his claim' in the subsection. It is the plaintiff's position that this phrase should be interpreted by reference to the Civil Judgments Enforcement Act. It is the second defendant's position this phrase refers back to the time limits applicable to the cause of action which led to the judgment – in this case the Fair Trading Act 1987 (WA) (FTA). I will explore the parties' respective contentions further below. However, it is convenient here to deal with the rest of the section.
Subsection (6) is really in the nature of a limitation section. The crucial date is the date upon which the person entitled to make a claim 'first became aware of the distributions'. This is a reference to actual knowledge – there is no reference to when a person should or might reasonably have become aware of the distribution. Furthermore, the limitation is absolute. If the application is not made within six months there is no power in the court to extend time within which to bring the application. Subsection (6) was not at issue in this application. It was accepted by the second defendant that the plaintiff fell within the time prescribed.
Only passing reference need be made to the remaining three subsections. Subsection (7) allows in this case the plaintiff to effectively bypass the first defendant (the executor) and claim directly against the second defendant (the beneficiary). In fact, subsection (7)(b) mandates the claim should be made against the second defendant (the beneficiary) before action is taken against the first defendant (the trustee). It was not submitted by either defendant that this subsection played any part in this application.
Subsection (8) embodies what is sometimes referred to as the 'altered position' defence. Apart from noting the subsection embodies a discretion and requires the court to decide granting relief would be 'inequitable', nothing more needs to be said about that subsection. It was not engaged in this case. Subsection (9) might be seen as a hardship provision. It can be relied upon by a defendant against whom an order is made even to the extent of discharging the order. Once again it is not relevant to this application.
Returning then to the point at issue in this case, the plaintiff says as at the date the Court of Appeal judgment was entered it became entitled to enforce the judgment. The term 'enforce' is not defined in the Civil Judgments Enforcement Act. However, s 5 makes the Act applicable to judgments given by the Supreme Court. Section 12 of the Act provides a limitation period for enforcement. The limitation period is 12 years. However, under s 13(1)(a) of the Act, leave is required if a judgment is to be enforced after a period of six years. It was the plaintiff's position that then it was entitled to enforce the judgment, it fell within s 65(5)(b) and the orders sought should be made.
The second defendant puts its position this way. The claim in respect of the estate was a claim pursuant to s 79 of the now repealed FTA for damages to compensate for loss suffered by the plaintiff caused by conduct of the second defendant's deceased husband in contravention of s 10 of the FTA. The Court of Appeal judgment does not expressly refer to s 79 of the FTA but refers to its analogue: s 82 of the Trade Practices Act 1974 (Cth). Section 79 of the FTA reads as follows:
79.Actions for damages (TPA s. 82)
(1)A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part II (sections 11 and 11A excepted), Part III, Part V or Part VI, may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.
(2)An action under subsection (1) may be commenced at any time within 3 years after the date on which the cause of action accrued.
The second defendant says the relevant action could have been commenced at any time within three years after the date on which the action accrued. That means the time within which the plaintiff could have enforced his claim in respect of the estate was within three years after the date on which the cause of action accrued. The cause of action accrued no later than a date one year after the date of settlement of the sale of the client list – that is 29 April 2010. The claim related to an overstatement of annual fees payable by the listed clients. So one year after the date of the sale it must have become apparent to the plaintiff loss had been occasioned. That being so, 29 April 2014 was the date after which the plaintiff could no longer have enforced its claim in respect of the estate.
As an aside, it is worth noting no limitation defence was raised in the original District Court action. Limitation periods are always a defence – they do not go to jurisdiction. So, if a potential limitation defence is not pleaded, there is no bar to relief being granted irrespective of the fact that had the limitation defence been raised, it may have been a complete answer to the claim.
On balance I am satisfied that the plaintiff's interpretation of the subsection is to be preferred. The way the plaintiff approaches the proper meaning to be given to the phrase 'could have enforced his claim' is I think, given the text and the context, to be preferred. If the second defendant's interpretation of the phrase was followed, it could give rise to an anomalous situation. Reworking the facts in this case, if a plaintiff issued proceedings on the last day of the three years provided for under s 79 but the case did not get to trial for another five years and judgment was not delivered until 12 months later, the plaintiff could not rely on s 65(5)(b). It may be that the proviso to the section which allows for an extension of time could be relied upon in such circumstances. But that would require 'special leave' of the court. In the context of State legislation the phrase 'special leave' is most unusual. Counsel for the plaintiff in his submissions said he had been unable to find any other legislative enactment of the State where it had been used. The phrase is referred to if not actually defined in s 35A of the Judiciary Act 1903 (Cth). But whatever import is to be given to the phrase, it is clearly intended to reserve extensions of time to only particular cases. If the interpretation of the subsection contended for by the second defendant was accepted, many cases would be caught by the time limit. That suggests the plaintiff's interpretation of the subsection is to be preferred.
In my view, the plaintiff has made good its case. I would make an order in terms of par 1 of the originating summons. Subject to hearing from the parties, costs should follow the event. If orders cannot be agreed, the parties should file opposing minutes and provide short submissions on costs.
I certify that the preceding paragraphs comprise the reasons for decision of the Supreme Court of Western Australia.
LH
Research Associate to the Honourable Chief Justice Quinlan
25 JUNE 2021
0
2
0