White v White By Her Tutor the NSW Trustee and Guardian

[2024] NSWSC 222

Supreme Court

New South Wales

Medium Neutral Citation:

White v White By Her Tutor the NSW Trustee and Guardian [2024] NSWSC 222

Hearing dates:

20 February 2024

Date of orders:

14 March 2024

Decision date:

14 March 2024

Jurisdiction:

Common Law

Before:

Davies J

Decision:

1. Dismiss the amended summons.

2. The plaintiff is to pay the defendant’s costs.

Catchwords:

APPEALS – appeal from Local Court to Supreme Court – proceedings for recovery of $65,000 – where daughter was appointed mother’s financial manager from 2013 to 2018 – whilst financial manager daughter transferred $65,000 from mother’s bank account to her own – NSW Trustee and Guardian appointed financial manager in 2018 – commenced proceedings in 2022 to recover sum plus interest – where daughter failed to respond to Notice to Produce bank records - Magistrate gave judgment against daughter – whether Magistrate erred by finding daughter retained the benefit of the $65,000 to the detriment of her mother – question of fact – Magistrate did not draw inferences from daughter’s failure to produce documents – cannot be said that there is no evidence to support the Magistrate’s finding – no error of law – ground rejected

APPEALS – appeal from Local Court to Supreme Court – on a question of mixed fact and law – whether Magistrate erred in permitting reliance on a claim for fraud – where fraud allegation was not particularised nor ultimately pursued – where Magistrate made findings on fraudulent concealment not fraud or deceit – where fraudulent concealment was put to the daughter in cross-examination – held no unfairness despite lack of particularisation – leave to appeal refused – ground not made out

APPEALS – appeal from Local Court to Supreme Court – on a question of mixed fact and law – question of costs – indemnity costs – where daughter rejected an earlier Calderbank offer – where Magistrate made lump sum costs order at $30,000 – whether Magistrate erred in finding the Calderbank offer was a valid basis to award indemnity costs – held Calderbank offer a valid offer of compromise – no reason shown for grant of leave in respect of ground – leave to appeal refused – summons dismissed

Legislation Cited:

Limitation Act 1969 (NSW) ss 55, 68A

Local Court Act 2007 (NSW) ss 39, 40, 41

Uniform Civil Procedure Rules 2005 (NSW) r 14.14

Cases Cited:

BCI Finances Pty Ltd (In Liq) v Binetter (No 4) [2016] FCA 1351; (2016) 117 ACSR 18

Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164

Brown v Dunn (1893) 6R 67

Cappello v Hammond & Simonds NSW Pty Ltd [2021] NSWCA 57

Hamod v State of New South Wales [2011] NSWCA 375

Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213

House v The King (1936) 55 CLR 499; [1936] HCA 40

Instrumatic Ltd v Supabrase Ltd [1969] 1 WLR 519

In the matter of Mediation & Online Dispute Resolution Operating Network Pty Ltd [2022] NSWSC 5

John Maiolo t/as M & N Peninsular Kitchens & Joinery v Chiarelli [2017] NSWSC 982

RL & D Investments Pty Ltd v Bisby [2002] NSWSC 1082; (2002) 37 MVR 479

Secretary, Department of Family and Community Services v Smith (2017) 95 NSWLR 597; [2017] NSWCA 206

Sgro v Australian Associated Motor Insurers Ltd (2015) 91 NSWLR 325; [2015] NSWCA 262

Stambolziovski v Nestorovic and Camanaro Prestige Properties Pty Ltd t/as Sydneyhome Real Estate [2015] NSWCA 332

US Manufacturing Co Pty Ltd v ABB Service Pty Ltd [2008] NSWSC 705

Young v Queensland Trustees Limited (1956) 99 CLR 560; [1956] HCA 51

Zepinic v Chateau Constructions (Aust) Ltd (No 2) [2014] NSWCA 99

Texts Cited:

Nil

Category:

Principal judgment

Parties:

Gaye Janice White (Plaintiff)
Cora White trading as By Her Tutor the NSW Trustee and Guardian (Defendant)

Representation:

Counsel:
J E Treherne (Plaintiff)
M Klooster (Defendant)

Solicitors:
Attwood Marshall Lawyers (Plaintiff)
Makinson d'Apice Lawyers (Defendant)

File Number(s):

2023/329240

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

Local Court of NSW

Jurisdiction:

Common Law

Citation:

Nil

Date of Decision:

23 August 2023

Before:

M Greenwood LCM

File Number(s):

2023/329340

Judgment

The Local Court proceedings

1. The plaintiff, Gaye White, is the daughter of the defendant, Cora White. I will refer to the defendant as Cora, with no disrespect intended, to avoid confusion by reason of Cora being the plaintiff in the court below.

2. At the time of the hearing at the Local Court, Cora resided at a high care unit at Calvary Retirement Community in Cessnock. She suffered from several conditions including Parkinson’s disease, vascular dementia and schizophrenia. On 18 October 2013, the plaintiff was appointed Cora’s financial manager by the Guardianship Tribunal.

3. Between 28 November 2013 to 16 December 2013, the plaintiff transferred a total of $65,000 from Cora’s bank account, in respect of which the plaintiff had the right to operate, to the plaintiff’s own bank account.

4. On 15 June 2018, the NSW Civil and Administrative Tribunal revoked the appointment of the plaintiff as Cora’s financial manager and appointed the NSW Trustee and Guardian (“NSWTAG”) as her manager.

5. In November 2022, Cora by her tutor the NSWTAG commenced proceedings against the plaintiff seeking to recover the sum of $65,000 together with interest.

6. The proceedings were heard by Magistrate Greenwood on 23 August 2023. The learned Magistrate gave judgment on 19 September 2023. The Magistrate entered judgment for Cora in the sum of $65,000 together with interest and a lump sum costs order of $30,000.

The appeal

7. By a summons filed 17 October 2023, the plaintiff seeks leave to appeal from the whole of the judgment of the Local Court. By an amended summons filed 23 November 2023, the grounds of appeal [altered by me to make clear who is being referred to] relied upon were these:

1. The learned Magistrate erred, as a matter of law, in failing to dismiss the proceeding on the basis that it is statute-barred pursuant to s 48 of the Limitation Act 1969 (NSW).

2. The learned Magistrate erred, as a matter of law, in finding that [the plaintiff] retained the benefit of the claimed sum to the detriment of [Cora].

3. [Omitted]

4. The learned Magistrate erred, as a matter of law, in permitting [Cora] to rely on a claim for fraud in circumstances where it was not properly pleaded.

5. The learned Magistrate erred, as a matter of law, in finding that the Calderbank Offer dated 2 August 2023, was a valid offer of compromise capable of reliance in support of an award of indemnity costs.

   8. At the outset of the hearing of the appeal, the plaintiff abandoned reliance on ground 1.

The Magistrate’s Reasons

9. The Magistrate identified the issues which her Honour had to decide as follows:

It seems to me the issues in these proceedings are, (1), can Cora sue in her own name? (2), does the Court have jurisdiction to deal with the 2013 transfers of money? If so, has this part of the claim been made out? And finally, has the allegation of fraud or deceit been made out?

10. Her Honour found that Cora was entitled to sue the plaintiff by her tutor the NSWTAG. There is no challenge to that determination.

11. In relation to the second issue concerning the Limitation Act, her Honour said:

The next issue is, does this court have jurisdiction to deal with the debt claim. Now the transfer of the funds occurred in 2013. The litigation commenced in 2022. Does the Court have jurisdiction to deal with these 2013 withdrawals? The 2014 Court of Appeal case of Eberstaller v Poulos is authority that the first duty of every court is to determine whether or not it has jurisdiction. Section 14 of the Limitation Act 1969 imposes a six-year period for the commencement of certain proceedings, including torts.

Now while not specifically pleaded, one allegation is unjust enrichment and that Gaye owed Cora a fiduciary duty to use Cora's money for Cora's benefit, not for Gaye's benefit. Given that the withdrawals occurred in November to December 2013 under s 14 Cora was required to commence proceedings by 35 December 2019 and, of course, the proceedings were commenced in November 2022.

Now Cora says the Court has jurisdiction because Gaye did not plead a statute bar. Section 68A of the Limitation Act says that specific pleading is required even when the claim would otherwise be extinguished, meaning that Gaye, to be able to rely on this legislation, must have specifically pleaded that the Court had no jurisdiction. Further, s 52 of the Act provides that:

Where a person has a cause of action, the limitation period fixed by this Act for the cause of action if it has commenced run and the person is under a disability. The running of the limitation period is suspended for the duration of the disability.

Now s 11.3 (scil. 11(3)) says that:

For the purposes of the Limitations Act, a person's under a disability, while the person is for a continuous period of 28 days or upwards incapable of or substantially impeded in the management of his or her affairs in relation to the cause of action in respect of the limitation period for which the question arises by reason of any disease or any impairment of his or her physical or mental condition.

I've already noted that the tribunal has accepted since 2007 that Cora has not been capable of managing her own affairs. I therefore find that there is no jurisdictional impediment to me determining this case.

12. There is now no challenge to the determination that the proceedings were not statute-barred.

13. In relation to whether the substantive claim had been made out and the $65,000 was applied for Cora’s benefit, the Magistrate noted the evidence that Cora at the time of the hearing owed $28,000 for her care from Calvary, that Cora was not indebted to Calvary before the plaintiff took over her financial management, that the plaintiff transferred two amounts of $29,000 and $54,000 to Cora’s account with the Newcastle Permanent Bank [in fact, as the affidavit of Jarrad McCarthy from the NSWTAG makes clear, it was the NSWTAG who transferred that money to Cora’s bank account], Cora subsequently received fortnightly pension payments of about $1,700 per month, and her monthly expenses including accommodation costs were just over $2,000, and by 27 July 2018, Cora was left with a balance of 23 cents in her bank account.

14. The Magistrate noted that the plaintiff pleaded and gave evidence that the funds she transferred to her own bank account were all applied for Cora’s benefit. The Magistrate noted the lodging of private manager accounts by the plaintiff with the NSWTAG, and the fact that those accounts were incomplete. The Magistrate noted Mr McCarthy’s evidence of his searches in the computer systems at the NSWTAG, and that he found no records of any documents provided by the plaintiff other than the limited accounts in evidence. The Magistrate noted that the plaintiff gave evidence that she no longer had copies of the documents she claimed to have sent to the NSWTAG, nor did she produce documents to the Court in response to a Notice to Produce.

15. The Magistrate went on to say:

She did not produce any documents to the Court to support any aspect of her claim. It is difficult for me to accept Gaye's evidence on this point because it is unlikely to be true that the Trustee and Guardian misplaced documents she sent on at least two occasions and that she no longer has a copy.

Now, I also cannot accept Gaye's evidence for the following reasons, I must conclude Gaye has serious credibility issues. [Cora] produced records from 2013 before Gaye assumed responsibility for Cora's finances and those records showed regular pension payments were being made to her account of more than $800 a fortnight. Cora's outgoings for this period primarily comprised accommodation, comfort, for example, including having her hair done and pharmaceutical costs and the Trustee and Guardians monthly management fees. Now despite saying she transferred the money for the purpose of paying Cora's bills, Gaye continued to pay Cora's accommodation and pharmacy bills from Cora's own bank account.

Further, Gaye gave no evidence of what other bills or expenses concerning Cora were paid from their $65,000. It was a bare assertion. Gaye's pleadings were that,

"Monies were transferred between accounts with the knowledge, approval and recommendation of the Trustee to facilitate the payment of overdue debts incurred when they were while they were managing my mother's accounts."

Now there is no evidence before the Court of any Trustee and Guardian approval or recommendation in relation to the withdrawals.

Now Mr McCarthy gave uncontested evidence that the nine withdrawals [totalling $65,000] were made without the knowledge or approval of the Trustee and Guardian. In any event, this claim was not repeated in Gaye's evidence to the Court when she claimed a bank teller advised her to transfer the money, contradicting her own pleadings. Gaye told the court that she transferred the money to her own account to stop the Trustee and Guardian accessing it. She maintained this position despite being shown bank documentation that showed that only Cora or Gaye could authorise transactions on Cora's account. No other entity was authorised to do so.

There was no evidence from Gaye as to where Cora's pension was paid while Gaye managed Cora's finances. It did not appear to be being paid into Cora's bank account during this period. Despite numerous requests by the Trustee and Guardian, Gaye did not respond to its request for information about how she spent the money she transferred to her own account. Now the plaintiff for Cora served a notice to produce on Gaye requiring production of Gaye's 2013 through to 2018 bank accounts. Gaye did not comply with this notice. She agreed she did not comply with this notice. A notice requiring her compliance, and yet she did nothing. She did not respond to it. Now she cited difficulties accessing the accounts because her only access was via her mobile phone. That's what she told the Court. I did not believe and cannot accept Gaye's evidence.

16. Finally, the Magistrate said this in relation to issue of fraud and deceit:

Has fraud, deceit, or concealment been made out? If I am wrong on my earlier interpretation of the Limitations (sic) Act, I am asked to postpone the limitation period under section 55. This section delays the commencement of the limitation period to the date the fraud, deceit or concealment is discovered.

Cora's pleadings were that the fraud, deceit, and concealment related to the withdrawal of the money. At hearing, though, the plaintiff argued instead that the allegation related to Gaye's non-compliance with the requirement for complete accounts. Now, UCPR, the rules, 14.14 require parties to specifically plead any matter which may take the opposite party by surprise. In this case, it is my view that Gaye was not taken by surprise because she specifically addressed this issue in her pleadings stating she had provided supplementary documents to the Trustee and Guardian, and they had misplaced them, evidence that I have rejected.

Section 140 of the Evidence Act sets out the standard of proof in civil proceedings: (1) in a civil proceeding, the Court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities; (2) without limiting the matters that the Court may take into account in deciding whether it is so satisfied, it is to take into account the nature of the cause of action or defence, the nature of the subject matter of the proceeding and the gravity of the matters alleged. The matters alleged are grave indeed.

They include an allegation of fraud or deceit, and the amount is significant for any individual. It is significant for Cora, who has, at the moment, would be in breach of her agreement, her accommodation agreement, and one would have thought that her place at that accommodation might be in jeopardy, and she is a vulnerable person. I find today that the plaintiff has presented compelling evidence.

For the reasons I have given, Gaye's evidence cannot be believed. I must find that she, first, did not use the $65,000 for Cora's benefit, second, misused her position as Cora's financial manager, third, has had the benefit of Cora's funds, and, fourth, has deprived Cora of Cora's use and benefit of Cora's funds. I also must find that Gaye fraudulently concealed her conduct in withdrawing the funds by failing to submit completed annual accounts for Cora's estate. She knew that if she provided the required information it would be immediately apparent that she had made significant unjustified withdrawals from Cora's account. I find that the limitation period, if I need to make the order I do, it has been postponed under section 55 of the Limitations (sic) Act.

Legislation

17. The Local Court Act 2007 (NSW) relevantly provides:

39 Appeals as of right (cf LCA 1982, section 73)

(1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law.

…

40 Appeals requiring leave (cf LCA 1982, section 74)

(1) A party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court on a ground that involves a question of mixed law and fact may appeal to the Supreme Court but only by leave of the Supreme Court.

(2) A party to proceedings before the Court sitting in its General Division who is dissatisfied with any of the following judgments or orders of the Court may appeal to the Supreme Court, but only by leave of the Supreme Court—

(a) an interlocutory judgment or order,

(b) a judgment or order made with the consent of the parties,

(c) an order as to costs.

41 Determination of appeals (cf LCA 1982, section 75)

(1) The Supreme Court may determine an appeal made under section 39 (1) or 40 -

(a) by varying the terms of the judgment or order, or

(b) by setting aside the judgment or order, or

(c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court’s directions, or

(d) by dismissing the appeal.

…

18. Section 55 of the Limitation Act 1969 (NSW) provides:

55 Fraud and deceit

(1) Subject to subsection (3) where -

(a) there is a cause of action based on fraud or deceit, or

(b) a cause of action or the identity of a person against whom a cause of action lies is fraudulently concealed,

the time which elapses after a limitation period fixed by or under this Act for the cause of action commences to run and before the date on which a person having (either solely or with other persons) the cause of action first discovers, or may with reasonable diligence discover, the fraud deceit or concealment, as the case may be, does not count in the reckoning of the limitation period for an action on the cause of action by the person or by a person claiming through the person against a person answerable for the fraud deceit or concealment.

(2) Subsection (1) has effect whether the limitation period for the cause of action would, but for this section, expire before or after the date mentioned in that subsection.

Grounds of appeal

19. As noted earlier, the amended summons seeks leave to appeal. Ms J Treherne, who appeared for the plaintiff, submitted that grounds 2 and 4 raised only questions of law. She accepted that leave was necessary in relation to ground 5, either because it involved a question of mixed law and fact or because it fell within s 40(2)(c) of the Local Court Act.

Ground 2:   The learned Magistrate erred, as a matter of law, in finding that [the plaintiff] retained the benefit of the claimed sum to the detriment of [Cora]

20. The findings are set out at [13]-[15] above in relation to this ground.

21. The plaintiff submitted that it was Cora who bore the onus of proving that the plaintiff retained the benefit of the claimed sum to the detriment of her mother. The plaintiff submitted that the Magistrate erred by finding that her failure to produce accounts and documents substantiating the expenditure gave a basis for inferring that she had retained the benefit of the claimed sum.

20. The plaintiff submitted that there was a distinct difference between the absence of documentation provided to substantiate expenditure and a finding of the plaintiff committing fraud, deceit or concealment. The plaintiff submitted that even if the Magistrate entirely disbelieved her evidence, the evidence led by the NSWTAG could not, and did not, substantiate a finding of fraud, deceit or concealment. The plaintiff submitted that the NSWTAG did not issue a subpoena for the bank accounts which it alleged would show the misuse of funds.

21. The plaintiff submitted that she was not asked whether the documents the subject of the Notice to Produce existed or were able to be obtained by her.

22. The plaintiff submitted that an inference may be drawn that evidence would not assist a party’s case where a party fails to adduce particular evidence that one would have expected that party to adduce where the failure to do so is not satisfactorily explained. The plaintiff drew attention to what was said by Ward JA (as her Honour then was) in Stambolziovski v Nestorovic and Camanaro Prestige Properties Pty Ltd t/as Sydneyhome Real Estate [2015] NSWCA 332 at [57], that untendered evidence cannot be used to fill gaps in the evidence, or to convert conjecture and suspicion into inference. The plaintiff submitted that that was what the Magistrate did.

23. Cora submitted that this ground raised a question of fact only. Cora submitted that, in any event, the Magistrate’s findings were well-justified on the evidence, and because the Magistrate did not accept the plaintiff’s evidence. Cora submitted that the Magistrate did not use the plaintiff’s failure to produce documents to fill in gaps in the evidence. Rather, the Magistrate simply concluded, correctly, that the documents would not have assisted the plaintiff’s case.

Determination

26. The issue of what involves a question of law, as far as appeals from the Local Court are concerned, was discussed by Hall J in US Manufacturing Co Pty Ltd v ABB Service Pty Ltd [2008] NSWSC 705 at [45]-[55]. His Honour first considered and accepted a number of propositions distilled by Kirby J in RL &  D Investments Pty Ltd v Bisby [2002] NSWSC 1082; (2002) 37 MVR 479 at [12]-[14] as follows:

First, there is no error of law in simply making a wrong finding of fact (Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 per Mason CJ at 341), unless there is no evidence to support that finding.

Secondly, it does not amount to an error of law if the finding of fact, or the inference (or the refusal to make a finding of fact or draw an inference) is perverse, in the sense that it is contrary to the overwhelming weight of evidence. (Glass JA in Azzopardi v Tasman UEB Industries Limited (1985) 4 NSWLR 139 at 155).

Thirdly, it is not an error of law, even if the reasoning process by which the Court reaches its conclusion of fact is demonstrably unsound or illogical (Menzies J in Regina v District Court: ex parte White (1966) 116 CLR 644 at 654).

Fourthly, there is a limited exception (which has no application in this case) in relation to decisions of fact in the context of a statutory description. In such a case there may be an error of law if the decision on the facts is one which could not be reasonably entertained, or supported, if the tribunal had properly understood the true construction of the relevant enactment (Mahoney v Industrial Registrar of NSW & Anor (1986) 8 NSWLR 1 per Hope JA at 1 at Samuels JA at 5).

27. Hall J then considered a number of other decisions including the observations of Lord Denning MR in Instrumatic Ltd v Supabrase Ltd [1969] 1 WLR 519 at 521 where his Lordship said:

There are many tribunals from which an appeal lies only on a ‘point of law’: and we always interpret the provision widely and liberally. In most of the cases, the tribunal finds the primary facts (which cannot be challenged on appeal): and the question at issue is what is the proper inference from those facts. In such cases, if a tribunal draws an inference which cannot reasonably be drawn, it errs in point of law, and its decision can be reviewed by the Courts. That was settled, once and for all, in Edwards (Inspector of Taxes) v Bairstow … In other cases, the question is whether, given the primary facts, the tribunal rightly exercised its discretion. In such cases, if the tribunal exercises its discretion in a way which is plainly wrong, it errs in point of law, and its decision can be reviewed by the Courts.

28. Hall J then said:

[54] It is clear that an error in point of law may include:

(1) A finding made where there is no evidence to support it or draws an inference from facts that cannot be reasonably drawn.

(2) A finding that no person acting judicially and properly instructed as to the relevant law could have made.

(3) Where a Court has misdirected itself in law: Australian Gas Light Co v Valuer-General [(1940) 40 SR (NSWQ) 126].

29. The finding made by the Magistrate was that the plaintiff retained the benefit of the claimed sum to the detriment of Cora. That is a finding of fact. For the plaintiff to succeed on this ground, she would have to show that there was no evidence to support that finding.

30. The Magistrate’s reasons for reaching this finding are these:

Now did Gaye apply the $65,000 for Cora’s benefit? Cora produced evidence from Calvary to show that she currently owes $28,000 for her care. Calvary’s lawyers have made formal demands for payment. Cora does not have funds to pay this debt. Documents in evidence show that Cora was not indebted to her aged care provider before Gaye took over Cora’s financial management. When Gaye took over as financial manager she transferred the $29,000 amount and the $45,000 amount of Cora’s money to the Newcastle bank account. By October 2016, Cora received fortnightly pension payment of $867, that’s about $1,700 a month, and her monthly expenses, including accommodation costs were just over $2,000. By 27 July 2018, Cora was left with a balance of just 23 cents in her bank account ending 800.

31. Apart from the mis-statement that Gaye transferred the amounts of $29,000 and $45,000 to the Newcastle bank account, there was evidence led on behalf of Cora to support all of these matters. The mis-statement was of no importance; those amounts were transferred, but at the instigation of the NSWTAG. Nor did the plaintiff dispute that she transferred amounts totalling $65,000 to her account.

32. It is not clear that the Magistrate drew any inference from the failures of the plaintiff to give evidence about matters or to produce documents. Her Honour only mentions these failures by saying:

Further, Gaye gave no evidence of what other bills or expenses concerning Cora were paid from their $65,000. It was a bare assertion.

…

There was no evidence from Gaye as to where Cora's pension was paid while Gaye managed Cora's finances. It did not appear to be being paid into Cora's bank account during this period. Despite numerous requests by the Trustee and Guardian, Gaye did not respond to its request for information about how she spent the money she transferred to her own account. Now the plaintiff for Cora served a notice to produce on Gaye requiring production of Gaye's 2013 through to 2018 bank accounts. Gaye did not comply with this notice. She agreed she did not comply with this notice. A notice requiring her compliance, and yet she did nothing. She did not respond to it. Now she cited difficulties accessing the accounts because her only access was via her mobile phone. That's what she told the Court. I did not believe and cannot accept Gaye's evidence.

33. Her Honour does not go on to draw any inference from these failures; not even an inference that such evidence or documents would not have assisted the plaintiff. Her Honour’s determination was found, rather, on the evidence led by Cora about her financial position vis-à-vis Calvary, and monies which ought to have been available to meet Cora’s liabilities, but were not.

34. Her Honour would have been entitled to draw an inference that the information not produced would not have assisted the plaintiff’s case. In Mediation & Online Dispute Resolution Operating Network Pty Ltd [2022] NSWSC 5, Rees J said:

[7]   An adverse inference may be drawn in respect of the absence of documentary evidence to support a party’s case, where the party might be expected to be in possession of documents to corroborate their account: Jones v Dunkel (1959) 101 CLR 298 at 320; [1959] HCA 8 (Windeyer J), citing with approval John Henry Wigmore, Wigmore on Evidence (3rd ed, 1940), vol. 2, page 162: “The failure to bring before the tribunal some circumstance, document or witness, when either the party himself or his opponent claims that the facts would thereby be elucidated, serves to indicate, as the most natural inference, that the party fears to do so, and this fear is some evidence that the circumstance or document or witness, if brought, would have exposed facts unfavourable to the party …”; Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17 at [134] (Callinan J); Ronchi v Portland Smelter Services Ltd [2005] VSCA 83 at [44] (Eames JA, with whom Buchanan JA agreed); Challenger Property Asset Management Pty Ltd v Stonnington City Council (2011) 34 VR 445; [2011] VSC 184 at [131]–[132] (Croft J); Sino-Resource Imp & Exp Co Ltd v Oakland Investment Group Ltd [2018] QSC 98 at [112] (Henry J). I readily draw such an inference in respect of the absence of documents which the defendants might be expected to have produced.

[8]   The implications of the lack of documentary evidence on the onus of proof – which is on the plaintiffs – should not be overlooked. As Gleeson J explained in BCI Finances Pty Ltd (In Liq) v Binetter (No 4) [2016] FCA 1351; (2016) 117 ACSR 18 at [125]:

All evidence “is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted”: Coshott v Prentice (2014) 221 FCR 450; [2014] FCAFC 88 at [80], quoting Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970. This maxim also bears upon the appropriateness of deciding whether a fact has been proved when only limited evidence is available. In Ho v Powell (2001) 51 NSWLR 572; [2001] NSWCA 168 at [14], [15], Hodgson JA (with whom Beazley JA agreed) said:

[I]n deciding facts according to the civil standard of proof, the court is dealing with two questions: not just what are the probabilities on the limited material which the court has, but also whether that limited material is an appropriate basis on which to reach a reasonable decision …

In considering the second question, it is important to have regard to the ability of parties, particularly parties bearing the onus of proof, to lead evidence on a particular matter, and the extent to which they have in fact done so …

Gleeson J’s judgment was relevantly affirmed on appeal in BCI Finances Pty Ltd (In Liq) v Binetter [2018] FCAFC 189; (2018) 132 ACSR 1.

35. It may be accepted in the present case that the onus was ultimately on Cora and not on the plaintiff. However, since the plaintiff accepted in her defence that the moneys had gone into her account, there was at least an evidentiary onus, which she did not discharge, to show that the monies were used for her mother’s benefit: Young v Queensland Trustees Limited (1956) 99 CLR 560 at 567. Similarly, as was said in BCI Finances Pty Ltd (In Liq) v Binetter (No 4) [2016] FCA 1351; (2016) 117 ACSR 18 at [125], “all evidence is to be weighed according to the proof of one side to have produced”.

36. This ground is concerned with the Magistrate’s determination of the third of the issues her Honour identified that she had to decide, set out at [9] above. It is clearly a question of fact. The plaintiff seeks to transform it into a question of law by submitting that the Magistrate drew wrong inferences. I have already determined that the Magistrate’s reasons did not show that she drew any inferences from the plaintiff’s failure to produce documents. Rather, the Magistrate drew inferences from her examination of Cora’s financial position from the time the $65,000 was transferred by the plaintiff to herself, and Cora’s financial position in July 2018 when she had nothing left (summarised at [13] above). There was evidence to support such a conclusion.

37. No error of law as ground 2 asserts is demonstrated.

Ground 4:   The learned Magistrate erred, as a matter of law, in permitting [Cora] to rely on a claim for fraud in circumstances where it was not properly pleaded

38. The allegation of fraud first appeared in the amended statement of claim filed in the Local Court on 14 April 2023. The only reference to it was found in paragraph 6A which provided:

The defendant, by paying herself out of the plaintiff’s bank accounts, while the plaintiff suffered under a disability, committed fraud, deceit or concealment.

The particulars under that paragraph only identified the amounts of money transferred from Cora’s accounts to the plaintiff’s accounts.

39. The fraud allegation appears to have been inserted along with other amendments designed to overcome the potential problem for Cora that the claim being made was being made outside the limitation period for a claim in debt or for money had and received.

40. The plaintiff submitted that the fraud pleading was embarrassing and impermissibly sparse. There were no particulars of deceit, of how the money was used for the plaintiff’s benefit or how what she did amounted to concealment.

41. The plaintiff submitted that the acts constituting the fraud and concealment were not put to her in cross-examination, contrary to the rule in Brown v Dunn (1893) 6R 67.

42. When the matter came to be argued before the Magistrate, Cora’s principal position was that the limitation period had not been pleaded and in that way the present plaintiff was not entitled to rely on it. Reliance in that regard was placed on the Limitation Act and on “r 14.12” of the Uniform Civil Procedure Rules 2005 (NSW), although r 14.14 must have been intended. Rule 14.14(2) provides:

(2)   In a defence or subsequent pleading, a party must plead specifically any matter -

(a)   that, if not pleaded specifically, may take the opposite party by surprise, or

(b)   that the party alleges makes any claim, defence or other case of the opposite party not maintainable, or

(c)   that raises matters of fact not arising out of the preceding pleading.

(3)   Matters which must be pleaded pursuant to subrule (2) include (but are not limited to) fraud, performance, release, statute of limitation, extinction of right or title, voluntary assumption of risk, causation of accident by unknown and undiscoverable mechanical defect and facts showing illegality.

(emphasis added)

43. In addition, s 68A(1) of the Limitation Act provides:

68A Extinction of right or title must be alleged in proceedings

(1) Where in proceedings before a judicial tribunal a question arises as to extinction under this Division of a right or title, a party to the proceedings shall not have the benefit in those proceedings of any such extinction of that right or title unless, as part of the proceedings, the party has pleaded or otherwise appropriately claimed in accordance with the procedures of the tribunal that the right or title has been so extinguished.

44. Counsel for Cora also made clear that reliance was placed on s 55 of the Limitation Act only if the Magistrate was against Cora in relation to the absence of pleading point.

45. Despite the pleading in par 6A of the amended statement of claim, no claim was pursued in fraud or deceit. All that was argued on Cora’s behalf was that the plaintiff had had the benefit of Cora’s money, and that she had fraudulently concealed her conduct by failing to lodge proper accounts. So much is clear from the document headed “Summary of the Plaintiff’s [Cora’s] case” which had been served on the present plaintiff, albeit the day before the hearing, and which was handed to the Magistrate during submissions.

46. Further, contrary to the plaintiff’s submissions in this Court, fraudulent concealment was put to the plaintiff more than once in cross-examination:

Q.   I put to you, Ms White, that you didn’t submit all of the information and documentation the Trustee required because if you did the withdrawal of the $65,000 would have come to the Trustee’s attention.

A.   And I did state to you you send it to--

Q.   Do you agree or disagree with that comment?

A.   I disagree. (T 33.44 – 34.2)

…

Q.   I put to you that you didn’t provide particulars of your mother’s bank account statement to the New South Wales Trustee & Guardian as there was only 23 cents in there and this would have alerted the Trustee that you had withdrawn a substantial amount of funds from your mother’s account.

A.   No that is not why.

Q.   It would lead to further enquiry about the $83,000 that was deposited in that account and that’s why you did not disclose the details of your mother’s bank account statement.

A.   That’s incorrect. (T34.40 – 49)

…

Q.   And I put to you that you did not submit complete accounts as you did not want to alert the New South Wales Trustee & Guardian to the fact that you had withdrawn by that stage $83,000 from your mother’s account.

A.   No, that’s incorrect. (T 35.26)

47. At the end of the plaintiff’s cross-examination, the following exchanges occurred:

HER HONOUR:

Q.   Thinking only about the questions that you’ve just been asked, is there anything else you want to tell the Court about what you saw, heard or did?

A.   I’m not sure if I’m repeating anything here, but as I said, this is incomplete. There is – I sent them the documents and everything that they asked for when they queried something--

Q.   Who’s “them”?

A.   Sorry, the Trustee. I sent the trustee whatever they asked for. I sent it to them. Because as I said, doing it on the phone was really hard and as I said, there was certain stuff I couldn’t get onto there so they asked for it to be sent and it was done so.

48. It is clear from the Magistrate’s judgment (in the passage set out at [11] above), that the Magistrate found that the Court had jurisdiction and that Cora was not statute-barred because there was no plea of the Limitation Act in the present plaintiff’s defence.

49. Ultimately, the Magistrate did not make findings of fraud or deceit against the present plaintiff. Her Honour said:

Cora's pleadings were that the fraud, deceit, and concealment related to the withdrawal of the money. At hearing, though, the plaintiff argued instead that the allegation related to Gaye's non-compliance with the requirement for complete accounts. …

…

For the reasons I have given, Gaye's evidence cannot be believed. I must find that she, first, did not use the $65,000 for Cora's benefit, second, misused her position as Cora's financial manager, third, has had the benefit of Cora's funds, and, fourth, has deprived Cora of Cora's use and benefit of Cora's funds. I also must find that Gaye fraudulently concealed her conduct in withdrawing the funds by failing to submit completed annual accounts for Cora's estate.

50. Given that the claim made by Cora was for the money that she alleged the present plaintiff had retained to her own the benefit, the Magistrate’s finding about fraudulently concealing her conduct was strictly unnecessary. To the extent that it was made for the purpose of s 55 of the Limitation Act, it was also unnecessary because the Magistrate had earlier found that the action was not statute-barred by reason of the failure of the present plaintiff to plead the Limitation Act in accordance with s 68A and r 14.14 UCPR.

51. However, fraudulent concealment had been pleaded, the basis for it was set out in the “Summary of the Plaintiff’s Case”, the plaintiff was aware that the issue of what documents and information she had supplied to the Trustee was what was being litigated (her Defence and her cross-examination of Mr McCarthy make that clear), and the matter had been put to her in cross-examination (above at [46]). It was not, therefore inappropriate for the Magistrate to make findings on the issue.

50. Whilst accepting that the proceedings brought by Cora were in the Local Court where greater informality might be permitted both in pleading and procedure, it was quite inappropriate of those acting for Cora to include the pleading in paragraph 6A of the amended statement of claim without providing proper particulars as r 14.14(1) requires. Although, as noted above, the basis for the fraudulent concealment claim was disclosed prior to the hearing, no particulars were ever given of the claims for fraud or deceit, nor were those claims expressly abandoned.

51. In Sgro v Australian Associated Motor Insurers Ltd [2015] NSWCA 262 Beazley P (with whom Meagher JA and McDougall J agreed) said:

[55]   The seriousness of raising a question of fraud underlies the express pleading requirement that fraud be clearly pleaded and properly particularised: Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 14.14. The pleading must allege the acts involved and that they were done in a manner that involves fraud: Banque Commerciale SA v Akhil Holdings Ltd [1990] HCA 11; 169 CLR 279 at 285; Minister Administering the Crown Lands Consolidation Act and Western Lands Act v Tweed Byron Local Aboriginal Land Council (1990) 71 LGRA 201 at 203-204.

[56]   In Ghazal v Government Insurance Office (NSW) (1992) 29 NSWLR 336 at 344, Kirby P observed, in the context of the manner in which a case was run at trial, that it is necessary to fairly confront a person with the suggestion that a case is false or fraudulent. His Honour pointed out that this was once considered a question of fairness but was now accepted to be a basic obligation of procedural justice: Somaghi v Minister for Immigration, Local Government and Ethnic Affairs (1991) 31 FCR 100; 102 ALR 339 at 108-109, 118-119; Inzaurralde v Government Insurance Office of New South Wales (Court of Appeal, 28 October 1992, unreported) per Mahoney JA; Ghazal at 345.

54. Counsel for Cora submitted that it was not raised before the Magistrate that no particulars of fraud or deceit had been provided, and in accordance with what was said in Cappello v Hammond & Simonds NSW Pty Ltd [2021] NSWCA 57 at [37], the point now cannot now be taken on appeal. That might be thought to be a harsh approach where the present plaintiff was acting for herself in the court below, and in circumstances where, to have ensured a fair trial, the Magistrate should have ensured that adequate particulars of the fraud and deceit alleged in paragraph 6A had been provided to the present plaintiff, or her Honour ought to have ruled that such claims could not be pursued.

55. However, notwithstanding that the pleading was defective, nothing flows from that in circumstances where the claims were not pursued and no findings were made. The principal findings of the Magistrate were that, because she did not believe the present plaintiff and by reason of the evidence presented by Cora, the present plaintiff did not use the $65,000 for Cora’s benefit and had the benefit of those funds for herself. Those findings were sufficient to justify the judgment given in favour of Cora against the present plaintiff.

56. The Magistrate did not permit Cora to rely on a claim of fraud because such claim was not pursued. A claim for fraudulent concealment was pursued but, despite the initial lack of particularisation, there was no unfairness to the plaintiff for the reasons given. The ground identified, in the circumstances, is not one “only on a question of law” but involves a question of mixed law and fact. Leave should not be granted because the ground is not, in any event, made out.

Ground 5:   The learned Magistrate erred, as a matter of law, in finding that the Calderbank Offer dated 2 August 2023, was a valid offer of compromise capable of reliance in support of an award of indemnity costs

57. At the conclusion of the judgment, the solicitor for Cora tendered documents including a letter containing a Calderbank offer. The Calderbank offer was served on 2 August 2023 and made an offer that Cora would accept that judgment against the present plaintiff for the sum of $35,000 together with costs fixed in the sum of $10,000. The offer was said to be open until 5:00pm on 9 August 2023.

58. On 15 September 2023, a further letter was sent by Cora’s solicitors saying that a lump sum costs order of $30,000 would be accepted in full satisfaction of costs owing to the NSWTAG. That offer was said to be open until 4:00pm on 18 September 2023.

59. In relation to costs, the Magistrate said this:

In this case, there was a Calderbank offer. It seems to the Court to have been a genuine offer of compromise. The offer was made on 2 August. Today's date is 19 September. There was plenty of time, quite a reasonable period of time to respond to that letter. It was open for seven days and, as I've said, it was a genuine offer.

Now, I'm satisfied that the plaintiff should have its costs in relation to that Calderbank and giving effect to that Calderbank offer. Now, I'm asked today to fix costs. If costs are fixed, there is a discount, a significant discount that is given. I've got material before me that satisfies me that the cost in this matter is in this region of $47,500, the plaintiff's costs and the plaintiff is offering to accept $30,000, which is a significant reduction indeed.

Now given the nature of these proceedings, the way in which they were conducted, I have to say that I must agree with Ms Morris, I can have no confidence other than that and in fact, what I've just heard from Ms White, I can have no confidence that any cost issue will be other than a protracted issue for the plaintiff. And I do note there is nothing in any legislation that entitles anyone to costs assessment.

AND TODAY I MAKE A COST ORDER. THE DEFENDANT IS TO PAY THE PLAINTIFF'S COSTS OF THE PROCEEDINGS AS PER THE 2 AUGUST 2023 CALDERBANK OFFER, BUT THOSE COSTS ARE FIXED IN THE SUM OF $30,000.

60. The plaintiff submitted that the offer was only open for seven days which was unreasonable in the circumstances of the case. The plaintiff submitted it should have been open for at least 14 days, which is accepted as a reasonable time frame in which to contemplate an offer.

61. The plaintiff submitted that in calculating indemnity costs, the Magistrate incorrectly allowed indemnity costs for the entirety of the claimed costs rather than from the date the offer was taken to have been rejected, being 10 August 2023. That can be discerned from the fact that the evidence was that the entirety of the costs amounted to $48,623, and the gross sum costs order was fixed at $30,000. In that way, the plaintiff submitted, the Magistrate erred in fixing the costs at a sum which exceeded the amount to which Cora was entitled.

62. Although the Magistrate does not expressly say she is awarding indemnity costs, the plaintiff submitted that a figure of $30,000 as a lump sum costs order could not be simply referable only to party-party costs plus indemnity costs from 10 August, when the costs totalled $48,623.

63. The ground involves a question of mixed fact and law, and, in any event, falls within s 40(2)(c) of the Local Court Act. In either case, leave is required to appeal on such a ground.

64. If leave to appeal is necessary, it is well established that a party seeking leave to appeal must point to something more than error. This may require showing an issue of principle, a question of general public importance, or an injustice which is reasonably clear, in the sense of going beyond what is merely arguable: Secretary, Department of Family and Community Services v Smith (2017) 95 NSWLR 597; [2017] NSWCA 206 at [28]; Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 at [32]-[37]; John Maiolo t/as M & N Peninsular Kitchens & Joinery v Chiarelli [2017] NSWSC 982 at [29]-[31].

65. There are two aspects to the plaintiff’s ground. The first is that the Magistrate erred in holding that a seven day’ period was reasonable. The second part of the ground is that the Magistrate must have had in mind indemnity costs for the whole period of the proceedings to have awarded an amount of $30,000.00 in the circumstances.

66. In relation to the period of time the offer was open, the decision whether or not it was a reasonable period was ultimately a discretionary decision for the Magistrate. In such circumstances the plaintiff would need to demonstrate a House v The King (1936) 55 CLR 499; [1936] HCA 40 type of error. No such error is identified.

67. In relation to the amount of the lump sum costs order, the plaintiff effectively asks this Court to conclude that the proportion between $30,000 and $48,623 is such that it must include indemnity costs prior to 10 August 2023. That is on the basis, presumably, that, ordinarily where indemnity costs lump sum costs orders are made, a significant discount is imposed on a broad brush basis taking into account contingencies: Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 at [21] and [22]; Hamod v State of New South Wales [2011] NSWCA 375 at [813]-[820]; and Zepinic v Chateau Constructions (Aust) Ltd (No 2) [2014] NSWCA 99 at [31].

68. I do not consider that it can be concluded that the Magistrate wrongly approached the assessment of the lump sum by awarding indemnity costs for the period prior to 10 August 2023. The ratio between the costs ordered and the total costs was approximately 61.7%. The period after 10 August included the hearing itself and the preparation for that hearing where significant costs would be incurred and would be recoverable to a large extent, even though on a party-party basis.

69. The further difficulty for the plaintiff is that the plaintiff cannot show that anything more than error has occurred, on the assumption that she is able to do that. No point of principle is involved, and the proceedings involve a relatively small sum of money. No reason is shown for the grant of leave in respect of this ground of appeal.

Conclusion

70. I make the following orders:

1. Dismiss the amended summons.

2. The plaintiff is to pay the defendant’s costs.

**********

Decision last updated: 14 March 2024