Legal Hypothetical: Signatory on account accused of misconduct

WILLIAM obtains accommodation in a nursing home and authorises his friend David to be a signatory in relation to his bank accounts.

David agrees to pay William’s bills and rollover his substantial fixed term deposits.

During the course of the following five years, William’s bank accounts are diminished by approximately $1 million.

When William passes-away, his son discovers in his office as executor of the estate, that cash amounts were systematically withdrawn from William’s bank account at his local branch and large amounts were transferred directly to David’s account and accounts in his children’s names.

William’s executor commences Supreme Court action against David.

It is alleged that David, as signatory, owes a “fiduciary duty” to act honestly and in good faith and not to prefer his own self-interests.

“Unjust enrichment” is also pleaded, together with breach of contract.

David claims that William was present during many of the transactions and says that William was entitled to give away his money as he saw fit.

A five-day hearing ensues, during which a myriad of transactions are carefully scrutinised.

The Court hears that David arranged for William’s bank statements to be sent directly to David’s address.

The Court finds that it was not William who was giving-away his money but that in fact it was David who was accessing William’s accounts. On this basis, David was held to owe William a “fiduciary duty”.

The Court states that David has the onus to prove the “righteousness” of the transactions which involved establishing William’s “fully informed consent”.

However, the Court rules that there was no contractual relationship between William and David and dismisses the breach of contract claim.

Ultimately, the Court holds that David’s actions did not constitute “conscious deceit” and accepts that some of the transactions were not for David’s personal benefit but that the bulk of the transactions justified an order that David and his children repay over $800,000.

Email Manny Wood, Principal Solicitor and Accredited Specialist in Wills and Estates at TB Law at or call him on (02) 66 487 487.

This column is only accurate at today’s date and is not legal advice.

By Manny WOOD, Solicitor

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