White v White By Her Tutor the NSW Trustee and Guardian

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Magistrate went on to say:

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

The Local Court Act 2007 (NSW) relevantly provides:

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

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

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

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

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

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

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

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

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

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

Hall J then said:

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

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

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

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

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

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

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

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

No error of law as ground 2 asserts is demonstrated.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In relation to costs, the Magistrate said this:

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

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

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

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

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

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

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

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

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

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

I make the following orders: