Phillippe Gray-Grzeszkiewicz v Dr Jerzy Gray-Grzeszkiewicz [2000] ACTSC 95 (27 October 2000)

Last Updated: 18 January 2001

Phillippe Gray-Grzeszkiewicz v Dr Jerzy Gray-Grzeszkiewicz [2000] ACTSC 95 (27 October 2000)

CATCHWORDS

REPAYMENT OF DEBT - Power of attorney granted to father to pay son's debts whilst absent overseas - Whether father has legal obligation to repay monies used for his own benefit to son.

No. SC 112 of 2000

Coram: Master T. Connolly

Supreme Court of the ACT

Date: 27 October 2000

IN THE SUPREME COURT OF THE )

) No. SC 112 of 2000

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: PHILLIPPE GRAY-GRZESZKIEWICZ

Plaintiff

AND: DR JERZY GRAY-GRZESZKIEWICZ

Defendant

ORDER

Coram: Master T. Connolly

Date: 27 October 2000

Place: Canberra

THE COURT ORDERS THAT:

1. Judgment be entered for the plaintiff in the sum of $26,984.

2. The defendant to pay the plaintiff's costs.

1. This is a claim for recovery of debt. The plaintiff, Phillippe Gray-Grzeszkiewicz, commenced the proceedings by originating application filed on 23 February 2000 against the defendant, Dr Jerzy Gray-Grzeszkiewicz, his father. The statement of claim alleges that by deed dated 7 January 1997 the plaintiff gave to the defendant a power of attorney to enable the defendant to manage the plaintiff's affairs while the plaintiff was overseas. It is alleged that the defendant made out a number of cheques for his own purposes during 1997, and that while he also paid back some funds, there remains a debt due to the plaintiff.

2. Applications for summary judgment were made by both plaintiff and defendant. The defendant's application, first in time, argued that the plaintiff had consented to the defendant using the plaintiff's funds for his own purposes, and that accordingly there was no debt. The applications came before me on 4 August 2000, and I found that there was a real issue to be tried between the parties, namely whether the defendant had been given permission by the plaintiff to use the plaintiff's funds for his own purposes, as alleged by the defendant, or whether the defendant had exceeded his authority under the power of attorney and was indebted to the plaintiff, as alleged by the plaintiff.

3. It was common ground that the plaintiff, who resides in Sydney and is a solicitor by profession, undertook an extensive overseas trip in January 1997. He placed his residential property in the hands of an agent, and asked his father to store certain goods at his father's Canberra home. The plaintiff says that it was his expectation that the income from the rental of his home would cover any ongoing expenses in relation to his affairs, but in order to cover any unforseen expenses he executed a power of attorney in his father's favour. He says that he handed to his father the power of attorney and two bank books, one relating to a savings account, and one related to a financial product developed by the State Bank known as "Veridian", which was a line of credit secured by a mortgage on his residential property. He had set this up to enable him to draw down funds while he was overseas.

4. There is a conflict in the evidence as to the circumstances in which the plaintiff handed the power of attorney to the defendant. The plaintiff said in his affidavit and confirmed in his evidence that when he handed the power of attorney and the bank books to his father he said words to the effect of,

"You probably won't have to use this. Surplus money from the rental of my house will be paid into the account, and the real estate agent will attend to paying all the expenses in relation to the Strathfield property, so I can't imagine what other expenses might occur. However, if there are any lets discuss them by telephone while I am away."

5. The defendant in his affidavit of 19 July 2000 says that when he took his son to the airport on the day of his departure he told him that he had reason to believe that he was seriously ill, and told the plaintiff that if he should die during the plaintiff's absence from Australia there was no point in the plaintiff returning for the funeral. The plaintiff acknowledged that a conversation did take place concerning the possibility of his father dying in his absence. In his oral evidence the defendant said that he had just recovered from surgery to his neck for cancer, but he acknowledged that this was incorrect, as this took place some months later. He acknowledged that due to a combination of health problems and his age he was prone to problems with recollection.

6. He says that, after this discussion about his health, his son handed him his bank books and the power of attorney and said words to the effect of, "Papa, use my cheque book in any ways you may need the money for". The defendant says that he understood this as permission from the plaintiff to draw down funds from the plaintiff's account for his own purposes with no legal obligation to repay.

7. The plaintiffs claim was brought in respect of 27 cheques drawn against the Viridian account in the period 31 January 1997 to 31 March 1988, for a total claim of $51,622.23. These fall into two categories, being cheques clearly drawn in favour of the defendant or his interests, and cheques said to have been drawn to meet expenses of the plaintiff. During the hearing certain of these latter cheques were acknowledged by the plaintiff to have been drawn by his father in his interest, including a cheque made out to the Law Society of New South Wales and a cheque in the sum of $18,204.23 which was made out to cover the cost of a trip the plaintiff made to Antarctica. The plaintiff alleges that the defendant failed to properly account for the use of the funds, but evidence was given by Mrs Stewart, the defendant's secretary, that she was the person who made out the cheques relating to the plaintiff's affairs, and that she gave him copies of all cheques and invoices on his return to Australia in early 1998. She was not cross examined on this assertion, and I am satisfied that she did so account for these expenses.

8. This leaves me with six cheques drawn in favour of the defendant or his interests. Cheque number 11, drawn in favour of the defendant on 27 March 1997 in the sum of $513 was said by the defendant to have been to reimburse his costs in relation to the storage of the plaintiff's goods, which amounted to some 20 boxes and various pieces of furniture, and this claim was not pursued by the plaintiff. The significant cheques are cheque 15, drawn on 25 June 1997 in the sum of $17,000 in favour of Jerzy Gray Pty Ltd Staff Superannuation, cheque number 17 drawn on the same day and in favour of the same payee in the sum of $15,000, cheque number 18 drawn on 15 July 1997 in the sum of $20,000 in favour of Jerzy Gray Pty Ltd, cheque number 19 drawn on 4 October 1997 in this sum of $3,000 in favour of Jerzy Gray Pty Ltd, and cheque number 20 drawn on 15 December 1997 in the sum of $10,000 in favour of Dr Jerzy Gray-Grzeszkiewicz. This amounts to a total of $65,000. I am satisfied that the defendant also made payments into the account of his own funds in the sum of $32,000 on 4 July 1997 and $12,000 on 2 September 1997. Although in a table in his affidavit the defendant also refers to a payment made to the account in the sum of $2,612 on 8 May 1997 I am satisfied that this relates to a payment made in of funds on the plaintiff's behalf. This results in the amount of $65,000 being drawn down and $44,000 being paid in by the defendant, for a net balance of $21,000, which the plaintiff says is owed to him.

9. The defendant acknowledges that he needed to make payments to his superannuation scheme before the end of the 1996-97 financial year, and that his cash flow position was such that he did not have the funds on hand, and he says that he used the power of attorney to draw down the amount of $32,000 on 25 June 1997, and paid the sum of $32,000 into the account from his own funds on 3 July 1997.

10. The next sum withdrawn is the sum of $20,000 on 15 July 1997. The Viridian cheque book, admitted in to evidence as Exhibit 1, records "15/7/97 - LOAN TAKEN 20000". The line immediately above this reads "Jerzy Gray Grzeszkiewicz". Mrs Stewart gave evidence that this was in her handwriting.

11. On 25 July 1997 Mrs Stewart wrote a letter to the plaintiff on the defendant's letterhead which began, "Your father asked me to write to you concerning your business affairs". In this letter Mrs Stewart said,

"I am to tell you that I am a witness to the fact that your father had to borrow $20,000 for a business loan from you and he will write out a stat. dec."

12. The next entry in the cheque book, which I am satisfied is in the hand of Mrs Stewart, shows a deposit made on 2 September 1997 in the sum of $12,000 and states, "Twelve th. Deposited towards the loan 20000 outstanding now 8000." There is also a deposit stub stapled to the back of the cheque book which shows the deposit of $12,000 on that date and states "partial rept of loan". There is no reference in the cheque book to the $3,000 cheque made out to Jerzy Gray Pty Ltd on 4 October 1997, but the $10,000 cheque on 15 December 1997 is referred to with the entry for that date stating, "Loan no 2=now total owing $18,000 to Phillippe".

13. The plaintiff exhibited to his affidavit a handwritten note which the defendant acknowledged was in his writing and signed by him which states,

"I write to confirm that as of today (15.12.1997) I owe my son Phillippe D Gray-Grzeszkiewicz the sum of $18,000 (eighteen thousand dollars) which was withdrawn from his State Bank Account (number)Viridian"

This note was witnessed by Mrs Stewart.

14. I find that the defendant withdrew the sum of $32,000 in two cheques on 25 June 1997 from his son's account pursuant to the power of attorney and applied the funds to his own purposes, being a payment to his superannuation fund. I find that he repaid this money on 15 July 1997. I find that he made further drawings from his son's account in the sums of $20,000 on 15 July 1997, $3,000 on 4 October 1997 and $10,000 on 15 December 1997. I find that he made a payment to his sons account of $12,000 on 2 September 1997. I find that in the period 15 July to 15 December 1997 the defendant had taken $33,000 from these accounts and paid in $12,000, leaving a net deficit of funds applied by the defendant for his own use by 15 December 1997 of $21,000. I find that Mrs Stewart, acting on instructions from the defendant, wrote to the plaintiff on 25 July 1997 to state that she was witness to the defendant borrowing $20,000 for a business loan. I find that the defendant on 15 December 1997 signed a handwritten document which acknowledged that as of that date he owed his son $18,000.

15. This seems to me to be overwhelming evidence of a debt owed by the defendant to the plaintiff. Against this the defendant acknowledges that he applied these monies from the plaintiffs accounts for his own purposes, and does not dispute that the net deficit amounts to $21,000. He moreover acknowledges that he owes a "moral debt" to his son. He says, however, that there is no legal debt.

16. There is a conflict in the evidence between the plaintiff and the defendant in relation to what was said when the bank books were handed over. Taking all of the evidence into account, I prefer the plaintiff's version to that of the defendant. The defendant acknowledged that he had memory problems. He acknowledged that his version of telling his son that he had just had an operation to remove a cancer before his son told him to use the money however he liked could not have been correct, as he did not have this operation until some time after his son left Australia. His version of his son saying that he could use the accounts as he saw fit is inconsistent with his acknowledgment of a debt and a loan.

17. It was further argued that the plaintiff had somehow acquiesced in the defendant's taking of these funds. While this was somewhat at odds with other complaints that the plaintiff was acting harshly and oppressively by litigating to recover the funds, it is also misconceived, in that the defendant, by his letter of 15 December 1997, had acknowledged a debt, and so his son, understandably, took comfort from this acknowledgment and assumed that the debt would be repaid. I am satisfied from all of the evidence that the plaintiff has asked for repayment, and has been repeatedly met with an acknowledgment of a "moral debt" but a refusal to make any payment and a denial that there is any legal debt.

18. I have found that the plaintiff left his father with a power of attorney and access to his bank accounts on the basis that the father would use these in the plaintiff son's interests during his absence overseas. I have found against the defendant's claim that the plaintiff authorised him to draw down funds for his own purposes, and it follows that in drawing down funds from his son's account for his own purposes he has exceeded the authority granted to him by his son, and he is legally obliged to repay this amount as a debt to his son.

19. It is always unfortunate when family arrangements break down and lead to litigation, and it is to be hoped that this case can be put behind this family and not lead to a permanent breakdown in relationships between the plaintiff and his father, the defendant. It is the role of the court to resolve the legal dispute between them, and in relation to the claim I find that the defendant has been indebted to the plaintiff since 15 December 1997 in the sum of $21,000 and I award this amount, with interest calculated in accordance with the Practice Directions of this court in the sum of $5,984.

20. An open offer was made at the commencement of the hearing in which the plaintiff indicated that he would accept a judgement for $21,000 plus interest plus costs. This is the order that I have made after hearing all of the evidence, and his counsel asked for costs on a more generous basis than normal party party costs. I note that the claim was initially for a greater sum, and included claims for cheques which were in fact applied for the plaintiff's purposes. While it was alleged that there had been a failure to account for these sums, I accept the evidence of Mrs Stewart, which was not challenged, that she did hand the plaintiff all records relating to these payments. In pursuing the full amount up to the date of the hearing the plaintiff has to some extent generated additional costs. In all of the circumstances of this case I am not satisfied that I ought to make a costs order in any terms other than the ordinary order for costs on a party and party basis.

I certify that the preceding 20 (twenty) numbered paragraphs are a true copy of the Reasons for Judgment herein of Master T. Connolly.

Associate:

Date: 27 October 2000

Counsel for the Plaintiff: Mr Mossop

Solicitor for the Plaintiff: Phelps Ried

Counsel for the Defendant: Mr Ziolkowski

Solicitor for the Defendant: Mr Ziolkowski

Date of hearing: 9 October 2000

Date of judgment: 27 October 2000