ADMINISTRATOR OF THE ESTATE RAISES ESTOPPEL AGAINST CLAIMS AGAINST THE ESTATE IN A NEW PROCEEDING
Lowe v Pascoe (No 9) [2021] NSWSC 163 (4 March 2021)
This is a claim against the estate case where the administrator of such estate argues that the new proceeding is barred by estoppel.
Facts:
These two proceedings, (the Lowe Proceedings) and (the FC Chow Proceedings), are concerned with certain actions of the late Kut Sze Tu (KST), who died intestate on 20 October 1997. The actions in question concerned the misappropriation by KST of funds of a partnership that commenced on 1 August 1975 and came to an end on 1 July 1989 (the Partnership).
In October 1933, KST married his first wife, Tang Fung, in China. They had five children, namely, Mary, Janet, John, Margaret and Helen. Relevantly, Mary, is married to Mr Geoffrey Lowe, who provided professional accounting services to the Partnership. In March 1956, KST married his second wife, Fung Chun Chow (FC Chow), in Hong Kong. KST and FC Chow had three children, namely, Stella, Gordon and Sunly. In addition, Mr Scott Pascoe (the Administrator) was appointed interim receiver of the estate of KST
The Lowe Proceedings involved a claim for relief on behalf of the Partnership, which included FC Chow, or her estate, as a member of the Partnership. The claim was made in respect of property of the Partnership and a declaration was sought, inter alia, that the estate of FC Chow had a 30% share in the Partnership as well as a declaration that each of the Partnership Properties was held on constructive trust for the Partnership, of which FC Chow was a member. Further, in the Lowe Proceedings, a declaration was sought that the profits derived by the use of the Partnership Properties were held on constructive trust for the Partnership, of which FC Chow was a member. Finally, orders were sought for a partnership account and a determination of the respective interests of the members of the Partnership, including FC Chow as well as orders that the estate of KST account to the Partnership on a willful default or alternatively a common form basis and that FC Chow, Sunly and Gordon account for the benefits that they had allegedly obtained through KST’s breaches of fiduciary duty.
In the FC Chow Proceedings, Sunly seeks an order that the Administrator pay to the estate of the late FC Chow 30% of the amount of the benefits the late KST obtained through his ownership, possession and/or use of the Partnership Properties since their acquisition as may be found to be held on constructive trust for the Partnership pursuant to the Inquiry.
The Administrator contends that it was unreasonable for the claims presently made in the FC Chow Proceedings not to have been raised in the Lowe Proceedings and that FC Chow’s estate is estopped from making them.
Issue: Is the administrator correct in contending that the claims presently made in the FC Chow Proceedings should not be raised in the Lowe Proceedings which makes FC Chow’s estate estopped from making them?
Held:
A party may be estopped from proceeding with a case where matters that are proposed to be relied upon in that case by that party were so relevant to the subject matter of an earlier action in which that party was a party that it was unreasonable not to rely upon those matters in the earlier proceedings. As a general rule, it will be unreasonable not to plead a defense if, having regard to the nature of the claim made by the plaintiff and its subject matter, it would be expected that the defendant would raise that defence and thereby enable relevant issues to be determined in one proceeding.
The court considers that no issue estoppel arises as to FC Chow’s knowledge of KST’s misappropriations because no determination as to her knowledge of relevant events was necessary in order to determine the entitlement of Geoffrey and Mary to the relief that they claimed in the Lowe Proceedings. Accordingly, a determination must be made as to FC Chow’s knowledge as to the use made of property of the Partnership to purchase the Partnership Properties before it can be determined that FC Chow had a right to an account as against KST in respect of those funds.
An issue estoppel would only arise to prevent a party being vexed by having to litigate an issue twice. The question of FC Chow’s knowledge was not litigated at all in the Lowe Proceedings. It might have been but for the fact of the submitting appearance filed by Stella on behalf of the estate of FC Chow. In so far as it is an element in the claim made on behalf of the estate of FC Chow that the misappropriation by KST of funds of the Partnership occurred without the acquiescence or knowledge of FC Chow, that is an issue that has not been litigated. It follows that there is no issue estoppel in relation to that question.
It might have been but for the fact of the submitting appearance filed by Stella on behalf of the estate of FC Chow. In so far as it is an element in the claim made on behalf of the estate of FC Chow that the misappropriation by KST of funds of the Partnership occurred without the acquiescence or knowledge of FC Chow, that is an issue that has not been litigated. It follows that there is no issue estoppel in relation to that question.
Conclusion: FC Chow’s estate is not estopped from making claims against the estate of KST.
