De Boer & Ors v Williams [2004] NSWSC 760

New South Wales Supreme Court

CITATION : De Boer & Ors v Williams [2004] NSWSC 760 HEARING DATE(S) : 16/08/04 JUDGMENT DATE : 23 August 2004

JUDGMENT OF : Gzell J DECISION : Judgment for withdrawals plus interests plus costs. Mareva Injunction extended in aid of execution.

CATCHWORDS : EQUITY - Equitable Estates and Interests - Breach of trust - Trustee withdrawing trust funds for own benefit - Replacement trustees seeking recovery of funds plus interests - No principles CASES CITED : Scott on Trusts, 4th ed, Little, Brown & Co, Boston, 1988, Vol 3 at [201] Jacobs' Law of Trusts in Australia, 6th ed, Butterworths, Sydney, 1997 at [2205] Donald Wilfred De Boer & Helen Louise Palin - 1st Plaintiffs PARTIES : Mark Henry Williams - 2nd Plaintiff John Ernest Williams - Defendant FILE NUMBER(S) : SC 2432/04 COUNSEL : Ms E R W Yam - Plaintiffs SOLICITORS : Kjekovic, Hearne & Walker Solicitors

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION LIST

GZELL J

MONDAY 23 AUGUST 2004

2432/04 DONALD WILFRED DE BOER & ORS v JOHN ERNEST WILLIAMS JUDGMENT 1 The first plaintiffs, Donald Wilfred De Boer and Helen Louise Palin, are the trustees of the estate of the late Herbert Henry Williams. John Ernest Williams, the defendant, is the former trustee of the estate. The first plaintiffs seek judgment against him for moneys allegedly misappropriated from trust funds. 2 John Williams did not appear at the hearing. The amended statement of claim and a notice of motion seeking expedition of the proceedings were served at his residence. While my orders granting expedition and setting the matter down for hearing were not personally served at that residence, at least three letters informing John Williams of the hearing were addressed to that residence by the solicitors for the plaintiffs. 3 Mark Henry Williams, the sole beneficiary under the trust, was joined as second plaintiff to give undertakings to the court on the basis of which a Mareva injunction was granted by Einstein J restraining John Williams, until further order, from selling, encumbering or otherwise dealing with his interest in a property at South Dubbo. 4 Mark Williams gave evidence that John Williams informed him that he had borrowed $32,000 from the estate to buy a block of land and he had borrowed a further $5,000 for the deposit on another block of land. 5 The trust bank statements were in evidence. With the exception of the period from 11 September 1998 to 10 October 1998, the statements covered the period from 11 February 1994 to 11 May 2000. They confirmed withdrawals of $32,000 and $5,000. There were no repayments. 6 Mark Williams said that he received from John Williams $500 in 1994, $1,000 in 1996 and $3,200 in April and May 1997. He also said he was not sure whether he received a further $1,000 in May 1998 and a further $2,000 in June 1998. Withdrawals in these amounts appear in the bank statements. They have been excluded from the calculation of unauthorised withdrawals, as has a withdrawal of $2,000 on 20 January 1998. 7 The closing balance of the account on 11 September 1998 was $63,498.04. The opening balance on 10 October 1998 was $62,579.93, a difference of $918.11. Allowing for fees, a figure of $910 has been included in the calculation as an unauthorised withdrawal. 8 The balance in the account at 11 May 2000 was $4,118.13. The bank account was closed on 26 June 2002. $4,118.13 has been added to the list of unauthorised withdrawals. There were no reimbursements to the account. 9 Allowing for the above adjustments, the withdrawals from the trust bank account for which the second plaintiff received no benefit totalled $105,053.87. 10 The bank account was operated on the signature of John Williams. He has not accounted to the first plaintiffs for any property belonging to the trust estate. He has failed to comply with orders of this court that he file, pass and verify accounts and that he deliver up all documents and records relating to or touching upon his administration of the estate. 11 The withdrawals were aggregated for each month and the bank interest rate applicable to that month on an account level calculated as if the withdrawals not been made, was applied to those withdrawals. The total interest calculation to 16 August 2004 was $24,612.66 giving a total loss to the trust estate as at 16 August 2004 of $129,666.53. 12 It is trite law that a trustee is chargeable with any loss that results from a breach of trust. He must make good to the estate the loss caused by his wrongful act (Scott on Trusts, 4th ed, Little, Brown & Co, Boston, 1988, Vol 3 at [201], Jacobs' Law of Trusts in Australia, 6th ed, Butterworths, Sydney, 1997 at [2205]). 13 There will be judgment for the first plaintiff for $129,666.53. The defendant must pay the plaintiffs costs of the action. The Mareva injunction will be extended for a period of 14 days after judgment in aid of execution.