Kenneth Walter Waddell v Allan William Waddell as executor of the Estate of the late Ronald John Waddell (No. 3) [2012] NSWSC 252

Supreme Court New South Wales

Medium Neutral Citation: Kenneth Walter Waddell v Allan William Waddell as executor of the Estate of the late Ronald John Waddell (No. 3) [2012] NSWSC 252 Hearing dates: 16 December 2011 Decision date: 20 March 2012 Before: Slattery J Decision: Benefit received by the plaintiff assessed at $167,869. Directions made for the determination of issues of costs. Catchwords: EQUITY - equitable remedies - plaintiff entitled in equity to the conveyance from the estate of a 10 acre property but on terms that he give credit for any benefits he has received from an interest free loan advanced to him by the deceased - inquiry as to benefit received by plaintiff from the $500,000 interest free loan. Cases Cited: McCathie v Federal Commissioner of Taxation (1944) 69 CLR 1 Tchadovitch v Tchadovitch [2010] NSWCA 316 Waddell v Waddell as Executor of Estate of Waddell [2011] NSWSC 1174 Waddell v Waddell as Executor of Estate of Waddell (No. 2) [2011] NSWSC 1688 Category: Principal judgment Parties: Plaintiff- Kenneth Walter Waddell Defendant- Allan William Waddell Representation: Plaintiff- L. Ellison SC; H. Bennett Defendant- A. Hill Plaintiff- J.J.Francis Defendant- M. Boemi File Number(s): 2010/00158898 Publication restriction: No

Judgment 1This is the Court's third judgment in these proceedings. The first judgment on 4 October 2011 made findings: that the late Ronald John Waddell ("Ron") had promised his son, the plaintiff, Kenneth Walter Waddell ("Ken"), that he would devise to Ken a 10 acre orchard block, then held in Ron's name; that Ken relied upon those promises to his detriment; and, that such detriment can only now be avoided by conveying the 10 acre block to Ken: Waddell v Waddell as Executor of Estate of Waddell [2011] NSWSC 1174. In the second judgment the Court, made a declaration to give effect to the first judgment, and made directions for an inquiry to quantify the benefit Ken had received from Ron's interest free loan to him in the 2007-2008 financial year, as described in [101] of the first judgment: Waddell v Waddell as Executor of Estate of Waddell (No. 2) [2011] NSWSC 1688. This third judgment results from that inquiry, which involved the filing of written expert evidence on both sides and an oral hearing on Friday, 16 December 2011. The remaining issue in the proceedings is costs. Directions are made at the end of this judgment to faciliate resolution of that issue. 2This judgment should be read with the Court's two prior judgments. Parties, events and things referred to in this judgment are described in the same way as they were in the two earlier judgments. The inquiry, the subject of the present judgment, arises out of paragraph [101] of the principal judgment, where the Court said:- "Here it seems to me that the Court should not grant relief in the plaintiff's favour without making some adjustment for the benefit that he has already received from the sale of part of the larger block. Notwithstanding the fact that he was promised the 10 acre block and not the larger block, the benefit he received in 2007 by way of advance for his superannuation can only be explained as a reward for the time he spent on the farm. In that sense what he received should be assessed in diminution of his benefits otherwise received. An inquiry will be needed as to what the value of that benefit has been to Ken and set off against the relief he claims." 3In the second judgment on 3 November 2011, the Court gave directions for the service of statements calculating the alleged benefit Ken had received and the serving of any additional evidence for the inquiry, including expert evidence. The Court also formally directed the holding of an inquiry in the following terms:- "7. Direct an inquiry in accordance with paragraph [101] of my principal judgment into: the benefit that the plaintiff received from the interest free loan; and the taxation benefit that the plaintiff may have received from the contribution of a substantial sum to his superannuation fund in the 2006/2007 financial year." 4At the inquiry hearing Ken contended that the scope of the inquiry into the benefits he had received was wholly limited to the receipt of past benefits (that is, benefits up to the date of the inquiry), which could be quantified as the interest he and his superannuation fund had earned on the capital of $500,000 advanced to him as an interest free loan. In contrast, the defendant, executor, contended for the estate that the benefit Ken had received was at least these past benefits but together with the net present value of all future superannuation, taxation and other future financial benefits, from which Ken would benefit, through his superannuation fund during his expected lifetime. 5In the result the Court has found that the estate's approach to the assessment of the benefits Ken has received is generally the one the Court prefers. But the estate's approach to the assessment should be modified to cover a more limited period than Ken's lifetime. 6Both parties presented expert evidence on the inquiry, without objection on either side as to relevance or admissibility. Both experts made assumptions about appropriate discount rates for actuarial calculations in respect of the plaintiff's expected life span. Because of this common, and if I may say so sensible approach, the Court has taken the evidence into account: Tchadovitch v Tchadovitch [2010] NSWCA 316, especially [55] - [59].