Woodward v Woodward

Supreme Court of NSW|2015-10-06|Before: White J

Solicitors: Paul Gowran & Co (Plaintiff) File Number(s): 2014/170245

Judgment

HIS HONOUR: The plaintiff, Stephen Woodward, is the executor of the estate of his mother, Ethel Marie Woodward, who died on 19 July 2013.
On 19 November 2011 the Guardianship Tribunal appointed the first defendant, Tyrone Woodward, as financial manager of Mrs Woodward's estate. Stephen and Tyrone Woodward are brothers. The second defendant, Sharon Woodward, is the wife of Tyrone Woodward. There is a third brother, Trevor. In these reasons I will refer to Mrs Woodward's children and Sharon Woodward by their first names. I do so for ease of reading and intending no disrespect.
Mrs Woodward left her estate to be divided equally between her three sons, Stephen, Tyrone and Trevor.
Stephen's primary claim is that an account be taken of all moneys received and disbursed by Tyrone as financial manager of his mother's estate between 19 September 2011 and her death on 19 July 2013. He seeks an order that Tyrone pay the Estate the amount which might be found to be due on the taking of accounts with interest.

Background facts

Mrs Woodward owned a house in Carrington Street, West Wallsend. At different times her children and their families or extended families lived in her house and paid board. On 28 May 2004 Mrs Woodward appointed Stephen as her attorney. Stephen deposed that Mrs Woodward's only income was her aged pension. The insurance premiums on the property and a home care fee for carers were paid by a direct deposit from her bank account. An arrangement was made with the third son, Trevor, who lived in the house, that he would pay water and electricity bills. A claim against Trevor has been settled.
On 22 July 2011 Mrs Woodward's house burnt down. Tyrone and Sharon took Mrs Woodward into their home. She had no clothes other than the nightdress she was wearing and no personal possessions other than her wheelchair. All her other personal possessions were destroyed in the fire. It was necessary to buy new clothes and personal effects for her. When Tyrone and Trevor went to the bank they discovered there was only $10.55 in Mrs Woodward's account. Tyrone purchased various items for his mother from his own money. These purchases were not specifically identified or quantified.
A week later Mrs Woodward and Trevor saw a solicitor and she signed a new power of attorney in favour of Trevor and Tyrone.
On 2 August 2011 Stephen applied to the Guardianship Tribunal for the appointment of himself as financial manager and guardian. On 19 September 2011 the Guardianship Tribunal consented to the withdrawal of the application by Stephen for a guardianship order for Mrs Woodward. It appointed Tyrone as her financial manager, "subject to the authorities and directions of the NSW Trustee". The Tribunal was satisfied that Mrs Woodward was incapable of managing her financial affairs. It recorded that Trevor had raised concerns regarding the management of his mother's affairs by Stephen when acting as her attorney. It recorded that Mrs Woodward was very happy where she was and that there was independent reporting that she was well cared for by Tyrone and his wife. The Tribunal stated that Tyrone did not wish to pursue the concern expressed by Trevor in the way Trevor did, that is by seeking a full investigation and possible laying of charges against his brother Stephen. It recorded that Tyrone agreed that Mrs Woodward could not independently manage her affairs. In deciding that Tyrone was a suitable person to be appointed as financial manager, subject to the authorities and directions of the NSW Trustee, the Tribunal noted that where a conflict of interest and duty might be more apparent than real, it should not necessarily present a bar to the appointment of a family member as financial manager who is otherwise appropriate to act. It said that whilst there was a power of attorney in place the Tribunal was not satisfied that the two attorneys (Trevor and Tyrone) could act in Mrs Woodward's best interests where Trevor wanted to pursue charges against Stephen whilst Trevor in any event owed money to Mrs Woodward's estate. He had a conflict of interest in pursuing moneys he owed to his mother. Hence the Tribunal appointed Tyrone as financial manager subject to the directions and authorities of the NSW Trustee.
The Tribunal was not told that Tyrone was illiterate. Nor was it told of any purported gifts by Mrs Woodward to Tyrone.
The Tribunal's order was made pursuant to s 25M of the Guardianship Act 1987 (NSW). That section is in Pt 3A of the Guardianship Act. Section 25E(1) provides that the Tribunal may in accordance with Pt 3A, order that the estate of a person be subject to management under the NSW Trustee and Guardian Act 2009. Section 25M provides: "25M Tribunal may commit estate of protected person to management (1) If the Tribunal makes a financial management order in respect of the estate (or part of the estate) of a person, the Tribunal may, by order: (a) appoint a suitable person as manager of that estate, or (b) commit the management of that estate to the NSW Trustee. (2) Despite section 61 of the Civil and Administrative Tribunal Act 2013, an order under subsection (1) (a) does not authorise the person appointed as manager to interfere in any way with the estate concerned unless: … (b) the NSW Trustee has, under Division 2 of Part 4.5 of the NSW Trustee and Guardian Act 2009, authorised the person to exercise functions in respect of the estate. (3) However, the person appointed as manager may take such action as may be necessary for the protection of the estate (including action specified by the Tribunal) pending the directions of the Court or authorisation by the NSW Trustee."
Section 66 of the NSW Trustee and Guardian Act (contained in Div 2 of Pt 4.5) relevantly provides: "66 NSW Trustee may authorise and direct functions of other managers (1) The NSW Trustee may, by order: (a) authorise a manager to have all, or any specified, functions necessary and incidental to the management and care of an estate and such other functions as the NSW Trustee may direct or authorise the manager to have or exercise, and (b) give a manager such directions in respect of the orders, authorities and directions authorised by this subsection as the NSW Trustee thinks fit."
By reason of s 25M(2) Tyrone was not authorised to expend his mother's estate until he had obtained the authority of the NSW Trustee to exercise functions in respect of the estate.
On 12 October 2011 the NSW Trustee provided directions and authorities under Pt 4.5 Div 2 of the NSW Trustee and Guardian Act. Tyrone was directed to provide a proposal for the management of his mother's estate within two months. He was authorised to gather information necessary to identify assets and liabilities, to take possession of all papers and documents belonging to his mother, to sign all documents relating to her estate, to receive and give a discharge for all money and property to which she was entitled, and to lodge all appropriate tax returns. He was authorised to continue the operation of his mother's bank account. He was authorised to incur only certain classes of expenditure. Clause 4 of the directions and authority issued by the NSW Trustee provided: "4. Expenditure Taking into consideration the managed person's financial resources, the manager is authorised to pay all properly incurred expenses as follows: (a) All reasonable living costs, including accommodation, care and medical expenses; (b) All minor expenses incidental to the management of the estate; (c) All income and property taxes; (d) Municipal, water and sewerage rates and charges and strata levies for real estate owned by the managed person; (e) The reasonable cost of minor repairs and maintenance as are necessary to maintain the managed person's real estate in good condition. Additions, renovations to real estate will require the prior written approval of the NSW Trustee and Guardian. A proposal for such work should be made addressing the NSW Trustee and Guardian's Requirements for Managers proposing to modify or renovate Properties Occupied to Accommodate Managed Persons; (f) The cost of insurance cover for the property of the managed person for the full insurable value and such workers' compensation, public, personal liability and other insurance covers as may be necessary; (g) Gas, electricity and telephone charges; (h) Contributions for private health insurance where appropriate; (i) the managed person's reasonable holiday expenses; (j) The reasonable cost of running and maintaining the managed person's motor vehicle. Note: In the case of joint liabilities, the manager is authorised to pay the managed person's proportional share only."
Clause 10 of the directions stated: "10. Restrictions on Powers The manager is directed: Not to deal with the estate of the managed person in any manner without the prior approval of the NSW Trustee and Guardian, unless stated otherwise in this document or any further Directions and Authorities given by the NSW Trustee and Guardian. All further applications to the NSW Trustee and Guardian regarding the administration and management of the managed person's estate shall be made by letter to the NSW Trustee and Guardian. The manager shall make all inquiries necessary to establish the facts and give the matter careful consideration in order to make a specific recommendation."
By clause 13 Tyrone was directed to: "(a) Keep proper accounts and vouchers relating to the management of the managed person's estate, to file the accounts annually in accordance with the NSW Trustee and Guardian's Requirements and to pay fees in accordance with the NSW Trustee and Guardian Act 2009; (b) Provide, with the annual accounts, a certificate stating that the manager has reviewed the performance of the managed person's investment portfolio and the manager is satisfied that the current investments as disclosed in the accounts fall within the NSW Trustee and Guardian's Requirements for Managers Seeking to Invest Managed Person's Funds."
On the same day that the Guardianship Tribunal made the financial management order in respect of Mrs Woodward's estate, $255,000 was transferred by Vero Insurance Limited into Mrs Woodward's account with the Newcastle Permanent Building Society (Account No. 86203xxxx). This was the insurance proceeds following the fire that destroyed Mrs Woodward's house. The following day $122,000 was withdrawn from the account. $120,000 was deposited to an account with the Newcastle Permanent Building Society that had been opened by Tyrone in his name (Account No. 50531yyyy). The account had been opened on 9 September 2011 with a cash deposit of $5. $120,000 was deposited to the account on 20 September 2011. In a report provided by Tyrone to the NSW Trustee on 23 October 2012 the withdrawal of $122,000 from Mrs Woodward's account was described as "gift to son". (Exhibit A page 244)
In oral evidence Tyrone confirmed that the payment was a gift to him. He also said in his affidavit that $2,000 of the $122,000 withdrawn was kept by his mother for her personal use. I accept that evidence. The purported gift to Tyrone was $120,000.
Tyrone explained the gift as follows. He said that on 20 September 2011 his mother received a letter from Centrelink telling her that her age pension had been suspended. He said she asked him to open the account because she was scared she was going to lose her pension. There are difficulties with this evidence. The letter from Centrelink was not produced. The account was not opened on 20 September 2011. It was opened on 9 September 2011 with a nominal cash deposit of $5. The wish to shelter money from Centrelink was consistent with his mother making a gift of the money to him.
But from 19 September 2011 Mrs Woodward had no power to deal with her own estate. Section 71 of the NSW Trustee and Guardian Act provides relevantly that: "71 Managed person cannot deal with estate (cf PE Act, s 23A) (1) The power of a managed person to deal with his or her estate is suspended in respect of so much of that estate as is subject to management under this Act. (2) However, the manager may, by instrument in writing, authorise the managed person to deal with so much of the estate as the manager considers appropriate and specifies in the instrument."
Section 76 of the NSW Trustee and Guardian Act provides: "76 Gifts (1) A manager may use property of the estate of a managed person for the following gifts: (a) a gift to a relative or close friend of the managed person that is of a seasonal nature or is given because of a special event (such as a birthday or marriage), (b) a donation of a nature that the managed person made when the managed person had capacity to do so or that the managed person might reasonably be expected to make. (2) A manager may make a gift under this section only if the value of the gift is not more than what is reasonable having regard to all the circumstances and, in particular, the managed person's financial circumstances and the size of the managed person's estate."
Mrs Woodward had no power to make a gift of $120,000 to Tyrone after the financial management order was made (NSW Trustee and Guardian Act 2009 (NSW), s 71(1)). Tyrone had no power to make that payment to himself. This was so for three reasons. First, he was not entitled to deal with the estate until he had received the authority and direction of the NSW Trustee. Secondly, the gift was not authorised by s 76 of the NSW Trustee and Guardian Act. Thirdly, the gift was not one that was within the scope of the authority that the NSW Trustee provided for him to deal with his mother's estate and his power as financial manager to deal with her estate was subject to the NSW Trustee's authorities and directions. Moreover, even if Tyrone had power to make the payment, it would be a clear breach of his fiduciary duty as financial manager to make a gift of his principal's estate to himself.
Tyrone relied upon what he called a "financial release" that he said his mother signed on 10 August 2011 to allow him to take any funds needed to make renovations to his house and for the use of his family. He deposed that his mother dictated a document that was typed by his wife on a computer and which his mother then signed. The document bears the date 10 August 2011 and states: "To whom it may concern I Ethel Woodward allow my son Tyrone Woodward to take out any sum of money from my account so that he could make renovations to the house he lives in to better suit me and also to help his family if needed."
Tyrone Woodward deposed that his mother said to him words to the effect "If I can live here now, I'll do anything I can to help you."
Counsel for Stephen challenged the date on the document. Ms Winfield pointed out that as at 10 August 2011 there was almost nothing in Mrs Woodward's account that could be applied for the purposes referred to. However, as at 10 August 2011 Mrs Woodward would have been expecting the receipt of the insurance proceeds to which, once the proceeds were banked, her statement could have applied. I accept that the document was signed by Mrs Woodward on the date it bears.
But the document does not avail Tyrone. Even if Mrs Woodward had capacity, the document itself was not an effective gift of any money or property. She did not do all that was necessary on her part to transfer any property to Tyrone. Nor was it a consent, even if informed, to Tyrone's exercising the power of attorney that had been granted on 29 July 2011 for his own benefit. The power of attorney had been given to Tyrone and Trevor jointly and did not extend to authorising the conferral of benefits on the attorney. In any event, that power of attorney was revoked on the making of the financial management order.
Nor could the document have been an effective consent in advance to the exercise by Tyrone of his powers as financial manager for his own benefit and not for the benefit of Mrs Woodward. He did not have power as financial manager to dispose of Mrs Woodward's property to himself by way of gift. Her consent, if otherwise effective, could not confer such a power.
In any event, I could not be satisfied that the consent given on 10 August 2011 was an informed consent of a person capable of giving it. Only a little over a month later the Guardianship Tribunal found that Mrs Woodward did not have capacity to manage her affairs. There is no evidence that she had capacity to give her informed consent to Tyrone making gifts of her property to himself. Tyrone said that his mother's mental capacity was undiminished. He said that she was a sharp and determined woman who would brook no argument. Nonetheless, he accepted the appointment as her financial manager that was predicated upon the Tribunal's finding that she was not able to manage her own affairs.
Tyrone did not seek to rely on s 76(1) as a source of power for the gift. Section 76(1)(a) is clearly not engaged. The payment of $120,000 was not a gift of a seasonal nature or given because of a special event such as a birthday or marriage. Nor is s 76(1)(b) engaged. In my view s 76(1)(b) does not enable a manager to make a gift of a managed person's property to himself or herself by contending that it is a "donation" that the managed person might reasonably be expected to make. Section 76 must be construed in its context and having regard to the purpose of the provisions of the Act regulating the management of estates. The context is the establishment of a statutory scheme for the appointment of managers who stand in a fiduciary relationship to the managed persons whose estates they control. The avoidance of a sensible possibility of conflict between interest and duty is a fundamental aspect of the duty of loyalty which the manager owes to his or her principal. Section 76, which is expressed as a conferral of power should not, in the absence of clear words, be construed in a way that would tend to undermine that principle. In my view, the limitation on the power to make gifts in s 76(1)(a) and the use of the term "donation" rather than "gift" in s 76(1)(b) indicates that s 76(1)(b) is not concerned with the making of gifts to the manager. In context, the word "donation" appears to refer to a gift or contribution to a charity (Australian Oxford Dictionary, 2nd ed). But even if s 76(1)(b) has a wider operation it does not extend to the making of a gift of the managed person's property by the manager to himself or herself in breach of fiduciary duty.
I consider that Tyrone held the $120,000 paid into the account in his name on constructive trust for his mother. The moneys disbursed from the account in his name are to be considered in the same way as the disbursement of the balance of the insurance proceeds that remained in Mrs Woodward's account. Tyrone is liable to restore the payment of $120,000, except insofar as he can demonstrate that the gift was applied for Mrs Woodward's benefit.

Use of $120,000 paid to Account 50531yyyy in Tyrone's name

On 26 September 2011 $20,000 was paid out of the account in favour of Shaun Woodward, the son of Tyrone and Sharon. Tyrone had borrowed $20,000 from Sharon in 2010. Tyrone gave evidence which I accept that he told his mother that he would like to repay Sharon the money he owed him and would like to pay some money towards the house. His mother replied "Anything I can do to help, I want to do".
Thus, the sum of $20,000 was applied not for the benefit of Mrs Woodward, but to discharge a liability of Tyrone.
On 27 September 2011 $12,000 was paid from the account to Tyrone. He said that he used it "towards payments on our house". Again, the payment was not for Mrs Woodward's benefit.
Between 27 September and 8 November 2011 there were deposits totalling $60 to the account and withdrawals totalling $2,700. These included a $2,000 withdrawal on 28 October 2011 and two withdrawals of $500 and $200 whose notation was "ATM Stockland and Glendale Branch". There was no evidence as to how these withdrawals were applied.
On 9 November 2011 a payment was made from the account of $10,990 to Australian Fleet Sales. This money was used to purchase a second-hand car. Tyrone gave evidence that he had a work car but his work car did not suit his mother. She had a walker and a bigger car was needed for that. He said "so I bought her the Holden". He used that car to drive his mother to bingo, and to a leagues club and for drives into the country. He said the car was "just mostly for her" and usually sat there until she wanted to go somewhere. Sharon took the car shopping.
Mrs Woodward lived with Sharon and Tyrone from 22 July 2011 until about February 2012. The car has remained in Tyrone's possession.
The use of Mrs Woodward's funds to purchase a car that was used for her benefit and for the incidental benefit of the household was a legitimate expenditure. But the car was an asset of Mrs Woodward's and now forms part of her estate. As the payment of $10,990 can be traced into the motor vehicle Tyrone is obliged to deliver the car purchased by the payment of $10,990 to Stephen as the executor of her estate. The car is an estate asset.
Between 26 November 2011 and 8 December 2011 there were withdrawals from the account as follows: 08/12/2011 WDL-CASH $800.00 06/12/2011 181500-THE GOOD GUYS $3,528.00 06/12/2011 WDL-CASH $2,000.00 06/12/2011 EFT-GOODGUYSWARNERSB $1,000.00 30/11/2011 EFT-METRO PETROLEUM $118.20 26/11/2011 EFT- ICE BOX LIQUOR $64.48

These transactions were not explained. Tyrone accepted that the payments of $1,000 and $3,528 to Good Guys Warners Bay were for the purchase of electrical appliances. In his affidavit Tyrone said that a payment of $5,600 to him on 4 October 2011 from the account in his mother's name was to reimburse him for expenditure he had made on his mother's behalf "including purchasing a new bed, linen, Television, clothing, shoes." He said that the TV cost $2,500. Hence, the payments of $1,000 and $3,528 to Good Guys did not include the purchase of a TV for his mother, or if they did, there would be double counting in respect of the justification for the expenditure of $5,600 by him on 4 October 2011. Thus, I cannot be satisfied that any of the expenditures referred to at para [45] above were applied for Mrs Woodward's benefit.
On 19 February 2015 Slattery J ordered Tyrone to produce copies of any receipts for payments made by cash withdrawals from the account for the period from 19 September 2011 to 19 July 2013. He had no documents to produce.

Expenditure of $72,700 on improvements to defendants' house

Some of the cash withdrawals were used to pay a builder, a Mr Luke Rigby, who did building work on Tyrone's house. Tyrone made four payments between 13 and 31 December 2011 from account 50531yyyy to Mr Rigby in cash. These totalled $23,000. Other payments were made, apparently by cheque, to Mr Rigby from the account 86203xxxx in Mrs Woodward's name on 2 November and 2 December 2011 in the sums of $18,560 and $8,000. On 8 December Tyrone withdrew $13,500 in cash from that account which he paid to Mr Rigby. He deposed that after 2 December Mr Rigby insisted on being paid in cash. He did not receive any receipts. Tyrone said that in total he paid Mr Rigby and other building contractors not less than $72,700, that most of the money was paid in cash and he was not able to identify specific withdrawals from which the cash was obtained. He said that the building work was undertaken for the benefit of his mother who was then living in his house.
Tyrone deposed that the building work done to his property involved converting a rumpus room into a bedroom for his mother, making it and the bathroom and toilet suitable for wheelchair access, replacing grass around the swimming pool with paving so that Mrs Woodward's wheelchair could be taken down near the swimming pool, constructing a shadecloth to protect Mrs Woodward from the sun, and constructing an upstairs balcony so that Mrs Woodward and her wheelchair could be carried upstairs and she could sit on the balcony and look over the yard. The moneys paid to Mr Rigby included moneys for the construction of a fountain. Tyrone acknowledged that the fountain was for him. He said he repaid his mother about $3,000 by instalments of cash of $500, $200 or $1,000 here or there. I accept that evidence.
The payments to Mr Rigby were to improve Tyrone's own property. All of the money used should be considered as Mrs Woodward's property, because Tyrone held the "gift" of $120,000 on constructive trust for his mother. His authority from the NSW Trustee to deal with his mother's estate did not extend to paying for the building work. As the money was applied at least partly for his and his wife's benefit, and because he did not have authority to disburse his mother's money in that way, the fact that Mrs Woodward derived, or was expected to derive, some benefit from the expenditure on the house is not a defence to the demand for the return of the moneys so disbursed.

Balance of withdrawals from account 50531yyyy

Apart from the generalised evidence referred to below in relation to handing over cash to his mother, there was no evidence to show that the balance of the $120,000 withdrawn was applied for his mother's benefit. Such evidence as there is concerning the application of cash withdrawals does not indicate that any of the cash withdrawals from the account 50531yyyy were applied for Mrs Woodward's benefit.

Obligation to keep accounts

In Countess of Bective v Federal Commissioner of Taxation, Dixon J said (at 420-421): "It is a general rule that guardians of infants, committees of the person of lunatics, and others who are entrusted with funds to be expended in the maintenance and support of persons under their care are not liable to account as trustees. They need not vouch the items of their expenditure, and, if they fulfil the obligation of maintenance in a manner commensurate with the income available to them for the purpose, an account will not be taken. Often the person to be maintained is a member of a family enjoying the advantages of a common establishment; always the end in view is to supply the daily wants of an individual, to provide for his comfort, edification and amusement, and to promote his happiness. It would defeat the very purpose for which the fund is provided, if its administration were hampered by the necessity of identifying, distinguishing, apportioning and recording every item of expenditure and vindicating its propriety. Although these considerations furnish an independent foundation for the general rule, yet, after all, it is a doctrine regulating the application of moneys payable under an instrument, whether a will, a settlement or an order of a Court of equity, and the operation of the doctrine must depend upon the provisions contained in the instrument, both express and implied. But the effect of the instrument will often be governed by the circumstances to which it was intended to apply, and, in particular, by a consideration of the nature of the actual abode, the condition of the household and the state of the family of the infant or other person to be maintained. Courts of equity have not disguised the fact that the general rule gives to a parent or guardian dispensing the fund an opportunity of gaining incidental benefits, but the nature and extent of the advantages permitted must depend peculiarly upon the attention ascribed to the instrument."
His Honour added (at 422-423): "A guardian is not permitted to receive moneys for maintenance without liability to account except upon the condition that he discharges his duty adequately to maintain and not otherwise. Upon his default the Court will administer the fund or intercept the payments and has jurisdiction to order an account or an inquiry … Where, however, the condition is performed the Court does not inquire whether the money has been completely expended or whether the recipient has spent small sums for his personal benefit, but, nevertheless, it remains an allowance to a person in a fiduciary capacity and for a definite purpose. …" (Citation of authorities omitted.)
Thus, in Brown v Smith (1878) 10 Ch D 377 a daughter was entitled to property under a will and her mother, the testator's widow, married again. The Court had directed that the income of the property be applied for the maintenance of the daughter. The trustee paid the whole of the income to the mother after the daughter came of age. She sought an account from the trustee of the past income paid after deducting a proper income for her maintenance and education. The account was refused. Jessel MR said (at 381-382): "What the Court does is to allow a fair sum for the maintenance, and education of the infant, and to see that the infant is fairly maintained and educated having regard to the sum allowed. The Court frequently allows a larger sum than is actually required for the infant on purpose. … It constantly happens in the case of relatives that they would be willing to take the infant as a member of their family … but you cannot expect that a person would take the infant for the bare cost of her maintenance and education; as a general rule this would not be done; and then the question arises, how much is worth the while of the guardian to pay, having regard to the interest of the infant, over and above the cost of maintenance, to induce these people to undertake the charge. … I think it is wrong to reckon up the number of shillings or the number of pounds exactly that the infant costs. You must look at the whole circumstances together, and say whether the allowance made was not a fair allowance."
An appeal from the orders of Jessel MR was dismissed. Brett LJ said (at 386): "Now, on the evidence it is clear that the money was expended. If any of it had been applied in making up a purse for the mother, the case would have been entirely different, but it is clear that the whole money was expended either in the maintenance and education of the Plaintiff, or in keeping up the establishment of which she had the benefit."
In this case, for the reasons below, to use Brett LJ's expression, Mrs Woodward's property was applied to "make up a purse" for Tyrone's benefit. Hence, even if the principle of these cases were applicable it would not avail Tyrone.
In any event, Tyrone's appointment as financial manager was subject to the authorities and directions of the NSW Trustee. The NSW Trustee directed that he keep an account and provided a template for the account to be provided. The template required the itemisation of payments and stated that entries on the form of account should mirror entries in the bank or other account statements. The form provided for the payments to be entered under headings "Accommodation", "Income Tax", "Insurance (Property)", "Mortgage", "Personal Expenses", "Rates/Property Taxes", "Repairs/Maintenance", and "Other Payments". Space was provided under the following heading: "Name of Company paying dividends/interest [sic] Property Address for Rent (if applicable) Details of Other only" Hence, the NSW Trustee required particularity in the keeping of accounts. As Tyrone's appointment was subject to the directions of the NSW Trustee he was required to provide accounts as directed by the NSW Trustee.
Tyrone was also required to submit to the NSW Trustee a "manager's plan". He submitted a document, that had been written for him by Sharon, which stated that Mrs Woodward's regular yearly expenses totalled $51,737. Her stated annual income was $689, but this was clearly an error. At the time of the submission of the plan Mrs Woodward received a fortnightly pension of $611.80, or $15,907 per year.

Disbursements from account 86203xxxx in Mrs Woodward's name

In the first year of the financial management, the cash withdrawals from account 86203xxxx totalled $90,150.
After referring to what he called the "financial release" signed by Mrs Woodward on 10 August 2011 referred to above at para [30], Tyrone deposed: "At a later time, although I cannot remember the exact date, Mum executed a further financial release authorizing me to take the sum of $90,150 from her bank account to use at any time for my and her personal needs."
He produced a typed document signed by Mrs Woodward addressed "To whom it may concern" which stated that: "I Ethel Woodward allow my son Tyrone Woodward to take out a sum of $90,150 out of my account so that my son to use at any time for his personal matters and my own needs as well [sic]."
In oral evidence Tyrone said that he did not know why the document referred to the specific sum of $90,150. I infer that it was because that was the amount the NSW Trustee had calculated (correctly) was the total amount withdrawn in cash for the 12 months to 19 September 2012 from account number 86203xxxx. This document does not provide any authority to Tyrone to use the cash otherwise than for Mrs Woodward's benefit. It is in the same category as the document he called a financial release dated 11 August 2011. (See paras [29]-[36] above.)
On 17 December 2013 Burke and Mead, solicitors then acting for Tyrone, stated, presumably on instructions, that in or around August 2011 Mrs Woodward: "signed a further document confirming that our client could apply a sum equivalent to the value of the Works from her account. Enclosed is a signed (undated) statement from the deceased allowing our client to apply the sum of $90,150.00 from her account in relation to the Works."
The "Works" were the renovations to Tyrone's property, including the erection of a rear deck, and installing a downstairs bathroom attached to the deceased's bedroom and shade sails. Tyrone did not give that explanation for the document. The letter is an admission that the works to Tyrone and Sharon's property had a value of $90,150. However, I do not accept that this is the true explanation for the document.
In the account submitted by Tyrone for the year from 19 September 2011 to 19 September 2012 (that was prepared for him by Sharon) he claimed that $81,226.93 was spent for "Living Expenses/Furniture/Clothing/ Entertainment/Gambling". No further detail was provided. Tyrone deposed that: "I paid all the costs for Mum's keep and her day to day expenses. These were paid for from cash withdrawals and I do not have any written records or precise recollection of which withdrawals covered which expenses. I simply paid for whatever Mum wanted or needed as required. I believed that the money was hers and should be used for her benefit as she wished."
He also deposed that: "I helped Mum to withdraw money for her own shopping many times and I did not question her decisions. … Mum … wanted to have a new television, furnishings for her room including a bed and mattress, and small knick knacks. She loved to buy household items, decorations and ornaments. Mum spent money playing bingo and housie at clubs in the Newcastle area. … On many occasions she withdrew money from her bank account or from my Newcastle Permanent Account (number 50531[yyyy]) to which she held a cashcard in order to play these games. … Mum also gave money away from time to time. Once, although I cannot remember the date, she insisted on giving $10,000 to the Salvation Army. I did not object to her decisions in this matter. I believed she was capable of making her own choices on how to deal with her money."
I accept this evidence, but it does not assist Tyrone. Rather it shows that he breached his duty as financial manager by not keeping accounts and by not managing his mother's money. As previously noted, Mrs Woodward's power to deal with her estate was suspended once her estate became subject to management under the NSW Trustee and Guardian Act (s 71(1)). Section 71(2), (3) and (5) provide: "71 Managed person cannot deal with estate … (2) However, the manager may, by instrument in writing, authorise the managed person to deal with so much of the estate as the manager considers appropriate and specifies in the instrument. (3) The authorisation may be given at any time and may be withdrawn, wholly or in part, at any time. … (5) An authorisation must not be given or withdrawn by a manager who is not the NSW Trustee without the approval of the NSW Trustee."
No authorisation under s 71(2) was given.
Tyrone did not provide an estimate as to how much of the cash withdrawn was used to pay expenses, or knick knacks or for playing bingo or housie. He did not produce a receipt or other corroborative evidence of a $10,000 gift to the Salvation Army.
Accordingly, and bearing in mind that Stephen confined his claim to an account in respect of the $255,000 received from Vero Insurance Limited and that Mrs Woodward was in receipt of the pension during the whole period of financial management, I conclude that Tyrone is liable to account for all of the $255,000 received, except insofar as he can demonstrate that particular payments were made for Mrs Woodward's benefit. I have already dealt with his obligation to account in respect of the $120,000 "gift". In respect of the balance of $135,000 Tyrone deposed that he paid Mr Rigby and other building contractors no less than $72,700 (mostly in cash) in respect of building work done to his house. As noted above, $23,000 of this sum was paid out of the account in Tyrone's name, number 50531yyyy. The balance of $49,700 appears to have come from Mrs Woodward's account number 86203xxxx. Tyrone did not suggest that any of the payments, including cash payments, came from some other account of his or his wife's.
That leaves $85,300 to be accounted for. The statement issued by the Newcastle Permanent Building Society identifies some cheque payments from which it is possible to draw a conclusion as to the purpose of the expenditure. On 28 September 2011 a payment of $2,692.07 was made to "Automotive Financial Service". This was a payment to discharge an amount owing by Tyrone on his car. He said that his mother made a gift to him of that money. For reasons previously given she was not capable of doing so. This was not a payment made for her benefit.
Also on 28 September 2011 there was a payment made of $1,831.15 to Geoffrey Mendelson Lawyers. Tyrone said that he had no knowledge of the payment, but I infer that it was made to pay an amount owed by Mrs Woodward. In a letter to the NSW Trustee signed by Tyrone, but written for him by Sharon, Tyrone said that the payment to Geoffrey Mendelson Lawyers was in respect of the change of the power of attorney. Mrs Woodward's signature to the power of attorney of 29 July 2011 was witnessed by a Mr Harvey of Harvey Law Firm. But there was no evidence that Tyrone or Sharon owed a debt to Geoffrey Mendelson Lawyers. Although the evidence is unsatisfactory I think on the balance of probabilities the payment was to discharge a debt owed by Mrs Woodward.
Also on 28 September 2011 there was a payment of $760 from account number 86203xxxx. The payment was to Capital Finance. This was a payment to reduce a debt that Tyrone and Sharon owed to Capital Finance.
On 4 October 2011 there was a payment of $5,600 by cheque to Tyrone. Tyrone gave evidence which I accept that this payment was to reimburse him for expenditure he made on his mother's behalf including purchasing a new bed, linen, television, clothing and shoes.
On 13 October 2011 there was a payment of $8,075.09 owed to Hunter Water Corporation. This was in respect of a debt owed by Mrs Woodward for outstanding water charges.
On 22 October 2011 a cheque was drawn to "New Look Shed City" for $2,421.
Tyrone said that his mother wanted to have her own privacy and asked him to convert his double garage into a granny flat so that she could have her own space. To do that he had to build a shed in which to store his tools. That was the explanation provided to the NSW Trustee on 14 June 2013. In oral evidence, Tyrone said that that was not the case. He had two sheds and the shed acquired from New Look Shed City was not the one used for tools and storage. He agreed that he converted the rumpus room and not the double garage. He said it was then too late because he had already bought the shed.
Having regard to the unsatisfactory state of this evidence, I am not satisfied that the shed was purchased for Mrs Woodward's benefit.
On 10 November 2011 a payment of $1,990 was made to Brunker Road Vet. I accept Tyrone's evidence that this was payment of a bill for Mrs Woodward's cat and was thus for her benefit. Tyrone also paid $810.20 to provide further treatment to Mrs Woodward's cat at the Cardiff Veterinary Hospital in January 2012. Those funds were paid from his account. He is entitled to credit for that amount.
Between 24 January 2012 and 23 July 2013 payments totalling $33,487.37 were made to Empowered Living Support Services Limited (that trades as Bethel Aged Care). Most of the payments were by direct transfer from account number 86203xxxx, but a number of the earlier payments did not come directly from that account. They were either paid by Tyrone or by Mrs Woodward from cash withdrawn from one of the two accounts.
Of course during this same period Mrs Woodward was receiving a Centrelink pension. In the period covered by the payments made to Empowered Living Support Services, that is, from 19 January 2012 to Mrs Woodward's death, $25,834.96 was received as pension payments. But the plaintiff has said that he seeks only an account in respect of the $255,000 received from Vero Insurance Limited. Having regard to the way the plaintiff has confined his case and having regard to the fact that some part, albeit an unidentified part, of the cash withdrawals, appears to have been used for Mrs Woodward's benefit, I think substantial justice would be done by confining the plaintiff to the way he put his case and not deducting the pension receipts before giving Tyrone credit for the payments made to Empowered Living Support Services Limited. Tyrone is entitled to credit for $33,487.37.
A further amount of $5,550 was received from Vero Insurance Limited on 28 September 2011. That is not part of the accounting sought by the plaintiff. Curiously, regular payments were made to Vero Insurance Limited, apparently as premiums, of $66.77 per month. This increased to $68.39 on 31 August 2012. The last payment was made on 17 October 2012. I infer these were payments of premium, although what insurance remained on foot is unclear. No challenge was made to Tyrone for continuing to pay insurance premiums. The premiums paid totalled $1,880.06. Tyrone is entitled to a credit in respect of this amount.
Tyrone deposed that his mother received services from Homecare. He deposed that so far as he was aware any fee payable for this was being paid by his mother. He believed it was deducted from her bank account 86203xxxx. He thought it possible that she paid Homecare directly. He did not produce any invoices or statements from Homecare. He deposed that Homecare was provided to his mother twice a day when she was living with him and his wife by Hammond Care. On 18 May 2013 there was a transfer of $1,888.75 from account 86203xxxx to Hammond Group. This was also an expense for which he is entitled to credit.
On 12 December 2011 Tyrone paid $670.20 to Wallsend Aged Care Facility, apparently for respite care for his mother. He is entitled to credit for that sum.
Together with the repayment of $3,000 referred to at para [49] and the purchase of the Holden car referred to at para [42], these are the only credits to which Tyrone has shown an entitlement. The amounts referred to at paras [42], [49], [72], [74], [75], [79], [81], [82], [83] and [84] amount to $70,222.82.
Sharon was joined as the second defendant to the proceeding. She was joined because the plaintiff sought a declaration that both Tyrone and Sharon held on trust for the estate so much of the value of their property as could be traced to payments from Mrs Woodward's account. That claim was not pressed. The claim against Sharon will be dismissed.
I conclude that Tyrone is liable to pay to Stephen in his capacity as executor of the estate of Mrs Woodward the amount of $184,777.18, being $255,000 less $70,222.82. He is also required to deliver up possession of the motor vehicle that was purchased with Mrs Woodward's money. The plaintiff claims interest. In my view Tyrone is liable to pay interest. Interest should be calculated from the date of Mrs Woodward's death to the date of judgment at the rates provided for the purposes of s 100 of the Civil Procedure Act 2005 (NSW).
For these reasons I make the following declaration and orders:
Declare that the first defendant as financial manager of the late Ethel Marie Woodward who died on 19 July 2013 ("the deceased") is liable to account to the plaintiff in his capacity as executor of the estate of the deceased in respect of moneys received by him as financial manager of the deceased, less proper disbursements.
Order that the first defendant pay to the plaintiff in his capacity as executor of the estate of the deceased the sum of $184,777.18 together with interest calculated in accordance with the rates prescribed for the purposes of s 100 of the Civil Procedure Act from 20 July 2013 to the date of these orders.
Order that the first defendant deliver to the plaintiff in his capacity as executor of the estate of the deceased the Holden motor vehicle purchased for the deceased from Australian Fleet Sales on or about 9 November 2011 at the cost of the estate, or allow the plaintiff in his capacity as executor to collect the said motor vehicle at the cost of the estate.
Order that the plaintiff's claims for relief be otherwise dismissed save as to costs.
I will hear the parties on costs. Prima facie the plaintiff should pay the costs of the second defendant and the first defendant should pay the plaintiff's costs.

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Trustee and Guardian Act 2009(NSW)

Guardian Act 2009(NSW)

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