Smith v Smith [2017] NSWSC 408

Smith v Smith [2017] NSWSC 408

The first defendant, having accepted appointment as enduring attorney, owed fiduciary obligations to the deceased to act solely in his interests within the limits of her authority. After the deceased lost capacity, she acted in breach of those duties by using his property for her benefit and that of her family, without authority or court approval, and in disregard of her obligation to keep accounts. As property was transferred to the third and fourth defendants as volunteers with knowledge of the breach, they hold it on constructive trust for the estate. The executor is not liable for devastavit, and laches or delay is no bar as the plaintiffs were excluded from management and lacked...

Parties
First Plaintiff: Ronald Allen Smith; Second Plaintiff: Neville Roland Smith; First Defendant: Joyce (Joy) Smith; Second Defendant: Michael Bingham (Executor); Third Defendant: Rosemary Ann Danby; Fourth Defendant: Derek George Danby
Jurisdiction
Australia
Judgment Date
13 April 2017
Procedural Posture
Equity / Principal Judgment, With Final Orders Entered After Submissions.
Outcome
First defendant held liable to account to the estate for her mismanagement and required to restore property, with constructive trust declared over property of third and fourth defendants. Second defendant (executor) not liable for devastavit. Orders made for recovery and sale of property, with first defendant...
Legal Topics
Fiduciary Duties, Enduring Power of Attorney, Constructive Trust, Breach of Fiduciary Duty, Protective Jurisdiction, Accounts and Inquiries, Laches and Acquiescence, Remedies in Equity
Equity Protective Jurisdiction Fiduciary Duties Enduring Power of Attorney Constructive Trust Breach of Fiduciary Duty Accounts and Inquiries Laches and Acquiescence +1 more

Case Brief

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Parties

Ronald Allen Smith

First Plaintiff

Neville Roland Smith

Second Plaintiff

Joyce (Joy) Smith

First Defendant

Michael Bingham (Executor)

Second Defendant

Rosemary Ann Danby

Third Defendant

Derek George Danby

Fourth Defendant

Procedural Posture

Equity / Principal Judgment, With Final Orders Entered After Submissions.

Legal Issues

  1. 1 Whether the first defendant as enduring attorney owed fiduciary obligations to the deceased and estate, including an obligation to account for dealings with property after incapacity;
  2. 2 Whether the first defendant breached fiduciary obligations by misapplication of the deceased's property;
  3. 3 Whether property purchased in the names of the third and fourth defendants using misapplied funds is held on constructive trust for the estate;

Ratio Decidendi

The first defendant, having accepted appointment as enduring attorney, owed fiduciary obligations to the deceased to act solely in his interests within the limits of her authority. After the deceased lost capacity, she acted in breach of those duties by using his property for her benefit and that of her family, without authority or court approval, and in disregard of her obligation to keep accounts. As property was transferred to the third and fourth defendants as volunteers with knowledge of the breach, they hold it on constructive trust for the estate. The executor is not liable for devastavit, and laches or delay is no bar as the plaintiffs were excluded from management and lacked...

Court Disposition

First defendant held liable to account to the estate for her mismanagement and required to restore property, with constructive trust declared over property of third and fourth defendants. Second defendant (executor) not liable for devastavit. Orders made for recovery and sale of property, with first defendant...

Orders

  • Declare the first defendant indebted to the estate in the sum of $1,602,595.81 (principal $1,019,872.71 plus $582,723.16 interest).
  • Order the first defendant to pay $1,602,595.81 to the second defendant as legal personal representative.