Bird v Bird

[2013] NSWCA 262

Court of Appeal (NSW)|2013-07-18|Before: Beazley P, Macfarlan JA, Ward JA

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Source facts

Court

Court of Appeal (NSW)

Decision date

2013-07-18

Before

Beazley P, Macfarlan JA, Ward JA

Source

Original judgment source is linked above.

Judgment (25 paragraphs)

[1]

Barnes v Addy (1874) LR 9 Ch App 244 Consul Development Pty Ltd v DPC Estates Pty Ltd [1975] HCA 8; 132 CLR 373 Howe v Teefy [1927] 27 SR (NSW) 301 Johnson v Perez [1988] HCA 64; 166 CLR 351 Murphy v Overton Investments Pty Ltd [2004] HCA 3; 216 CLR 388 Re Hallets Estate [1880] 13 Ch D 696 Sellars v Adelaide Petroleum NL [1994] HCA 4; 179 CLR 332 Wardley Australia Ltd v Western Australia [1992] HCA 55; 175 CLR 514 Winnote Pty Ltd v Page [2006] NSWCA 287; 68 NSWLR 531 Category: Principal judgment Parties: Deborah Michelle Bird (Appellant) Warrick Lindsay Bird (First Respondent) Rodney David Bird (Second Respondent) Herbert James Cannington (Third Respondent) Estate of Mona Ethel Bird (Fourth Respondent) Representation: Counsel: B W Rayment QC/J S Drummond (Appellant) R Darke SC/M K Condon SC (First and Second Respondents) C Champion (Third Respondent) Solicitors: Wilson & Co Lawyers (Appellant) Hills Solicitors (First and second Respondents) Middletons Lawyers (Third Respondent) File Number(s): CA 2012/203657 Decision under appeal Jurisdiction: 9111 Citation: Bird v Bird (No 4) [2012] NSWSC 648 Bird v Bird (No 5) [2012] NSWSC 734 Before: Rein J File Number(s): SC 2005/262267

[2]

Judgment 1BEAZLEY P: I agree with Macfarlan JA. 2MACFARLAN JA: These proceedings concern a dispute between the appellant, Deborah Bird, on the one hand and her brothers, Warrick and Rodney Bird (the first and second respondents) and a solicitor, Mr Herbert Cannington (the third respondent) on the other. 3Prior to his death in 1996, the late Mr Percy Bird, the father of Deborah, Warrick and Rodney, granted Powers of Attorney to his wife Mona and to Warrick and Rodney. In 1993, acting under the Powers of Attorney, Mona sold four properties owned by Percy but, without Percy's authority, deposited the proceeds of sale into a bank account in her own name. 4After Percy's death in 1996, his executors, Warrick, Rodney and Mr Cannington, did not identify this wrongful action taken by Mona and consequently did not take any steps to recover the sale proceeds from her. 5In 2005 Deborah commenced the present proceedings claiming: (a) that Warrick and Rodney received from Mona part of the sale proceeds with knowledge that they were obtained by her without Percy's authority and that they were therefore liable under the first limb of the principles in Barnes v Addy (1874) LR 9 Ch App 244 to indemnify the estate in respect of Percy's loss of that part of the proceeds; and (b) that the executors breached their duties by not attempting to recoup the sale proceeds from Mona (that is, that they committed a devastavit) and seeking orders that they indemnify Percy's estate for the loss it suffered. 6At least on appeal, the respondents did not contend that Deborah did not have standing to bring the proceedings and all parties agreed that, as Percy's will provided for his residuary estate to be divided equally between his three children, Deborah should be treated as entitled to an order for payment directly to her of one-third of any amount to which the estate is found to be entitled. No order would then be made in favour of the estate as the other two residuary beneficiaries are the principal defendants. 7After a lengthy hearing in the Equity Division, Rein J rejected Deborah's Barnes v Addy claim on the basis that Warrick and Rodney were not proved to have known that their receipts were of funds Mona obtained by acting without Percy's authority and his Honour rejected her devastavit claim upon the grounds that Deborah had suffered no loss and that the claim was in any event statute barred. 8For the reasons that follow, my view is that Deborah's appeal should fail in relation to her Barnes v Addy claim but succeed in relation to her devastavit claim.

[3]

FACTUAL CIRCUMSTANCES 9By his will of 31 July 1991 Percy gave Mona a legacy of $300,000 and two properties owned by him, known as Lots 161 and 163, with the residue to be divided equally between Warrick, Rodney and Deborah. By a codicil of 11 April 1994, he provided that if by the date of his death he had disposed of Lots 161 and 163, Mona was to have a legacy of $700,000, to be reduced to $500,000 in the event that she had by then "acquired another home". 10Until Percy became ill in 1991, Mona received a weekly allowance from him and possessed only a bank account in her own name ("Account 6307") and a property known as Carrington which she had inherited from her parents. 11In 1991 Percy executed a Power of Attorney in favour of Mona, Warrick and Rodney. It was drafted by his solicitor, Mr Cannington, who also prepared his will and codicil. Percy executed a second Power of Attorney, which was relevantly in the same terms, on 28 March 1994. In both, a line was drawn through a clause in the following terms: "In the exercise of the authority conferred on him/them by Section 163B of the Conveyancing Act 1919, my attorney/ies is/are authorised to execute an assurance or other document or do any other act whereby a benefit is conferred on him/them." 12In both Powers of Attorney, the word "NIL" appeared under a heading "Conditions and Limitations". 13Percy was admitted to hospital in 1993 and thereafter to convalescent and nursing homes where he remained until his death. At about the time of his admission to hospital, the funds in bank accounts operated by Percy were transferred to accounts in the joint names of himself and Mona. In 1993 and 1994, with the assistance of Warrick and Rodney and acting under the Powers of Attorney, Mona sold Lots 161 and 163, as well as two other properties owned by Percy and referred to in the proceedings as Bonnington and Marks Point. The cheques in payment of the sale proceeds were payable to Percy but were deposited to Account 6307 in Mona's name. Why Mona's bank permitted this was not explained by the evidence. 14Late in 1994 Mona purchased a property referred to in the proceedings as Ashtonfield upon which, in the following year, she erected a home for herself to live in. Her total expenditure on this property was $228,328.05 (Judgment [20]). 15After Percy's death on 2 September 1996 probate of his will was granted to Warrick, Rodney and Mr Cannington. Partial payments of Mona's legacy of $500,000 commenced on 28 November 1996. In total, she was paid $445,586.70 of the legacy. 16Deborah commenced the present proceedings in 2005. Initially Mona was not a party, but she was subsequently joined as a result of an observation by Palmer J that, being a beneficiary under Percy's estate, she should be a party. Deborah made no claim for relief against her. 17Mona swore an affidavit that was read in the proceedings but died on 26 January 2011, before the final hearing at first instance.

[5]

The Barnes v Addy claim 20The primary judge held that from the sale proceeds Mona gave Warrick at least $79,000 and Rodney $274,000 (Judgment [83] - [84]). 21His Honour then noted, first, that the elements of a claim under the first limb of Barnes v Addy are the receipt of trust property and knowledge of the recipient that the property was obtained in breach of trust or fiduciary duty, and, secondly, that Warrick and Rodney's knowledge was alleged to be actual knowledge as distinct from any form of constructive knowledge (Judgment [92], [94]). 22His Honour rejected Deborah's Barnes v Addy claim because he was not able to conclude that Warrick and Rodney were aware that Mona's authority under the Powers of Attorney was limited and that she placed the sale proceeds in an account solely in her name, knowledge of both of these matters being essential to establish that they had notice of Mona's wrongdoing. 23His Honour's reasoning was as follows: "96 ... I do not believe Rodney and Warrick when they say they did not read the powers of attorney. However, whilst I am prepared to find that they did read the powers of attorney, I am not convinced that on reading the powers of attorney, they must have appreciated that the powers of attorney were limited. I say that because, without legal training and, I would add, some knowledge of powers of attorney, the route to understanding that the power of attorney is subject to a limitation requires: (a) a reading of what had been struck through in the two powers; and (b) regard to be paid to s 163[B] of the Conveyancing Act 1919. In this connection it will be observed that under the heading 'Limitations' in the powers of attorney the word 'Nil' appears and it would be more productive of clarity if in these forms reference were made under that heading to a limitation on benefit to the donees of the power, rather than striking through words prior to that, which words having been struck through might not be read even by a prudent person. 97 Warrick said in cross examination that he did notice the word 'Nil' under the heading 'Limitations'. It was not put to Rodney and Warrick that they had read the powers of attorney and that, having read them, they then appreciated the powers of attorney were limited or that, had they read them, it would have been clear to them that they were limited or that they knew they were limited and I am not able to conclude that not only did they read them but that having read them, it was or would have been clear to them that they were limited. 98 Mr Grieve [senior counsel for Rodney and Warrick] pointed out at T1083 and T1085.1 - 11 that it was not put to Rodney or Warrick that they knew that Mona had placed the money in an account operated solely in her name and Mr Drummond [counsel for Deborah] did not challenge that contention in his submissions."

[6]

The devastavit claim against the executors - no loss suffered 24The primary judge noted that executors are under a positive duty to call in and collect the assets of the deceased and that they are liable to the estate for any loss caused by breach of this duty (Judgment [104] - [105]). His Honour then held that the executors should reasonably have become aware by the end of 1996 that Mona had misappropriated the proceeds of sale of the four properties (ibid [113]). 25To assist in determining what would have occurred if the executors had not breached their duty, he determined, as follows, what amount would have been recoverable by the executors from Mona if she had been sued. 26His Honour concluded that the estate's prima facie entitlement of $838,979.75, representing the misappropriated sale proceeds, should be reduced to $455,011.70 by four set off items as follows. 27First, his Honour considered that Mona's expenditure of $228,328.05 in relation to Ashtonfield (see [14] above) should be deducted for the following reasons: "(1) I think that had the estate been entitled to claim that Ashtonfield was purchased with funds owned by Percy and that Mona should not have the beneficial interest in the house, Mona would then have been entitled to $200,000 in lieu by the terms of the will or she would at least have had a credible case to that effect; (2) I think that had Deborah's views been sought, she would have agreed that the $228,328.05 should be deducted (see T109 - T110 and T123.32 and see Deborah's letter of 20 October 2006 in Exhibit D at pp1705 - 1710, Court Book 6) and there is no question that would have been the view of the other two residuary beneficiaries; and (3) although it was not a financial benefit, there was some personal benefit to Percy by virtue of Mona moving closer to the nursing home." 28Secondly, his Honour held that a deduction of $14,230 should be made for funeral and legal expenses paid by Mona on behalf of the estate. The parties agreed on appeal that this deduction was appropriate. 29Thirdly, his Honour considered that an amount of $82,759 should be deducted. This represented one-half of a debt owed by the estate to P C Bird Pty Ltd, a company whose shares were effectively half owned by Mona. 30Fourthly, his Honour considered that an amount of $58,651 should be deducted. At the date of Percy's death this amount was contained in a bank account in the joint names of himself and Mona. It was disbursed by the estate rather than being paid to Mona, as was her entitlement as the surviving joint tenant. 31His Honour noted that, the net entitlement of the estate to be paid by Mona thus being $455,011.70, the amount of Deborah's claim (excluding interest) would prima facie be one-third of that, that is $151,670.56 (Judgment [124]). However, his Honour took the view that Deborah's receipt from Mona of three categories of payments or benefits amounting to $163,295.33, and therefore exceeding her prima facie claim of $151,670.56, indicated that Deborah suffered no loss, with the result that her devastavit claim failed (Judgment [128] and [138] - [139]). 32These receipts first comprised payments of $98,490.90 that the primary judge held Mona to have paid Deborah out of the proceeds of sale. I will return to this item below. 33Secondly, his Honour took account of a payment by Mona to Deborah of $50,000 out of one of the instalments of Mona's legacy. 34Thirdly, his Honour took account of the estate's non-payment to Mona of a portion of her legacy of $500,000. His Honour considered that this non-payment conferred a benefit on Deborah, to the extent of one-third of the unpaid portion. He calculated this non-payment as $44,413.30, with one-third being $14,804.43. It was however pointed out on appeal that these figures are incorrect, the correct figures being $54,413.30 and $18,137.76 respectively. The error did not have any impact on the judge's reasoning process. 35Referring to the first item, the amount of $98,490.90 held to have been paid by Mona to Deborah out of the sale proceeds comprised $26,223 expended by Mona to purchase a motor vehicle for Deborah, $6,000 for some other expenses and $66,267.90 towards renovations of Carrington, a property owned by Mona in which Deborah and her family lived (Judgment [85] - [86]). 36The primary judge's reasoning in relation to this item was as follows: "87 In my view, whilst the money expended on Carrington by Mona out of the proceeds was technically not given to Deborah, at the relevant time the expenditure was for Deborah's benefit as she resided in the home rent-free and had an understanding that in due course the house would be hers (as in fact occurred). I think that in any calculations of what Deborah would be entitled to as a share of money recoverable from Warrick and Rodney or by the estate from Mona, the total of the monies spent on Carrington and the other monies paid to or for Deborah (such as the vehicle), being $98,490.90, needs to be taken into account as monies for Deborah's direct benefit." 37The primary judge then noted that whilst Deborah received $98,490.90 out of the sale proceeds, Rodney received $275,000 and Warrick received $79,000, being in total $452,490.90, approximately equivalent to the net sum to which the estate was entitled from Mona (Judgment [132] - [133]). As is obvious, Rodney received more than his one-third share and Deborah and Warrick receiving less. 38The primary judge then concluded: "134 This leads me to think that the problem with which the executors would have been faced would have been capable of resolution by an adjustment whereby Deborah would receive another $52,339.40 (plus interest) to bring her share to $150,830.30 (plus interest). That is all that would need to be paid by Rodney, were he acting reasonably, or by Mona, if Rodney would not cooperate. 135 I raised this approach with the parties in submissions. Mr Drummond [counsel for Deborah], although making clear that in his view the adjustment would need to have been higher, based upon the contention that neither the $228,328.05 for the Ashtonfield property nor the $58,651 for Account 0275 should be deducted, contended that his client would have accepted an adjustment approach. Mr Grieve [senior counsel for the defendants] did not contend that his clients would have disagreed with an adjustment approach but contended that Deborah would not have agreed to such a proposal. 136 I think it is more probable than not that Deborah would have accepted an adjustment which "evened out" the amount which the residuary beneficiaries received out of the portion of the proceeds of sale which Mona would otherwise be required to repay ... ... 138 In the event that Rodney was not himself willing to pay an amount of $65,000 (to allow for interest on the monies) to Deborah to balance the lack of equality of distribution, I think it is more probable than not that Mona would not have contested the withholding of $65,000 from the legacy due to her ... ".

[9]

Knowledge that Mona lacked authority 43Deborah's case at first instance was not put on the basis that Warrick and Rodney should have realised that as a matter of general law and commonsense an agent cannot use the principal's funds for the agent's own purposes unless specifically authorised to do so. Rather, it was put on the basis that the Powers of Attorney denied the attorneys such authority and that Warrick and Rodney read those documents, including the crossed out clause otherwise conferring authority on the attorneys to use Percy's funds for their own benefit. 44The primary judge rejected Warrick and Rodney's evidence that they did not read the Powers of Attorney and found that they did so (see [23] above). The basis upon which his Honour made the latter finding is not however clear as rejection of their evidence does not of itself prove the converse and no other reasoning was given. Further, it is not clear whether the primary judge considered that Warrick and Rodney had read the clause that had been crossed out. However it is at least clear that his Honour took the view that, if they did read it, it was not established that reading it led them to appreciate that the Powers of Attorneys were relevantly limited. This seems to me to be the correct conclusion in circumstances where they denied in their affidavits that they were aware of any impropriety on Mona's part, there was no specific evidence indicating the contrary and their cross-examiner did not suggest that they were so aware and the means by which they became aware. 45Whilst Warrick and Rodney were on notice through the pleadings that such awareness was alleged against them, the primary judge could not in my view have made a finding to that effect without the means by which they became aware being put to them in cross-examination. It needed to be put to them that they read the part of the document that had been deleted, understood that if it had not been deleted it would have conferred authority on the attorneys to use the principal's money for their own purposes, that its deletion resulted in there being no such authority and that in the case of Warrick who said that he read the reference in the documents to "limitations" being "nil" that that reference did not mean that the attorneys had unlimited authority. In the absence of this occurring and giving rise to evidence capable of supporting Deborah's case, a realistic inference that the attorneys did not read and appreciate the significance of the deleted clause remained, with Deborah not having established the contrary on the balance of probabilities. 46I do not accept Deborah's submission that Warrick and Rodney's understanding of the Powers of Attorney was irrelevant: the allegation that they had actual notice of Mona's breach called for proof of their subjective appreciation of her lack of authority. Nor do I accept Deborah's submission that the primary judge erred in treating her as bearing an onus of proof. Contrary to her submissions, the legal and evidentiary onus in respect of this issue remained on her. The position was not, as she submitted, analogous to one where a party is contractually bound by a document that he or she signs. Warrick and Rodney did not sign the Powers of Attorney and, in any event, the issue is not one of contractual liability but of liability under equitable principles in respect of the receipt of monies known to be the fruits of wrongdoing. If, as here, the case is based on actual notice, that is what must be proved by the person propounding the case.

[11]

WHETHER LOSS PROVED 49There was no challenge on appeal to the primary judge's finding that in accordance with their duties the executors ought to have discovered, if they did not already know it, that prior to Percy's death Mona, acting under the Powers of Attorney, had sold four substantial properties owned by Percy and wrongfully failed to account to Percy for the proceeds. 50Further, in findings that were unchallenged on appeal, the primary judge concluded that if the executors had complied with their duties, they would have sought the views of the beneficiaries about the position and that an agreement would probably have been reached between them, Mona and the residuary beneficiaries under which Deborah would receive an additional amount to bring her receipts from the misappropriated sale proceeds to one-third of the net amount considered to be recoverable from Mona (see [38] above). Again unchallenged was his Honour's view that if Rodney (who had received more than his share) was not willing to make up the difference to Deborah, Mona would have agreed to the adjustment amount payable to Deborah being withheld from her legacy (ibid). 51Approached in this way, any loss suffered by Deborah as a result of the executors' breach is commensurate with the amount that is likely to have been agreed to be paid to her as a result of these discussions. Whilst the ascertainment of this amount is undoubtedly difficult, such difficulty does not preclude the Court from performing its duty to make the best assessment that it can make on the evidence before it (Howe v Teefy [1927] 27 SR (NSW) 301 at 306; Johnson v Perez [1988] HCA 64; 166 CLR 351 at 363). The assessment of damages where the defendant has allowed a cause of action to become statute barred may well require a broad brush approach (see Johnson v Perez at 367). It is necessary here for the Court to consider the probability of the parties reaching an agreement in particular terms and to adjust its award of damages to reflect the degree of probability (see Sellars v Adelaide Petroleum NL [1994] HCA 4; 179 CLR 332 at 349 - 50). 52To ascertain Deborah's entitlement, the primary judge looked first at the set-offs that Mona had against her liability to restore the misappropriated proceeds of sale and secondly at the amounts of the misappropriated proceeds which Deborah had already received from Mona. On appeal, the parties proceeded upon the basis that the appeal should in essence be resolved by the Court concluding whether and to what extent his Honour's views as to those set-offs and receipts were sound because these conclusions would identify the amount, if any, that the parties would, if the executors had not breached their duties, have been likely to have agreed that Deborah should be paid. 53As noted earlier, his Honour concluded that four identified set-offs would have reduced the amount recoverable from Mona to $455,011.70 and that Deborah had effectively already received her one-third share of this amount ($150,830.30) by means of three identified receipts (see [26] to [37] above), with the consequence that no amount would have been agreed to be paid to her and she therefore suffered no loss as a result of the executors' breach. 54I turn therefore to consider the four identified set-offs and three identified receipts.

[12]

The Ashtonfield set-off 55The primary judge's principal point about the expenditure of $228,328.05 on Ashtonfield was that, on the assumption that the expenditure came from the misappropriated proceeds of sale, Mona would have held that property on a constructive trust for the estate, with the result that prior to Percy's death Mona had not, in the words of the codicil, "acquired another home" because she had not become the beneficial owner of Ashtonfield (see [27] above). On this basis, Mona would, on the terms of the codicil, have been entitled to a legacy of $700,000 rather than $500,000, and she would have been entitled to set-off her additional legacy entitlement against the claim against her for restoration of the misappropriated sale proceeds. This does not, as the appellant appeared to suggest, mean that the estate would have been entitled to double recovery - both the $228,328.05 that was expended in relation to Ashtonfield and the property itself. Rather, the estate's claim to that amount would effectively have been secured by its constructive trust interest in the property. 56In my view the logic of the primary judge's approach on this point was sound. However, the assumption upon which it rested, that the expenditure on Ashtonfield came out of the misappropriated sale proceeds, was challenged by Deborah. My views on that challenge are as follows. 57The expenditure on Ashtonfield was debited to Account 6307 into which Mona had placed the misappropriated sale proceeds. However, prior to deposit of the sale proceeds there was in the account a balance of $139,562.79 representing Mona's own funds. Furthermore, prior to the expenditure on Ashtonfield an amount of $32,965.70, to which Mona was entitled, was deposited to the account. Upon the basis of the principle in Re Hallets Estate [1880] 13 Ch D 696 (at 719 - 720, 727 - 728, 737) that a trustee is presumed in making payments for his or her own benefit from a mixed fund to have drawn so far as possible on his or her own funds rather than trust funds, Mona should be presumed to have used these two amounts, totalling $172,528.49, in relation to Ashtonfield, with the balance of the $228,328.05 expenditure ($55,799.56) necessarily being drawn from the misappropriated sale proceeds in the account. 58The question then is whether, notwithstanding that $55,799.56 of the misappropriated sale proceeds were used in relation to Ashtonfield, Mona's acquisition of that property constituted an acquisition by her of "another home" in the terms of the codicil. As, on this basis, Ashtonfield was to the extent of about 75 per cent beneficially owned by Mona, I consider the better view to be that it was such an acquisition and that Mona would not therefore have been entitled to the $200,000 increment in her legacy. However I consider that a deduction of $50,000 should be made to allow for the possibility that in their negotiations the parties may have been advised that Mona was entitled to the additional legacy or should be given a set-off of the sum of $55,799.56 applied to the property. 59In allowing a set-off of the full amount of $228,328.05 spent by Mona on Ashtonfield, the primary judge took into account, as a second matter, a conclusion that Deborah would have been likely to agree to this course (see [27] above). However Deborah made it clear in her evidence that she did not know how much money of her own her mother had in the bank and did not know whether the expenditure on the property was from the misappropriated funds (Transcript p 211.38). I do not consider that it can be inferred that if, as I think would have occurred, she received advice that the expenditure on Ashtonfield was only to a limited extent out of the misappropriated funds, she would have agreed to deduction of the whole amount. 60The third matter to which the primary judge referred was the fact that Mona's purchase of Ashtonfield was of some benefit to Percy because it resulted in Mona moving to live closer to Percy's nursing home. As his Honour recognised, that was not a benefit that was quantifiable in monetary terms. There is no basis on which Mona could have relied upon it as a partial defence or set-off to the estate's claim for restitution of the proceeds and I see no reason why in their discussions the parties, assuming they were properly advised, would nevertheless have treated it as such. 61In summary as to Ashtonfield, I consider that the proper legal advice to the parties would have been that because Ashtonfield was largely beneficially owned by her, Mona was not entitled to a $200,000 increment in her legacy but to reflect some uncertainty in the position she should be allowed a set-off of $50,000. This compares to the set-off of $228,328.05 allowed by the primary judge. I note that on appeal the respondents accepted that the set-off for the Ashtonfield expenditure should be reduced by $1,809.50. However, in light of my conclusions in relation to that expenditure, that concession is of no consequence.

[18]

The $98,490.90 receipt 70The primary judge concluded that Deborah had received from Mona $98,490.90 out of the misappropriated sale proceeds (see [32] above). This amount comprised the amount of $66,267.90 expended on Carrington, $26,223 for a motor vehicle and another amount of $6,000 (Judgment [86] - [87], [127]). Evidence appeared to establish that the amount of $6,000 also related to expenditure on Carrington. 71Deborah challenged the primary judge's conclusion that these amounts came out of the misappropriated sale proceeds. That challenge should be upheld in relation to the amount of $66,267.90 as it was paid prior to Mona's receipt of the misappropriated sale proceeds. The remaining amounts however were paid out of Account 6307 after the misappropriated sale proceeds were deposited into it. In my analysis earlier I have concluded (in Deborah's favour) that those amounts in the account which represented Mona's own money were used in expenditure on Ashtonfield. If they were so used, they were not available for the further expenditure on Carrington and the motor vehicle, with the consequence that that expenditure must have been out of the misappropriated sale proceeds. 72An alternative view would be that those non-trust funds were used for the Carrington payment of $6,000 and the motor vehicle payment of $26,223, but this would lead to the conclusion that more of the trust funds were used for the Ashtonfield expenditure. This alternative analysis might benefit Deborah because she is effectively entitled only to one-third of the benefit of having Mona's set-offs reduced whereas she is entitled to the whole of the benefit of having her receipts of the sale proceeds reduced. However, against her interests is the fact that the more the Ashtonfield expenditure is found to have been out of the misappropriated sale proceeds, the stronger is the argument that the whole of the $200,000 legacy increment should be allowed as a set-off. Balancing these competing considerations, I would make an allowance in her favour of $10,000 for the possibility that the alternative analysis reflects the correct approach. 73Thus Deborah should, under this heading, be treated as having received $22,223 (being $6,000 plus $26,223 less $10,000) out of the misappropriated sale proceeds. As the primary judge held, Carrington was Deborah's family home which, although owned by Mona, was at all relevant times intended by Mona to be transferred to Deborah, as it subsequently was (see [36] above). Expenditure of part of the misappropriated sale proceeds on it therefore constituted a benefit to Deborah and an indirect receipt by her of part of them.

[22]

THE DEVASTAVIT CLAIM - THE LIMITATIONS DEFENCE 78The primary judge held that this defence succeeded because the beneficiaries' (and therefore Deborah's) cause of action accrued, and time therefore commenced to run, when the executors failed to hold back the legacy due to Mona (see [39] above). This conclusion was premised upon the duty of the executors to take advantage of the fact that Mona was entitled to a legacy to recoup at least part of the funds which Mona had misappropriated from Percy. Insofar as Deborah's claim was based on breach of that duty, the primary judge's conclusion was undoubtedly correct as the loss in respect of that breach was suffered when the legacy was paid. 79However where a plaintiff has multiple causes of action, he or she is entitled to rely upon one that is not statute barred even if others are (Winnote Pty Ltd v Page [2006] NSWCA 287; 68 NSWLR 531 at [64]). For this purpose, the Court must consider whether there is in substance more than one cause of action, without regard to any artificial framework adopted by the plaintiff (ibid). Here the gravamen of Deborah's complaint as pleaded and litigated was that the executors failed to identify the misappropriation by Mona and to make demand upon or commence proceedings against her (Second Further Amended Statement of Claim 55 - (iii)). This was a separate cause of action from that based upon their failure to withhold the legacy. In my view no loss was suffered in respect of this cause of action until the time at which any action that the executors might have been able to bring against Mona became statute barred, that is, in 1999 after the expiration of six years from Mona's first misappropriation. On this basis, Deborah's proceedings against the executors were commenced within time because they were commenced within six years of the relevant date in 1999. 80Certainly the executors had the opportunity to recoup part of the loss by withholding Mona's legacy but a similar opportunity might have existed in a variety of circumstances. For example, the fact that the executors might have had the opportunity to recover part of the loss by, say, making demand in year one or commencing proceedings in year three does not necessarily mean that the estate suffered loss when that opportunity was not taken. Subsequent events might establish that it did suffer loss at that time, perhaps because, to take a hypothetical example, it might transpire that in year three Mona had funds to satisfy a judgment obtained but that she did not by year six. 81The position is analogous to that described by the plurality in Wardley Australia Ltd v Western Australia [1992] HCA 55; 175 CLR 514 at 527 in relation to the entry into the indemnity agreement there said to constitute the suffering of loss: " ... In many instances the disadvantageous character or effect of the agreement cannot be ascertained until some future date when its impact upon events as they unfold becomes known or apparent and, by then, the relevant limitation period may have expired. To compel a plaintiff to institute proceedings before the existence of his or her loss is ascertained or ascertainable would be unjust. Moreover, it would increase the possibility that the courts would be forced to estimate damages on the basis of likelihood or probability instead of assessing damages by reference to established events. In such a situation, there would be an ever-present risk of undercompensation or overcompensation, the risk of the former being the greater." 82In the present case there is no evidence to suggest that it was known (if it were in fact the case) that after payment of the legacy to Mona the estate would not have other opportunities to recoup the misappropriated funds from her. Indeed, the evidence suggests the contrary, namely, that Mona had significant funds during the six years following 1993. Accordingly, any loss suffered by the estate as the result of the executors' failure to withhold the legacy was at best contingent at the time the legacy payments were made. Such a loss does not cause a limitation period to commence to run (see Murphy v Overton Investments Pty Ltd [2004] HCA 3; 216 CLR 388 at [46] and [55]). 83For these reasons, the executors' limitation defence fails.

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III MR CANNINGTON'S CROSS-APPEAL AND NOTICE OF CONTENTION 84Mr Cannington's counsel indicated at the hearing of the appeal (Transcript 18 July 2013, p 83) that Mr Cannington's cross-appeal was not being pressed except to the extent that it related to Mr Cannington's claim for contribution or indemnity from Warrick and Rodney (it being agreed that this issue should be remitted for determination by the Equity Division). Nevertheless, counsel did put an argument, falling within the ambit of the cross-appeal, that Percy did not suffer any loss as a result of Mona's placement of the sale proceeds in an account in her sole name because she could, instead, have placed them in an account in the joint names of herself and Percy and then withdrawn the funds. The primary judge rejected this argument, as do I. The fact that Mona might lawfully have been able to obtain use of the funds by dealing with them differently is not in my view relevant. Mr Cannington's submission is no different in principle from an assertion that if Mona had asked Percy for permission he would have been likely to give it. The fact remains that the course Mona took was unauthorised and constituted a misappropriation of the funds. The case must be decided upon the basis of what occurred, not hypotheses as to different courses that might have been taken. 85Counsel for Mr Cannington indicated that he did not press paragraphs 1 to 6 and 11 of his Amended Notice of Contention (Transcript 18 July 2013, p 82). 86The remaining grounds were to the effect that the executors did not breach their duties because Deborah would not have supported an action by the executors against Mona during her lifetime and that any action against Mona would have been likely to have been met by a claim by her under the Family Provision Act 1982. Counsel did not seek to support these grounds with any detailed submissions and I would reject them. The probabilities as to what would have occurred if the executors had complied with their duties are, as the primary judge found, that they would have sought the views of the beneficiaries about the position and an agreement would have been reached between the executors, Mona and the residuary beneficiaries of the type to which I have referred in [50] above. 87It has not been established that any threatened Family Provision Act claim would have led to a different outcome than that envisaged by the primary judge (as varied as to quantum in the way that I have indicated above). Even if Mona had some prospects of success in such a claim, it does not seem to me likely that she would have pressed it. More likely her concern would have been to achieve a fair distribution amongst her children. This is consistent with the primary judge's approach that contemplated that Mona would have made any necessary adjusting payment to Deborah if Rodney had not been prepared to cooperate (see [38] above).

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CONCLUSIONS AND ORDERS 88For the reasons I have given, the primary judge was correct in dismissing Deborah's Barnes v Addy claim but should have upheld her devastavit claim against the executors and entered judgment in her favour for $188,920.25 plus interest. In these circumstances, the executors' cross-claims against each other for contribution and indemnity arise for determination. These cross-claims were not considered by the primary judge and, as requested by the executors, should be remitted to the Equity Division for determination. 89I would reduce to 50 per cent Deborah's entitlement against Warrick and Rodney to her costs of the appeal to reflect her lack of success on her severable Barnes v Addy claim against them. She should have the whole of her appeal costs from Mr Cannington as she was successful on her only claim against him. 90I would order the respondents to pay the whole of Deborah's first instance costs as failure at first instance on one of multiple claims does not ordinarily result in a plaintiff being deprived of his or her costs. I see no reason here to depart from this usual position. 91I propose the following orders: (1) Allow the appeal in part. (2) Set aside orders (1), (3) and (4) made on 5 June 2012 and orders (1) to (4) made on 27 June 2012. (3) Judgment for Deborah Bird against Warrick Bird, Rodney Bird and Herbert Cannington in the sum of $188,920.25 plus interest to be calculated. (4) Order Warrick Bird, Rodney Bird and Herbert Cannington to pay Deborah Bird's costs of the proceedings at first instance. (5) Order Herbert Cannington to pay Deborah Bird's costs of the appeal and order Warrick Bird and Rodney Bird to pay 50 per cent of those costs. (6) Remit the second and third cross-claims to the Equity Division for determination. (7) Direct that, if the parties are able to agree on the order to be made, they submit to the Court a form of consent order identifying the amount of the judgment inclusive of interest to which Deborah Bird is entitled in accordance with these reasons for judgment. (8) If the parties are unable to so agree, direct that they lodge draft orders and submissions in accordance with the following timetable: (a) Deborah Bird to lodge draft orders and submissions within seven days of the date of this judgment. (b) Warrick Bird, Rodney Bird and Herbert Cannington to lodge draft orders and submissions within a further seven days. (c) Deborah Bird to lodge any reply within a further seven days. (9) Direct that the terms of the judgment to be entered in favour of Deborah Bird be determined by the Court on the basis of the draft orders and submissions of the parties without the necessity for a further oral hearing. 92WARD JA: I agree with Macfarlan JA.