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[2020] NSWSC 1570
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Torok v Becker [2020] NSWSC 1570 (9 November 2020)
Last Updated: 9 November 2020
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Supreme Court
New South Wales
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Case Name:
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Torok v Becker
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Medium Neutral Citation:
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Hearing Date(s):
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30 September; 1, 6–7, 9 October 2020
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Date of Orders:
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9 November 2020
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Decision Date:
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9 November 2020
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Jurisdiction:
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Equity
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Before:
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Ward CJ in Eq
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Decision:
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1. Direct the parties to provide written submissions
within seven days as to the form of the orders to be made to reflect these
reasons and as to costs.
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Catchwords:
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EQUITY — Undue influence — Relationships giving rise to
presumption of undue influence — Actual undue influence
— Relevant
factors — Unconscionable conduct — Special disability or
disadvantage
SUCCESSION — Family provision — Claim by
adult child — Notional estate — Whether order designating property
as notional estate should be made
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Legislation Cited:
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Cases Cited:
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Texts Cited:
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Ford and Lee, Principles of the Law of Trusts (1st ed, 1983, Law Book
Co) Jordan, Administration of the Estates of Deceased Persons (3rd ed, 1948,
Government Printer) Meagher Gummow & Lehane, Equity: Doctrines and
Remedies (5th ed, 2015, LexisNexis) Sir Anthony Mason, “The Impact of
Equitable Doctrine on the Law of Contract” (1998) 27 Anglo-American Law
Review 1Underhill and Hayton, Underhill’s Law of Trusts and Trustees
(13th ed, 1979, Butterworths) |
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Category:
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Principal judgment
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Parties:
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Lara Caroline Torok (First Plaintiff)
Lara Caroline Torok as legal
representative of the estate of the late Isolde Becker (Second
Plaintiff)
David Theodore Becker (Defendant)
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Representation:
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Counsel:
D Smallbone (Plaintiffs)
P Russell
(Defendant)
Solicitors:
Prime Lawyers (Plaintiffs)
Austin Giugni
Martin Lawyers (Defendant)
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File Number(s):
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2019/00337892
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Publication Restriction:
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Nil
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JUDGMENT
- HER
HONOUR: This matter was listed before me for hearing from the Expedition
List. The reason for expedition lay in the fact that there was
in place, in
effect, a freezing order regime which limited the use that the defendant could
make of funds from which he would otherwise
be able to conduct his business and
make provision for his family but where even the limited use that the defendant
was then permitted
to make out of those funds would inevitably deplete the funds
available to meet any judgment that the plaintiff might obtain in these
proceedings. By consent, at the conclusion of the hearing, when judgment was
reserved, there was amendment to that regime further
limiting the
defendant’s ability to have access to the disputed
funds.
Introduction
- Broadly,
by way of introduction, the dispute between the parties is yet another
unfortunate example of disputes between siblings over
a deceased parent’s
estate, involving complaint as to events that occurred prior to the
deceased’s death with allegations
(amongst others) of undue influence and
unconscionable conduct on the part of the defendant.
- The
family in question is the Becker family. Mrs Isolde Becker (the deceased) died
of pneumonia on 13 July 2019 aged 82. The deceased
had survived her husband, Dr
Theodore Becker, who had died three years earlier, aged 93. The deceased and her
husband had two children,
Lara Caroline Torok (the first plaintiff) and David
Theodore Becker (the defendant). I will refer to the family members, intending
no disrespect, by their first names. I note that Lara is also the second
plaintiff in these proceedings in her capacity as the legal
representative of
the estate of the deceased, Lara having been appointed by Robb J as the
estate’s representative for that
purpose (see Torok v Becker [2019]
NSWSC 1662 (Torok v Becker (2019)) (see also the relevant principles in
relation to such appointments referred to in Bayside Council v Estate of
Goodman [2019] NSWSC 530; and Hewitt v Gardner [2009] NSWSC
705).
- By
her last Will dated 31 August 2016, the deceased made provision for each of her
two children in the form of pecuniary legacies
($1 million to Lara and
$2 million to David), with the residue of the estate to be divided equally
between them. At the time of making
of the Will in August 2016, Lara says that
the net value of the deceased’s estate (which included a property at
Glenhaven)
was estimated to be not less than $3,037,800. David appears not to
dispute this, since he says that, at the time of the 2016 Will,
it was estimated
that the deceased’s then residence at Glenhaven would sell for between $6
million and $7 million (David’s 17 March 2020 affidavit at [97]-[98]).
Whatever may have been the market value of the Glenhaven property in August
2016, it is clear
that, as at that time, the deceased had not insignificant
assets from which she would no doubt have anticipated her testamentary
intentions would be satisfied. As it was, however, by the time of her death in
July 2019, the deceased held no real estate, only
a small number of shares, cash
totalling $2,917.57, and (on David’s evidence) very little personal items
or furniture.
- The
circumstances in which the deceased’s estate was diminished to such an
extent, including by way of the purchase of a house
in Beaumont Hills in the
names of David and his wife (Susan Mary Becker) (using some $1,522,272.03 of the
proceeds of sale of the
deceased’s Glenhaven residence) (the Beaumont
Hills Property) and by way of electronic transfers of substantial funds from
the
deceased’s bank account to David’s account or, it is alleged, for
his benefit) are the subject of the undue influence
and unconscionable conduct
claims now brought against David. The electronic funds transfers (whether used
for the purchase of the
Beaumont Hills Property or otherwise for David’s
benefit) are also the subject of a claim that David is liable, as a fiduciary,
to account therefor.
- In
summary, Lara contends that David received (or had the benefit of) funds
totalling some $2,958,525.13 from the deceased following
the making of her
August 2016 Will and that, from the period after David and his family moved into
the deceased’s Glenhaven
residence in 2014, David benefited by the receipt
of amounts (including the abovementioned funds) totalling $3,298,326.13. There
is also a claim in relation to the apparent disposal by David of various
chattels of the deceased.
- In
the alternative, in the event that the amounts received or transferred to David
or for his benefit are held to have been authorised
by the deceased and/or were
valid gifts to him, then Lara brings a claim for provision pursuant to s 59
of the Succession Act 2006 (NSW) (Succession Act).
- For
the reasons set out below, I am of the view that the primary claims brought by
Lara are made good and that it is therefore unnecessary
to deal with the
Succession Act claim (but I will nevertheless set out, in due course,
what would have been my findings in relation to that claim had it arise for
determination).
Background
- By
way of background, as already noted, the deceased and her husband had two
children (Lara and David). The deceased’s husband
(Dr Becker) was a
general practitioner who continued to practise as a doctor until he retired in
his mid-80’s. The deceased
had assisted Dr Becker in his medical practice
as a secretary until the birth of their children. The deceased was Dr
Becker’s
second wife and Dr Becker had three children from his earlier
marriage. Those children do not feature in this dispute (although there
was some
evidence from Lara that Dr Becker had told her that he had made provision for
each of his first three children – see
T 62, which may serve to explain
his undoubted generosity also to Lara during his lifetime).
- In
1988, the deceased and Dr Becker, as joint tenants, purchased a property in
Glenhaven, NSW (the Glenhaven Property). At some time
thereafter, they
demolished the existing house on the property and built a large six-bedroom
house on the land, financed by a $500,000
loan from the Commonwealth Bank of
Australia (CBA). They lived in the Glenhaven Property (which became the family
home) for much
of the rest of their respective lives.
- On
21 December 1995, Dr Becker and the deceased made mirror Wills (and in March
2007 and April 2008 he and the deceased made mirror
codicils). I will refer in
due course to the content of the relevant testamentary documents (see [38]
below).
- Following
her schooling, Lara remained living with her parents while she completed degrees
at Sydney University in occupational therapy
and physiotherapy. David did not
pursue a tertiary education. He enrolled in an information technology course and
subsequently established
a business of carpet overlocking and binding,
manufacturing mats, rugs and floor runners from carpet offcuts.
- In
2004, David left the Glenhaven Property. He and Susan moved into a home they had
built on land they had purchased in Kellyville
(the Kellyville Property). Also
in 2004, Lara married Adam Torok, who is now a practising solicitor but who was
then still a student,
studying law and working in various part-time jobs.
Following their wedding, Adam moved into the Glenhaven Property with Lara and
her parents.
- Lara
and Adam remained living at the Glenhaven Property until July 2005, when they
moved into their own home at Baulkham Hills. Later,
for a period of time in
2007, Adam and Lara moved back into the Glenhaven Property while they renovated
a residence on land they
had purchased at Wallacia (the Wallacia
Property).
Financial accommodation provided to Lara (and
Adam)
- It
is not disputed that, over the course of their lives, Dr Becker and the deceased
provided financial accommodation to Lara (and
Adam) by way of the provision of
guarantees to secure a succession of loans. It is relevant to note that the
financial accommodation
consisted in the first instance of the provision of
guarantees secured over the Glenhaven Property (not loans, as such, as was
suggested
in some of the evidence). However, in 2007 (when Dr Becker retired)
the extant loans which were then secured by way of those guarantees
were paid
out by way of refinance obtained by Dr Becker and the deceased from a Homesafe
“reverse mortgage” (about which
I will say more in due course); and
later, according to Lara, after Lara and Adam had paid a certain amount towards
repayment of
the amount referrable to the loans that had been guaranteed for
their benefit, Dr Becker (and the deceased) in effect forgave the
balance of the
amount repayable by Lara in that regard.
- Lara
accepted in cross-examination that she had approached her parents for financial
assistance over the years and that they had been
generous (in her words,
“amazing”) in the provision of that assistance. Both Lara and Adam
accepted that they could not
have acquired the assets that they did (at those
times) without the assistance of the deceased and Dr Becker (see, for example,
Lara’s
evidence at T 62).
- Pausing
here, it seems that David may have a sense of grievance that similar
accommodation was not made to him as it was to Lara (and
Adam), at least insofar
as the financial accommodation to his sister was a matter on which no little
emphasis was placed in submissions
in this matter and, according to Adam, David
pressed him for information about this. In that regard, Adam’s evidence is
that
(by 2015) David had questioned him a number of times as to the amount of
financial accommodation his parents had given Lara and Adam
with regular
frequency: along the lines, “[s]o how much money have my parents given to
you and Lara?” and “[y]ou
must know what they gave you” (see
Adam’s 9 April 2020 affidavit at [20]).
- Whether
or not David did feel aggrieved at the disconformity in provision made as
between he and Lara during their lifetimes, it is
evident from the
deceased’s testamentary instruments and, in particular, the instructions
given by her in relation to her ultimate
Will (as recorded by her, and
David’s, solicitor) that the deceased wanted to “even things
up” between her two
children.
- The
guarantees provided by Dr Becker and the deceased (secured over the Homebush
Property) in relation to borrowings by or for Lara’s
benefit were as
follows.
(a) The Homebush Guarantee
- The
first of the guarantees (the Homebush Guarantee) was in connection with the
purchase by Lara and Adam in November 2004 of an apartment
in Homebush. Lara
says this was an investment property bought at the suggestion of her father.
CBA (with whom the deceased and Dr
Becker had their home loan) provided the
funding for that purchase (apart from the deposit, which Lara says she and Adam
provided
out of their savings). The loan secured by the Homebush Guarantee was
serviced by Adam and Lara directly with CBA. The Homebush
loan was paid out in
full when the Homebush Property was subsequently sold in 2006 at around the time
of the purchase of the Wallacia
Property (see below).
(b)
The Baulkham Hills Guarantee
- In
July 2005, Adam and Lara purchased a home in Baulkham Hills. Again, the purchase
was financed by CBA. In June 2005, the deceased
and her husband gave a guarantee
in respect of the Baulkham Hills home loan (limited to an amount of
approximately $450,000) (the
Baulkham Hills Guarantee). The loan secured by the
Baulkham Hills Guarantee was again serviced by Adam and Lara directly with CBA.
The Baulkham Hills loan was paid out in full when the property was sold in 2006
(at the time that Lara and Adam acquired the Wallacia
Property).
(c) The Physiotherapy
Guarantee
- In
early 2006, Lara, who by that time had worked as a physiotherapist for two
years, purchased (through a company incorporated for
that purpose – Lara
Torok Pty Ltd) her own physiotherapy and hydrotherapy practice in Penrith,
Nepean Manipulative Physiotherapy
and Hydrotherapy Centre (with, she says, her
father’s encouragement).
- The
deceased and Dr Becker guaranteed a bank loan of $160,000 for the purchase (the
Physiotherapy Guarantee), and also provided a
bank guarantee in the amount of
$13,479.98 in relation to the practice (it seems likely that this was by way of
a bond for the lease
by the company of the business premises from which the
physiotherapy practice operated). The Physiotherapy Guarantee was secured
over
the Glenhaven Property. Lara’s company was the principal debtor in respect
of the loan secured by the Physiotherapy Guarantee,
and serviced the
Physiotherapy loan by direct debit payments to the CBA.
(d)
The Wallacia Guarantee
- In
late 2006, Lara and Adam purchased a property at Wallacia, with the intention of
making this their family home. Dr Becker and the
deceased again provided a
guarantee securing the finance obtained for the acquisition of the Wallacia
Property. On settlement of
the Wallacia Property purchase, CBA created two
facilities – one, in the amount of $722,000, which related to that part of
the loan secured over the Wallacia Property itself; the other, in the amount of
$180,000, which was secured by way of guarantee given
by Dr Becker and the
deceased and secured over the Glenhaven Property (the Wallacia Guarantee).
Following settlement of the Wallacia
purchase, Adam and Lara serviced the loan
secured by the Wallacia Guarantee by way of direct debit payments to CBA (see Ex
6).
2007 codicils
- On
21 March 2007, the deceased made a codicil to her 21 December 1995 Will in which
she directed her executors to take into account
advances (with interest) made to
each of Lara and David, when dividing her estate equally between them.
- The
2007 codicil refers to an advance to Lara in the amount of $38,000 in May 2005
and an advance to David in the amount of $160,000
at the same date. It is
accepted that there was an error in the drafting of the codicil, in that the
relevant amounts were transposed
(i.e., the amount of $160,000 was referable to
the Physiotherapy Guarantee and was for the benefit of Lara, not David, and
vice versa). Some time later, on 29 April 2014, Mrs Becker corrected the
codicil to note that the advance of $160,000 was to Lara, and the advance
of
$38,000 was to David.
- Pausing
here, as already noted, there had not been an advance, as such, to Lara of
$160,000 as at the date of the 2007 codicil; rather,
Dr Becker and the deceased
had provided security by way of guarantee secured by mortgage over the Glenhaven
Property for the Physiotherapy
loan in the amount of $160,000 (thus putting
their assets at risk but without the outlay by them of any funds at that
stage).
Retirement of Dr Becker and refinance of Glenhaven home
loan
- In
2007, at the age of 84, Dr Becker retired from his medical practice. At the
time, Lara and Adam were back living at the Glenhaven
Property (while the
Wallacia Property was being renovated) and there were still on foot the loan the
subject of the Wallacia Guarantee
and the loan in respect of the Physiotherapy
Guarantee ((see Lara’s 26 October 2019 affidavit at [91]; [97]-[98]).
- At
around the time of Dr Becker’s retirement (and, it is said, unbeknownst to
Lara or Adam), Dr Becker and the deceased’s
existing loan with CBA was in
the amount of approximately $545,000.
- On
31 May 2007, Dr Becker and the deceased sent a facsimile transmission to their
solicitor, Mr Ken Austin, in relation to the proposed
refinancing of their CBA
loan by way of entry into a “reverse mortgage” arrangement with
“Homesafe”. In
that document, the payout figures for the refinance
appeared as follows:
$409,000.00 plus
$160,000.00 Guarantee for business for Lara Torok Pty Limited, plus $179,000.00
Guarantee for home loan.
- For
Lara, it is said that the $409,000 figure noted in the above facsimile
transmission was the approximate payout figure of the deceased
and
Dr Becker’s then $545,000 loan, less the offsetting amount of funds
in their mortgage interest saver account at the time.
- Consistent
with the above there is a note by the deceased in June 2007 as
follows:
Lara & Adam
$160,000 Business guarantee
$179,000 Home guarantee
$339,000 Total guarantee
Our Mortgage $408,707.
- On
22 June 2007, Dr Becker and the deceased settled the refinance of their CBA loan
with Homesafe. The total amount of the refinancing
was $853,325 (see
Lara’s 16 October 2019 affidavit at [74]). The refinance encompassed the
payout of the Physiotherapy Guarantee ($160,928.26), the Wallacia
Guarantee
($177,967.56), and Dr Becker and the deceased’s home loan in respect of
the Glenhaven Property. After repayment
of those amounts, the Homesafe loan
made available to Dr Becker and the deceased an amount of approximately
$93,000.
- David
points out that the effect of the above was that the 2007 refinancing (by way of
reverse mortgage) of the Glenhaven Property
was increased by the sum of
$338,895.82 to reflect the payout of the borrowings attributable to Lara and
Adam. (This is not disputed.)
David’s evidence is that this was a matter
about which the deceased and Dr Becker were very concerned (see David’s
8 November 2019 affidavit at [10]-[11] and [19], and his 17 March 2020
affidavit at [38], [41], [45]-[50], [52] and [96]). (I interpose
to note that I
treat that evidence with some caution in the absence of any independent
corroboration of any such concern at the relevant
time i.e., when the Homesafe
mortgage was taken out. I also refer in due course to evidence as to the
deceased’s reported concern,
at a later time, about the Homesafe mortgage,
in the context of the Glenhaven Property sale; which concern appears to have
been prompted
to some extent by David at least insofar as it appears he took the
deceased to a financial planner for advice about the mortgage
– see
below.)
- David
relies on the discharge of Lara and Adam’s loans, via the reverse
mortgage, as amounting to financial accommodation in
favour of Lara (as it
plainly was).
Discharge of Physiotherapy and Wallacia
Guarantees
- As
noted above, at the time of the Homesafe refinance of the CBA loans, Lara and
Adam were living at the Glenhaven Property. Lara
cannot recall how she came to
learn of the refinance of the Glenhaven Property but presumes that it was
because she had noticed at
least one of the CBA loans “disappear”
from her internet banking account. Adam similarly made reference to this.
- Lara’s
evidence is that, after she learnt about the refinance, Dr Becker directed her
to start making repayments of the loans
which related to the Physiotherapy
Guarantee ($160,928.26, including fees) and the Wallacia Guarantee ($177,967.56
at the time of
refinance) into Dr Becker and the deceased’s joint bank
account in the amount of $1,100 per fortnight. That is corroborated
by the
evidence of such transfers commencing around then and by the codicils executed
by the deceased and Dr Becker in April 2008
(see below).
2008
Codicils
- On
1 April 2008, Dr Becker and the deceased executed mirror codicils to their Wills
in which each directed their executor to take
into account the sum of
$338,895.82 (which Lara notes comprised the sum of $177,967.56 (Wallacia
Guarantee) and the sum of $160,928.26
(Physiotherapy Guarantee)) refinanced by
them, when making an equal distribution between Lara and David. The codicils
recorded that
the said amount was being repaid by Lara at $2,200 per calendar
month, interest free. (The codicils did not, however, record those
two separate
components of the sum of $338,895.82 but nothing turns on
this.)
Payment to Dr Becker and the deceased of $1,100 per
fortnight from July 2007
- Between
July 2007 and 2009, Lara continued to pay Dr Becker and the deceased the amount
of $1,100 per fortnight directly to their
nominated bank accounts (as adverted
to above, copies of bank transfers were in evidence).
- Lara’s
evidence is that, in 2009, Lara was approached by Dr Becker to change the
payment method from direct transfer to cash
(to enable he and his wife to claim
a part-pension) and that from then Lara started making repayments by cash
instead of bank transfer.
Lara’s evidence is that she and Adam continued
making cash repayments to Dr Becker and the deceased up until March 2010. There
is no evidence of any complaint by Dr Becker (or the deceased at least at that
stage) as to any failure to do so.
Sale of physiotherapy business
and later forgiveness of balance of the loans
- Lara’s
evidence is that, in about February 2010, when she was pregnant with her first
child, Lara had discussions with her father
in which Dr Becker advised Lara to
sell the physiotherapy business to allow her to concentrate on raising a family.
(Lara’s
evidence was that her father thought a mother should stay at home
with her family – see T 76.32.)
- Lara’s
evidence is that the decision to sell the physiotherapy practice, which was
profitable according to Lara, was made in
the context of the arrangement that
Lara and Adam would not then need to continue making the monthly repayments to
her parents. She
said that she would not have sold the practice without knowing
that they did not have to meet the $2,200 monthly repayments (T 71).
(The
practice was not sold for a profit – Lara’s evidence is that the
market for the sale of such practices at the time
was that they were lucky even
to be able to sell the physiotherapy practice when they did.)
- Lara
says that her father told her that he wanted no part of the sale proceeds
(approximately $135,000) and directed Lara to stop
making all loan repayments to
him and the deceased in order to enable Lara and Adam to service their own home
loan, and focus on
raising a family. Adam similarly gives evidence of a
discussion at which he was present in the kitchen at the Glenhaven Property
with
Lara, Dr Becker and the deceased, at which he says Dr Becker said “You
don’t have to worry about repaying us as
we have made it equal in our
wills”. Again, this is consistent with the codicils made in 2008.
- Lara
thus contends for a finding that, while Dr Becker and the deceased provided Adam
and her with financial accommodation in the
form of forgiveness of the
$338,895.82 paid by Dr Becker and the deceased as part of the 2007 Homesafe
refinance, that sum had already
been noted by Dr Becker and the deceased in
their respective Wills to ensure an equal division between their children (as
part of
a regime in which Lara and Adam had repaid Dr Becker and the deceased
upwards of $55,000 following the making of the Homesafe refinance).
That
accords with the evidence; and I so find.
Carpet interlocking
business joint enterprise
- By
2011, David had been operating his own carpet overlocking and binding business
for a number of years. In 2011 Lara and Adam went
into business with David,
trading as “Sydney Overlocking” (Lara says against Dr Becker’s
advice but with the deceased’s
support). There was no signed written
agreement in relation to the business arrangements between the siblings (and
their spouses),
though there was some suggestion in Lara’s evidence that a
draft partnership agreement had been prepared at some time. Lara
referred to it
in a later letter to her mother as a “partnership” and said in
cross-examination there was a verbal partnership
agreement (T 80).
- Lara’s
evidence is that the carpet overlocking business in which the siblings and their
spouses were jointly involved was an
amalgamation of David’s business and
a business that she and Adam acquired and for which they paid cash out of the
proceeds
of sale of the physiotherapy business in order to invest in the carpet
business (T 73). Lara’s evidence is thus that she and
Adam had invested
their capital at that time in the carpet business.
- Whether
or not the business arrangement between the siblings was, as a matter of law, a
partnership as such (see the definition of
partnership in s 1(1) of the
Partnership Act 1892 (NSW) (Partnership Act), as being the
relation which exists between persons carrying on business in common with a view
of profit, and s 2 of the Partnership Act which sets out various
rules to which regard shall be had in determining whether a partnership does or
does not exist; and see also
the discussion of the test of partnership in
Bova v Avati [2009] NSWSC 921), there was on any view of things a joint
venture (see United Dominions Corporation Limited v Brian Proprietary Limited
(1985) 157 CLR 1; [1985] HCA 49 (United Dominions) at 10, per Mason J
(as his Honour then was), Brennan and Deane JJ) between the siblings and their
spouses in relation to the carpet
overlocking business from around 2011 through
to February 2016. Lara confirmed in the witness box that all four (she and Adam,
David
and Susan) were shareholders and directors of the entity carrying on the
business. On all accounts, the joint enterprise ended very
acrimoniously (see
below).
Deterioration of Dr Becker’s health and his move to
an aged care facility
- In
2014, Dr Becker was admitted to hospital suffering chest pain. It does not
appear to be disputed that his health had been slowly
deteriorating, and it is
said that he was by then exhibiting symptoms of dementia. Lara, however, is
adamant that at that stage her
father was exhibiting only mild dementia (which I
note here not as amounting to any evidence of his actual medical condition at
the
time but simply because it informs Lara’s apparent disagreement at
that time as to the necessity for placement of her father
into a nursing home
– see T 94).
- Lara
gives evidence that she suggested to David at some stage in 2014 (see her
affidavit affirmed 26 October 2019 at [133]) that their
parents downsize to a
smaller property; and that David rejected any such proposition, telling Lara:
“Don’t be stupid
Lara. We need to make them keep Glenhaven for as
long as possible. That is our inheritance. Just imagine, we’d be set for
life”.
David does not refer to this conversation or whether it occurred,
but he did say in cross-examination that he did not discuss downsizing
with his
mother (see at T 276), but in any event, it does not appear to be disputed that
the deceased at that stage did not agree
to any suggestion that the Glenhaven
Property be sold (whether to allow the couple to “downsize”, or
otherwise).
- In
any event, in 2014, after his hospitalisation, Dr Becker moved to live in
“The Poplars” aged care facility in Epping.
He never returned to
live in the Glenhaven Property. In connection with his admission to The Poplars,
payment of an accommodation
bond in the amount of $590,000 was required (the
Accommodation Bond).
- On
David’s evidence, he and his wife Susan sold their Kellyville Property at
that time in order to be in a position to pay the
Accommodation Bond for
Dr Becker’s admission to The Poplars. (This is of relevance given his
evidence as to the deceased’s
later concern that they had done so
“for no reason” in order to pay the Accommodation Bond – see
David’s 8 November 2019 affidavit at [16], and his 17 March 2020 affidavit
at [59] and [88].)
- Indeed,
prior to the commencement of the proceedings, David’s solicitors (Austin
Guigni Martin), by letter dated 11 October
2019, made the assertion that part of
the proceeds of the sale of the Kellyville Property had been used to pay part of
the Accommodation
Bond (an assertion that it is here accepted was incorrect).
The letter stated that:
In 2014, Theodore’s health deteriorated and he moved into Poplars Nursing
Home. The deceased and Theodore did not have sufficient
funds for the
accommodation bond. Our client sold his Kellyville property and used part of
the proceeds to pay the shortfall of the bond. The deceased was on her own
in the Glenhaven property and our client and his wife gave up full-time work to
become the deceased’s
full-time live-in carers. [Emphasis
added]
- However,
it is clear from documents produced on subpoena in these proceedings (and it is
not here disputed) that it was simply incorrect
for David’s solicitors to
assert that David had paid any part of the Accommodation Bond (what in fact
happened was that it
was paid in two tranches from the deceased’s and Dr
Becker’s own funds); just as it was incorrect for them to assert
that the
deceased and Dr Becker did not have sufficient funds for the Accommodation Bond.
As at 2014, Dr Becker and the deceased
had sums totalling $720,000 on term
deposit with the Commonwealth Bank (being term deposits #6319 ($80,000); #2828
($500,000); #6217
($90,000); #2836 ($50,000)). (I hasten to add that I make no
criticism of David’s solicitors in this regard, since it is not
suggested
that they knew those statements were incorrect at the time they were made on
behalf of their client.)
- In
David’s first affidavit in these proceedings sworn 8 November 2019 (made
after the documents establishing the incorrectness
of above propositions had
been produced on subpoena), David deposes that he had intended to pay the
Accommodation Bond, until such
time as it was discovered that his parents had
adequate funds to do so (and he referred to advice from an unidentified
financial
planner that it was in his mother’s interests for the bond to be
paid from the deceased and Dr Becker’s funds) (see David’s 8
November 2019 affidavit at [13]-[15], and 17 March 2020 affidavit at [54];
[56]-[59]).
- Pausing
here, this is by no means the only statement contained in correspondence from
David’s solicitors (which correspondence
one can only assume was on
instructions from David) that has turned out to be incorrect (or perhaps, viewed
more charitably, to be
incomplete). For example, the “Bitcoin”
correspondence, and the early correspondence as to the extent of any gifts or
loans by the deceased, to which I refer below, are but two more topics on which
responses by David’s solicitors were later
shown to be incorrect or
incomplete. Again, no doubt, that was primarily a product of the
solicitors’ instructions. However,
as I address in due course, this
reinforces the serious doubts I have as to the reliability of much of
David’s evidence in
general.
- I
also note that there was some suggestion in cross-examination of David that the
sale of the Kellyville Property may have been due
to financial difficulties on
David and Susan’s part but this was denied by David (and seemed to be
based a misreading of his
affidavit evidence as to the disposition of the
proceeds of sale (i.e., where he deposed to an amount paid to discharge the
couple’s
personal debts, it appears from his evidence in cross-examination
that by this he meant the mortgage debt on the property itself).
Be that as it
may, as I understand it, after the sale of the Kellyville Property, David and
Susan had around $290,000 in net proceeds
of sale (see below) but they chose not
to purchase another property – instead they remained living rent-free with
the deceased
for whom (they say) they were the full-time live-in carers from
2014. That latter assertion also seems likely to be a somewhat exaggerated
claim
since David was working on various business ventures (the carpet business and a
proposed Tesla business) during at least some
of the period from 2014 (and, he
says, he was supervising the renovations of the Glenhaven Property).
Nevertheless, I accept that
David and Susan lived with, and provided day-to-day
care for, the deceased from 2014 (and for most of the rest of the
deceased’s
life).
- I
will return in due course to the question of the reverse mortgage (see
below).
Corrective codicil
- As
adverted to above, on 29 April 2014, the deceased made a codicil correcting the
2009 codicil (Ex D).
David and Susan relocate their family to
the Glenhaven Property
- As
also adverted to above, in about July 2014, David and Susan sold the Kellyville
Property. David and Susan and their two children,
then moved into the Glenhaven
Property. The Kellyville Property was sold for $821,500.00 (Ex A). Upon
the sale of the Kellyville
Property, after repayment of the mortgage on that
property, David and Susan received the sum of $298,657.73 together with the sum
of $62,200, being the balance of the deposit (David’s 8 November 2019
affidavit at [14], and 17 March 2020 affidavit at [58]).
NetBank
Saver Account in deceased’s name
- On
15 January 2015, David was allocated NetBank Access to his CBA account.
- On
5 February 2015, a new “NetBank Saver” account was opened with the
CBA in the name of the deceased. Lara says that,
prior to February 2015,
Dr Becker and the deceased’s accounts reveal a course of dealing with
those accounts in which Dr Becker
and the deceased made payments by cheque and
withdrawals of cash from the ATM; and contends that the opening of a NetBank
account
marks a distinct change of banking practice in that regard. There seems
little doubt that David assisted the deceased to open that
NetBank account.
(Indeed, David’s evidence is that the deceased did not have a computer
when he first moved into the Glenhaven
Property and he admitted at T 196
that he taught his mother “NetBanking”.)
- On
8 February 2015, the first electronic external transfer on any of the
deceased’s accounts was effected. It was the transfer
of the sum of
$1,249.00 from the deceased’s account into David’s CBA account. The
transfer contained the description
“Pay IPhone” (David says, in his
affidavit of 17 March 2020 at [81], that this was a reimbursement to him for the
purchase
of an iPhone for his mother).
- Pausing
here, I note that a substantial complaint in the proceedings is that, in the
years from 2015, numerous electronic transfers
were made from the
deceased’s accounts (using her NetBank facility) of sums of money into the
accounts of: David, David’s
and Susan’s company (S&D Becker Pty
Ltd); or Tesla (to purchase a new vehicle for David), in amounts exceeding $1.77
million
(see below).
Breakdown of the “partnership”
or joint venture between the siblings
- Lara’s
evidence is that, in 2015, the carpet overlocking business was losing money; and
it appears there was concern as to the
lack of time David was spending in the
company.
- In
June 2015, David travelled to the United States of America (apparently to pursue
a business of importing and selling Tesla after-sale
parts) (see David’s
17 March 2020 affidavit at [89]). (It seems that part of the discord between the
siblings as to the carpet joint venture at around this
time was as to
David’s commitment or lack of commitment to it; that being of some
significance since Lara’s evidence
is that it was David who had the
relevant client contacts.)
- On
11 November 2015, (consistent with his then business plan being to be involved
in the sale of Tesla after-sale parts), David bought
a Tesla model S motor
vehicle for the sum of $214,636.50.
- Lara’s
evidence is that, by January 2016, the carpet overlocking business had no money
to pay its staff and that she arranged
a transfer from her home loan offset
account to ensure that the business paid the wages (see Lara’s
26 October 2019 affidavit at [159]-[161]). There is also evidence that at
some stage Lara expressed to the deceased her concerns at
David’s role in
the business but Lara understood that the deceased did not want to become
involved in a dispute between the
siblings.
- On
5 February 2016, David wrote a letter of resignation in relation to the carpet
overlocking business (Ex A), stating:
5 February 2016
Adam Torok,
I am informing you as of today the 5 February 2016 I am formally resigning as a
Director from Sydney Overlocking PTY LTD due to ongoing
unresolvable problems. I
will continue to be a 50% shareholder however you can do what you like with the
company from this point
on.
Phone numbers [xxx] and [xxx] will be removed from Sydney Overlocking today 5
Feb 2015.
In order to keep the company going I am willing to offer services as
follows:
If you require contract cutting service for Sydney Overlooking, I am offering
three hours or less per day at $80.00 per hour. Cutting
service will be invoiced
directly to Sydney Overlocking, my payment terms are weekly. No payment no
more cutting. Two of us cutting effectively 6 hours work time (I will inform
you if I am unavailable at any point well in advance [sic]
I will provide contract technical support for machinery, computer, or other
items that can’t be resolved by yourself charged
at $120.00 per hour or
per call out.
If you require holidays I can provide Management service for Sydney Overlocking
at a fee.
There is a large debt which I have greatly reduced that needs to be paid to
myself to the amount of $20.000. I have investigated
bookwork and bank
statements beyond 2013 and found various inconsistencies to the excess of way
over $35.000.
I am willing to give you one month to pay me the reduced amount of $20.000 or if
you are unable to do so I will require evidence
to support your inability to pay
out your debt. Please note there is approximately $85.000 of outstanding debtors
to Sydney Overlocking.
I see no reason why you can’t pay me promptly.
If you don’t want to pay back the debt I will have no option but to
relinquish my offer to subcontract to Sydney Overlocking
and we can part
ways.
What I have set out is NOT NEGOTIABLE it is up to you what you want to do
from here.
Please respond to me by midday on Monday 8th February or I will consider no deal
and we can part ways.
Regards
David Becker.
[Emphasis in the original]
- Lara’s
evidence is that she and Adam then had no choice but to close the business
(since David had all the client contacts)
(see Lara’s 26 October 2019
affidavit at [162]-[163]).
- Lara
readily accepted in the witness box that the last time she spoke to David was at
this time (she says when she asked him to assist
in the payment of staff wages
and, as I understand it, David refused to do so).
- Significantly,
whoever was to blame for the clearly acrimonious end to the joint venture or
partnership between the siblings and their
spouses, the consequence of this (one
way or another), was that communications between the deceased and Lara were
impaired. In effect,
David says this was Lara’s fault (and that Lara at
all times was able to contact the deceased); Lara says, in effect, that
David
isolated her from their mother and, by inference at least, suggests that David
‘poisoned’ the deceased’s
mind against Lara. Wherever the
truth lies in that regard, it is apparent that as a result of the breakdown in
the relationship between
David and Lara, the deceased was then clearly more
susceptible to influence by David on whom she was by then increasingly dependent
for her physical and emotional needs.
Change to deceased’s
mobile telephone number
- Lara’s
evidence is that on 6 February 2016 (the day after David tendered his
“resignation” from the carpet overlocking
business), Lara spoke to
the deceased who told her that “David is extremely upset and I think it
would be best if you and Adam
no longer came to the house” (see
Lara’s 26 October 2019 affidavit at [159]-[165]).
- It
appears that on the same day the deceased’s telephone number was changed.
Lara says that in the months which followed she
was unable to raise her mother
on the telephone. It appears that the deceased’s mobile phone number had
been changed (see
the Amaysim contract; and David’s cross-examination at T
210-211), although David says that the landline was unaffected (see
David’s 17 March 2020 affidavit at [55]). David maintains (but Lara
disputes) that Lara was at all times able to contact the deceased. There
seems
little doubt, however, that it was David who effected the changes to the
deceased’s telephone numbers although David
says “we” changed
the mobile phones (he says to obtain a different payment plan) (see
T 277).
- Relevantly,
this is another instance of incomplete or inaccurate statements being made on
David’s behalf. Through his solicitors,
David denied that he had an
Amaysim telephone account whereas in fact it seems that there were at least four
such accounts (see T
210-211) and David’s explanation for this in the
witness box was that he forgot about them and he thought the accounts were
with
Optus. This is another instance where his account is unreliable (and even if he
simply forgot about the accounts, this suggests
a lack of any real attention to
the production of accurate or complete information as and when that was
requested in the course of
the proceedings). I say more about this in due
course.
- Lara’s
account of concern at being unable to contact the deceased in this period is
corroborated by the fact that she made a
police report at around this time
(something one would think an extreme step to take had Lara in fact been able to
make contact with
the deceased at the time, as David asserted she was).
Lara’s evidence in the witness box (given in a resigned fashion) was
that
the deceased was angry that the police had been called; and Lara accepted (at
least in hindsight) that the deceased would have
found it mortifying for her
neighbours to see the police attending at the premises. My impression was that
Lara’s concern for
her mother’s welfare was genuine (not least
because once that concern was resolved (by the police having checked on her
mother)
Lara did not pursue it any further though she maintains she was still
upset at the lack of contact with her mother).
Renovation of
Glenhaven Property
- David
says that, in the period from mid-2016 to 24 June 2017, substantial landscaping
and renovation works were undertaken to the
Glenhaven Property (David’s 8
November 2019 affidavit at [19]-[20], and 19 March 2020 at [3]-[19] and [99]).
David says that he contributed to the cost of renovations
of the Glenhaven
Property by using his own money and the net proceeds of sale of the Kellyville
Property referred to above (David’s 8 November 2019 affidavit at [14] and
[25], and 17 March 2020 affidavit at [56]-[58]). A DVD containing video footage
(taken from a
drone) was in evidence showing the extent of the landscaping works
carried out to the Glenhaven Property prior to its sale (the probative
force of
which was limited by the difficulty in ascertaining precisely what was done to
the property, although it was evident that
extensive landscaping works had been
carried out).
- Criticism
was made, through David’s cross-examination, that there had been no
independent advice as to how best to market the
property and whether the
renovations were necessary (or prudent) to undertake for that purpose.
David’s evidence was that he
had some (seemingly informal) advice from a
friend who was a real estate agent friend (but not from the real estate agent
ultimately
involved in relation to the sale of the Glenhaven Property). (I
interpose to note that the prudence or otherwise of making extensive
renovations
to a property prior to its proposed sale, particularly in light of the prospect
that this might amount to over-capitalisation,
highlights the vulnerability of
the deceased insofar as there is no suggestion that she had any independent
advice on this issue
– and extensive viewing of home renovation
programmes, even assuming that to have been the deceased’s interest, would
hardly qualify as expert advice on the subject.)
Death of Dr
Becker
- Lara’s
evidence is that between January 2016 and April 2016 she continued to visit her
father at The Poplars (see Lara’s 26 October 2019 affidavit at [177]). Dr
Becker died on 6 May 2016.
- Lara’s
evidence is that she arranged for a private viewing on the day of the funeral to
mourn her father’s death and,
later, at Bondi Beach scattered some her
father’s ashes (which Adam had collected from the deceased at a
pre-arranged place)
(see Lara’s 26 October 2019 affidavit at [184]-[187]).
David’s evidence is that the deceased was upset that Lara did not attend
her father’s
funeral. It is not apparent that David (or the deceased) was
aware of the private viewing at that time.
- There
is a dispute as to whether or not David did not permit the deceased to get out
of the car when Adam invited her for a coffee
on the occasion that the ashes
were collected (as Adam says) (see Adam’s 9 April 2020 affidavit at [50]),
or whether the deceased simply did not like Adam and did not wish to join him
for coffee (as David
says) (see T 278.16). However, there is no dispute
that there was an occasion when some of the ashes were given to Adam for
Lara’s
benefit.
Contact with the deceased after Dr
Becker’s funeral
- According
to Lara, by the time Adam collected Dr Becker’s ashes from the deceased,
Lara had obtained her mother’s new
telephone number from Lara and
David’s cousin, Melita (see Lara’s 26 October 2019 affidavit at
[188]). (Melita did not give evidence in the proceedings but I was not asked to
draw any Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 inference about
this; nor do I here do so.)
Instructions for a new Will for the
deceased
- On
10 May 2016, David and the deceased together attended the offices of Austin
Giugni Martin to give instructions as to the estate
of Dr Becker. At that time
instructions were provided for a new Will for the deceased. There is nothing in
the solicitor’s
file note to suggest that the deceased gave those
instructions in the absence of David (and there was no evidence adduced from the
solicitor to elucidate this one way or the other).
- On
13 May 2016, David’s solicitor in the present proceedings, Mr Giugni, sent
David an email with a draft for the deceased’s
Will, a draft statement of
the deceased’s intention in relation to her Will, Power of Attorney, and
Appointment of Enduring
Guardian. The draft Will provided for an unspecified
legacy to David with the balance of residue to be divided equally between the
siblings. (It is of relevance to note that the communication in relation to the
Will was directed to David not the deceased, suggesting
that the instructions
were being communicated by or at least through David.)
- On
18 May 2016, the deceased attended the offices of Austin Giugni Martin and
executed a Power of Attorney appointing David as her
attorney. David accepted
the appointment at the same time. On that occasion the deceased collected her
draft Will. Mr Giugni’s
file note of the 18 May 2016 conference is as
follows:
Meeting with Mrs Becker. She took away her will to consider what she wanted
to give David [to] even things up with Lara. Lara has paid some of her loan
back and she and her Husband did not wish to charge interest.
She wants to even things out with David and compensate him for living with
her and not buying his own house. She will get back to me with a figure and
then we can finalise her will. She did sign POA and EG forms and will look at
the statements
as to explaining why she is not leaving everything 50/50 between
David and Lara.
[Emphasis added]
- Pausing
here, the draft statement explaining the differential legacies as between
siblings was never finalised and in the absence
of any evidence as to the basis
on which it was drafted I cannot be confident that it recorded the
deceased’s then instructions
to the solicitor (as opposed, say, to the
possibility that it represented David’s thoughts or observations as may
have been
conveyed by him to the solicitor).
- On
30 May 2016, Mr Giugni provided written advice as to the Homesafe reverse
mortgage. Tellingly, that advice was again addressed
to David. In summary, Mr
Guigni advised as to the “three triggers that can cause money to be made
payable to Homesafe”,
and that in each scenario, Homesafe would be
entitled to 65% of the sale proceeds less any applicable rebates (Ex C). The
final paragraph
of the letter reads:
Otherwise, we request your advice as to the status of the Wills
[sic] and what figures should be inserted into that document so it may be
completed and signed.
- Relevantly,
when one refers to the mortgage there was no time specified within which the
Glenhaven Property had to be sold in order
to repay the mortgage. Rather, the
significance of the advice received by David was that there would be a rebate
(early sale rebate)
of the percentage otherwise payable to the lender out of the
proceeds of sale depending on when the property was sold. It was thus
in the
interests of those who might inherit the deceased’s estate for the
Homesafe mortgage to be repaid sooner rather than
later but there was no
imperative from the perspective of someone in the position of the deceased that
the Homesafe mortgage be discharged
sooner rather than later (at least unless
there came a point where, on the sale of the secured property there would not be
sufficient
funds to meet, say, an accommodation bond for aged care or nursing
home accommodation were that to be necessary – and there
is no suggestion
there this was the case here).
Lara’s letter to her
mother
- Lara’s
evidence is that, shortly after receiving her mother’s new telephone
number, she spoke with her mother and arranged
for her to have lunch at
Lara’s Wallacia Property, at which time Lara read her mother a letter with
her view of the recent
events (see Lara’s 26 October 2019 affidavit at
[190]). Lara’s evidence was that this was because the deceased had not
heard her “side”
of the story. Lara said the letter had taken some
time to write and that it took a while to read to her mother.
- David
contends that this letter contained a number of provable lies or falsehoods (T
371): first, that it referred to a partnership
(whereas he says no partnership
agreement was ever entered into); second, that it talked about a requirement for
six months’
notice (again pointing to the lack of a written agreement);
third, that it suggested that David would thereafter receive (or expected
to
receive) 50% of the earnings without doing any work (whereas, it is said that
historically only salaries were drawn from the company
and no dividends had been
paid); fourth, that it said David had demanded the sum of $36,000 (whereas, he
had demanded the sum of
$20,000); and, fifth, that David had demanded payment of
a rate of $360 per hour for future work (whereas the hourly rate suggested
in
the letter was different).
- Pausing
here, it was accepted by Lara that some of the above assertions made by her in
the letter were incorrect (such as the amount
she attributed to the demands by
David for payment and as to the stipulated hourly rate for future work); and
Lara accepted that
there was not a written partnership agreement (though she
maintained that there was a verbal partnership agreement – see at
T 80).
Lara’s explanation for the errors in the document she read out to the
deceased at this meeting was that she was preparing
the letter at a time when
she did not have David’s resignation letter with her. Further, insofar as
Lara had described David’s
resignation letter as extremely threatening,
that seems indeed to have been Lara’s perspective of the position adopted
by David
in the letter and there is some substance to such a complaint even if
it might be said to have been somewhat overstated.
- I
consider that the weight sought to be placed on these matters by David is
misplaced. The tenor of the letter (insofar as it related
to the end of the
siblings’ joint venture or joint enterprise into the carpet overlocking
business) seems to me to reflect
in substance what had happened. David had
resigned without notice (leaving aside whether he had any obligation to give
such notice,
one might have expected some notice of his departure from the
business to have been given, if only as a matter of courtesy to his
business
colleagues); David had indicated that he was leaving the business to Lara and
Adam (though, of course, that meant little
if, as Lara says, David had all the
customer contacts); and David had set out the terms on which he (and his wife
would be prepared
to continue to work in the business (albeit that those terms
were not accurately stated in the letter Lara read to her mother). More
relevantly, perhaps, it is apparent from the letter that this was putting
Lara’s perspective as to the breakdown of the business
relationship (and
one would assume that the deceased would have understood it as such and that
there was or may well have been another
side to the story, namely David’s
side, about which the deceased was clearly capable of speaking to David had she
wished).
- As
to the issue whether there was a partnership (and the emphasis sought to be
placed on this as a “provable lie”), as
adverted to above, I do not
consider that anything turns on this. In both United Dominions and
Industrial Equity Ltd v Lyons (Supreme Court (NSW), Cohen J, 15 October
1991, unrep), it was recognised that there may be a joint venture which does not
constitute
a partnership; what is important is the substance of the transaction
(see Canny Gabriel Castle Jackson Advertising Pty Limited v Volume Sales
(Finance) Pty Limited [1974] HCA 22; (1974) 131 CLR 321 at 327; [1974] HCA 22).
- Clearly,
in the present case there was a business or commercial venture being undertaken
jointly in relation to the carpet overlocking
business between, on the one hand,
David and Susan and, on the other hand, Lara and Adam. Therefore, whether this
was in truth a
partnership, as a matter of law, is not material. What is
relevant is that the joint enterprise clearly ended acrimoniously (Lara’s
evidence is that she never spoke to David again). It is not necessary to
determine where the fault for that breakdown lies (indeed,
there may well have
been fault on both sides). What is clear, however, is that once the relationship
between Lara and David broke
down (at around the time of the 5 February 2016
letter), this was followed by a strain in the relationship between Lara and the
deceased
(again, as to whose fault that was is not relevant to the primary
claims brought by Lara – although it would be of relevance
to the
alternative family provision claim). The relevance of this is that it means that
the deceased became increasingly dependent
on her relationship with David for
care and assistance.
- Lara
quite readily admitted that the letter she read to her mother (over a lengthy
period of time) was an attempt by her to “smear”
David’s
character (see T 79), but she denied that she wanted David “out of”
her mother’s life “altogether”.
Instead, in effect, Lara says
that she wanted David’s influence removed (i.e., that the deceased and
David did not continue
to live together), so that Lara would be able to visit
her mother again (saying, with obvious emotion in the witness box, “I
wanted her back in my life” – see at T 84), which was something that
Lara obviously considered was not possible while
David was living with the
deceased (though David does not accept this). Lara accepted that her plan (at
this stage) was to make David
leave the Glenhaven Property (see T 85) and,
tellingly, insofar as it reinforces the evident animosity between them, she
regarded
David as “collateral damage” (se T 83). Lara accepted that
she thought her mother was under David’s control (T
98) and that she
blamed David for the breakdown in her relationship with her mother
(“absolutely” – see T 77) (though
as to the latter Lara said
that this was her view in hindsight (T 77), and that she did not know what was
going on at the time).
- David
made much of the fact that the options that Lara put before her mother in the
letter read out by Lara at the Wallacia lunch
all involved the deceased living
alone or in accommodation separate from both Lara and her family and David and
his family, those
options being: that the deceased remain at the Glenhaven
Property with ACAT assistance (but that David and his family leave the Glenhaven
Property); that the deceased build separate accommodation on the Wallacia
Property (at the deceased’s expense); and that the
deceased move into a
“luxury” retirement village in the Cobbity area. (Ironically, given
the criticism made by David
of those options, the final accommodation proposed
by David for the deceased was in a rental duplex separate but next door to
David’s
family; i.e., he seems to have had no difficulty with the motion
of the deceased living in separate premises at that stage albeit
close by
– a not dissimilar arrangement to the second of the options Lara had
proposed; and, as I understand it, the deceased
was living in a “granny
flat’ in the Beaumont Hills Property, not the main residence, as
such.)
- Lara’s
evidence is that, at the Wallacia meeting in about June 2016, the deceased said
words to the effect “[a]fter your
father died David told me that you
wanted to sell Glenhaven so you could get your hands on your share of your
inheritance and put
me in a nursing home” and “David has been making
me feel guilty” and “I don’t know how to make him
leave”. In answer to a query as to why the phone was disconnected, Lara
says that the deceased said “David told me I
had to stop the sales people
from calling” (see Lara’s 26 October 2019 affidavit at
[191]).
- Pausing
here, I accept the caution required to be exercised in accepting one
party’s version of conversations with a deceased
person, as urged upon me
by David’s Counsel (see, for example, the caution expressed in Plunkett
v Bull [1915] HCA 14; (1915) 19 CLR 544 at 548-9, per Isaacs J; [1915] HCA 14 and
the authorities referred to in Moore v Aubusson [2020] NSWSC 1466.
However, that caution applies equally to both parties’
evidence.
“Secret” meetings
- Lara’s
evidence is that over the next few weeks, Lara continued to visit her mother,
including taking her to “Disney on
Ice” at Olympic Park. Lara says
that, at the deceased’s request, the visits were kept secret from David,
for fear that
it may cause upset (see Lara’s 26 October 2019 affidavit at
[195]). David submits that it is not plausible that any such visits could have
taken place secretly (since
the deceased was living with him and by then he was
home much of the time). I agree that it is difficult to place much weight on
the
“secret” meetings evidence without independent
corroboration.
Execution of August 2016 Will
- On
31 August 2016, the deceased executed her last Will. There is no file note of
her attendance at the solicitors’ office on
that occasion (although I note
that Mr Michael Giugni (a solicitor) and Ms Janelle Yong (a law clerk) witnessed
the Will). As adverted
to above, the 2016 Will provided David with a legacy of
$1 million more than that left to Lara under the Will. Lara’s position
is
that this $1 million was the sum that the deceased thought was appropriate
recompense for David’s time living with her,
David not having his own
house, and the financial assistance provided to Lara in the form of the
forgiveness of the Physiotherapy
and Wallacia loans, in order to provide an
overall equal treatment of her children. That is certainly a plausibly
explanation for
the differential legacies (and consistent with the instructions
recorded by the deceased’s solicitor at the time). It is said
by Lara (and
I accept) that this equality of treatment had been a hallmark of Dr Becker and
the deceased’s successive wills
and codicils over the
years.
The deceased moves out of Glenhaven Property
- In
November 2016, while renovation works were undertaken to the Glenhaven Property,
the deceased moved out of the Glenhaven Property
and into the residence of Ms
Natalia McCarthy, a friend of David and Susan (Susan being the godmother of Ms
McCarthy’s child),
who described herself in her affidavit as a friend of
the deceased (see [1] of her affidavit sworn 28 May 2020). There was no little
uncertainty as to when the renovation work that was carried out actually
commenced but there is no dispute that the deceased was
living at Ms
McCarthy’s house for a number of months (from November 2016 until August
2017, apart from a period of hospitalisation
in January 2017 during the
deceased’s knee surgery). Ms McCarthy gave evidence as to David’s
attendance at her house
on an almost daily basis to visit his mother during this
time ([8] of her affidavit sworn 28 May 2020).
The
deceased’s declining health
- It
is Lara’s evidence that the deceased had had a number of falls around the
house between 2012-2014 (see Lara’s 26 October 2019 affidavit at
[145]-[146]). This is consistent with medical notes that record that the
deceased underwent surgery for
an “extensive fracture and
dislocation” in October 2012, and that the deceased had a number of health
conditions which
limited her movement, including three spinal fusions,
hypertension, wrist and shoulder fractures and dislocations.
- According
to the medical records, the deceased’s conditions required ongoing
prescription medication in the form of sleeping
tablets “Normison”,
pain medication “Panadeine Forte” (1-2 tablets four times a day),
and anti-inflammatories.
David in his defence did not admit that his mother
suffered back pain but in cross-examination while he did admit that she had pain
(T 280), and that the deceased was on a variety of medications, David would
not accept she was in considerable pain (T 280). Indeed,
David’s
evidence is that these medications made his mother forgetful, that she often
stayed home the entire day in her dressing
gown or comfortable clothes as she
was finding it difficult to dress herself, and that, by the end of 2015, or
early 2016, the deceased
could not look after herself (see David’s 17
March 2020 affidavit at [78]-[80]). David also gave evidence that the deceased
often had difficulty sleeping and had irregular sleeping
hours (see, for
example, at T 189) (though fortuitously it appears that David was also awake at
such irregular hours, when NetBank
transactions and/or log-ins happened to occur
almost simultaneously on both his account and that of the deceased – see
below).
- In
January 2017, the deceased attended an orthopaedic surgeon (Dr Muderis) for
consultation about her knee. The report records that
the deceased had been
suffering from a significant disability for some time:
Isolde is an 80 year old lady who has been complaining from pain in both knees,
worse on the right side. She has had the pain for
many many years and she has
left it for a long time and she is getting to the stage where she is almost
completely disabled and over
the last 12 months she has been hardly able to
walk.
Isolde’s knee is extremely deformed with significant valgus deformity and
looking at the knee there is significant deformity
and significant instability.
Radiologically she has complete destruction of the joint space in the lateral
compartment and in the
medial compartment with large bone loss.
Unfortunately Isolde’s condition is very severe and a standard knee
replacement is going to fail and with her kind of condition,
which is also
complicated by the rheumatoid arthritis that she has, she would need a
constrained knee.
- The
deceased underwent a total knee replacement on 23 January 2017 at Norwest
Private Hospital, and was then a patient at Hills Private
Hospital from 29
January 2017 to 16 February 2017. The medical notes of 23 January 2017 (record
that the deceased was “very
stressed due to selling of home”, which
must be a reference to the Glenhaven Property which was placed on the market in
May
2017 (see below). This is consistent with the fact that when the deceased
was discharged from hospital the deceased moved back into
Ms McCarthy’s
residence, and David’s evidence is that there would have been no furniture
at the Glenhaven Property by
then. (The deceased moved out of Ms
McCarthy’s residence in April 2017 – see Ms McCarthy’s
affidavit sworn 28 May
2020 at [6].)
- Lara’s
evidence is that from about late 2015 she noticed a change in her mother’s
demeanour, describing the deceased as
appearing depressed, withdrawn, quieter,
having less interest in her appearance, and being less engaged with Lara and her
children
(see Lara’s 26 October 2019 affidavit at [149]). It is
Lara’s evidence that, by the time of their “secret” meetings
in 2016,
her mother was not the same happy woman she had known prior to 2015, as
she was guarded, withdrawn, and would go quiet if David’s
name was
mentioned (see Lara’s 26 October 2019 affidavit at [199]).
- Pausing
here, David emphasises (and I agree) that there is no evidence that the
deceased’s cognitive ability was impaired.
Glenhaven
Property sold and Beaumont Hills Property acquired
- The
Glenhaven Property was placed on the market in May 2017. By that time the
deceased had less than $2,000 in her bank account (the
account balance at one
point being as low as $2.30 in March 2017). Also by that time it appears that
David had already replaced or
moved the deceased’s furniture into storage.
Lara noted that $47,435 worth of furniture was purchased, using the
deceased’s
account, between October and December 2017. As noted above, the
deceased had been living with Ms McCarthy both before and after her
knee
replacement (see Ms McCarthy’s 28 May 2020 affidavit at [6]).
- On
24 June 2017, the deceased exchanged contracts for the sale of the Glenhaven
Property for $4.625 million.
- David
has put forward a number of reasons for the sale of the Glenhaven Property. In
his 17 March 2020 affidavit (at [96]), David
deposes as follows in relation to
the sale of the Glenhaven Property: “[a]round that time, my mother and I
became concerned
as to the amount that was needed to repay Homesafe upon the
sale of the Glenhaven property”. (I note that I did not read the
words
“my mother and”, to which objection was taken (T 143.44), but it is
perhaps telling that David had a propensity
in his affidavit evidence to
attribute intentions and wishes to the deceased in common with his own.)
- It
is difficult to see why the impact of the reverse sale mortgage would have
caused such concern on the part of the deceased as was
attributed to her by
David. The time at which the property was sold would certainly affect the
percentage of proceeds to which the
mortgagee was entitled to out of the sale,
but for practical purposes while that would obviously affect the size of the
deceased’s
estate, it would not have affected the deceased’s
position during her lifetime (unless for some reason she had to sell the
property). For someone who might be looking at maximising the value of his or
her potential inheritance that would, of course, be
a different story.
- A
second reason proffered for the sale, as appears from David’s 28 August
2020 affidavit (at [21]), was in the conversation to which David deposes with
the deceased in which he says his mother said
to him:
The property is too big and there is too much to do if we continue to live
here.... We should renovate the property now with our
money to get the best
price so we can buy a new house.
- That
is, of course, inconsistent with the position the deceased appears previously to
have taken in relation to downsizing (according
to Lara), and it attributes to
the deceased the suggestion of renovation where there is no independent
corroboration of this. What
seems to be suggested was that the deceased liked
watching home renovation shows on television and that this prompted her
suggestion
about renovation of either the Glenhaven Property or some other
investment property (see below).
- A
third reason proffered for the sale was that the deceased spoke about buying an
investment property to renovate and sell (again
noting that the deceased was
said to be interested in home renovation properties on television) but David
said in cross-examination
that this idea “went out the window”
– T 271).
- It
also seems to be suggested that the sale proceeds were paid to David as
repayment of a loan for renovations (T 18). However, Lara
points out that there
was no independent advice obtained about the renovations (nor any contracts
entered into for the renovation
works).
- Lara
argues (and I accept the force of this) that the reverse mortgage was no reason
(or at least was not necessarily of itself the
reason) for the sale of the
Glenhaven Property. Lara notes that David was aware that the mortgage need not
be paid until after the
death of his mother because he had personally received
advice on the reverse mortgage from the solicitor who drafted the
deceased’s
Will.
- Interposing
here, the evidence of the real estate agent (Mr Hampson), that the deceased told
him she “had to sell” because
of the reverse mortgage, suggests
that, if the deceased indeed had such a (mis)apprehension, it was likely to be
attributable to
something David had said to her since David, on his own
evidence, had a concern about the reverse mortgage and had taken his mother
to
obtain advice about it. As adverted to above, Lara also says that David’s
evidence that his mother contemplated selling
the Glenhaven Property as early as
2015 is at odds with the deceased’s wish to remain in her own home, when
Lara says she suggested
that the property be sold and downsized at the time of
Dr Becker’s admission to The Poplars.
- It
is noted by Lara that, as at early 2015 (despite the deceased having paid
Dr Becker’s Accommodation Bond of $590,000 in 2015),
the deceased
still had access to $130,000 on term deposit (comprised of #6217 ($50,000) and
#6319 ($80,000)); that the deceased received
a further $117,000 in March 2015
from the ATO being for unclaimed superannuation; and that, following the death
of Dr Becker, the
deceased received the proceeds of her late husband’s
estate amounting to $531,963.71.
- Lara
also points to the fact that bank documents produced on subpoena reveal that, by
early 2015, David had started to receive very
substantial sums of money from the
deceased’s account via NetBank transfers, including the receipt of
$150,000 in June 2015
(which David deposes was used to buy stock for his Tesla
after-sale parts business (see David’s 17 March 2020 affidavit at [89])).
The payout figure of the reverse mortgage was $2,045,209 as at 3 October 2017
upon the sale of the
Glenhaven Property (Susan’s 26 October 2019
affidavit at [222], and David’s 8 November 2019 affidavit at [30]). The
initial advance made by the reverse mortgage lender was $853,325 of which the
loans in respect
of the Wallacia Guarantee and the Physiotherapy Guarantee in
the total sum of $338,895.82 represented approximately 40%. David says
that,
applying this percentage to the payout figures gives a sum of approximately
$818,000, although it is noted that Lara also gives
evidence that she made some
further repayments to her parents in the period to March 2010 (see Lara’s
14 November 2019 affidavit at [82], [90] and [97]).
- On
4 July 2017, the deposit paid for the purchase was released (prior to
completion), following a request that it be available to
acquire other
accommodation (see T 265). David’s affidavit evidence was that this
was in order to pay outstanding costs associated
with the renovation of the
Glenhaven Property (see David’s 8 November 2019 affidavit at [29]). Lara
contends, and David appeared in cross-examination to accept, that in fact the
amount went
substantially to the acquisition of a Tesla car (see below) –
T 271.
Further vehicle purchase
- Meanwhile,
on 3 July 2017, as adverted to above, David purchased a Tesla model X motor
vehicle for $187,425.35. David’s evidence
is that the deceased was
interested in cars and liked the design of the Tesla vehicle. Pausing here, that
does not explain why such
a purchase was considered necessary or desirable in
the deceased’s interests at the time; nor why a deposit released
ostensibly
for the purpose of acquisition of other accommodation might have been
used for the acquisition of a motor vehicle.
Purchase of Beaumont
Hills Property
- On
20 July 2017, David and Susan exchanged contracts for the purchase of a property
at Beaumont Hills (the Beaumont Hills Property)
for the sum of $1.525 million
(the sale completing on 3 October 2017). The proceeds of sale from the Glenhaven
Property were used
to purchase the Beaumont Hills Property in David and
Susan’s name.
- David
asserts that, at the time of the purchase of the Beaumont Hills Property, the
deceased said to him words to the effect: “You
looked after me so I will
look after you”, and “I want you and Susan to be okay, you have done
so much for me. I understand
how much you have sacrificed so that I can live
with you”, and “any money left over from the sale we can share so we
both have something but I want you and Susan to have a home of your own”
(see David’s 8 November 2019 affidavit at [32]).
- David
says that the deceased was “actively involved” in choosing the
Beaumont Hills Property and had the “final
say” in the purchase (see
David’s 8 November 2019 affidavit at [32]). It is noted that the property
included a “granny flat” which was subsequently used
by the deceased
(see Susan’s 17 March 2020 affidavit at [27]-[29] and affidavit of
the real estate agent, Mr Wayne Danckert sworn 18 March 2020 affidavit at
[6]).
As to Mr William Hampson’s evidence (another real estate agent), in
it appears that the deceased’s so-called “active
involvement”
amounted to little more than that the deceased inspected the property and gave
instructions (no doubt when asked)
about the reserve price (which Mr Hampson
thought she appeared to understand) (see Mr Hampson’s affidavit sworn 21
July 2020
at [6]).
- Completion
of the sale of the Glenhaven Property occurred on 3 October 2017 (Ex 2). On
completion, the sum of $1,522,272.03 from the
proceeds of sale from the
Glenhaven Property was applied to the purchase of the Beaumont Hills Property
and the payment of stamp
duty (Lara’s 26 October 2019 affidavit at [222],
and David’s 8 November 2019 affidavit at [32]). The net proceeds of sale
were shortly thereafter transferred to David’s bank account –
see
below.
- Pausing
here, it is noted by Lara that the effect of this transaction (which can hardly
be disputed) was that the deceased was then
in the position where she had no
real estate in her own name, no or very little money in the bank, and was
totally dependent on the
support of others.
- For
David, it is put that he always intended to look after his mother (and that he
in fact did so); and that his mother was happy
with the arrangement and wanted
to live with David and his family. Accepting that this was David’s
intention (and that his
mother was happy to live with David and his family), it
does not change the reality of the situation, which was that, had David simply
changed his mind or had circumstances changed (such as, for example, a failure
of David’s (then in its infancy) “Tesla”
business, or a loss
on David’s digital currency trading, or a breakdown in David’s
marriage) necessitating a sale of
the Beaumont Hills Property, the deceased was
in an extremely vulnerable position. Pausing here, the improvidence of the
transaction
in relation to the sale of the Glenhaven Property and the use of a
large part of the proceeds of sale for the acquisition of the
Beaumont Hills
Property in David’s and Susan’s names (at the very least without any
binding contractual arrangement to
protect the deceased’s future needs for
care and accommodation) is to me staggeringly obvious; although this was
staunchly
resisted by David and denied in his defence – see [36]ff.)
- Instead,
David’s complaint seems to be that the increase in the amount of
refinancing in 2007 in the sum of $338,895.82 caused
by the two loans to Lara in
turn significantly reduced the amount received by the deceased upon the sale of
the Glenhaven Property
on 3 October 2017 (Ex 2) (and, one might speculate, the
amount which otherwise would have been available for use by David in the
acquisition of the Beaumont Hills Property, or otherwise for David’s
benefit, as the bulk of the proceeds of sale ultimately
were
used).
Christmas Day 2017
- Lara
was not aware of the sale of the Glenhaven Property until she spoke with her
mother on Christmas Day 2017, that being the last
time that Lara spoke with her
mother (see Lara’s 26 October 2019 affidavit at [225]). Lara’s
evidence is that, during that conversation, the deceased either did not know or
would
not disclose to Lara the location of her new address and said, in answer
to an enquiry as to whether the deceased had purchased David
a house, “I
need to live somewhere Lara” (see Lara’s 26 October 2019 affidavit
at [223]). Lara’s evidence is that she continued to write to her mother
but never received a response
(and that the deceased had previously sent Lara
and her family cards up until the end of 2017). David and Susan deny that they
received
any such cards or letters for the deceased.
- Lara’s
evidence is that, in November 2018, Lara received a text message from her mother
for her birthday and that she responded
to the message (despite being of the
opinion that her mother was incapable of sending a text message) (see
Lara’s 26 October 2019 affidavit at [228]); (her mother’s inability
to do so being confirmed, it is said, in Susan’s evidence (see
Susan’s 17 March 2020 affidavit at [32])).
Surplus from
Glenhaven Property sale
- There
was a surplus of $591,212.22 received by the deceased on 3 October 2017 from the
sale of the Glenhaven Property after purchasing
the Beaumont Hills Property. By
the end of the month, however, that amount had been electronically transferred
to David (see David’s 28 August 2020 affidavit at [138]). (The net sale
proceeds plus the deposit of around $55,000 form part of the claimed 1.776
million
in NetBank transfers.)
- In
his affidavit evidence, David deposes that he had initially resisted a transfer
of funds to his account, saying “[n]o, it’s
your money so it should
be in your account” (see David’s 28 August 2020 affidavit at [141]).
However, Lara points out that by January 2018 (after David had received
$590,000.00 of the $591,212.22
received by the deceased, and a further amount of
$20,000 from the deceased’s account in January 2018) the deceased was
again
left with only a few thousand dollars in her account. Lara says (and I
accept) that the deceased was then totally dependent on David;
noting that David
described the deceased as being able to manage to walk only a few metres at the
time, even with her walking frame
(see David’s 8 November 2019 affidavit
at [33]).
- Much
emphasis was placed by Lara on David’s reference to a conversation with
the deceased in 2015 in which he says she referred
to him being able to
“manage the finances”. Cross-examined about the concept of managing
the deceased’s finances,
David insisted that he would discuss any
“major” expenses (which he put as in the order of $2,000) with the
deceased.
Lara relies on the assumption by David of a role in “managing
the finances” as giving rise to a fiduciary duty of the
kind owed by the
defendant in Barkley v Barkley Brown [2009] NSWSC 76 (Barkley v
Barkley Brown).
Sale of Beaumont Hills Property
- In
his affidavit evidence, David deposes that, by the middle of 2019, he “was
concerned that my mother would need care that
Susan and I could not
provide”, and “did not believe we had sufficient funds to pay for
professional assistance to keep
her at home” (see David’s 8 November
2019 affidavit at [34], see also Susan’s 17 March 2020 affidavit at
[33]).
- On
24 May 2019, the Beaumont Hills Property was listed for sale. Contracts for sale
were exchanged on 13 June 2019 for a purchase
price of $1.3 million (see
David’s 8 September 2019 affidavit at [35]). David’s evidence is
that he planned to move the deceased into a rented duplex, with David
and Susan
to live next door (see David’s 8 September 2019 affidavit at [36], 14
November 2019 affidavit at [11]). (Pausing here, as adverted to already, this
renders somewhat
hollow the criticism made by David of Lara’s proposal
that her mother move to a separate dwelling on the Wallacia Property,
although I
accept that Lara’s proposal itself suffered from practical issues –
in particular, the likelihood that an
elderly woman in her mid-80’s with
the deceased’s medical issues would readily be contemplating engaging in
building
renovations that might take some indefinite time.)
- The
deposit paid for the purchase of the Beaumont Hills Property was released prior
to completion, and on 21 June 2019 the sum of
$39,680 from the deposit proceeds
was used to prepay the bond and rent for six months’ rent for the duplex
units (David’s 8 November 2019 affidavit at [36]; [43], and David’s
14 November 2009 affidavit at [11]).
- On
19 August 2019, the sale of the Beaumont Hills Property completed and David and
Susan received the sum of $1,168,032.80 from the
sale proceeds and the sum of
$57,263 by way of release of the deposit (David’s 8 November 2019
affidavit at [43]).
- Pausing
here, the deceased was recorded in various assessment reports as being concerned
to stay in her own home “with independence”.
Lara accepts that the
deceased may well have regarded the Beaumont Hills Property as living in her own
home in a practical sense
but points out that the legal situation was very
different and says that, by this time, the deceased was financially and
economically
dependent on David. I agree.
The deceased’s
death
- The
deceased died on 13 July 2019. Lara’s evidence is that she did not learn
of her mother’s death for more than a week
later (see Lara’s 26
October 2019 affidavit at [230]).
Correspondence as to
gifts/NetBank transfers
- On
10 September 2019, Lara’s solicitor wrote to David’s solicitor,
asking:
Please advise whether your client has received any gift or loan from the
deceased, in an amount exceeding $1,000, following the making
of the 31 August
2016 will? If so please provide us with the particulars of same.
- On
25 September 2019, David’s solicitor replied:
The only gift received by our client from the Deceased was $1,522,272.03
referred to above. Our client did receive approximately
$150,000 as a loan
repayment for the renovations carried out to the Glenhaven property by our
client.
- The
$1,522,272.03 clearly related to the purchase of the Beaumont Hills Property;
the $150,000 “repayment” figure was
subsequently enlarged to a
figure of around $250,000 (as per the schedules prepared by David for the
hearing).
- On
26 September 2019, Lara’s solicitor wrote to David’s
solicitor:
7. Please indicate the date in which your client received the
$150,000 loan repayment, and provide us with particulars as to the
dates and
amounts said to have been advanced/paid by your client to the deceased.
...
10. Please confirm that your client will agree to place the
sum of $1,522,272.03......... into an interest bearing account....
- On
11 October 2019 David’s solicitor replied to the 26 September 2019
correspondence, relevantly:
7. The $150,000.00 was repaid to my client over several years
from the renovations and for the ongoing care provided by my client.
[it is
noted by Lara that part of the reason for the differential legacies in the 2016
Will was said to be this same care]
...
10. This is not agreed as this was a gift from the deceased
for the sacrifices that he and his family had made for the ongoing
care and
future care of the deceased.
- For
Lara, it is said that this statement (said to be on instructions) is an
admission by David that none of the other payments he
received from his mother
was a gift. It is noted that David has now admitted to receiving $1,637,197.42
in electronic transfers into
his accounts or accounts of his company, S&D
Becker (see David’s 28 August 2020 affidavit). It is said that, in
addition to the $1,637,197.42 in admitted receipts, further electronic transfers
were
made from the deceased’s account for the benefit of David (see as
itemised in Lara’s submissions at [158]).
- In
summary, it is said that David has now admitted to the direct receipt of
$1,637,197.42 in bank transfers from the deceased’s
NetBank facility, with
a further $138,856.68 being paid to third parties for David’s direct
benefit, at a total of $1,776,054.10;
that amount being in addition to the funds
received by David for the purchase of the Beaumont Hills Property, and not
including $47,436.00
of transfers from the deceased’s account for the
purchase of new furniture in David’s
possession.
Commencement of proceedings
- On
28 October 2019, Lara commenced these proceedings seeking urgent interlocutory
relief to protect what (on Lara’s case) are
assets of the estate. An
initial interlocutory regime was put in place by Rein J on 31 October 2019,
which was then amended following
a number of hearings before Robb J (see
Torok v Becker (2019)) resulting in orders made on 16 December
2019. There was an application to vary those orders (to which I refer below),
and at the
conclusion of the hearing (as noted above) an amended regime was put
in place by consent between the parties.
- Pursuant
to the orders of Rein J and Robb J, David was required to deposit certain moneys
into a controlled moneys account of his
solicitor, and was enjoined from dealing
with his assets, including his Tesla motor vehicle.
- As
part of the interlocutory orders, David was permitted to draw on the funds in
the controlled moneys account for the purposes of
his legal costs and day-to-day
living expenses, and a separate allocation of funds was made (in the amount of
$80,000) to permit
David to conduct his company’s Tesla after-sale parts
business (trading as Unplugged Performance Australia).
- As
at 6 January 2020, the balance of the moneys held in the controlled moneys
account was $766,634.91. As at 24 September 2020, the
balance held in that
account was $496,039.04. Thus, Lara, in her submissions, has noted that, since
the date of the orders David
has drawn a total of $361,771.70 against the
controlled moneys account for his current and future legal costs, day-to day
living
expenses, and business fund (with an additional $4,897.89 from separate
funds prior to the establishment of the controlled moneys
account).
- Lara
points out that the same Tesla after-sale parts business (i.e., the one being
financed from the controlled moneys account) had
earlier received cash from the
deceased’s accounts since 2015 and that stock was purchased for that
business from mid-2015.
Using the information recorded in the company’s
bank accounts, accounting ledgers and sales notes, Lara’s solicitor has
compiled a table (which I treat as an aide memoire) identifying that the
business has made only 45 sales since 2015, receiving $175,938.21
(excluding
GST), and in the corresponding period the business purchased $754,053.31 of
stock.
- As
at the time of the hearing before me it was noted that, since Robb J permitted
the use of $80,000 of controlled moneys in November
2019, the Tesla business has
made only 8 sales, generating $52,841.31 of revenue; and, in the corresponding
period, the business
incurred $74,860.69 of expenses, making an overall cash
loss of more than $22,000 (despite the Tesla business paying no wages). Thus,
Lara’s complaint is that it is a business that continues to lose money is
being funded from property of the deceased’s
estate.
- In
August 2020, various issues arose between the parties, including the discovery
of a $30,000 asset in David’s name (a “Cub
Camper” vehicle)
not disclosed to Robb J at the time the interlocutory injunction was contested.
I understand that Lara sought
to have the matter relisted before Robb J to have
the injunction varied (pursuant to the liberty that had been granted by his
Honour)
but that it was agreed between the parties (due to Robb J’s
inability to allocate time to hear that application and the proximity
of the
final hearing date) that any motion for amendment to the orders would be
determined during the trial. Accordingly, at the
outset of the hearing Lara
filed a notice of motion seeking such a variation, which motion was dealt with
at the conclusion of the
hearing by way of a consent regime that limited the
amount of expenditure from the controlled moneys account and included a
requirement
for notification in relation to expenditure for business purposes.
Therefore, it was not necessary for me to determine that motion.
However, given
the exigencies of David’s position, particularly in relation to the
business, I have endeavoured to deliver
judgment as soon as
possible.
Relief sought
- The
matter ultimately proceeded by way of pleadings. On 11 February 2020, Lara filed
an amended statement of claim seeking the following
by way of final
relief:
7A. An Order that the administration of the estate of the late
Isolde Becker be carried out and executed by and under the direction
of this
honourable Court and that all necessary declarations be made, and enquiries
held, and accounts taken to carry the same into
effect. [i.e., a general
administration order]
7B. Further, if it be found necessary that an administrator of
the said estate be appointed, or in the alternative, an Order that
letters of
administration of the estate of the late Isolde Becker, annexing the last will
and testament of the deceased dated 31
August, 2016 be granted to the plaintiff.
[i.e., an order that Lara be appointed as administrator of the estate]
7C. An Order that the first defendant do within 4 business days
pay and deliver up to the Court, or alternatively, to the plaintiff
all of the
funds, assets, books and records of the estate of the deceased.
8. A declaration that the payment in the sum of $1,522,272.03
to the first defendant by or on behalf of the deceased from the sale
proceeds of
[the Glenhaven Property] was obtained by undue influence.
8A. A declaration that the funds transferred from the NetBank
facility of the deceased Isolde Becker that are listed in the Schedule
to this
Statement of Claim were not authorised by the deceased and/or were transferred
by or for the benefit of the first defendant
in breach of his fiduciary and
equitable duties.
8B. In the alternative to the relief sought in paragraph 8A, a
declaration that the funds transferred from the NetBank facility
of the deceased
Isolde Becker that are listed in the Schedule to this Statement of Claim were
obtained by undue influence.
9. In the alternative to the relief sought in paragraph 8, a
declaration that payment in the sum of $1,522,272.03 to the first
defendant by
or on behalf of the deceased from the sale proceeds of [the Glenhaven Property]
was obtained by unconscionable conduct
of the first defendant.
9A. In the further alternative to the relief sought in
paragraphs 8A-B, a declaration that the funds transferred from the NetBank
facility of the deceased Isolde Becker that are listed in the Schedule to this
Statement of Claim were obtained by unconscionable
conduct of the first
defendant.
10. A declaration that the first defendant holds or held the
net sale proceeds of the sale of the [Beaumont Hills Property] and
such assets
as he subsequently acquired using same on trust for the estate.
10A. An order that an enquiry be held to ascertain the amount
of the said proceeds that are still held by the first defendant,
and in respect
of any amount no longer held by him, how the said proceeds have been applied,
and what assets have been acquired by
the first defendant using the same and
their value.
11. An order that the first defendant pay and deliver up to the
Registrar to be held at the direction of the Court, or alternatively
to the
plaintiff as administrator of the estate of the deceased, all funds and other
assets, documents of title and things which
it may be found upon the said
enquiry he has acquired using the said sale proceeds or any part thereof.
12. An Order that the first defendant pay into Court, or,
alternatively, to the plaintiff as legal representative of the estate
of the
deceased, equitable compensation in the amount of the difference between sum
certified upon the enquiry held pursuant to the
Order in paragraph 10A and the
sum of $1,522,272.03, together with compound interest thereon at the defaulting
trustee rate.
12A. An Order that an enquiry be held into and account taken of
the dealings and transactions of the first defendant with the deceased’s
Personal property as defined by paragraph 78 of the pleadings herein, and the
funds transferred from the NetBank facility of the
deceased Isolde Becker that
are listed in the Schedule to this Statement of Claim, on the basis of wilful
default, and that the first
defendant pay into Court or alternatively to the
plaintiff as administrator of the estate of the late Isolde Becker the amount
found
due upon the taking of the said account, together with compound interest
thereon at the defaulting trustee rate.
12B. An Order that upon the taking of the said enquiry it be
determined what are the assets acquired by the first defendant as
a result of
the said dealings and transactions and a Declaration be made that the same are
held by the first defendant on trust for
the estate of the deceased or
alternatively that they shall stand charged with payment of the amount found due
upon the taking of
the said account, and an Order that the first defendant do
deliver up to the Court or to the plaintiff as administrator of the estate
of
the deceased the said assets so found upon the taking of the said enquiry with
all documents of title appurtenant thereto.
12C. An Order that the interest of the first defendant as
legatee and otherwise as beneficiary of the estate of the deceased be
impounded
and held as security for his liabilities as determined under these orders.
12D. Further, or in the alternative, to the extent that it may
be found that any of:
(a) The payment in the sum of $1,522,272.03 to the first
defendant by or on behalf of the deceased from the sale proceeds of [the
Glenhaven Property]; and
(b) Those of the payments listed in the schedule to this
Statement of Claim that were made after the date of the said will;
were otherwise valid actions of the deceased free of any claim on the conscience
of the first defendant, then a Declaration that
by reason of and to the extent
of those payments the legacy and portion of residue given to the first defendant
by the said will
of the deceased are deemed or satisfied.
12E. An Order that the funds held in controlled money account
pursuant to Interlocutory orders made in these proceedings be paid
out to the
plaintiffs by way of satisfaction of:
(a) First, the costs of these proceedings; and
(b) Next, the legacy provided by the said will for the first
plaintiff; and
(c) Next, the first plaintiff’s share of residue.
13. In the further alternative to the relief sought in
paragraphs 8-12, an Order, pursuant to section 80 of the Succession Act
2006, that the net sale proceeds of [the Beaumont Hills Property] and any
assets acquired by the first defendant using those proceeds
of sale be
designated as notional estate.
13A. In the further alternative to the relief sought in
paragraphs 12A and 12B, an Order pursuant to section 80 of the Succession
Act 2006, that the amounts listed in the Schedule to this Statement of Claim
and any assets acquired by the first defendant using those moneys
be designated
notional estate.
14. An Order pursuant to section 59 of the Succession Act 2006,
that the plaintiff receive further provision from the estate and/or notional
estate of the deceased.
- Prayers
15-16A seek interest and costs on the indemnity basis.
- David’s
defence, filed on 24 February 2020, does not raise any plea of justification or
other affirmative case supporting any
of the impugned transactions. David
admitted that the deceased required assistance for day to day needs ([35](b)).
David denied that
he was in a position of dominance or ascendency ([35]), but
alleged not only that the deceased did not want to move into an aged
care
facility but also that the deceased had trust and confidence in him. (For Lara
it is said that the admission that the deceased
reposed trust and confidence in
David establishes a presumptive relationship of undue influence and that there
is no pleading of
any facts rebutting the presumed
influence.)
Witnesses
- Before
turning to the parties’ submissions on the issues for determination, it is
convenient at this point to set out my observations
of the principal witnesses
and their evidence.
David
- Unfortunately,
there were a number of difficulties with David’s evidence, such that I
cannot find him a credible witness. The
impression I formed was that he was
focussed on his own perception of events (i.e., his evidence was highly
subjective), and that
he had a tendency to make a series of excuses when taken
to statements made on his behalf (and purportedly on his instructions) that
were
proven to be incorrect or otherwise were misleading due to the fact that they
did not paint a complete picture of events.
- I
have adverted above to the statements made by David’s solicitor in
relation to the proceeds of sale of the Kellyville Property
(namely that part of
the proceeds of sale of the Kellyville Property had been paid for Dr
Backer’s Accommodation Bond and that
Dr Becker and the deceased did not
have sufficient funds to pay the Accommodation Bond). Those statements were
simply false. Even
if David had sold the Kellyville Property with the intention
of using the proceeds to assist with the payment of the Accommodation
Bond it
was simply untrue to assert that that was what had happened. At the very least,
this points to an unreliability on the part
of David when giving
instructions.
- There
were a number of other examples of David’s unreliability as a witness or
in the giving of instructions in the conduct
of the proceedings. In no
particular order, those include the following.
- First,
David’s conduct (and response through his solicitors) in relation to the
sale of the Suzuki Jimny motor vehicle that
Robb J directed be sold and the
moneys deposited to the defendant’s solicitor’s controlled moneys
account. David’s
solicitor’s correspondence in relation to this sale
clearly conveys to Lara’s solicitor that the sale price was $25,000
(as
does the transfer of registration form signed by the purchaser, Ms
Cotrone).
- In
fact, however, as David admits, the vehicle was sold for $30,000 ($25,000 paid
by bank cheque, the balance in cash – some
minor part of the cash balance
being attributed to reimbursement for registration expenses). David’s
explanation for this (see
the cross-examination at T 241ff) was
unconvincing in the extreme. His evidence was unclear as to who (he or the
purchaser) requested
that there be a part payment in cash.
- David
suggested in the witness box that he had queried with his solicitor whether he
could use the cash to pay some personal accounts
(and said that if that had been
permissible it would have been easier to effect if the money had not been
provided as a bank cheque).
- David
denied that he had attempted not to disclose the full purchase price to Lara
(saying that he knew that Lara’s solicitor
would talk to the purchaser and
that he had alerted the purchaser to this). David suggested that Lara’s
solicitor had sent
an “extremely threatening” communication to the
purchaser (Ms Cotrone). I interpose to note that when a copy of the actual
communication was produced it was my view that a less threatening request for
information would be hard to imagine.
- The
upshot is that there was some delay in the balance of the purchase price for the
Suzuki vehicle being deposited in the controlled
moneys account (and, tellingly,
that this did not occur until after Lara’s solicitor had pressed the issue
as to the actual
purchase price).
- Second,
and not dissimilar to the above, there was delay in the deposit into the
controlled moneys account of the whole of the digital
currency as required by
Robb J’s orders. The background to this was that David initially converted
to cash and deposited in
the controlled moneys account of $340,000 from his
digital currency accounts, and deposes to there being further digital currency
worth approximately $385,000, which he was required to convert to cash and
deposit into the controlled moneys account. The amount
that was subsequently
deposited was $344,191.43 (see Ex G). There were communications back and forth
between the respective solicitors
as to this discrepancy, in which Lara’s
solicitor pressed for further information as to what had happened and
David’s
solicitor conveyed what were presumably his various instructions
– first, that there seemed to be a “glitch”; that
his client
was making enquiries; and then (incorrectly) that the whole of the amount had
been converted into cash. Nowhere in the
later correspondence was it suggested
that David was still making enquiries about this, or that the money (around
$36,000) was inexplicably
“missing”.
- David’s
evidence in the witness box in relation to this (see cross-examination from
T 163ff) was confused. Moreover, David seemed
remarkably sanguine as to the
risks of currency fluctuations (or simply the seemingly ever-present risk that
currency would go “missing”
in the course of conversion from digital
currency (through international exchange facilities) to actual currency).
- Again,
the response from David’s solicitor, insofar as it went, was incomplete
and it is difficult to have any confidence that,
but for Lara’s
solicitor’s diligence in pursuing the issue, the missing $36,000 would not
simply have remained “missing”.
David’s explanation for what
happened (that he transcribed the wrong address in the transfer documents and
that he did not
realise the money was in a particular Bitcoin
“wallet” he had suggests a remarkable lack of concern for the
accuracy
of his own currency transactions. Indeed, David’s explanation of
the digital currency in general suggests that even if the
deceased was, as he
insisted, very interested in Bitcoin, there should have been a proper
explanation to her of the risks in such
trading before she expended substantial
sums therein).
- Third,
there was no disclosure by David in his affidavit evidence setting out his
assets and liabilities of a Cub camper vehicle that
he owns (seat T 280).
His explanation for this was that it was of no value (having suffered water
damage after being left outside
for some time), although it had been used not
long before that on a family trip in Queensland and it appears that David was
keen
to retain the vehicle. David said he thought it was worth little and might
not have been able to be repaired, but that he then made
enquiries and found out
that he was able to have it repaired under warranty, which then occurred
(T 247). His explanation for non-disclosure
of this asset is not readily
explicable other than as an attempt not to disclose all his assets (since other
assets listed by him
were or little or nominal stated value). (There was
similarly non-disclosure of the deceased’s grand piano or other items of
personal property disposed of by David – see below.)
- Fourth,
there is the assertion in early correspondence from David’s solicitor
(before the commencement of proceedings) that
the only gift David had received
from the deceased was the proceeds of sale from the Glenhaven Property that were
used to acquire
the Beaumont Hills Property and as to the sum of $150,000 that
it is said was received (first, as repayment for the renovations carried
out to
the Glenhaven Property and, second, as repayment “over several
years” of loans for renovations and for the ongoing care provided
by David to the deceased). That account of events is belied by the evidence now
put forward as to the
NetBank transactions (see below) and, even on
David’s own evidence, the suggestion that all he had received (other than
part
of the proceeds of sale of the Glenhaven Property) was the amount of
$150,000 was a significant understatement.
- Fifth,
there is the correspondence from David’s solicitor responding to a query
(after the freezing orders had been made) as
to the receipt by David and Susan
of any income for the period after the interlocutory regime was in place. It may
be noted that
Susan was not precluded from earning income during this period
(and nor was David) but the enquiry went to the question of whether
income had
been received. The answer (again presumably on instructions – and it would
seem on Susan’s evidence that this
could only have been instructions from
David) was none. In fact, however, as David and Susan each admitted in
cross-examination,
work had been carried on in relation to the carpet
overlocking business (for former clients of David) for which it is said only a
small amount had been received over the year ($1,000 or $1,500).
- It
was unclear precisely who was carrying out the work (Susan’s evidence was
that she was trying to restart the business but
the communications seem to be on
company letterhead and the contact details included David’s), but it seems
not coincidental
that David disclaimed earning any money in circumstances where,
had he done so, the receipt of that income would have needed to be
taken into
account in determining how much could be withdrawn on a monthly basis under the
interlocutory regime that was in place.
At the very least, this might be said to
be contrary to the regime of the orders (if business that otherwise would have
come to David
or the company, and been accountable under the regime, were
diverted to Susan and therefore not accountable) but it is not necessary
to come
to any view about this. The real issue is that this is another instance of an
incorrect response in correspondence from David’s
solicitor, again casting
doubt on the reliability of David’s instructions. Moreover, David’s
answer in cross-examination
as to evidence on which reliance was placed in an
affidavit used on an interlocutory application in his matter, was to say it
“wasn’t
quite accurate” – T 229 (which bespeaks
either an inattention to detail on his part or a lack of concern to put forward
an accurate picture of events).
- Finally,
David’s account of the assets of the estate at the time of the
deceased’s death was incomplete at least insofar
as it did not include the
grand piano (which he said was sun-damaged and worthless, and which he gave away
for no consideration to
the deceased’s podiatrist), and any items that
remained in storage after the move from the Glenhaven Property (although I
accept
that it is not clear precisely when those goods were disposed of or given
away). Some goods, David said, he gave away to contractors.
Some, he or Susan
may have sold on e-Bay. David’s account of what happened to the $47,000
odd of new household furniture acquired
from HomeValet for the purposes of the
Glenhaven Property sale is wholly unclear. All of this is redolent of a lack of
understanding
of David’s responsibilities as executor at best (or, to the
extent that goods were disposed of prior to the deceased’s
death, to an
attitude on this part that the deceased’s property was his to deal with as
he wished).
- Regrettably,
I cannot place weight on David’s assertions where those are uncorroborated
by independent or objective evidence.
His account of events was in many
instances confused and defensive; and his account was in a number of respects
inherently implausible
(particularly in relation to the NetBank transactions).
Moreover, he clearly bears a degree of animosity towards Lara (though that
may
well be as a result of the litigation itself). His answer to one question was
“Lara managed to do that all on her own with
her threatening calls”)
(T 284).
- Other
evidence of his was also inherently implausible (such as the suggestion that
total knee replacement surgery would not be painful
– particularly given
the pain relief medication that it appears was prescribed for the
deceased).
Susan
- Susan
engaged in confrontation with the cross-examiner almost from the start of the
cross-examination; and was assertive in the witness
box and defensive of her own
position (such as in relation to the receipt of income). I accept that Susan was
(understandably) protective
of her husband and family (emphasising the need to
put food on the table for her family) but overall it was clear that she was
giving
evidence as an advocate in her husband’s case rather than in an
impartial manner. Susan and her husband obviously have a close
relationship (as
was evident when they were sitting together in court) and clearly there is much
underlying emotion as to how events
within the family have transpired, as
between Susan and her sister-in-law.
- I
make no adverse findings as to Susan’s credibility evidence. I simply note
that she was not a particularly co-operative witness
and that she clearly has an
interest in the outcome of the proceedings. Therefore I would not accept
assertions made by her on critical
issues in the proceedings without independent
and objective evidence to corroborate those
assertions.
Lara
- I
found Lara to be a genuine and believable witness and her account of events
struck me as plausible. Lara did not shy away from issues
such as her animosity
towards David or as to the fact that she (and Adam) had received considerable
financial assistance from the
deceased and Dr Becker over a number of
years.
- It
is clear (and Lara to her credit did not attempt to hide this) that there is no
love lost between Lara and David (indeed that seems
to me to be apparent on both
sides). Lara readily accepted that she had attempted to “smear”
David’s character
with the deceased (behaviour that from her
mother’s perspective would no doubt have been upsetting); and that she
wanted to
put in place a situation where the deceased was removed from
David’s influence. I considered her evidence to be believable
when she
explained that this was because she wanted to put her side of the story to her
mother and that she wanted her mother back
in her life.
- I
accept that the dismissive reference to David as potentially being
“collateral damage” does not reflect highly on Lara’s
opinion
of, or feelings for, David but, having regard to the evidence that has emerged
in relation to the deceased’s estate,
it is in my opinion understandable
that Lara would feel that David has done the wrong thing in relation to the
deceased’s estate.
Certainly, insofar as the deceased’s testamentary
intentions as discerned from the Will are concerned, what occurred was
inconsistent
with those intentions.
- As
adverted to above, Lara’s explanation of matters to which she was taken to
in the letter written to her mother was credible
and her reason for doing so
explicable.
- Therefore,
while I treat with caution such of Lara’s account of events as is
uncorroborated (such as her account of conversations
with the deceased and
especially the so-called “secret meetings”), just as I treat with
caution such evidence from David,
on the whole I accept Lara’s account of
events as credible.
Adam
- Adam’s
evidence was not really shaken in cross-examination. He was a co-operative and
considered witness. While he clearly has
a personal interest in the outcome of
the litigation, I accept he gave a truthful account of events according to his
recollection
of events.
Other witnesses
- It
is not really necessary to say much about the other witnesses. Ms McCarthy
was clearly a partial witness, being a friend of David
and Susan, but her
evidence does not take matters much further than to confirm that the deceased
stayed at her house for a number
of months and that David visited her regularly
during that time. (There was also, for no explanation that Ms McCarthy
could provide,
evidence of a joint account that had been opened in her and
David’s name – but she denied any knowledge of this.) I do
note that
one feature of the affidavit evidence of Ms McCarthy and that of the
deceased’s podiatrist (Ms Ignacz) was the common
wording of the paragraphs
of their affidavits deposing to their shared cultural heritage with the deceased
(which suggests that the
affidavits were not wholly in their own words), but
nothing here turns on this (cf cases such as those considered in
Rosebanner Pty Limited v Energy Australia (2009) 223 FLR 406;
[2009] NSWSC 43 from [323]; and Day v Perisher Blue Pty Ltd (2005) 62
NSWLR 731; [2005] NSWCA 110).
- It
is, however, relevant here to note that the evidence of the real estate agents
(Mr Hampson and Mr Dackert) and of the website developer,
Mr Kossow, as tested
in cross-examination, revealed a tendency to make generalised observations
without clear focus on the basis
for the observations there made. So, for
example, the evidence of the real estate agents as to the deceased’s
“active”
involvement in the sale of the Glenhaven Property and
acquisition of the Beaumont Hills Property seemed to boil down to little more
than that the deceased had signed various documents and attended various
meetings. The evidence that she understood the letter setting
the reserve price
for the sale, for example, was underwhelming.
- As
to the website developer, with no disrespect to him, that evidence boiled down
to him seeing the deceased watching a video on YouTube
and the deceased
“chuckling” when he commented on that. Any suggestion based on that
evidence that the deceased was computer
literate (and therefore likely to have
been effecting her own NetBank transactions) is extraordinary. I will come back
to that in
due course.
Submissions
- I
turn now to the parties’ submissions on the issues in the
proceedings.
Lara’s submissions
Accounting for the NetBank transfers
- Lara
notes, that, unlike the application of the deceased’s funds for the
purchase of the Beaumont Hills Property, David does
not give evidence that the
$1.77 million of NetBank transfers were gifts made by the deceased to David, his
family, and company.
Rather, David explains the receipts totalling $1.77
million as: loans advanced by the deceased to his business; reimbursement for
expenses paid by David for the deceased’s benefit; or advance payment for
likely future expenses of the deceased.
- By
these proceedings, Lara has sought an account be ordered as to what was done
with the money David so received from the deceased’s
NetBank account
(prayer 12A). Lara contends that, having received $1.77 million of the
deceased’s funds (leaving to one side
for the moment the Beaumont Hills
Property purchase), David has a duty to account to Lara (as the representative
of the estate for
the purpose of these proceedings) for a number of
reasons.
- First,
that the transfers were not gifts and that the deceased is a person who placed
considerable trust and confidence in David.
David accepted that he understood
his mother trusted him with her finances (T 265.80). Lara points to
David’s affidavit evidence
as revealing that this trust and confidence
extended to management of the deceased’s finances in that David has
deposed to
a conversation in early 2015 that: “It will be easier to manage
or finances if our money is in one account so I will transfer
you money. You pay
the bills and pay off your credit card” (see David’s 28 August 2020
affidavit at [21]). Lara points out that a manager is accountable to the
principal, and that this is a position of trust
and confidence which gives rise
to a fiduciary relationship, and as a result a duty to keep proper accounts
(citing Hospital Products Limited v United Surgical Corporation (1984)
156 CLR 41; [1984] HCA 64 (Hospital Products)).
- Second,
Lara contends that if it is established that David gained operational access to
the deceased’s NetBank facility, and
did himself transact on that
facility, then David’s dealings with the deceased’s money, if made
with authority constitute
a dealing of an agent for the principal (citing
Barkley v Barkley Brown); and if made without authority his position is
so much the worse.
- Third,
that, by May 2016, David had been expressly authorised to act as the
deceased’s attorney. It is said that, so far as he transacted
the
transfers, he was not authorised by the Power of Attorney to confer benefits
upon himself (see Perochinsky v Kirschner [2013] NSWSC 400; and consider
also Dimitrovski v Australian Executor Trustees Limited [2014] NSWCA 68
at [68], per Emmett JA, with whom Bergin CJ in Eq agreed). (It is said that the
Power of Attorney has also a secondary significance in the
alternative case of
undue influence, as a circumstance supporting the relation of trust and
confidence.)
- Fourth,
that on David’s own evidence much of the money being received was not by
way of reimbursement, but for future expenses,
living costs and care (see
David’s 14 November 2019 table p 11). In these circumstances, and on his
own evidence, it is said that David was holding money as agent or
trustee.
- Thus
Lara submits that David is liable to account. It is noted that David was put on
notice of what was required when the matter first
came before Robb J - see
Torok v Becker (2019) at [119]:
119. ... Mr Becker must be required to serve his evidence in
response expeditiously. He will be required to explain in detail the
factual
justification for his claim to be entitled to all of the monies paid to him to
the exclusion of Ms Torok. He will also be
required to explain in detail what
happened to all of the money, and in particular how it was applied in repayment
of monies owed
by the deceased to him or for her benefit.
- Lara
points out that if an enquiry is ordered into what was done with the
deceased’s $1.77 million transferred from the deceased’s
accounts
this proceeds upon an assumption that the party calling for the account is
entitled to the sum found due after such an accounting
(see
Barkley v Barkley Brown at [10], citing Doss v Doss (1843)
3 Moo Ind App 175 at 196-7; 18 ER 464 at 472).
- Lara
says that David has had seven months since the filing of the amended statement
of claim to provide his explanation of his transactions;
and has done so in the
form of his 110 page affidavit sworn 28 August 2020, as well his affidavits
sworn 14 November 2019 and 17
March 2020. It is noted that in the time since
Robb J gave judgment, David has not produced a single invoice substantiating
funds
which were alleged to have been spent by David for the deceased’s
benefit; instead, David has analysed his bank statements
particularising those
transactions said to have been for the deceased’s sole benefit (marked
“A”), those transactions
made at the request of Mrs Becker but which
also benefitted David and his family (marked “B”), and those which
can be
categorised as general living expenses benefiting all members of the
household (marked “C”) (see David’s 28 August 2020 affidavit
at [5]). Lara accepts that this evidence is admissible in order to identify how
David claims to account for the money, but says that it is not admissible
to prove the truth of the justifications offered.
- Lara
notes that examples of transactions said to have been effected for the
deceased’s sole benefit include: cash withdrawals
from David’s
accounts, money spent on clothing or department stores such as Myer or David
Jones, a Christmas present purchased
for the deceased, and $19,840.00 of
“rent” for the duplex into which the deceased never moved because
she had died. It
is said that the Christmas present (whilst a small item) is
indicative of David’s “complete lack of objectivity in approaching
the task of justifying his transactions and his utter lack of any proper moral
sense”. It is said that it quite obviously can
only have been a private
expense of David to buy a present for his mother at Christmas (otherwise
it was not a present at all); and that to represent himself to his mother
at Christmas as making a gift for her, which he was in fact paying for with her
money, was a “mean and petty deception”.
- Examples
of transactions said to have been effected at the request of the deceased but
for the benefit of the whole family include
the payment of $97,076.30 by David
to purchase a Model S Tesla vehicle, valued at $214,636.50, and $8,102.74 of
airfares to fly Susan’s
sister and her husband to Australia from the
United States.
- Examples
of transactions said to have been effected for the benefit of all family members
are: David’s $14,300.00 purchase of
solar panels for the Beaumont Hills
Property, sound equipment and television for the family, and veterinarian costs
relating to David’s
dog, Jax.
- To
the extent that the relevant NetBank transactions are found to have been
authorised by the deceased, it is said that David’s
failure to produce a
single receipt for any purchases said to have been made by him for the
deceased’s benefit (including for
purported renovations which are disputed
by Lara), should lead to a finding that David has not adequately accounted for
any of the
admitted receipts, and judgment should be entered in favour of the
estate for that sum (about $1.77 million) plus interest to run
from the several
dates of the transfers from the deceased’s account.
- It
is said that, even if David were to produce satisfactory accounts for all
of the transactions asserted by him to be for the deceased’s benefit,
those amounts, on David’s own evidence, account
for a mere $464,020.41 of
the $1.77 million received by him (directly or indirectly).
- Furthermore,
it is said that, assuming that the deceased knew and approved of various of the
transfers (see submissions at [185]),
there should be a findings that these were
loans to David, given that: David himself does not suggest they were gifts and
says they
were advances for the benefit of the deceased; the evidence does not
support a case that David had made payments for the deceased’s
benefit at
the times of the respective payments for which she ought to reimburse him; and
many of the transfers are described in
the bank records themselves as loans
(although it is said for Lara that it is more likely that David simply
“took the money
and labelled it that way”).
Personal
property
- Lara
points out that the deceased’s contents were insured for $247,900, and
that on David’s own evidence the Glenhaven
Property was furnished with new
furniture following the deceased’s move to Ms McCarthy’s property;
and prior to its sale,
and that transfers were made from the deceased’s
account to pay for the purchase of furniture of some $47,000. However, on
her
death, the deceased’s personal items, furniture, and chattels on death
were said by David to have consisted only of: jewellery,
three to four figurines
and one Persian rug. It is said that this limited admission cannot be accepted
as a complete statement.
- Lara
seeks an order that David deliver up furniture and personal items in his
possession or control that are property of the estate,
or were otherwise
acquired with use of funds of the deceased.
Undue Influence &
Unconscionable Conduct
- To
the extent that any of the NetBank transactions is found to have been a gift,
Lara asserts that such a transfer, together with
the $1.522 million of the
deceased’s funds applied for the purchase of the Beaumont Hills Property,
are vitiated by presumed
or actual undue influence, and/or unconscionable
conduct.
Undue Influence
- As
to the allegation of undue influence, this is both on the basis of alleged
presumed undue influence (arising from the relationship
of trust and confidence
between the deceased and her son); alternatively, Lara alleges actual undue
influence.
- As
to the claim based on presumed undue influence, it is noted that in Johnson v
Buttress [1936] HCA 41; (1936) 56 CLR 113 (Johnson v Buttress) at 119; [1936] HCA
41, Latham CJ said:
The jurisdiction of a court of equity to set aside gifts inter vivos which have
been procured by undue influence is exercised where
undue influence is
proved as a fact, or where, undue influence being presumed from the
relations existing between the parties, the
presumption has not been rebutted.
Where certain special relations exist undue influence is presumed in the
case of such gifts. These
relations include those of parent and child, guardian
and ward, trustee and cestui que trust, solicitor and client, physician and
patient and cases of religious influence. The relations mentioned, however, do
not constitute an exhaustive list of the cases in
which undue influence
will be presumed from personal relations. Wherever the relation between donor
and donee is such that the latter is in a position to exercise dominion over the
former by reason
of the trust and confidence reposed in the latter, the
presumption of undue influence is raised.
[Emphasis added; citations omitted]
- Lara
points to the deceased’s medical conditions and notes that David’s
own evidence describes him as her primary carer;
and that he took appointment as
her attorney under the Power of Attorney.
- It
is said that by 2015, or early 2016, the deceased could not look after herself,
(her surgeon describing her as almost completely
disabled); and that, on
David’s own evidence, the deceased entrusted David with significant sums
of money (her life savings)
leaving her without sufficient funds for her future
in the event that her relationship with David “turned sour”, or she
were otherwise in need of funds (for, say, accommodation or medical care).
- It
is noted that there need not be a finding that David did exercise dominion over
the deceased, only that he was in a position to
exercise dominion. In this
regard, Lara contends that the deceased was an 80 year old lady, beset with
significant ailments, and
dependent on David to provide her with meals,
clothing, and, importantly for the deceased, accommodation outside of an aged
care
facility. It is said that, not only was the deceased dependent on David
from the outset of his move to the Glenhaven Property, but
that the more money
he received from her the more dependent on him she became, as she lost the
financial independence to exercise
any control of her place or residence or
finance for her future needs. Further, it is said that the deceased’s
isolation from
Lara in the final years of her life left her extremely dependent
on, and vulnerable to, David. It is said that the deceased’s
tentative and
secretive arrangements to make contact with Lara demonstrate how reluctant and
even fearful she was of been seen by
David to take a course of which, in her
perception, she might be disappointing his wishes. (Pausing here, I do not rely
on these
alleged secret meetings or arrangements for a finding of dependence,
bearing in mind the lack of independent corroboration of such
meetings and the
caution to be exercised when considering accounts of conversations with persons
who are now deceased.)
- Lara
contends for a finding that, due to her health, age, lack of social and other
support systems, financial circumstances, and trust
in her son, David was in a
position to exercise dominion over the deceased, leading to a presumption that
all of the NetBank transactions,
and the $1.522 million of funds applied for the
purchase of the Beaumont Hills Property, were obtained by the undue influence of
David.
- It
is clear that, where a presumption of undue influence exists, the donee must
positively justify the retention of the benefit conferred
(see Winefield v
Clarke [2008] NSWSC 882 (Winefield v Clarke) at [44], per Barrett J,
as his Honour then was). Lara submits that there is virtually no evidence in
this case capable of rebutting
the presumed influence. Lara submits that such
explanations as are provided by David tend only to reinforce the conclusion that
the
deceased was in fact highly dependent on, and susceptible to, the influence
of David. (Further it is said that much of David’s
own evidential case
supports Lara’s alternative case of actual undue influence.) Lara
maintains that the deceased’s desire to “even things” up
presented an opportunity for advantage
to be taken as the deceased’s
abilities were diminishing.
- Lara
argues that the grossly improvident dispositions and the manifest partiality to
a person who volunteered (and, she says, even
insisted on) being her primary or
sole carer, to the exclusion of the normal family relations hitherto enjoyed,
are circumstances
strongly probative of influence and of the probability that
the dispositions were produced by that influence.
- Lara
contends that, even without any calculated manipulation, the relation of
influence, whether presumed or actual, was productive
of the dispositions; and
that it follows that they cannot stand, even if could be shown that
David’s actions showed him to
be no more than a passive recipient.
- Emphasis
is placed by Lara on the fact that the donor is deceased, and to the need
carefully to scrutinise the evidence to ascertain
whether what the living donee
puts forward as a probable and credible account of what really happened
(referring to Barkley v Barkley Brown at [151], quoting Huguenin v
Basely (1807) 14 Ves Jun Supp 273 at 299-300) (Huguenin v
Basely).
- Lara
points to the fact that there is no evidence that the deceased obtained
financial advice from a qualified adviser as to any of
the NetBank transfers, or
the application of $1.522 million of her funds used to purchase the Beaumont
Hills Property in David’s
and Susan’s names. It is noted that
David’s evidence is that he had taken his mother to receive financial
advice regarding
the payment of the Accommodation Bond (see David’s 17
March 2020 affidavit at [57]), but that there is no reference to an adviser
being called in to assist the deceased thereafter, or
in reference to any other
transaction. Lara submits that the absence of records or of contemporaneous
arrangements to ensure that
the transactions in question could be seen as
objectively justified, is telling against David, because he understood the
importance
of his mother being competently and independently advised. It is
noted that the deceased received no legal advice as to any of the
NetBank
transfers; nor did she receive any advice (free of David’s participation),
on the sale of the Glenhaven Property and
use of its proceeds for the purchase
of Beaumont Hills Property, nor on the investment or other disposition of any of
the balance
of the proceeds of sale. It is said that no protective arrangements
at all were made and carried through to secure the deceased’s
interest and
provide for her needs.
- Lara
argues that the fact that the deceased proceeded with the purchase of Beaumont
Hills in David’s and Susan’s name
is not evidence of a free and
voluntary transfer. Lara maintains that its gross improvidence suggests the
contrary and, taken with
the other matters to which she has referred, strongly
points to a conclusion that the deceased was no longer capable of making any
worthwhile judgment as to her own interest. It is noted that David entered into
the contract to purchase the Beaumont Hills Property
in July 2017 (the deposit
was paid on 20 July 2017) and that, in the period when application of the
deceased’s funds for that
purpose was being determined, the deceased had
only recently had extensive knee surgery and had already exchanged contracts to
sell
her own home (the Glenhaven Property). It is said that the deceased was
hardly in a position to create any discord with the person
on whom she was
likely to depend for the rest of her life. Lara points to the medical notes
that record that the deceased was “very
stressed due to selling of
home”.
- Lara
thus submits that the evidence does not permit a finding that, in all the
circumstances, the Beaumont Hills purchase in David’s
and Susan’s
names, and the various NetBank transfers, occurred in circumstances that enabled
the deceased to exercise her own
free will; noting (because the focus is on the
donor’s circumstances and state of mind), that such a finding can be made
without
having to find that David acted
improperly.
Unconscionable conduct
- Lara
accepts that, whereas undue influence looks at the circumstances and free will
of the donor, a claim for unconscionable conduct
focuses on the action, or
inaction, of the donee. For Lara, reliance was placed on the well-known passage
from Commercial Bank of Australia Limited v Amadio (1983) 151 CLR 477;
[1983] HCA 14 (Amadio). It is said that in the present case, the deceased
was under a special disability by reason of a combination of her age, health,
and dependence on David for her day-to-day living and financial needs.
- It
is contended that, if there is a finding that the NetBank transfers were
authorised by the deceased, and were intended as gifts,
and can be taken as
being transactions of the true free will of the deceased, then the transactions
should nevertheless be set aside
on the basis that it is not consistent with
equity or good conscience to allow David to have received the benefit of those
transactions
because he took advantage of the deceased when she was labouring
under special disabilities (her age, infirmity, failing health,
dependence,
isolation from effective access to her daughter, and lack of independent
recourse to advice and assistance at the end
of her life).
- It
is said that the NetBank transfers resulted in the deceased losing her financial
independence at a point in time where she was
most vulnerable. Lara maintains
that the transactions were improvident, not in the deceased’s interests,
and would not have
reflected her wishes had she not suffered under her special
disabilities. It is said that this can be seen from the testamentary
provision
that the deceased actually made in a succession of wills and codicils up to and
including the 2016 Will. It is said that
it is not likely that, if free of the
disabilities, the deceased would have set out to defeat her own long-standing
testamentary
policy.
- Lara
says that David acknowledged it was not right that he should receive hundreds of
thousands of dollars of the deceased’s
savings when he said to the
deceased “[n]o, it’s your money so it should be in your
account”, but notes that David
then went on to receive additional funds
without further objection, (i.e., it is said, understanding that it was not
right that he
receive them). It is said that the same is true for the funds
used to purchase the Beaumont Hills Property. Lara argues that the
purchase of
the Beaumont Hills Property in David’s and Susan’s names not only
removed a significant financial resource
available to the deceased, but meant
that she had no legal right to occupy the property, (absent declaratory relief
obtained in proceedings
of this kind).
- It
is said that the improvidence of the Beaumont Hills transaction, and all the
other NetBank transactions, “came home to roost”
in the last few
weeks of the deceased’s life when it was necessary for the Beaumont Hills
Property to be sold (converting the
deceased to a potential tenant to an unknown
landlord and subject to David’s capacity to pay the rent).
- Tellingly,
it is said that the deceased died without enough funds to pay even for her own
funeral expenses. It is said that a dutiful
son in the position of the defendant
could not in good conscience let these transactions occur or let them stand.
Presumed Ademption
- To
the extent that there is a finding that any of the NetBank transactions was
authorised by the deceased, for her benefit, or a valid
gift free of presumed or
actual undue influence and made in good conscience, Lara submits that any such
transfer made after 31 August
2016 should be taken as an ademption or
satisfaction of the gifts to David under the Will (in full or in part). The
same is also
said of the $1.522 million in funds used to purchase the Beaumont
Hills Property, that transaction happening after the date of the
Will.
- The
basis of the presumption of ademption is the maxim that equity leans against
double portions – see Reynolds v Bonnici [2017] NSWSC 828 at [45],
where Lindsay J quoted Murray CJ in In re Everett; Executor Trustee and
Agency Company of South Australia Limited v Everett [1917] SALawRp 3; [1917] SALR 52 at 65-66
to explain the presumption of ademption as follows.
Ademption depends on the intention of the donor. In some cases the intention is
presumed. ...
An intention to adeem is presumed in only two classes of cases: (1) where a
father or person in loco parentis gives a legacy to a child of his own or
to a person towards whom he stands in loco parentis, and subsequently
makes a gift or advance of substantially the same quality as the legacy to the
same child or person during his
lifetime; and (2) where a person gives a legacy
for a particular purpose and subsequently makes a gift or advance to the legatee
for the same purpose. In these cases it is presumed that the donor did not
intend that both benefits should be taken, but meant the
gift to be in
satisfaction of the legacy either wholly or pro tanto according to the
amount of the gift is equal to or less than the amount of the legacy. The
presumption, however, may be rebutted by
evidence shewing that the donor
intended both gift and legacy to have effect, and this in its turn may be met by
evidence in confirmation
of the presumption.
- In
the present case it is said that the presumption applies, noting that: the
deceased is David’s mother, and the amounts received
by David are of the
same quality of the $2 million legacy in the Will. It is said that the history
of testamentary dispositions made
by Dr Becker and the deceased shows the one
constant – an equal division between their children after adjustment for
inter vivos advancements. It is noted that this equal division is
expressly provided for in the form of codicils to ensure that inter vivos
gifts made to their children after the date of their Wills had been taken into
account by the executor when dividing up the estate.
- It
is noted that the terms of the 2016 Will followed contemplation by the deceased
of figures in an effort to “even things up
with Lara”, and to
“compensate [David] for living with her” and “not buying his
own house”. It is
said that the funds received following the date of the
Will were enough to redress the imbalance which existed in 2016 (and more).
It
is further said that there is no evidence that the deceased intended to confer
the benefit of the whole of her estate on David
to the exception of Lara so as
to rebut the presumption of ademption.
- Reference
is made to the birthday card sent to Lara after completion of the purchase of
the Beaumont Hills Property that it is said
contains words that do not evidence
a mother wanting to cut her daughter out of her estate. It is said that the
relevant time to
assess whether the deceased intended to confer a double portion
on David is at the time of the inter vivos disposition in
question.
Family Provision
- Finally,
if the net effect of the findings is that Lara receives less than
$1 million, then it is submitted that an order should be
made pursuant to
s 80 of the Succession Act designating sufficient funds traced to
the NetBank transactions within the last three years of death, or the Beaumont
Hills Property
proceeds of sale, as notional estate for the purpose of meeting a
family provision order under s 59 of the Succession Act to meet a
legacy of $1 million plus costs. It is said that there should be a further
enquiry for the purpose of tracing the funds.
- Lara
notes that determination of her family provision claim will only become
necessary if there are findings that the impugned transactions
were valid
dispositions. Lara’s position is that if that is so, it should be found
that the disposition were entered wholly
or partly by the deceased for the
purpose denying or limiting provision being made out of the deceased’s
estate to Lara.
- If
it becomes necessary to make a family provision order, it is said that an order
should be made in Lara’s favour in the amount
of $1 million plus costs out
of the notional estate having regard to: the benefits conferred on David in the
last few years of the
deceased’s life; the financial and other material
circumstances of Lara and her young family; the significant legal costs Lara
has
been forced to incur in prosecuting these proceedings; and the conduct of David
after the date of death of his mother in the
context of these proceedings. It is
said that the history of testamentary instruments up to and including the 2016
Will demonstrates
what the testator would have done had her scheme not
miscarried by reason of the transactions that have
occurred.
Letters of Administration c.t.a.
- Finally,
Lara says that David is not a fit person to administer the estate of the
deceased and that an administrator should be appointed
to complete the tasks
necessary.
- The
evidence relied upon in support of this submission includes: the funds received
by David during his mother’s lifetime for
purposes other than his
mother’s benefit; David’s failure to keep and provide proper
accounts during and after the death
of the deceased; and David’s lack of
candour and untruthfulness in dealing with the estate, and the evidence put
before the
Court.
- It
is said that there is no need to burden the estate with the appointment of a
third-party administrator; that Lara is the person
next most interested in the
estate and therefore the proper applicant for letters of administration; and
that Lara is already familiar
with the details of the estate, David’s
accounts, and the matters required to administer the estate. Further, Lara says
that
(the estate having already been considerably wasted), the estate ought not
be subjected to further unnecessary burdens.
David’s
submissions
- David
relies on a number of affidavits sworn by him in the proceedings as well as
affidavit evidence from his wife (Susan), his mother-in-law
(Ms Margaret Ann
Hart (see her affidavit of 17 March 2020, two real estate agents (Mr Wayne
Danckert – see his affidavit of
18 March 2020; and Mr William Angus
Hampson – see his affidavit of 19 March 2020); a website developer, Mr
Daniel Kossow (see
his affidavit of 18 March 2020), Ms Natalia McCarthy (see her
affidavit of 28 May 2020); and Ms Phillipa Joan Ignacz (the deceased’s
podiatrist, to whom David gave the deceased’s grand piano after her death
– see her affidavit of 14 May 2020).
- David
says that, when he and his family moved into the Glenhaven Property, he
undertook repairs including: fixing leaking bathrooms,
works to the lounge room,
renovating the downstairs area, installing hand rails on the stairs, maintaining
the backyard and pool,
renovating the pool, removing the horse stables and
dangerous trees, and undertaking plumbing and electrical work (David’s 8
November 2019 affidavit at [18], and 17 March 2020 affidavit at [60] and [69],
and Susan’s 17 March 2020 affidavit at [13]). David says that he paid for
these works from his own funds from the sale of the Kellyville Property
(David’s affidavit 17 February 2020 affidavit at [60]).
- David
says that, after he moved into the Glenhaven Property, he purchased a Ford Focus
Titanium for the deceased (see David’s 17 February 2020 affidavit at [70]
and 28 August 2020 affidavit at [41]).
- David’s
evidence is that in the period after July 2014 when he and his family moved into
the Glenhaven Property, he usually
paid for the household shopping, and also
commenced paying the utility bills (David’s 17 March 2020 affidavit at
[62]).
- As
to the list of payments in schedule A to the amended statement of claim
(Schedule A), David gives evidence that, in the period
from 8 February 2015 to
19 June 2019, the deceased paid to him directly the sum of $1,637,197.42, being
certain of the payments referred
to in Schedule A (David’s 28 August 2020
affidavit at [190]). In relation to the balance of the payments referred to in
Schedule A, being payments in the sum
of $191,847.83 ($1,829,045.25 less
$1,637,197.42), David says that payments in the sum of $183,741.76 were made to
bank accounts
to which David does not have access, and alleged payments in the
sum of $8,106.07 were made to unknown recipients for unknown purposes
(David’s 28 August 2020 affidavit at [18]-[19] and [191]). I discuss below
how David groups these sums into categories of payments that he says
were: for
the sole benefit of the deceased; made at the deceased’s request for the
benefit of David and his family as well
as for the deceased; or made for general
living expenses of the household (inclusive of the deceased and David’s
family).
- David’s
evidence is that in the period from when David and his family commenced living
with the deceased at the Glenhaven Property
in July 2014 until her death, the
deceased kept her own bank accounts. He says that all moneys provided to him or
his business were
transferred by way of internet transfers authorised by the
deceased (David’s 14 November 2019 affidavit at [6]-[7], and 17 March 2020
affidavit at [66], and Susan’s 17 March 2020 affidavit at [17] and
[36]-[41]).
- David’s
evidence is that in the period from the end of 2015 or early 2016, the defendant
and his wife were the deceased’s
primary carers (David’s
8 November 2019 affidavit at [17], and 17 March 2020 affidavit at [78]).
David says that in the period from October 2017, David and
his wife were full
time carers of the deceased. David and his wife assisted the deceased by taking
her to medical appointments and
hairdressers, cooking and bringing meals to her,
cleaning, entertaining her, dressing her, washing clothes, and as she became
older
assisting her in her dressing and personal care (David’s affidavit 8
November 2019 affidavit at [33]). In the period from October
2017, David says he
continued to pay all the deceased’s living expenses (David’s
17 March 2020 affidavit at [156]).
- David
says that in the period after 6 February 2016, Lara had limited contact with the
deceased (referring to Lara’s 26 October 2019 affidavit at [203], [215],
[223] and [224], and David’s 8 November 2019 affidavit at [11], [13],
[16]); and her relationship with the deceased was strained (David’s 8
November 2020 affidavit at [11] and [47]).
The claims made
against David
Schedule A payments said to be made for the sole benefit of the
deceased
- David
says that payments in the sum of $508,465.49 (being payments in the sum
$464,020.41 from the payments received by David referred
to at David’s 28
August 2020 affidavit at [190] and the payments in the sum of $44,445.08 from
the payments made to bank accounts to which David does
not have access being the
five payments referred to at David’s 28 August 2020 affidavit at [90],
[94], [96], [98] and [126]) were either for, or were in reimbursement of,
expenditure on items solely
for the deceased’s benefit (although I
interpose to note that those payments are at least in part referable to home
interior
design expenses). It is submitted that there can no basis for equity
setting aside the payments made to David in reimbursement of
those
payments.
Schedule A payments in respect of which the deceased
accepts he received a benefit
- David
says the following in respect of payments in the sum of $1,320,579.76 comprised
within the Schedule A payments.
- First,
that payments in the sum of $232,823.17 from the payments received by David were
either for, or were in reimbursement of, expenditure
on items purchase at the
deceased’s request for the benefit of the deceased as well as for the
benefit of David, his wife and/or
their children (David’s 28 August 2020
affidavit at [190]).
- Second,
that payments in the sum of $18,132.00 from the payments made to the bank
accounts to which David does not have access were
for the benefit of the
deceased as well as for the benefit of David and his wife (being the six
payments referred to at David’s 28 August 2020 affidavit at [86], [95] and
[125]).
- Third,
that payments in the sum of $361,836.93 from the payments received by David were
either for, or were in reimbursement of, expenditure
in respect of general
living expenses for the household which comprised the deceased, David, his wife
and their children (David’s 28 August 2020 affidavit at [190]).
- Fourth,
that payments in the sum of $578,516.91 from the payments received by David
which were payments which were not for the direct
benefit of the deceased
(David’s 28 August 2020 affidavit at [190]), although were substantially
payments made in respect of David’s businesses.
- Fifth,
that payments in the sum of $121,164.68 from the payments made to bank accounts
to which David does not have access were not
for the direct benefit of the
deceased (being the three payments referred to at David’s 18 February
2020 affidavit at [108], [128] and [142]).
- Sixth,
that payments in the sum of $8,106.07 alleged to be made to bank account to
which David does not have access which were made
to unknown recipients for
unknown purposes (being the payments referred to at David’s 28 August 2020
affidavit at [19]. It is said that these are payments which cannot properly be
the subject of a claim against David on
any basis.
- David
contends that, to the extent to which he and his family received a benefit from
the Schedule A payments, it should be concluded
that the deceased voluntarily
intended to make a gift to David in exercise of her free will and independent
judgment and were in
all the circumstances fair, just, and reasonable. It is
said that this is especially so in circumstances where David and his wife
were
caring for the deceased and had a close relationship with her. In contrast, it
is noted that Lara had had a falling out with
the deceased on 6 February 2016
and had limited contact with the deceased in the period after that date.
- It
is submitted that it is also relevant that Lara had previously received
substantially greater benefits from the deceased and Dr
Becker than David
(including the Wallacia and Physiotherapy loans). It is said (and Lara accepts)
that those loans were not fully
repaid by Lara and (which Lara does not accept)
that this was a matter about which the deceased and Dr Becker were very
concerned.
- David
says that the statements made by the deceased to him also support the conclusion
that the payments were made voluntarily in
repayment of all the assistance
provided to the deceased by David and his wife (David’s 8 November
2019 affidavit at [32], and Susan’s 17 March 2020 affidavit at [27]-[28],
and David’s 28 August 2020 affidavit at [20]-[25] and [141]-[142]).
- It
is said that, after selling the Kellyville Property in July 2014 (with the
intention of funding Dr Becker’s Accommodation
Bond), David and his wife
and children lived with the deceased and cared for her until she died on
13 July 2019. David says that
in or about 2016, he and the deceased decided
to pool their funds to renovate and landscape the Glenhaven Property to maximise
its
sales value (David’s 8 November 2019 affidavit at [20] and [29], 14
November 2019 affidavit at [18], 17 March 2020 affidavit at [150], and
28 August 2020
affidavit at [17] and [21]). It is said that in June 2019,
David again sold his house, being the Beaumont Hills Property, in order
to
obtain sufficient money to care for the deceased.
- David
says that, in these circumstances, it should be inferred that at the time of
making the Schedule A payments, the deceased considered
that she would be living
with David for the rest of her life and that he would continue to care for her
and ensure that all her expenses
were paid until she died. It is said that
David did this “even to the extent to selling Beaumont Hills Property to
obtain
the necessary funds”, and to ensure that they had sufficient funds
to pay for in-home care for the deceased if and when needed
(David’s
8 November 2019 affidavit at [34]-[35]).
- Further,
it is said that, to the extent to which the payments made by the deceased were
in respect of David’s Tesla after-sale
and Bitcoin trading businesses, it
is relevant that the deceased was interested in both businesses and discussed
the businesses with
David (David’s 17 March 2020 affidavit at [93] and
[151], and his 28 August 2020 affidavit at [20]; Ms Hart’s 17 March 2020
affidavit at [5], and Mr Kossow’s 18 March 2020 affidavit at [3]-[4]) (and
see his evidence in cross-examination at T 281 that the deceased encouraged
the Tesla business).
- Reliance
is also placed on the fact that the last payment made by the deceased to David
in excess of $5,000 was made on 15 January
2018, approximately one and a half
years prior to the deceased’s death on 13 July 2019; and that David and
Susan still continued
to care for the deceased and maintain her level of comfort
and lifestyle until the date of her death.
- It
is submitted that it was completely rational for the deceased to make the
Schedule A payments to David, notwithstanding that in
respect of some of the
payments David and his family also received a benefit as well as the deceased,
and that in respect of some
of the payment payments the deceased received no
direct benefit, although (allegedly) was interested in, and discussed with
David,
the businesses to which the funds were applied. It is submitted that in
all the circumstances, it should be inferred that the deceased
voluntarily made
the Schedule A payments in recognition of her close relationship with her son,
and the care and assistance which
he had provided and would continue to
provide.
- David
says that it is also relevant that the Schedule A payments comprised 94
individual payments made over a period of four years
and four months (in
contrast to cases such as Mentick v Olsen [2020] NSWCA 182;
Bridgewater v Leahy (1998) 194 CLR 457; [1998] HCA 66 (Bridgewater v
Leahy); and Amadio where it was a single, or small number of,
transaction(s) under scrutiny).
- David
says that the multiplicity of payments, where a large number of those payments
were for the sole benefit or partial benefit
of the deceased, made over an
extended period supports the conclusion that all the payments comprised within
Schedule A payments
were made voluntarily by the deceased in exercise of her
free will and independent judgment.
Beaumont Hills Property
purchase moneys
- In
respect of the Beaumont Hills Property purchase moneys, David contends that it
should be concluded that the deceased intended to
make the purchase moneys a
gift to David in exercise of her free will and independent judgment. It is said
that this is especially
so where: the deceased benefited from the purchase of
the Beaumont Hills Property in that it had a granny flat “which provided
her with somewhere to live”; the deceased was closely involved in the
purchase of the Beaumont Hills Property and approved
its purchase; and where the
deceased also benefited from the sale of the Beaumont Hills Property in that
part of the sale proceeds
were used to pay 6 months’ rent for a duplex
unit in which in which it was intended she would live (this amount also being
referred to as a payment made solely for the benefit of the deceased by David in
his 28 August 2020 affidavit at [187]).
- Further,
emphasis is again placed on the fact that David and Susan had previously sold
the Kellyville Property with the (stated) intention
of funding
Dr Becker’s nursing home bond, and the deceased had expressed concern
that David and his wife had sold their house
for no reason (David’s
8 November 2019 affidavit at [16], and 17 March 2020 affidavit at [59] and
[88]).
Appropriate intervention if relief granted
- David
says that if, contrary to his contentions, it is concluded that he should not
receive the benefit of all the payments made to
him by the deceased, then any
relief granted to Lara should be such as to achieve practical justice and to
ensure that Lara does
not receive an unwarranted benefit at David’s
expense (referring by way of example to Bridgewater v Leahy at
[125]-[127], per Gaudron, Gummow and Kirby JJ).
- In
this regard, David submits that any relief granted to Lara should take into
account the benefit received by the deceased from the
payments, the assistance
given by David to the deceased, and the desire of the deceased to benefit David.
It is said that any relief
granted should also take into account the loss made
on the sale of the Beaumont Hills Property in the sum of $225,000.00; and also
the payment of the sum of $19,840.00 for rental paid in advance for the unit in
which the deceased was to live.
- Further,
if, contrary to David’s contentions, it is concluded that any of the
payments made to David are liable to be set aside
at equity, then it is
submitted that such payments should be considered to adeem or satisfy in whole
or in part David’s legacy and portion of residue given to him by the Will
of the deceased, and be set-off against the said legacy and portion
of residue.
It is said that the valuation of the benefit received by David for the purpose
of any ademption claim should take into
account the matters referred to
above.
Costs
- David
has sought the opportunity to make submissions as to costs after the substantive
judgment.
Determination
- I
turn now to the issues for determination. I propose to deal first with the
NetBank transactions because there is an additional claim
in relation to those
(i.e., additional to the claims of undue influence and the like that relate both
to the NetBank transactions
and to the proceeds of sale that were applied to the
Beaumont Hills Property).
NetBank transfers
- The
first issue in this context is who it was that effected the NetBank transfers
out of the deceased’s account over the period
from 2015.
- David
has sworn a number of affidavits in these proceedings in which he deposes that
it was the deceased who effected the $1.77 million
worth of NetBank transfers
from her account over the relevant period. So, for example, David has deposed
that:
Since I commenced living with my mother at the Glenhaven property, my mother
kept her own bank accounts and was the only person who
had access to them. I did
not have her passwords until after she passed away. While looking for documents
relating to this matter,
after her death, I discovered where she had written
down the passwords [see David’s 14 November 2019 affidavit at [6]]
...
All monies provided to me, my wife or our business were transferred to us by way
of internet transfers authorised and made by my
mother. At no stage prior to her
death did she not make her own financial decisions. [see David’s 14
November 2019 affidavit at [7]]
...
The money was transferred by her to my accounts. [see David’s 14 November
2019 affidavit at [21]]
...
Since I commenced living with my mother at the Glenhaven property, my mother
kept her own bank accounts and was the only person who
had access to them. In
order to login into [sic] her Netbank online banking, there was a two-factor
authentication process where
the code would be sent to her Commonwealth Bank app
on her phone which she then inserted online. I did not have any of her passwords
until she passed away. When my mother passed away, her belongings were stored in
a box and whilst looking for documents relating
to this matter, I discovered a
notebook where she had written down the passwords which included the Netbank
password. [see David’s 17 March 2020 affidavit at [64]]
...
All monies provided to me, Susan or our business were transferred to us by way
of internet transfers authorised and made by my mother
from my mother. [see
David’s 17 March 2020 affidavit at [66]]
...
My mother would transfer the monies to my bank account and I would arrange for
the cash to be withdrawn from the bank [see David’s 17 March 2020
affidavit at [99]].
- On
28 August 2020, David swore a further affidavit in which (at [2]) he confirmed
the above statements and gave further evidence to
the effect that it was the
deceased who effected the transfers (see at [20]-[21], [23]-[26]). In the
witness box, David adhered to
this evidence.
- Lara’s
position, as noted above, is that the NetBank transfers were not made by the
deceased but, rather, were effected by David.
Lara contends that David accessed
the deceased’s NetBank facility and “set about transferring sums as
and when he pleased”
for the benefit of David, Susan, and David’s
business.
- I
have referred above to the implausibility of the evidence as to how the internet
transactions occurred. On David’s own case,
the deceased did not have a
computer when he moved into the Glenhaven Property. He says that he gave the
deceased an old MacBook
or iPad of his own. The deceased’s NetBank
facility was opened shortly after David’s NetBank account was opened, and
David’s evidence was that he taught the deceased how to do NetBank
transactions (see at T 196). Despite the very generalised
evidence given by
witnesses of observing the deceased on the computer, Susan’s own evidence
indicated the deceased’s
inability to send text messages on her mobile
phone. David also seems to have been responsible for setting up contracts in
relation
to the deceased’s mobile phones over that period (see the Amaysim
contracts).
- I
accept (as was stressed more than once for David in oral submissions) that there
is no evidence to suggest that the deceased was
suffering from any cognitive
impairment in the last few years of her life. I also accept that various
witnesses saw her watching
YouTube or current affairs (or home renovation)
programmes on the television or computer, and depose to the deceased’s
interest
in current affairs, reading books and the like.
- I
heard much in submissions as to the deceased being an organised person (by
reference to the fact that she had told one or more people
she had worked as a
legal secretary many years before – and indeed this must have been some
time before her marriage since
she was working as a secretary in her
husband’s medical practice at that time). However, even assuming that the
deceased worked
for a time as a legal secretary (and leaving aside the perhaps
debatable question as to whether qualification as a legal secretary
makes it
more likely or not that a person is organised), what I do not accept from this
or the above evidence as to the deceased’s
television or other interests
is that it makes it more likely that it was the deceased who was effecting the
substantial transfers
of money out of her accounts (at odd hours of the day and
night; almost simultaneously with someone, presumably David, accessing
David’s own accounts; and, on David’s own account, in close physical
proximity to David and in discussion with him).
Indeed, the almost
contemporaneous log-ins to David’s account when various transactions were
effected on the deceased’s
account would suggest that David was confirming
that the transfer(s) had been duly effected and that the moneys in question had
been
received in his account, since otherwise it is hard to see any explanation
for the contemporaneity of log-ins. (It is not, however,
necessary to make any
concluded finding on that aspect of the evidence.)
- On
David’s own evidence, the deceased asked him to “manage” her
finances. If so, and whatever David understood the
deceased to mean by such a
request, there logically would have been no need (and no logical explanation)
for the deceased herself
to continue to effect the relevant electronic
transactions (as David insists she did) if the deceased understood that David
was doing
so on her behalf.
- Moreover,
there is an inconsistency between the deceased having her own debit or credit
card (and apparently using it on a particular
day) and at the same time there
being credit purchases or payments on-line for the same shops by way of NetBank
transfer on the same
day (for which David had no explanation in
cross-examination). There is also room for doubt as to whether all of the
expenses in
question related to the deceased, in that some might seem more
likely to have been expenses referable to Susan (having regard to
the fashion
outlets in respect of which some of the purchases were made, and to the age
differential between Susan and the deceased
which would suggest it is more
likely that the clothing items were for a younger woman) but again there is no
need to make any findings
on this aspect of the evidence. Nor is it necessary to
do anything other than observe that it seems incongruous that an elderly woman
having a regular weekly $25 haircut at the same local hairdresser would also be
having a much more expensive haircut at another hairdressing
salon at around the
same time (although David’s evidence was that it was nonetheless his
mother, and not his wife, who had
undergone the champagne and hair treatment at
the Lattouf Hair Salon in question).
- Significant,
to my mind, is the contemporaneity of the access to the deceased’s NetBank
account and access to David’s
NetBank account on many of those occasions,
to which I have referred above. David’s account of this is that he and the
deceased
would be sitting together (in the home office, or in the kitchen, or
sometimes at a café or in the hospital) and would be
separately logging
into their computers to access the accounts. This is inherently implausible when
one considers that some of the
transactions were in the middle of the night (and
at least one was on a Boxing Day afternoon when the deceased was staying with Ms
McCarthy and David and his family were at Ms McCarthy’s house – see
at T 217). Even accepting that the deceased may have
had difficulty in sleeping
and kept irregular sleeping hours, on David’s account of events he must
(fortuitously it would seem)
not only also have been awake at the same time, but
sitting with the deceased when she logged into her computer. This, together with
the unreliability and self-serving nature of much of David’s evidence,
means that I simply cannot accept David’s account
of these events without
any independent corroboration, and I can find no such independent corroboration
in the evidence.
- Therefore,
I find, on the balance of probabilities, that it was David (not the deceased)
who was effecting the NetBank transfers from
the deceased’s account over
the period from 2015. I interpose to note that even if (which I consider most
improbable) David’s
version of events is correct, and it was the deceased
who (in collaboration with David) was physically effecting the transfers, the
ultimate outcome would be the same – because on that version of events it
would be accepted that the transfers were all, or
mostly, done when David was
together with the deceased (albeit each on his or her separate computer devices)
working together on
the accounts. I consider that this (taken with the findings
in relation to the deceased’s overall and increasing dependence
on David
in this period) supports the finding of presumed or actual undue influence in
relation to those transactions (see further
below).
- Given
my finding that the transfers were effected by David, a liability to account
therefor will arise in circumstances where the
electronic transfers were made by
David at a time when he was at least acting as agent for the deceased (and, on
balance, I find
in a fiduciary capacity on behalf of the deceased) (see the
discussion of principles in this regard in Barkley v Barkley-Brown,
though I note that there, unlike the present case, there was no pleading of any
separate cause of action based on any alleged undue
influence or unconscionable
dealing).
- In
Hospital Products, Mason J (as his Honour then was), noting that the
categories of fiduciary relationships are infinitely varied and that the duties
of the fiduciary vary with the circumstances which govern the relationship,
commented (at 102) that fiduciary relationships range
from the trustee to the
errand boy (citing the example given by Fletcher Moulton LJ in In re
Coomber [1911] UKLawRpCh 45; [1911] 1 Ch 723). In the present case, even if the electronic
transfers were made by the deceased (and as noted above, I consider that on the
balance
of probabilities this is not what happened) it is clear (on
David’s own evidence) that the transfers took place in collaboration
with
him. Certainly it appears that the electronic transfers were done at the same,
or around the same, time (and on his account
in his presence) as his own
log-ins. Furthermore, there is no doubt that the deceased reposed considerable
trust and confidence in
David.
- While
I accept that in particular cases agents may not necessarily owe fiduciary
duties to the principal (though I note that Meagher
Gummow & Lehane have
opined as to the general rule being that agency is a fiduciary relationship
– see Meagher Gummow &
Lehane, Equity: Doctrines and Remedies
(5th ed, 2015, Lexis Nexis) from [5-210]), in Asset Risk Management v
Hyndes [1999] NSWCA 201 (Asset Risk Management v Hyndes), Meagher JA
(at [9]) held that an employee to whom money was entrusted owed a fiduciary duty
to his master, relying upon Hospital Products.
- Accepting
for present purposes that the deceased did ask David to manage her finances,
then I consider David had a fiduciary duty
in so doing. Moreover, as the
deceased’s agent in making the electronic transfers (absent any
attenuation by the deceased of
such a duty), the first duty of David was to keep
and (at least when requested) communicate a clear account of the moneys passing
through his account (see Pearse v Green [1819] EngR 773; (1819) 1 Jac & W 135 at
140; [1819] EngR 773; 37 ER 327, as discussed in Barkley v Barkley Brown), and failure to
do so (when called upon) amounts to breach of that duty. As I noted in
Barkley v Barkley Brown (at [101]), the obligation to provide an account
(absent express agreement to the contrary) survives the termination of the
agency
(see Yasuda Fire & Marine Insurance Co of Europe Ltd v Orion
Marine Insurance Underwriting Ltd [1995] QB 174 at 185-186, per Colman
J; [1995] 3 All ER 211), and the failure of the principal to ask for an account,
even over a long period, does not diminish the duty of the agent to keep
proper
accounts (see Lord Chedworth v Edwards (1802) 8 Ves Jun 46; 32 ER
68).
- As
it is impossible to ascertain any particular transfers for which the deceased
may have orally dispensed with the need to account,
David would remain under an
obligation as agent to account to the deceased for all the sums received into
his accounts; and that
obligation would enure for the benefit of the
deceased’s estate. An agent can be ordered to account when in breach of no
duty
other than the duty to provide an account (see, for example, what was said
by Meagher JA in Asset Risk Management v Hyndes at [5], [8]; his
Honour there citing Snells, Principles of Equity (28th ed))
(see also Peninsular and Oriental Steam Navigation Company v
Johnson [1938] HCA 16; [1937-1938] 60 CLR 189 at 218, per Latham CJ; [1938] HCA
16).
- In
my opinion, therefore, David was obliged to account for the electronic
transfers. At best, he has here provided an explanation
for them (without much
more, it would seem, than reference to whatever was disclosed on any narration
made at the time of the transfer,
or the recipient of the funds to the extent
that the recipient was a third party). I do not consider that this complies with
his
duty to account to the deceased for the moneys that were transferred out of
her account.
- However,
insofar as Lara calls for an order for a more complete accounting to be made, I
note that in Warman International Limited v Dwyer [1995] HCA 18; (1995) 182 CLR 544 at
559; [1995] HCA 18 (where the Court was considering an application for an
account of profits), the Court referred to the “cardinal principle of
equity that the remedy must be fashioned to fit the nature of the case and the
particular facts”. It seems to me unlikely given
the nature of the account
made to date that much will be gained by requiring David to carry out a further
exercise in accounting
for the NetBank transfers. Rather, I consider that the
most appropriate course is to order David to refund to the estate the amounts
withdrawn from the deceased’s account (with the exception of those amounts
that I am satisfied, from the description given
by David and the nature of the
third party payee, are most likely to have been for the benefit of the deceased
– those being
the pharmaceutical amounts, payments to Fournez Hair, and to
OPSM). I appreciate that this is a relatively arbitrary process but
I consider
that it errs on the side of the estate (and I note that David is also a
beneficiary of the estate). I have calculated
that amount as being
$1,819,573.84.
- In
so finding, I am conscious that David’s evidence was, in effect, that the
family finances were pooled and that some expenses
for the deceased (such as the
provision of food or telephone bills and the like) would be necessarily shared
expenses. However, the
difficulty is that it is impossible on the material
before me to separate out those expenses (and the blame for that must rest at
David’s feet).
Undue influence
- I
turn now to the claims of undue influence (presumed undue influence and, in the
alternative, actual undue influence), which cover
both the NetBank transfers
(including the deposit and that portion of the proceeds of sale from the
Glenhaven Property that were
deposited to the deceased’s account), and the
proceeds of sale from the Glenhaven Property to the extent that they were used
to acquire the Beaumont Hills Property, as well as the sum expended for the new
furniture acquired at the time of the marketing of
the Glenhaven Property.
- I
have extracted above the well-known passage from Johnson v Buttress in
this regard. It is also relevant to extract again what was said by Sir Anthony
Mason (writing extra-curially about the doctrines
of undue influence and
unconscionable dealing in “The Impact of Equitable Doctrine on the Law of
Contract” (1998) 27 Anglo-American Law Review 1) of what he
referred to as a class 2B relationship (at 6-7) (using the terminology adopted
by the English Court of Appeal in Bank of Credit and Commerce International
SA v Aboody [1990] 1 QB 923; [1992] 4 All ER 955):
My understanding of undue influence, not altogether fashionable in the light of
modern English decisions, is that it denotes an ascendancy
by the stronger party
over the weaker party such that the relevant transaction is not the free,
voluntary and independent act of
the weaker party (Commercial Bank of
Australia Ltd v. Amadio [1983] HCA 14; (1983) 151 CLR 447 at 461,474). In other words, it
is the actual or presumed impairment of the judgment of the weaker party that is
the critical element
in the grant of relief on the ground of undue influence
(See Peter Birks and Chin Nyuk Yin, On the Nature of Undue Influence, Ed.
J. Beatson and D. Friedmann, “Good Faith and Fault in Contract Law”
57 et seq.). The list of the old relationships of influence from which
undue influence was presumed supports this view: solicitor and client,
doctor
and patient, spiritual adviser and novice or parishioner, parent and child,
guardian and ward and possibly express trustee
and beneficiary (See Meagher,
Gummow and Lehane, Equity, Doctrines and Remedies, 3rd edn (1992)
§ 1519). In these relationships, called class 2A relationships in
Barclays Bank plc v. O’Brien ([1994] 1 AC 180 at 189), the weaker
party, dependent on the stronger party, is not likely to bring to bear a free,
voluntary and
independent judgment to a transaction involving the parties to the
relationship, whether it is a contract or a gift. Class 2A relationships are
to be distinguished from class 2B cases where a de facto relationship of trust
and confidence will raise
a presumption of undue influence.
[Emphasis added]
- The
question is whether there was a sufficient relationship of dependency upon or
ascendancy exercised by the donee. See, for example,
Tulloch (deceased) v
Braybon (No 2) [2010] NSWSC 650, where Brereton J, as his Honour then was,
referred to the question as to whether the relationship was one of
“dominion or
influence” (see at [80]).
- This
is not a case where there is presumption of undue influence merely by reference
to the parent/child relationship (since that
operates where it is the child who
confers a benefit upon the parent, not vice versa – see Urane v
Whipper [2001] NSWSC 796; and Whereat v Duff [1972] 2 NSWLR 147
(Whereat v Duff).
- In
my opinion, it is beyond doubt that there was a sufficient relationship of
dependency by the deceased upon David (or ascendancy
over the deceased exercised
by David) to give rise to the presumption of undue influence; i.e., that David
“stood in a position
of undue influence towards” the deceased (much
as was the case in Winefield v Clarke).
- It
is clear that, from the time that David and his family moved into the Glenhaven
Property, the deceased was in a position of increasing
dependence on him. Thus
was particularly so after the breakdown of the relationship between David and
Lara (after which Lara did
not visit the deceased at the Glenhaven Property),
which meant that (whoever was to blame for this) the deceased was isolated from
her daughter and presumably increasingly emotionally dependent on her son and
his family.
- The
deceased was elderly. She was in deteriorating physical health. She was on
medication for pain relief and, even on David’s
evidence, she had pain
(though he refused to accept it was considerable pain), and was experiencing
increasing difficulty in caring
for herself. On David’s own case, the
deceased felt beholden to him (and Susan) on the basis that they had sold their
Kellyville
Property “for no reason” in connection with the
Accommodation Bond (whether that was an idea encouraged by David is not
to the
point – it is tolerably clear that the deceased had that perception, by
reference to the instructions recorded by the
solicitor in respect of her draft
Will).
- There
can be little doubt that the deceased reposed trust and confidence in David (and
this is admitted in his defence, as it was
by him in his cross-examination).
Once the estrangement occurred with Lara, it is obvious that the
deceased’s dependence on
David must have become more acute. Moreover, once
the Glenhaven Property was sold and the proceeds of sale distributed as they
were,
the deceased was totally dependent on David for financial support and for
her accommodation (in the sense that she had little or
no assets from which she
could have supported herself if there had been a withdrawal of support by
David).
- In
those circumstances, I am satisfied that there was a clear relationship of
dependence such as to place David in a position where
undue influence would be
presumed over the deceased; and it falls on David positively to justify the
retention of the benefit conferred
on him. Where the presumption is not
rebutted, equity will intervene and set aside the transaction (Johnson v
Buttress at 119-120, per Latham CJ; and at 134-135, Dixon J, as his Honour
then was; Winefield v Clarke at [27], per Barrett J, as his Honour then
was).
- It
is not necessary for there to have been an actual use of influence for the
purpose of obtaining the benefit; i.e., that undue influence
be proved as a
fact. Moreover, as Asprey JA said in Whereat v Duff at 167, in those
circumstances:
... The court does not act on the ground that any wrongful act has been
committed by the donee, but on the ground of public policy
and to prevent
the relations which existed between the parties and the influence arising
therefrom being abused: Allcard v. Skinner [1887] UKLawRpCh 151; (1887) 36
Ch D 145 at 171.
- What
David was required to show in order to justify the retention of the benefits
conferred on him (given that on no view of things
could it be said that these
were trifling benefits – see Rhodes v Bate [1866] UKLawRpCh 9; (1866) LR 1 Ch App 252;
Spong v Spong (1914) 18 CLR 544; [1914] HCA 52 (Spong v Spong))
was that the amounts he received, or from which he benefited, were the
independent and well understood acts of the deceased made
when she was in a
position to exercise a free judgment based on information as full as was
David.
- In
Allcard v Skinner [1887] UKLawRpCh 151; (1887) 36 Ch D 145, to which reference was made in the
passage cited above from Whereat v Duff, it was said that once
the facts are established (as they are here) from which the court will
infer that a situation exists where
undue influence may have been exerted,
then the presumption arises and the onus then falls upon the donee to rebut the
presumption
by proving that “in fact the gift was the spontaneous act
of the donor acting under circumstances which enabled him to exercise
an
independent will and which justifies the Court in holding that the gift was
the result of a free exercise of the donor’s
will” (at 171, per
Cotton LJ).
- It
is clear that, when undue influence is raised, one looks to the quality of the
consent or assent by the weaker party (see Deane
J at 474 in Amadio). The
fact that the deceased may have expressed the intention to make a gift is not
sufficient (see Whereat v Duff at 168-169, per Asprey JA). The question
is how that intention was produced; and it is relevant to bear in mind the
caution expressed
in Huguenin v Basely at 531-532
that:
... where a gift is immoderate, bears no proportion to the circumstances of the
giver, where no reason appears, or the reason given
is falsified, and the giver
is a weak man, liable to be imposed upon, this Court will look upon such a gift
with a very jealous eye;
and very strictly examine the conduct of the persons,
in whose favour it is made; and if it sees, that any arts or stratagems, or
any
undue means, have been used, if it sees the least speck of imposition at the
bottom, or that the donor is in such a situation
with respect to the donee as
may naturally give an undue influence over him ....
- See
also the recognition in Poosathurai v Kannappa Chettiar (1919) LR 47 Ind
App 1 that the burden thrown on the person in “a position to use his
dominating power” is a heavy burden “of establishing
affirmatively
that no domination was practised so as to bring about the transaction
...”.
- One
way of rebutting the presumption of undue influence would of course be to point
to the receipt of independent competent and sufficient
legal or other advice,
but the lack of such advice (though a relevant factor) is not determinative (see
Johnson v Buttress; Stivactas v Michaletos (No 2) [1994]
ANZ ConvR 252; and see the review of authorities in Riz v Perpetual Trustee
Australia Ltd [2007] NSWSC 1153 at [116]- [128], per Brereton J, as his
Honour then was).
- Here,
to maintain the impugned transactions David must show affirmatively that the
deceased knew what she was doing at the time of
the transaction, in the sense
that she understood its effect and the significance of that transaction in
relation to herself; and
that it was done at the incidence of the
deceased’s own free and independent will (Spong v Spong).
- The
principal evidence adduced by David to rebut the presumption of undue influence
was his own account of the conversations in which
it was said that the deceased
told him she was making gifts to him, or otherwise that she was giving him the
money was to reimburse
him, or that it was an advance for future payments. As
already noted, I have difficulty accepting David’s account of those
conversations.
- It
is also relevant to bear in mind (see Whereat v Duff) that, where the
presumption is not rebutted, the Court is does not proceed on the basis that the
donee has committed a wrongful
act, but is acting on the basis of public policy
and to prevent the relations which existed between the parties, and the
influence
arising therefrom, being abused.
- I
find that the presumption of undue influence is established and has not been
rebutted in relation to the proceeds of sale used to
acquire the Beaumont Hills
Property and the NetBank transfers, as well as the new furniture payments.
- It
is not necessary therefore to consider the actual undue influence claim,
although had it been necessary to do so, I would have
found that it was also
made good, for the same reasons.
Catching Bargain/Unconscionable
conduct
- In
the alternative, Lara claims that the relevant transactions amounted to a
catching and unconscientious bargain, i.e., that they
were procured by
unconscionable conduct. It is strictly not necessary to determine this given my
findings in relation to the previous
issues. However, for completeness I note as
follows in relation to the alternative claims based on a catching bargain or
unconscionable
conduct by David.
- In
Amadio, Deane J noted (at 474) that:
The equitable principles relating to relief against unconscionable dealing and
the principles relating to undue influence are closely
related. The two
doctrines are, however, distinct. Undue influence, like common law duress, looks
to the quality of the consent or
assent of the weaker party (see Union Bank
of Australia Ltd. v. Whitelaw, at p. 720; Watkins v. Combes, at pp.
193-194; Morrison v. Coast Finance Ltd., at p. 713). Unconscionable
dealing looks to the conduct of the stronger party in attempting to enforce, or
retain the benefit of,
a dealing with a person under a special disability in
circumstances where it is not consistent with equity or good conscience that
he
should do so.
- In
Morrison v Coast Finance Ltd (1965) 55 DLR (2d) 710 at 713, to which
Deane J referred in the above passage, the elements of an unconscionable bargain
were set out as follows by Davey
JA.
On such a claim the material ingredients [of an unconscionable bargain] are
proof of inequality in the position of the parties arising
out of the ignorance,
need or distress of the weaker, which left him in the power of the stronger, and
proof of substantial unfairness
of the bargain obtained by the stronger. On
proof of these circumstances, it creates a presumption of fraud which the
stronger must
repel by proving that the bargain was fair, just and
reasonable...
- See
also Turner v Windever [2003] NSWSC 1147 (Turner v Windever) at
[105], where Austin J adopted the following summary of the elements of
unconscionable dealing (based on cases such as Blomley v Ryan [1956] HCA 81; (1956) 99
CLR 362 at 415 per Kitto J; [1956] HCA 81; Amadio; Louth v Diprose (1992)
175 CLR 621; [1992] HCA 61; and Bridgewater v Leahy): first, that the
weaker party must, at the time of entering into the transaction, suffer from a
special disadvantage vis-a-vis the
stronger party; second, that the special
disadvantage must seriously affect the weaker party’s capacity to judge or
protect
his or her own interests; third, that the stronger party must know of
the special disadvantage (or know of facts which would raise
that possibility in
the mind of any reasonable person); fourth, that the stronger party must take
advantage of the opportunity presented
by the disadvantage; and, fifth, that the
taking of advantage must have been unconscientious. His Honour observed that
once the first
three of those elements were established and the improvidence of
the transaction was shown, the plaintiff’s task was “made
easier by
an equitable presumption to the effect that the improvident transaction was a
consequence of the special disadvantage,
and that the defendant has
unconscientiously taken advantage of the opportunity presented by the
disadvantage” (see at [106]).
- The
requisite disadvantage or disability must be one which seriously affects the
ability of the weaker party to make a judgment as
to his or her own best
interests (see Amadio at 462, per Mason J (as his Honour then was);
Turner v Windever at [105], per Austin J).
- In
the present case, I consider that the deceased was in a position of special
disadvantage at the very least after the breakdown
of the relationship between
David and Lara (which had the result that the deceased had less contact with
Lara) and the subsequent
sale of the Glenhaven Property, because the deceased
was then not only elderly and suffering from physical ailments (as well as being
dependent on David for emotional support and care), but she was also vulnerable
because she was dependent on David for her future
accommodation. Even before
that time (and indeed from at least 2015 when the NetBank facility was set up by
David), there is a reasonable
basis to conclude that the deceased was at a
special disadvantage vis a vis David by reason of her age and emotional and
physical
dependence upon David, though this is not as stark as the position was
in this respect from 2016.
- I
consider that the special disadvantage under which the deceased was placed was
of the kind that must seriously have affected the
deceased’s ability to
judge or protect her own interests (as evidenced by the gross improvidence of
what she did in relation
to the proceeds of sale of the Glenhaven Property), and
that David must have appreciated that the deceased was under that special
disadvantage (but even if he did not appreciate this, he certainly knew of the
facts which would raise that possibility in the mind
of any reasonable
person).
- Thus,
I consider that the elements of a catching bargain or unconscionable conduct are
established, at least in relation to the dealings
from early 2016, and that
David unconscientiously took advantage of that opportunity. Had it been
necessary to determine, I would
have found these claims made out for the NetBank
transactions from February 2016 and in relation to the proceeds of sale that
were
applied to the purchase of the Beaumont Hills Property and the acquisition
of the new furniture for the Glenhaven Property at the
time of its marketing for
sale.
Claim for further provision
- The
claim for further provision out of the estate or notional estate of the deceased
does not arise in light of the findings I have
made on Lara’s principal
claims. However, in the event that the conclusions I have reached above be
incorrect, I will briefly
deal with the alternative claim for a family provision
order. This must be approached on the assumption (contrary to the above
findings)
that the NetBank transfers were authorised by the deceased (or were
valid gifts), and that the gift of the proceeds of sale of the
Glenhaven
Property survived the other challenges made by Lara on her primary claims. In
those circumstances, there is (in practical
terms) almost no actual estate, and
the only way in which an order for provision (if otherwise warranted) could be
made would be
from the designation of some property as notional estate (see
below).
Relevant Principles
- Section
59 of the Succession Act empowers the making of a family provision
order in relation to the estate of a deceased person if the Court is satisfied
of the matters
set out in s 59(1) of the Succession Act (see the
principles articulated by Hallen J in Page v Hull-Moody [2020] NSWSC 411
from [120]). A determination as to whether a claimant has been left without
adequate provision for his or her proper maintenance
and advancement in life
involves an evaluative judgment.
- The
question, relevantly, is whether the Court is satisfied that “adequate
provision for the proper maintenance, education or
advancement in life”
has not been made for the claimant (i.e., here, Lara). The time at which the
adequacy of provision is
to be tested is the time the application is considered
(s 59(1)(c) of the Succession Act). If, at that time, it is found that
the deceased did not make adequate provision for the plaintiff’s proper
maintenance, education,
and advancement in life, then there must be a
determination as to whether, and what, provision the Court ought to make for the
claimant.
- In
Sgro v Thompson [2017] NSWCA 326, White JA (McColl and Payne JJA
agreeing) said (at [86]):
86. ... The most important word in s 59(1)(c) is
“proper”. Until the court has identified what is proper maintenance,
education and advancement in life for an applicant,
it cannot assess whether the
provision made, if any, is adequate. What is proper requires an evaluative
judgment that has regard
to all relevant circumstances, not merely the
parties’ financial circumstances. Whilst the court will know the latter,
it will
only have an incomplete picture of the former. Of course, the
court’s assessment of what is proper maintenance, education and
advancement in life must be made when the court is considering the application.
That does not mean that considerable weight should
not be given to the
assessment of a capable testator or testatrix who has given due consideration to
the claims on his or her estate.
- Pursuant
to s 60(1) of the Succession Act, regard may be had (on a
non-exhaustive basis) to the matters set out in s 60(2) of the
Succession Act for the purpose of determining whether to make a
family provision order, and the nature of any such order. Those matters may be
relevant
both to the question of any inadequacy of provision and, if the
provision is found to be inadequate, to the question whether, and
if so what,
order for provision should be made.
- There
are no special rules or principles applicable to claims of adult children (nor
is there any presumption for or against there
being a moral obligation to make
provision for an adult child) (see for example, Towson v Francis [2017]
NSWSC 1034 (Towson v Francis) at [78]-[80], per Hallen J; his Honour
there citing Burke v Burke (No 2) [2015] NSWCA 195; Nicholas
v Tubb [2016] TASSC 53;
Toscano v Toscano [2017] NSWSC 419 (Toscano v
Toscano); and Underwood v Gaudron [2014] NSWSC 1055) (see also the
summary of principles in Camernik v Reholc [2012] NSWSC 1537 at [159],
per Hallen J). Each case must be considered by reference to its particular facts
and circumstances.
- As
to the question of notional estate, pursuant to s 80 of the Succession
Act, a notional estate order designating property specified in the order as
notional estate of the deceased may be made if the Court
is satisfied that the
deceased entered into a relevant property transaction before the
deceased’s death, being a transaction
to which the section applies (see
the types of transactions set out in ss 75 and 76 of the Succession
Act).
- The
disposition of the proceeds of sale of the Glenhaven Property (by gift for the
acquisition of the Beaumont Hills Property, and
then by way of electronic
transfer of the balance) occurred within three years (but not within one year)
of the deceased’s
death. Therefore, what must be established is that the
transaction was entered into “with the intention, wholly or partly,
of
denying or limiting provision being made out of the estate for the maintenance,
education or advancement in life of any person
entitled to apply for a family
provision order” (see s 80(2)(a) of the Succession Act).
- The
Court can designate property as notional estate not only to make provision for
an applicant but also, if making an order for provision
for an applicant, for
costs (see s 78 of the Succession Act).
- A
notional estate order must not be made without consideration of the importance
of not interfering with reasonable expectations in
relation to property, and of
the substantial justice and merits involved in making or refusing to make the
order (see s 87 of the Succession Act).
- As
to the question of intention (for the purposes of a transaction within
s 80(2)(a) of the Succession Act), see Kastrounis v
Foundouradakis [2012] NSWSC 264 at [108]- [112], per Hallen AsJ, as his
Honour then was; Toscano v Toscano at [229], per Robb J; and, more
recently, McDonald v O’Connor [2019] NSWSC 261 (McDonald v
O’Connor) at [98]ff, per Hallen J. Whether the relevant intention
(i.e., an intention, wholly or partly, of denying or limiting provision
being
made out of the decease’s estate for the maintenance or advancement in
life of an eligible applicant for a family provision
order) is established is a
question of fact.
- In
Toscano v Toscano, Robb J (in an observation adopted by Hallen J in
McDonald v O’Connor at [107]) said (at [234]) that “while the
intention to prevent the property transferred being available to meet a claim
for
a family provision order does not follow from the transfer having that
effect, the consequence may be one factor that may assist
in the court in
drawing the inference that the intention existed”. At [108] in McDonald
v O’Connor, Hallen J said:
108. A person is ordinarily understood to intend a result by
her, or his, action if she, or he, means to produce that result. Thus,
evidence
that the deceased understood that a particular result was an inevitable
consequence may assist in proving the relevant intention.
- However,
it is also to be noted that, as recognised by Macready AsJ in Hildebrandt v
Soncini [2007] NSWSC 1227 at [25]- [26], the mere intention to benefit one
eligible person does not necessarily amount to an intention to deny or limit
provision being made
for another.
- With
the above principles in mind, I turn first to a summary of the evidence going to
the factors to which account may be taken pursuant
to s 60(2) of the
Succession Act, those being relevant both to whether there has been
adequate and proper provision for Lara, and, if not, as to whether an order
for
provision should be made, and if so what order.
Section 60(2)(a)
– any family or other relationship between the applicant and the deceased
person, including the nature and duration of the
relationship
- As
noted above, Lara and David are the only children of the deceased and
Dr Becker. They both appear to have had a close relationship
with the
deceased during their childhood and early adulthood. Lara’s relationship
with her mother became more distant (and
for a time non-existent) in the last
few years of the deceased’s life. David, on the other hand, was the
primary carer for
the deceased with whom she lived for the last years of her
life. The evidence supports the conclusion that the deceased loved both
her
children and sought to provide for each of them (and that she was distressed at
the breakdown of the relationship between her
children; and upset at her lack of
contact with Lara at the end of her life).
- There
are competing versions as to why the deceased’s relationship with Lara did
not continue up until the deceased’s
death. Lara obviously considers that
David poisoned their mother’s mind towards her – and says David made
it impossible
for her to visit her mother during the last years of her life.
David denies this. Suffice it to say that there was obvious antipathy
between
the siblings and it is likely that the deceased was placed in an invidious
position in that regard.
- I
accept that Lara was genuine in her expression of upset at being excluded (as
she perceived it) from her mother’s life; and
that she genuinely felt that
David was responsible for the breakdown in her relationship with her mother. I
also accept that David
was genuinely caring of his mother and that she was happy
living with David and his family.
Section 60(2)(b) – nature
and extent of any obligations or responsibilities owed by the deceased person to
the applicant, to any other person
in respect of whom an application has been
made for a family provision order or to any beneficiary of the deceased
person’s
estate
- The
deceased’s obligations, as such, to Lara and David did not go beyond the
kind of moral obligation to consider the application
of her testamentary bounty
to her adult children (and I bear in mind in this regard the caution that has
been expressed as to expressions
of this kind).
Section 60(2)(c)
– nature and extent of the deceased person’s estate (including any
property that is, or could be, designated as notional
estate of the deceased
person) and of any liabilities or charges to which the estate is subject, as in
existence when the application
is being considered
- When
the deceased died, she had no real property in her own name and very little in
the way of assets. On the assumption (which as
noted above is the assumption on
which this alternative claim is predicated) that the transactions challenged by
Lara’s primary
claims are not set aside, then as noted above there is
virtually no estate for distribution, and any order for provision could only
be
made if there is a designation of notional estate. What Lara seeks to have
designated as “notional estate” (see prayers
13 and 14) are the
proceeds of sale used to acquire the Beaumont Hills Property (and any assets
acquired from the proceeds of sale
of that property), and such of the NetBank
transfers as were made during the period of three years before the
deceased’s death.
- I
have set out above what must be established in order for there to be a notional
estate order in the present case. Relevantly, it
must be established that the
deceased entered into the relevant property transactions with the intention,
wholly or in part, of denying
or limiting the estate that otherwise would have
been available to meet a claim for provision by Lara.
- It
is obvious that, when the proceeds of sale of the Glenhaven Property were used
to acquire the Beaumont Hills Property, and again
when the balance of the
proceeds were transferred electronically out of the deceased’s account and
into David’s account,
or were used otherwise for his benefit, this had the
inevitable effect of depleting the deceased’s estate that otherwise would
have been available for distribution to the beneficiaries under her Will.
However, I cannot conclude that the deceased understood
that in so doing
(particularly in relation to the proceeds of sale used to acquire the Beaumont
Hills Property), this would have
the effect of depleting her estate to the
extent that it would exclude Lara from benefiting under the Will (so as to
enable me to
conclude on the balance of probabilities that the deceased intended
to deny or limit a claim by Lara for provision out of the estate).
- I
consider that it is more likely that the gift of proceeds for use in the
acquisition of the Beaumont Hills Property was the product
of the
deceased’s concern that David and his wife had sold their own home
(“for no reason”), and were living with
and caring for her. The
intention to benefit David (and his wife) does not of itself amount to an
intention to deny or limit a claim
by Lara. As to the balance of the proceeds of
sale, then even on the assumption that the impugned NetBank transfers were in
fact
dispositions by the deceased of her property, although these are more
problematic, I am still not persuaded on the balance of probabilities
that they
were with the intent of denying a claim by Lara (although they certainly had
that effect). In that regard, the fact that
the NetBank transfers were in
incremental amounts, and (on the hypothesis that they were intentional
transfers) that some at least
were for investment in David’s business
which would be consistent with a desire by the deceased to support that
business, supports
the conclusion that the payments were to benefit David but
not intentionally to deprive Lara of an entitlement to share in the estate.
- Thus
I would have had difficulty in concluding that any of those transactions fell
within the definition of a relevant property transaction
for the purposes of
s 80(2)(a) of Succession Act, such that those transactions would not
be available to be the subject of an order designating them as notional estate
(which would
render of no utility Lara’s alternative claim in the present
proceedings as there effectively would be nothing from which to
make any order
for further provision).
Section 60(2)(d) – financial
resources (including earning capacity) and financial needs, both present and
future, of the applicant, of any other
person in respect of whom an application
has been made for a family provision order or of any beneficiary of the deceased
person’s
estate
- The
evidence of the financial resources and needs (or claimed needs) of Lara (and
the circumstances of David) may be summarised as
follows.
- Lara
has disclosed her financial resources and needs in her affidavit affirmed 8
November 2019. She and Adam live with their children
in rental accommodation and
plan to rent until they can afford to build a residence on land they have
purchased at Werombi (after
the sale of the Wallacia Property). They carry on a
conveyancing practice. They have assets totalling $1,214,844.85 and liabilities
of $844,358.01. The business had a trading account balance of $56,445.62 and
profits in the years ending 2017 and 2018 of $150,217
and $96,254 respectively.
The family’s sole source of income is the amount received from the
business. Lara’s needs are
said to be the provision of a fund to enable
the construction of a dwelling on the Werombi land, to pay off the business
loan, and
provide a capital sum to provide for exigencies of life, and/or an
investment in superannuation for her retirement.
- David
has sworn an affidavit on 14 November 2019 in which he sets out his assets and
liabilities. It is said that from the proceeds
of sale of the Beaumont Hills
Property, he invested $700,000 in digital assets for the purposes of trading.
(It appears only $385,068.87
was left by the time they were converted and
returned to Australia.) David deposes that neither he nor Susan is employed, and
that
they receive fortnightly Centrelink benefits. He lists his assets at
$1,467,586.89, and his liabilities as $148,756.64.
- David
and his family live in rental accommodation. He estimates the family’s
living expenses on a monthly basis as $7,634.84.
He has given evidence of the
Tesla business investment (paid for out of the proceeds of sale of the Beaumont
Hills Property), and
the estimated costs of the business.
- I
should note that complaint is made by David as to the level of disclosure by
Lara about her financial circumstances; in particular
as to the position of the
conveyancing business now operated by Adam (Conveyancing Solutions and Legal)
which commenced in about
2016. Lara’s evidence was that this was, in
effect, a sole solicitor practice with the assistance of a conveyancing or other
clerk. For Lara, it is said that the value of the business is comprised in the
personal exertions of Adam, and therefore the complaint
as to non-disclosure is
not sustainable.
- Complaint
is likewise made by Lara as to the reliability of the figures provided by David
(which was tested to an extent when the
current freezing order regime was
debated at the outset of the hearing and again when judgment was reserved). I
accept that there
is a large element of uncertainty as to what has happened with
the moneys that David received from the proceeds of sale of the Glenhaven
and
Beaumont Hills Properties and from the NetBank transfers. Moreover, it is
unclear to me why it is that the Tesla business assets
could not be sold or
utilised to make a profit (which does not seem to have occurred to date).
- There
has been consideration in various cases as to the requirement for an applicant
for a family provision order to disclose as fully
and as frankly as possible all
details of his or her financial and material circumstances (see Leary v NSW
Trustee and Guardian [2017] NSWSC 1113 (Leary) at [53], citing
Collings v Vakas [2006] NSWSC 393 at [66]- [67] per Campbell J, as his
Honour then was; Foye v Foye [2008] NSWSC 1305 at [14]- [15], per
McLaughlin AsJ; In the Estate of the late Anthony Marras [2014]
NSWSC 915 at [238], per Bergin CJ in Eq); and Singh v Singh
[2015] NSWSC
1457 
at [154] , per Black J) (and see also what was said in Stone v Stone
[2019] NSWSC 233, at [161]ff, per Hammerschlag J).
- Here,
however, I consider that sufficient information has been provided for me to make
an informed assessment of Lara’s financial
circumstances. Just as I
considered to be the case in Watton v MacTaggart [2020] NSWSC 1233, I
consider the present case to be distinguishable from those in which false
evidence is given throughout the proceedings (see for
example Ahmad v
Ahmad [2002] NSWSC 579), or where there has been a deliberate expenditure of
funds shortly prior to the application without offering any adequate explanation
or documentary evidence as to what had been done with that money (see for
example Mayfield v Public Trustee [2009] NSWSC 330; and as was the case
in Leary).
Section 60(2)(e) – financial
circumstances of any person with whom the applicant is cohabiting
- Adam’s
financial circumstances were not disclosed in any detail, save that he is a
solicitor operating his own conveyancing
practice. It must be assumed that Adam
is in a position to help support his wife and children; and that he intends to
do so consistent
with his responsibilities as a husband and
father.
Section 60(2)(f) – any physical, intellectual or
mental disability of the applicant, any other person in respect of whom an
application has
been made for a family provision order or any beneficiary of the
deceased person’s estate that is in existence when the application
is
being considered or that may reasonably be anticipated
- Not
applicable.
Section 60(2)(g) – age of the applicant when
the application is being considered
- Lara
is nearly 45 years of age. David is currently 43 years of
age.
Section 60(2)(h) – any contribution (whether financial
or otherwise) by the applicant to the acquisition, conservation and improvement
of the
estate of the deceased person or to the welfare of the deceased person or
the deceased person’s family, whether made before
or after the deceased
person’s death, for which adequate consideration (not including any
pension or other benefit) was not
received, by the applicant
- Lara’s
contribution to the deceased’s welfare was mainly in the period prior to
her father’s death. I accept that
Lara had a strong relationship with her
father during his lifetime. After the breakdown in her relationship with David,
there is
no suggestion that Lara made any contribution to the deceased’s
welfare. She does not appear to have made any contribution
to the
deceased’s estate as such.
Section 60(2)(i) – any
provision made for the applicant by the deceased person, either during the
deceased person’s lifetime or made from
the deceased person’s
estate
- There
is no doubt that substantial provision was made for Lara during the
deceased’s lifetime (as outlined above) including
the payment of
Lara’s university fees (see Lara’s 26 October 2019 affidavit at
[182(a)] and [25]) and, more significantly in financial terms the forgiving of
the debts that were discharged
at the time of the reverse mortgage. (This was,
however, recognised in effect by the differential pecuniary legacies given to
Lara
and David under the Will.)
Section 60(2)(j) – any
evidence of the testamentary intentions of the deceased person, including
evidence of statements made by the deceased
person
- Evidence
of the deceased’s testamentary intentions can be gleaned to an extent from
her prior testamentary documents, but more
relevantly from the instructions
recorded by the solicitor who drafted her last Will – namely, that she was
seeking to “even
things up” between Lara and
David.
Section 60(2)(k) – whether the applicant was being
maintained, either wholly or partly, by the deceased person before the deceased
person’s
death and, if the Court considers it relevant, the extent to
which and the basis on which the deceased person did so
- Not
applicable.
Section 60(2)(l) – whether any other person is
liable to support the applicant
- As
noted above, Adam would have the usual obligation of a spouse in relation to the
maintenance and support of his spouse, Lara.
Section 60(2)(m)
– character and conduct of the applicant before and after the date of the
death of the deceased person
- There
was no doubt a period (albeit relatively small) of estrangement or distance in
the relationship between Lara and the deceased
in the last years of the
deceased’s life. At best, it appears that Lara had a limited number of
phone calls to her mother during
the last two years of her life (although she
says that she continued to send cards or letters). I have already noted the
competing
versions as to the cause of the limited contact. Suffice it to note
that it does not appear to have led the deceased to change her
testamentary
intentions. (As to estrangement in the context of family provision cases
generally, see what was said by Basten JA in
Andrew v Andrew (2012) 81
NSWLR 656; [2012] NSWCA 308 at [40], [49]; and see also the discussion by Hallen
J in Nielsen v Kongspark [2019] NSWSC 1821 at [233]- [237], and Page v
Page [2016] NSWSC 1218 at [59]- [60]).
- I
do not consider that this is a disentitling factor in the present case, in
circumstances where the deceased clearly was on notice
of the tension between
Lara and David (and it may be assumed that she was therefore aware of the
difficulty that Lara might experience
in visiting the home when David was living
there).
Section 60(2)(n) – conduct of any other person
before and after the date of the death of the deceased person
- David’s
evidence is (and I accept) that, during his life, including in the period from
2014 to the date of the deceased’s
death, he and Susan had a very close
and loving relationship with the deceased (see for example David’s 8
November 2019 affidavit at [16], and 17 March 2020 at [24] and [26], and
Susan’s 17 March 2020 affidavit at [15] and [75]). They say that in the
period from 2014 until the deceased’s death, they provided extensive
assistance to the deceased, and did the deceased’s laundry, cooked and
provided her meals, drove her to appointments and cleaned
the house
(Susan’s 17 March 2020 affidavit at [16], and David’s 8 November
2019 affidavit at [33). I accept that they provided day to day care and
assistance over this period.
Section 60(2)(o) – any
relevant Aboriginal or Torres Strait Islander customary law
- None
is here applicable.
Section 60(2)(p) – any other matter the
Court considers relevant, including matters in existence at the time of the
deceased person’s
death or at the time the application is being
considered
- No
particular matters were relied upon in relation to this
factor.
Determination as to alternative family provision
claim
- Taking
into account all the circumstances set out above, I consider that the fact that
Lara (on the assumptions on which the alternative
claim has been predicated) has
been left with no provision at all out of the deceased’s estate means that
she has been left
without adequate or proper provision. I accept that at the end
of the deceased’s life the relationship between the two was
distant, and I
accept that there was substantial provision made for Lara during the
deceased’s life, but it is clear that the
deceased still felt that Lara
had a claim on her testamentary bounty.
- While
Lara has assets in terms of her home and an interest in what appears to be a
profitable business, and has the support of her
husband, she has two young
children and her home is encumbered, such that to make no provision for her
under the Will is not in my
opinion proper or adequate.
- That
said, when comparing Lara’s needs with those of David (even accepting that
David’s needs are no doubt contributed
to by his seemingly poor track
record in business investments and his foray into digital currency trading),
David is in a position
of greater need (and he also has a young family to
support); and David provided the day to day care and support for the deceased
during the last years of her life. I also consider that Lara’s prospects
of advancement in life through her own efforts (and
those of her husband) are
greater than those of David.
- In
those circumstances, were I to have made an order for provision for Lara out of
the estate I would have limited it to a lump sum
of $100,000 as a buffer for the
vicissitudes and contingencies of life. As it is, I am not persuaded that there
are relevant property
transactions out of which a notional estate order can be
made, and therefore had the matter fallen to be determined on the alternative
claim, I would have concluded that it should be dismissed even though I accept
that there had not been adequate or proper provision
made for Lara by the
deceased under the Will, having regard to the extent of the deceased’s
assets at the time that the application
was
determined.
Conclusion
- For
the reasons above, I have concluded that David is liable to account to the
estate for the amount of the NetBank transfers (less
the sum of $9,531.41 for
transactions that, on balance, I accept were most probably solely for the
deceased’s benefit –
being pharmaceutical disbursements of
$8,975.41; Fournez Hair for $61; and OPSM from $495), I have reached that
conclusion on the
basis that these were effected by David (and not authorised by
the deceased) as the deceased’s agent and/or as her fiduciary
(he having
been entrusted by her, on his own case, to manage his finances). Having not
satisfactorily accounted to the estate for
those amounts, I have concluded that
David should reimburse the estate for the sum of $1,819,513.84.
- Further,
I find that there was a sufficient relationship of dominion and ascendancy of
David in respect of the deceased so as to give
rise to a presumption of undue
influence in relation to: the NetBank transfers; the proceeds of sale of the
Glenhaven Property that
were applied to the Beaumont Hills Property; and the
acquisition of the new furniture for the Glenhaven Property at the time that
it
was marketed for sale. I have concluded that the presumption of undue influence
has not been rebutted and (had it been necessary
to determine) I would have
concluded that this was a case where actual undue influence and unconscionable
conduct were made out.
Accordingly, David should account to the estate and is
liable for equitable compensation in favour of the estate for those amounts.
Taken together, the proceeds of the sale of Glenhaven Property that were applied
for the purchase of the Beaumont Hills Property
($1,522,272.03), and the amount
of NetBank transfers that I have concluded should be reimbursed to the estate
($1,819,513.84), comes
to a total of $3,341,785.87.
- As
to the personal property that appears to have been disposed of by David, it is
difficult to put a value on that and I am not persuaded
that it is in the
interests of the estate for further costs to be expended in proceeding to order
an account in respect of that issue.
- To
the extent that David is unable to reimburse the estate for the full amount so
ordered, then the shortfall should be treated as
an ademption of the legacy
provided for him under the Will, since he has in effect had the benefit of that
legacy already. I note
that as at the final day of the hearing (9 October 2020),
there remained only $474,794 in the controlled moneys account, and a further
$57,000 in a business account (resulting in the funds available to satisfy any
judgment on David’s evidence being a cumulative
total of $531,794). Since
there seems no basis (having regard to David’s evidence as to his
financial circumstances) to believe
that he will be in a position to reimburse
the estate sufficiently to permit the payment out of both his legacy and that
for which
provision was made for Lara, there should be an order that the amounts
presently held in the controlled moneys account be paid out
to Lara in partial
satisfaction of her legacy under the Will. Therefore (unless the parties
persuade me otherwise in relation to
the form of the orders to be made –
see below), the sum $531,794 held in the controlled moneys account and the
business account
should be transferred to Lara, as well as any proceeds from the
sale of Tesla parts as may later be made to liquidate stock, up to
the amount of
$1 million in satisfaction of her legacy under the Will. I consider that David
has already had the benefit of the legacy
provided for him under the Will, and,
accordingly, that any amounts owing to the estate that cannot be repaid should
be considered
the satisfaction of his share of the estate, in accordance with
the principles of ademption.
- Finally,
I accept that David has shown himself unfit to carry out the duties as executor
of the deceased’s estate and I consider
that it is appropriate that an
order should be made for Lara to be appointed as administrator of the
deceased’s estate. Lara
has sought a general administration order in that
regard (see in this regard the discussion by Young J, as his Honour then was, of
general administration orders in McLean v Burns Philp Trustee Co Pty Ltd
(1985) 2 NSWLR 623 from p 633ff; his Honour there referring to the position as
summarised in Underhill and Hayton, Underhill’s Law of Trusts and
Trustees (13th ed, 1979, Butterworths) at 699 as to the three categories of
case in which a general administration order would be made, one
of which being
where a prima facie doubt is thrown on the bona fides or
discretion of one or more of the trustees. Young J (at p 635) opined that in
such a category of case the court “takes a
relatively benign view and
might act on relatively weak evidence” because of the heavy potential
burden of costs that his Honour
considered to have been “a prime weapon
for controlling administration suits and keeping them within proper
bounds”.
His Honour also noted that there were useful passages on
administration proceedings in New South Wales in Jordan, Administration of
the Estates of Deceased Persons (3rd ed, 1948, Government Printer) at 42-43,
and Ford and Lee, Principles of the Law of Trusts (1st ed, 1983, Law Book
Co) at 766).
- In
the present case, on David’s evidence, his co-executor (his and
Lara’s cousin Melita) has renounced probate and it
had not been his
intention to apply for a Grant of Probate of the deceased’s estate as
there were insufficient funds in the
estate to pay the specific legacies set out
in the deceased’s last Will (see his 8 November 2019 affidavit at [38],
[42]).
Moreover, even leaving aside the impugned transactions that have been the
subject of my findings as to undue influence and unauthorised
transactions,
David has not shown a proper understanding of his duties as executor (and I have
serious doubts as to his ability or
willingness properly to administer the
deceased’s estate). I therefore consider that it is in order for the
relief sought by
Lara in relation to the administration of the deceased’s
estate to be made and (mindful of the desirability to minimise further
costs
that would deplete the estate) that Lara should be appointed as administrator of
the estate and should administer the estate
on the basis (as indicated above)
that David’s legacy is treated as having been adeemed to the extent of the
shortfall in the
amount for which he is required to account to the estate. (It
may be that it is sufficient for the purposes of the administration
of the
estate for there not to be a general administration order, as such, but simply
for Lara to be appointed as administrator of
the deceased’s estate –
but that is a matter on which Lara may wish to make
submissions.)
Orders
- I
therefore propose to make the following orders, but before finalising those
orders I will invite the parties to make any (brief)
submissions as to the terms
of the orders if the parties consider that the orders do not adequately reflect
the above reasons, or
if there are further orders required in order to implement
the above reasons. I will also (as requested by David) give the parties
an
opportunity to make submissions as to costs with a view to finalising all orders
on the papers.
- The
orders I propose to make (leaving aside the question of costs) are as
follows:
(1) Order that the administration of the estate of the late
Isolde Becker be carried out and executed by and under the direction of
this
Court and that all necessary declarations be made, and enquiries held, and
accounts taken to carry the same into effect.
(2) Further to Order 1, order that letters of administration of the estate of
the late Isolde Becker (the deceased), annexing the
last Will and testament of
the deceased dated 31 August 2016 be granted to the plaintiff (Lara Caroline
Torok).
(3) Order that the first defendant do, within 4 business days, pay and
deliver up to the plaintiff, as administrator of the estate
of the deceased all
of the funds, assets, books and records of the estate of the deceased.
(4) Declare that the payment in the sum of $1,522,272.03 to the first
defendant by or on behalf of the deceased from the sale proceeds
of the property
referred to in these reasons as the Glenhaven Property was obtained by undue
influence.
(5) Declare that funds totalling ($1,829,045.25) transferred from the NetBank
facility of the deceased Isolde Becker were not authorised
by the deceased and
were transferred by or for the benefit of the first defendant in breach of his
fiduciary and equitable duties
as the deceased’s agent (and were obtained
by the first defendant by undue influence).
(6) Declare that the first defendant holds or held the net sale proceeds of
the sale of the property referred to in these reasons
as the Beaumont Hills
Property, and such assets as he subsequently acquired using the same, on trust
for the estate.
(7) Order that the first defendant pay and deliver up to the plaintiff as
administrator of the estate of the deceased, all funds and
other assets,
documents of title and things which he has acquired using the said sale proceeds
or any part thereof.
(8) Order that the first defendant pay to the plaintiff as legal
representative of the estate of the deceased, equitable compensation
in the sums
of $1,522,272.03 and $1,819,513.84 (totalling $3,341,785.87), together with
compound interest thereon at the defaulting
trustee rate.
(9) Order that the interest of the first defendant, as legatee and otherwise
as beneficiary of the estate of the deceased, be impounded
and held as security
for his liabilities as determined under these orders.
(10) Order that the funds held in the controlled moneys account pursuant to
Interlocutory orders made in these proceedings be paid
out to the plaintiffs by
way of satisfaction of the legacy provided by the deceased’s Will for the
first plaintiff.
- At
this stage, however, the only order I will make is that the parties provide
written submissions within seven days as to the form
of the orders to be made to
reflect these reasons and as to costs.
**********
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