These proceedings have gone off the rails for want of a properly pleaded statement of claim, accompanied by an insatiable demand by the plaintiff for discovery.
In the interests of the administration of justice, and the due administration of a deceased estate, the plaintiff's beneficial interest in which underpins his standing to run a case against the defendant, case management orders are necessary in an endeavour to put the proceedings back on track.
In the principal proceedings before the Court the plaintiff (a self-represented litigant) sues the defendant (as the statutory successor of the Public Trustee and in its own right) on what appears to be a claim for equitable compensation for breaches of trust (discussed in Meagher, Gummow and Lehane's Equity Doctrines and Remedies (Butterworths Australia, 5 ed, 2015) at paras 23-020, 23-030 and 23-070) said to arise out of wilful defaults in accounting for moneys formerly held by the Public Trustee on trust for his incapacitated daughter and now held by the defendant as trustee of her deceased estate.
A trustee has an obligation to account which, in the common case, is an obligation to account for moneys actually received. Where there has been a wilful breach of the obligation to account, the trustee may be held liable not only for moneys actually received but also for moneys which the trustee ought to have received.
The defendant contends that, having complied with its statutory obligations, initially, as the trustee (appointed in 1989 under s 4(c)(i) of the Damages (Infants and Persons of Unsound Mind) Act 1929 NSW) of a personal injury compensation award made to the plaintiff's daughter and, following her death, as administrator and trustee of her deceased intestate estate, it now holds on trust for the plaintiff the sum of $2,245,765.40 or thereabouts based on an accounting for actual receipts and expenditure.
Section 4 of the Damages (Infants and Persons of Unsound Mind) Act 1929 was the equivalent of what is now found in the Civil Procedure Act 2005 NSW, s 77. It provided that damages recovered on behalf of a minor were to be paid into court and, unless the Court otherwise directed, to be paid out to the Public Trustee.
The moneys paid out to the Public Trustee in this case appear to have been paid out by way of an order under s 16 of the Infants Custody and Settlement Act 1899 NSW for settlement of the moneys on trust for the plaintiff's daughter (rather than the making of management orders rendering her a protected person in exercise of the Court's protective jurisdiction). Compare P McI v K M McI (1987) 10 NSWLR 243, Re Estate of BL (2006) 69 NSWLR 734, JP v CP [2013] NSWSC 273 and AC v OC (a minor) [2014] NSWSC 53.
By operation of s 5 of the Damages (Infants and Persons of Unsound Mind) Act 1929, the moneys paid out by the Court to the Public Trustee in 1989 were to be "held and applied by the Public Trustee in such manner as the Public Trustee shall think fit for the maintenance and education or otherwise for the benefit of the minor" [the plaintiff's daughter].
The order for the payment out of moneys in court to the Public Trustee was, apparently, made on 30 January 1989 in proceedings numbered 12252/1981. The evidence presently before the Court includes a letter dated 23 February 1989 addressed by the Prothonotary to the Public Trustee notifying the Public Trustee of the order for payment out.
The plaintiff's daughter (N) was born in April 1975 and died in April 2010.
On 23 August 2010 the Court granted to the defendant (in proceedings numbered 2010/275576) letters of administration of N's intestate estate.
Under New South Wales intestacy law, the persons beneficially entitled to N's estate were her parents.
Her mother (the plaintiff's former wife) has been paid a significant sum on account of her interest in the deceased estate during the course of the defendant's administration of it.
The plaintiff (N's father) has not been paid any of his entitlements because he has, before now, refused to sign a formal document (entitled "Declaration of Kinship") required by the defendant to facilitate the payment of his entitlements to him.
That formal document, contrary to his understanding, does not in terms seek a release of any claim that he or anybody else might have against the defendant. It does, however, require a declaration by the plaintiff that his interest in his daughter's estate is not affected by any law of bankruptcy, and that he has not dealt with his interest in the estate so as to confer on another party a right to receive it in whole or part.
Until today the plaintiff appears to have conducted his affairs, and the present proceedings, on an assumption (said by the defendant to be incorrect) that, if he were to receive any part of the money due to him from his daughter's estate, his receipt of that money would prejudice his entitlement to claim anything more from the defendant.
He has been fixated on perceived deficiencies in the defendant's camp, and alleged injustices suffered by his late daughter, apparently unmindful of his own personal, present entitlement to half her estate. He has, irrationally, or perhaps only without a full appreciation of his entitlements, pursued metaphorical birds in the bush, refusing to take the one in his hand.
In the course of interchanges between bench and bar on two separate occasions (namely, 19 February 2015 and today) I have, at times, suspected that the plaintiff has, in fact, preferred not to receive any part of the money due to him (even if on account of a larger sum ultimately found due) because he maintains that the defendant should immediately (without a contested hearing) account, not only for what it has actually received, but also for what he contends it ought to have received.
The plaintiff's contention that there is a difference between these two measures is based, essentially, on his objection to the way that the defendant (in each of its manifestations) has:
1. invested his daughter's money in the "common fund" established under Division 6 (especially ss 36A-36C) of the Public Trustee Act 1913 NSW, incorporating amendments made in 1942, continued in operation by Division 4 of Schedule 1 of the NSW Trustee and Guardian Act 2009 NSW; and
2. deducted from such investments, for its own use and benefit, allowances for its overhead costs as well as indemnification for expenses referable to administration of his daughter's investments, and remuneration by way of fees for service as her trustee.
The plaintiff contends that the defendant (in each of its manifestations) has received substantially more from investment of his daughter's money than it has allowed, by way of interest on those investments, in favour of his daughter.
A secondary contention of the plaintiff appears to be that the defendant (in its guise as the Public Trustee) has been "negligent", in the sense of being in wilful breach of its obligations as a fiduciary in maintaining its role as a trustee for his daughter after she had attained her majority, without taking steps to have her estate administered by the appointment of a protected estate manager under ss 13 and 22 of the Protected Estates Act 1982 NSW, the predecessor of the NSW Trustee and Guardian Act 2009, NSW s 41, with parallel provisions under the Guardianship Act 1987 NSW ss 25E, 25G and 25M.
A third contention of the plaintiff appears to be that in making an interim distribution from his daughter's estate in favour of his former wife, and in doing so without his consent, the defendant acted "negligently", again in the sense of being in wilful breach of its obligations as a fiduciary, so that it is bound to provide him with equitable compensation for a failure to account.
In setting out, in this judgment, what I presently understand to be the case that the plaintiff seeks to make in the principal proceedings, I am not to be taken as expressing any view, one way or the other, as to the availability of such a case, or as to the merits of such (if any) case as may be available. I have taken the course of setting out my understanding of the case the plaintiff seeks to make so as to facilitate his obtaining legal advice before advancing the principal proceedings further.
Before the Court, today, are three notices of motion: One filed by the defendant (on 26 June 2014), and two by the plaintiff (on 23 July 2014 and 18 August 2014). By orders made on 19 February 2015, all three motions have been heard together and, at the same time, the principal proceedings have been before the Court for directions generally.
Via his motions, the plaintiff seeks further discovery from the defendant.
Via its motion, the defendant seeks leave to file an amended defence to the plaintiff's statement of claim filed 3 May 2012. It seeks to articulate statutory defences claimed to be available to it pursuant to the Limitation Act 1969 NSW, the Public Trustee Act 1913 (repealed on 30 June 2009) and the NSW Trustee and Guardian Act 2009.
Neither party has, by the motions formally relied upon, confronted the substantial problem in this case, the absence of a statement of claim in proper form.
The statement of claim filed on 3 May 2012 is deficient in each of the respects identified in r 14.28(1) of the Uniform Civil Procedure Rules 2005 NSW. It discloses no reasonable cause of action. It has a tendency to cause prejudice, embarrassment or delay in the proceedings. It is an abuse of the process of the Court. Its deficiencies are too great to survive cosmetic amendment. It does not seek in any coherent way, at least as a lawyer would understand coherence, the substantive case outlined earlier in this judgment.
The plaintiff has prepared a draft amended statement of claim (reproduced in exhibit D1, a court book, at pages 32-39) but it is no better. It should not be received by the Court if proffered as a pleading to be substituted for the existing statement of claim.
The plaintiff should be held, in his own interests as well as those of the Court and his contradictor, to a regular standard of pleading notwithstanding that he is a litigant in person. Apart from any other consideration, that is because he manifestly has resources available to him, if he but accepts them, to fund legal advice and representation.
Without any objection on the part of the defendant, I propose to make orders designed to have the defendant pay into court that amount of the estate of N which the defendant accepts, as a matter of substance, is held by it on behalf of the plaintiff; and to order that such moneys abide orders of the Court formulated with the intention of ensuring that, if a payment is made out to the plaintiff, his acceptance of such a payment will not prejudice such (if any) case he may seek to advance against the defendant in the principal proceedings.
With the intention of bringing order to the proceedings, and to the ongoing administration of Natasha's estate, I make the following orders:
1. ORDER that the amended statement of claim filed on 3 May 2012 be struck out.
2. ORDER, subject to further order, that the plaintiff file and serve, no later than 8 May 2015 such (if any) amended form of statement of claim he proposes to file.
3. ORDER that the draft document (comprising 39 paragraphs of text of the character of "relief claimed" and "pleading and particulars" of eight pages) entitled Amended Statement of Claim, a copy of which is reproduced at pages 32-39 of exhibit D1, not be received as a pleading in these proceedings.
4. ORDER that the defendant's notice of motion filed on 26 June 2014 be dismissed.
5. ORDER that the plaintiff's notice of motion filed 23 July 2014 be dismissed.
6. ORDER that the plaintiff's notice of motion filed 18 August 2014 be dismissed.
7. ORDER that the moneys presently held by the defendant on trust for the plaintiff as a beneficiary of the intestate estate of N (being the amount acknowledged in paragraph 29 of the defendant's written submissions filed 5 March 2015 (exhibit D4)) be paid into court no later than 20 March 2015 or such later time as may be appointed by the Court (on account of moneys found to be due to the plaintiff in the principal proceedings), to abide the further order or orders of the Court generally.
8. RESERVE:
1. to the plaintiff, liberty to apply for an order that any such moneys paid into court be paid out (in whole or part) to him or as he may direct; and
2. to the defendant, liberty to apply for an order that any such moneys be held or applied (in whole or part) as security for costs, or in satisfaction of any liability the plaintiff may have for costs, in these proceedings.
1. reserve for further consideration all questions as to whether the plaintiff is capable of managing his own affairs and, if not, whether:
1. a tutor should be appointed to conduct these proceedings on his behalf; and/or
2. orders should be made for management of his estate under the NSW Trustee and Guardian Act 2009 NSW or otherwise.
1. ORDER that the plaintiff pay the costs of the defendant, on the ordinary basis, of the notices of motion respectively filed on 26 June 2014, 23 July 2014 and 18 August 2014.
2. ORDER that any liability the plaintiff may have for those costs, after assessment, not be enforced without the leave of the Court or further order.
3. ORDER that the proceedings be listed before the Protective List Judge (Lindsay J) on 29 May 2015 at 9.30 am for directions.
4. RESERVE general liberty to apply to the Protective List judge on three days' notice.
These orders call for additional elucidation in three respects:
First, I have not made any provision for the plaintiff to have the benefit of further discovery because, it seems to me, he has already had sufficient discovery to enable the type of case I understand him to want to advance to be the subject of a proper pleading, and because any requirement for further discovery without the benefit of a properly pleaded statement of claim, and a defence responsive to it, is likely to achieve little to further the proceedings.
Apart from anything else, a properly formulated statement of claim, might anticipate that ancillary accounting procedures can be pursued after a determination of the parties' respective rights and obligations.
Secondly, the scheme of the orders made contemplates that, after the defendant pays moneys into court, the plaintiff will have a reasonable opportunity to seek, at least on a preliminary basis, that he be put in funds (from the moneys paid in) so as to facilitate his obtaining legal advice and representation.
I anticipate that, as a matter of logistics, this process of paying money into court and having some paid out on a preliminary basis will operate to the advantage of both sides of the record, in the long term at least, if there is a degree of cooperation between them.
If the parties agree on terms for the payment out of moneys to facilitate the plaintiff obtaining legal advice and representation, I will allow an application for an order for orders to be made in chambers to give effect to that agreement, sympathetically.
Thirdly, I have reserved for further consideration all questions as to whether the plaintiff is capable of managing his own affairs and, if not, questions relating to orders that might be made following a finding of incapacity for self-management, not intending that such a finding or such orders will necessarily be made, but to ensure that, if there is some need on the part of the plaintiff for protection in this regard, orders can be made affording him that protection without unnecessary costs or delay.
It may be, I fully recognise, that when the plaintiff has had an opportunity to obtain legal advice and to consider his position generally, the element of irrationality hitherto manifested in his conduct of the principal proceedings from time to time will evaporate, and the proceedings can be conducted without any exercise of protective jurisdiction.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 18 March 2015