Anna Carr as administratrix of the estate of Giuseppe Larussa v Larussa Pastoral Holdings Pty Ltd as former trustee of the Larussa Pastoral Trust
[2019] WASC 471
•23 DECEMBER 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: ANNA CARR as administratrix of the estate of GIUSEPPE LARUSSA -v- LARUSSA PASTORAL HOLDINGS PTY LTD as former trustee of THE LARUSSA PASTORAL TRUST [2019] WASC 471
CORAM: CURTHOYS J
HEARD: 21 OCTOBER 2019
DELIVERED : 23 DECEMBER 2019
FILE NO/S: CIV 2162 of 2016
BETWEEN: ANNA CARR as administratrix of the estate of GIUSEPPE LARUSSA
Plaintiff
AND
LARUSSA PASTORAL HOLDINGS PTY LTD as former trustee of THE LARUSSA PASTORAL TRUST
First Defendant
LARUSSA CUSTODIAN SERVICES AUSTRALIA PTY LTD as trustee of THE LARUSSA PASTORAL TRUST
Second Defendant
TONY LARUSSA
Third Defendant
Catchwords:
Undue influence - Unconscionable conduct - Public policy - Father and son
Legislation:
Corporations Act 2001 (Cth), s 1305
Criminal Property Confiscation Act 2000 (WA)
Result:
Plaintiff's case dismissed
Judgment for the defendants
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr S M Standing |
| First Defendant | : | Mr C G Juebner |
| Second Defendant | : | Mr C G Juebner |
| Third Defendant | : | Mr S K Wilson QC with him Mr B J Murphy |
Solicitors:
| Plaintiff | : | Friedman Lurie Singh & D'Angelo |
| First Defendant | : | Corporate Counsel Lawyers |
| Second Defendant | : | Corporate Counsel Lawyers |
| Third Defendant | : | Garde-Wilson Lawyers |
Case(s) referred to in decision(s):
Angius v Angius [2018] NSWSC 1772
Bridgewater v Leahy [1998] HCA 66; (1998) 194 CLR 457
Civil and Allied Technical Construction Pty Ltd v A1 Quality Concrete Tanks Pty Ltd [2018] VSCA 157
Gnych v Polish Club Ltd [2015] HCA 23
Mercanti v Mercanti [2015] WASC 297
Tulloch v Braybon (No 2) [2010] NSWSC 650
CURTHOYS J:
Introduction
Anna Carr, is the daughter of Giuseppe (Joe) and Maria Larussa. Anna was granted letters of administration of Joe's estate on 27 October 2014.
Tony Larussa is the son of Joe and Maria Larussa.
Joe committed suicide on the night of 27 ‑ 28 November 2013.
Larussa Pastoral Holdings Pty Ltd was at the relevant time the trustee of the Larussa Pastoral Trust (the Trust). Larussa Custodian Services Australia Pty Ltd is the present trustee of the Trust.
As at 30 June 2015 the Trust owed Joe $6,593,963. The Trust owed Tony $103,872. No issue arises as to the fact that the debts were owing or the amount.
On 27 October 2013 Joe and Tony executed a Memorandum of Release of their debts to the Trust (the Memorandum). It was not in issue at trial that the effect of the Memorandum was to release their debts to the Trust.
Anna Carr claims that the Memorandum was entered into by Joe as a result of the undue influence or unconscionable conduct of Tony. She further argues that the Memorandum is void for public policy reasons.
If Anna Carr were to succeed then the Memorandum would be set aside and the Trust's debt to Joe would form part of his estate.
For the reasons which follow I have concluded that Anna's claim should be dismissed.
Far from the Memorandum being entered into as a result of any undue influence or unconscionable conduct by Tony, it was entered into by Joe because it reflected his desire to remove the debt from his estate so as to ensure that Tony, and his family, benefited to the exclusion of Maria and Anna.
The Will litigation
Anna and Tony have previously been involved in litigation - Larussa v Carr as administratrix of the estate of Giuseppe Larussa[2016] WASC 332 (the Will case). The only relevance of that litigation is that his Honour Justice Chaney found that the 1991 will referred to below was revoked prior to Joe's death.
The terms of the Memorandum
The terms of the Memorandum signed by Joe and Tony were:
Memorandum of Agreement
Mutual Release
IT WELL REMEMBERED THAT we GUISEPPE LARUSSA ('the Father') and ANTHONY LARUSSA ('the Son') in consideration of the natural love affection existing and for certain mutual financial advantages have mutually resolved and do agree with each other as does hereinafter provided
To remove certain impediments hardship and obligations that may occur in the event of the occurrence of a significant life event (as defined) and for the purposes of better securing the welfare and circumstances of the family the Parties hereto are consensus ad idem and have mutually and severally agreed to these provisions now made.
NOW THIS AGREEMENT DOES WITNESS that both parties have mutually resolved and do agree with each that each of them mutually release absolved pardoned and discharged absolutely:
(a)Each other; and
(b)Larussa Pastoral Trust (and its Trustee); and
(c)any executory discretionary or constructive trust (and the Trustee(s) thereof) that both parties may be joint appointers and/or life guardians thereof .
from all and any obligations, debts or encumbrance including (but not limited to) any contract, loan, advance, debenture, share, promissory note, mortgage or similar instrument or obligation (and hereafter collectively referred to as 'the obligations') howsoever constructed and whether real or personal held by or due to the parties both now and at the time in the future that a Significant Life Event (as defined hereinafter) occurs and to which one party is subject to
PROVIDED ALWAYS that
1.In this agreement the following words terms and phrases shall be deemed (unless context does not permit or it is expressly declared otherwise) to have and admit the meaning assigned (which is to say)
'Significant Life Event' means the act or occurrence of any of the following
1.1the demise of one of the Parties; or
1.2an application for the appointment of a trustee in bankruptcy; or
1.3an application for the appointment of a guardian for the purposes of the Mental Health Act 1996; or
1.4an application for a freezing order or other adverse order within the meaning of the Criminal Property Confiscation Act 2000;
or equivalent, like or similar statutory provisions regulations or Acts in other jurisdiction including the Commonwealth FURTHER the act of making an application (whether granted or not) for an order under 1.2 to 1.4 shall trigger the provisions of this Agreement notwithstanding that the application for such an order may not be known at that time but shall be deemed to be a Significant Life Event for the purposes of this Agreement.
2.In the event that neither Party survives the other by thirty (30) days from the death first demised party or both Parties are subject to a Significant Life Event, then (and in that event) such obligations shall be deemed to be assigned, gifted and conveyed to the Larussa Pastoral Trust (or other executory, discretionary or constructive trust of which both parties were life guardians or appointors at the time of the first parties demise) as a corpus gift.
3.For the purposes of removal of doubt this deed shall have immediate effect and validity and shall continue to operate and have effect until revoked or amended.
4.If there is more than one executory discretionary or constructive trust then the surviving party, may direct by simple instrument in writing that such benefits of any Obligations, debts or encumbrance shall flow to one or more of those trusts and in such portions as the surviving party may direct.
5.In the event that there exists a conflict between the provisions of this agreement and any Will and Testamentary disposition of the demised party then and in that case the provisions of that Will and Testamentary disposition shall prevail notwithstanding what is herein provided for.
6.The provisions of this agreement may be amended by mutual agreement or may be rescinded and the Obligations reinstated by either party by written notice given to the other in writing PROVIDED ALWAYS that a Significant Life Event has not occurred.
Minutes of meeting of the directors of Larussa Pastoral Holdings
The minutes of the meeting of directors signed by Tony on 27 October 2013 (exhibit , page 514) provided:
The meeting of the directors of Larussa Pastoral Holdings Pty Ltd (ABN 95009032464) was held
at: 27.10.2013
on the: 8 Ethel STN/PERTH 2013
PRESENT: TONY LARUSSA GIUSEPPE LARUSSA
A quorum of directors was present.
Advice from Dunns tendered and annexed.
The directors having received advice from both the company's solicitors and accountants that is desirable in the interests of each director and the trust to dispose of the Beneficiary Loan Accounts and consolidate the same into the corpus of the trust.
Both directors have agreed to release each other and the trust of those debts and the reconstruction of the trust as a gift to corpus.
That the accountants for the company be consulted regarding the tax effect of the release.
RESOLVED that the company accept the release of liability for the beneficial loan accounts in both director's names and that the BLA accounts from both directors be consolidation into the corpus of the trust effective from the date of this meeting with their consent.
The issues
At trial there were three issues:
(1)whether the Memorandum was executed by Joe in circumstances of undue influence exercised by Tony;
(2)whether the Memorandum was executed by Joe in consequence of Tony's unconscionable conduct; and
(3)whether the Memorandum is unenforceable on public policy grounds, given its reference to the Criminal Property Confiscation Act 2000 (CPCA) in par 1.4 of the definition of 'Significant Life Event'.
The pleadings
The relevant pleadings are set out below.
Paragraph 24 of the statement of claim pleads:
24.During the period from about April 2013 until his death, the Deceased -
24.1lived alone on a farm in the Beermullah district of WA;
24.2was 72 years of age, and was physically and mentally unwell;
Particulars
i.the Deceased sustained a fractured right ankle in April 2013 which caused ongoing pain and mobility problems;
ii.the Deceased had diverticulosis;
iii.the Deceased had liver disease;
iv.the Deceased had trouble sleeping, was anxious and suicidal and was finding it hard to cope.
24.3was largely unable to work his farm;
24.4depended upon the third defendant (who lived on a nearby farm) for assistance in the working of his farm and in the management of his affairs;
24.5had only a limited education and limited ability to read in the English language and required assistance from the third defendant or others to read documents written in the English language.
Save that the first and second defendants admit that Joe lived alone they effectively deny par 24 of the statement of claim.
Paragraph 25 of the statement of claim pleads:
25.In the premises -
25.1the Deceased was in a position of dependence upon the third defendant and reposed trust and confidence in him, such that the third defendant was in a position to exercise dominion, influence, power or ascendency over the Deceased in relation to matters concerning the Trust and the Deceased's affairs generally;
25.2the relationship between the Deceased and the third defendant gave rise to a presumptive relationship of undue influence.
The defendants deny par 25.
Paragraph 27 of the statement of claim pleads:
27.If duly executed and valid in accordance with its terms, the Memorandum was of unequal effect and substantially benefitted the third defendant at the expense of the Deceased in that it involved -
27.1the Deceased gifting the Debt (comprising the sum of $6,593,963) to the Trust, whereas the third defendant was only gifting the sum of $103,872 to the Trust;
27.2the sum of $6,593,963 immediately ceasing to be an asset of the Deceased and becoming unavailable to include as part of any testamentary disposition of the Deceased, whereas only $103,872 ceased to be an asset of the third defendant;
27.3notwithstanding the purported effect of clause 6, the Deceased not being able to unilaterally rescind the Memorandum and cause (inter alia) the Debt to be reinstated.
The defendants deny par 27.
Paragraph 28 of the statement of claim pleads:
28.At the time of alleged execution of the Memorandum -
28.1the Deceased was elderly and physically and mentally unwell;
Particulars
The plaintiff repeats paragraph 24 above.
a.The Deceased and the third defendant were joint guardians of the Trust, and if one of them died then the survivor (or his appointee or legal representative) would thereafter be sole guardian;
b.The Class 1 beneficiaries under the Trust were the Deceased, the third defendant and the children and spouse of the third defendant;
c.The Deceased and the third defendant were the directors of the first defendant and if one of them died then the other could continue to conduct the affairs of the first defendant as sole director;
d.In the event that the Deceased died, the third defendant would effectively have sole control over the Trust and its assets.
The defendants deny par 28.
Paragraph 29 of the statement of claim pleads:
29.In the premises, the Memorandum (if duly executed and valid in accordance with its terms) -
29.1was manifestly disadvantageous to the Deceased;
29.2comprised a substantial benefit to the third defendant.
The defendants deny par 29.
Paragraph 30 of the statement of claim pleads:
In the premises, it should be presumed that the Memorandum (if duly executed and valid in accordance with its terms) was executed by the Deceased in circumstances of undue influence on the part of the third defendant and should be set aside.
The defendants deny par 30.
Paragraph 31 of the statement of claim pleads:
31.Further or alternatively to paragraphs 24 to 30 above, the plaintiff says that -
31.1the Deceased received no independent, fully informed advice about the Memorandum, including advice as to the true effect of clause 6;
31.2the Deceased was, by reason of the matters pleaded in paragraphs 23 to 28 above and the absence of independent advice, under a special disability or disadvantage vis a vis the third defendant at the time of alleged execution of the Memorandum;
31.3the special disability or disadvantage seriously affected the Deceased's ability to make a judgment as to his best interests in relation to the Memorandum;
31.4in the above circumstances there was an absence of any reasonable degree of equality as between the Deceased and the third defendant;
31.5If the Memorandum was duly executed by the Deceased, such execution was procured by the third defendant in circumstances where the third defendant -
(a)knew or ought to have known of the Deceased's special disability or disadvantage and the lack of equality between them and its effect on the Deceased, and -
(b)thereby took advantage of that special disability or disadvantage;
(c)did not know whether the Deceased had obtained independent advice about the Memorandum.
The defendants effectively deny par 31.
It was not in issue at trial that the Joe did not receive independent legal advice before he executed the Memorandum.
Paragraph 32 of the statement of claim pleads:
32.In the premises -
32.1the third defendant's conduct in procuring or accepting the Deceased's assent to the Memorandum, and further or alternatively in seeking to enforce or retain the benefit of the Memorandum, was and is prima facie unconscientious;
32.2the Memorandum (if duly executed and valid in accordance with its terms) should be set aside by reason of the third defendant's unconscionable conduct.
The defendants deny par 32.
Paragraph 33 of the statement of claim pleads:
Further or alternatively, the Memorandum expressly provides, by clauses 1.4 and 6, that if an application for a freezing order or other adverse order within the meaning of the Criminal Property Confiscation Act 2000 (WA) (Act) is made, that would be a 'Significant Life Event,' and a consequence of which would be that the Memorandum would cease to be revocable at the instance of a party thereto.
The defendants deny par 33.
Paragraph 34 of the statement of claim pleads:
The purpose of the above provisions is that, if proceedings are brought under the Act, property that might otherwise be the subject of an order under the Act would be irrevocably placed beyond the reach of orders under the Act, with the intention of defeating, avoiding, preventing or impeding the operation of the Act.
Particulars
The pleaded purpose is to be inferred from the terms of the Memorandum and in particular clauses 1.4 and 6 thereof.
The defendants deny par 34.
Paragraph 35 of the statement of claim pleads:
In the premises, the Memorandum is a contract which tends to pervert or obstruct the course of justice, or otherwise interfere with or be prejudicial to the administration of justice, or tends to defeat the Act and by reason of which is unenforceable as being contrary to public policy.
The defendants deny par 35.
Paragraph 36 of the statement of claim pleads:
And the Plaintiff claims:
1.A declaration that the first defendant (in its capacity as former trustee of the Larussa Pastoral Trust) is indebted to the Estate of the late Giuseppe Larussa in the sum of $6,593,963.00.
2.A declaration that the first defendant has a right of indemnity against the assets of the Larussa Pastoral Trust including such assets as are now held by the second defendant in respect of the sum of $6,593,963.00 plus interest.
3.A declaration that the plaintiff is entitled to be subrogated to, and to enforce, the first defendant's right of indemnity against the assets of the Trust including assets held by the second defendant in respect of the sum of $6,595,963.00 plus interest.
4.An order requiring the first defendant to pay to the plaintiff (in her capacity as Administratrix of the estate of the late Giuseppe Larussa) the sum of $6,593,963 plus interest on that sum from 28 November 2013 to judgment at the rate of 6% per annum pursuant to s32 of the Supreme Court Act.
5.An order for the appointment of the plaintiff as receiver of the assets of the Larussa Pastoral Trust for the purpose of realising such of those assets as are necessary to satisfy the first defendant's right of indemnity.; alternatively an order for judicial sale of such assets.
6.In the event that this Honourable Court finds that the Memorandum of Mutual Release dated 27 October 2013 was entered into by the Deceased and the third defendant -
(a)(Not used)
(b)a declaration that the Memorandum of Agreement Mutual Release was executed in circumstances of undue influence and an order that the said Memorandum be set aside.
(c)a declaration that the late Giuseppe Larussa executed the Memorandum of Agreement Mutual Release as a consequence of unconscionable conduct on the part of the third defendant and an order that the said Memorandum be set aside.
(d)a declaration that the Memorandum of Agreement Mutual Release is unenforceable as being contrary to public policy.
7.Costs.
8.Such further or other orders as this Honourable Court see fit.
The authorities
The law relating to undue influence and unconscionable conduct is accurately and conveniently set out in the judgment of Sackar J in Angius v Angius:[1]
[1] Angius v Angius [2018] NSWSC 1772 [92] ‑ [95].
In Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; [1983] HCA 14 ('Amadio'), Deane J (with Wilson J agreeing) said (at 474 ‑ 5) (citations omitted):
'The jurisdiction of courts of equity to relieve against unconscionable dealing developed from the jurisdiction which the Court of Chancery assumed, at a very early period, to set aside transactions in which expectant heirs had dealt with their expectations without being adequately protected against the pressure put upon them by their poverty (see O'Rorke v Bolingbroke). The jurisdiction is long established as extending generally to circumstances in which (i) a party to a transaction was under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them and (ii) that disability was sufficiently evident to the stronger party to make it prima facie unfair or "unconscientious" that he procure, or accept, the weaker party's assent to the impugned transaction in the circumstances in which he procured or accepted it. Where such circumstances are shown to have existed, an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable: 'the burthen of shewing the fairness of the transaction is thrown on the person who seeks to obtain the benefit of the contract' (see per Lord Hatherley, O'Rorke v Bolingbroke; Fry v Lane; Blomley v Ryan).
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; Watkins v Combes; Morrison v Coast Finance Ltd). 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. The adverse circumstances which may constitute a special disability for the purposes of the principles relating to relief against unconscionable dealing may take a wide variety of forms and are not susceptible to being comprehensively catalogued. In Blomley v Ryan, Fullagar J listed some examples of such disability: "poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary". As Fullagar J remarked, the common characteristic of such adverse circumstances 'seems to be that they have the effect of placing one party at a serious disadvantage vis‑à-vis the other'.
The distinction between unconscionable conduct and undue influence reinforced by Deane J in Amadio was also affirmed by Brennan J in Louth v Diprose (1992) 175 CLR 621; [1992] HCA 61 (at 626 ‑ 7) (citations omitted):
'The jurisdiction of equity to set aside gifts procured by unconscionable conduct ordinarily arises from the concatenation of three factors: a relationship between the parties which, to the knowledge of the donee, places the donor at a special disadvantage vis-à-vis the donee; the donee's unconscientious exploitation of the donor's disadvantage; and the consequent overbearing of the will of the donor whereby the donor is unable to make a worthwhile judgment as to what is in his or her best interest. A similar jurisdiction exists to set aside gifts procured by undue influence. In Commercial Bank of Australia Ltd v Amadio, Mason J distinguished unconscionable conduct from undue influence in these terms:
"In the latter the will of the innocent party is not independent and voluntary because it is overborne. In the former the will of the innocent party, even if independent and voluntary, is the result of the disadvantageous position in which he is placed and of the other party unconscientiously taking advantage of that position."'
Deane J identified the difference in the nature of the two jurisdictions:
'Undue influence, like common law duress, looks to the quality of the consent or assent of the weaker party … 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.'
Although the two jurisdictions are distinct, they both depend upon the effect of influence (presumed or actual) improperly brought to bear by one party to a relationship on the mind of the other whereby the other disposes of his property.
In Thorne v Kennedy (2017) 91 ALJR 1260; [2017] HCA 49, Kiefel CJ, Bell, Gageler, Keane and Edelman JJ observed at [37] ‑ [40] (citations omitted):
'There was no controversy on this appeal concerning the principles of unconscionable conduct in equity. Those principles were recently restated by this Court in Kakavas v Crown Melbourne Ltd.
A conclusion of unconscionable conduct requires the innocent party to be subject to a special disadvantage 'which seriously affects the ability of the innocent party to make a judgment as to [the innocent party's] own best interests'. The other party must also unconscientiously take advantage of that special disadvantage. This has been variously described as requiring 'victimisation', 'unconscientious conduct', or 'exploitation'. Before there can be a finding of unconscientious taking of advantage, it is also generally necessary that the other party knew or ought to have known of the existence and effect of the special disadvantage.
In Commercial Bank of Australia Ltd v Amadio, Deane J said that the equitable principles concerning relief against unconscionable conduct are closely related to those concerned with undue influence. The same circumstances can result in the conclusion that the person seeking relief (i) has been subject to undue influence, and (ii) is in a position of special disadvantage for the purposes of the doctrine concerned with unconscionable conduct. For instance, in Diprose v Louth (No 1), the trial judge, King CJ, observed that both doctrines were satisfied where the defendant "was in a position of emotional dominance which gave her an influence over the [plaintiff] which she exercised unconscientiously to procure the gift of the house". Before the High Court in that case, Mr Diprose relied only upon the ground of unconscionable conduct.
Although undue influence and unconscionable conduct will overlap, they have distinct spheres of operation. One difference is that although one way in which the element of special disadvantage for a finding of unconscionable conduct can be established is by a finding of undue influence, there are many other circumstances that can amount to a special disadvantage which would not establish undue influence. A further difference between the doctrines is that although undue influence cases will often arise from the assertion of pressure by the other party which might amount to victimisation or exploitation, this is not always required. In Commercial Bank of Australia Ltd v Amadio, Mason J emphasised the difference between unconscionable conduct and undue influence as follows:
"In the latter the will of the innocent party is not independent and voluntary because it is overborne. In the former the will of the innocent party, even if independent and voluntary, is the result of the disadvantageous position in which he is placed and of the other party unconscientiously taking advantage of that position."'
With respect to the distinct but related doctrine of undue influence again Kiefel CJ, Bell, Gageler, Keane and Edelman JJ observed in Thorne v Kennedy (2017) 91 ALJR 1260; [2017] HCA 49 at [30] ‑ [34] (citations omitted):
'In Allcard v Skinner, Lindley LJ said that 'no Court has ever attempted to define undue influence'. One reason for the difficulty of defining undue influence is that the label 'undue influence' has been used to mean different things. It has been used to include abuse of confidence, misrepresentation, and the pressure which amounts to common law duress. Each of those concepts is better seen as distinct. Nevertheless, the boundaries, particularly between undue influence and duress, are blurred. One reason why there is no clear distinction is that undue influence can arise from widely different sources, one of which is excessive pressure. Importantly, however, since pressure is only one of the many sources for the influence that one person can have over another, it is not necessary that the pressure which contributes to a conclusion of undue influence be characterised as illegitimate or improper.
In 1836, in a passage which was copied verbatim by Snell thirty years later, Story said that a person can be subjected to undue influence where the effect of factors such as pressure is that the person 'has no free will, but stands in vinculis [in chains]'. He explained that 'the constant rule in Equity is, that, where a party is not a free agent, and is not equal to protecting himself, the Court will protect him'. In 1866, this approach was applied in equity by the House of Lords, recognising undue influence in a case of pressure that deprived the plaintiff of 'free agency'. In 1868, in probate, Sir James Wilde also described undue influence as arising where a person is not a 'free agent'. In Johnson v Buttress, Dixon J described how undue influence could arise from the 'deliberate contrivance' of another (which naturally includes pressure) giving rise to such influence over the mind of the other that the act of the other is not a 'free act'. And, in Bank of New South Wales v Rogers, McTiernan J characterised the absence of undue influence as a "free and well‑understood act" and Williams J referred to "the free exercise of the respondent's will".
The question whether a person's act is "free" requires consideration of the extent to which the person was constrained in assessing alternatives and deciding between them. Pressure can deprive a person of free choice in this sense where it causes the person substantially to subordinate his or her will to that of the other party. It is not necessary for a conclusion that a person's free will has been substantially subordinated to find that the party seeking relief was reduced entirely to an automaton or that the person became a 'mere channel through which the will of the defendant operated'. Questions of degree are involved. But, at the very least, the judgmental capacity of the party seeking relief must be "markedly sub‑standard" as a result of the effect upon the person's mind of the will of another.
An example which illustrates the characterisation by a court of a lack of free will sufficient to amount to undue influence is the decision of this Court in Johnson v Buttress. In that case, Mr Buttress was a 67 year old man, who was "wholly illiterate, not very intelligent, and of little or no experience or capacity in business". He made a voluntary transfer of land to a relative of his wife. The land was his only property and his only means of livelihood. When he made the transfer he did not understand that he had parted with the land irrevocably. After Mr Buttress died, the administrator of his estate brought an application to set aside the transfer. The trial judge set aside the transfer on the basis of undue influence. This decision was upheld in this Court. Although other members of the Court relied upon a presumption of undue influence, which is considered below, one member of the Court, Starke J, concluded that it was open to the trial judge to find that undue influence arose without any presumption. His Honour upheld the conclusion of the trial judge that the circumstances of the transfer invited the inference that it was "not the result of the free and deliberate judgment of the deceased".
There are different ways to prove the existence of undue influence. One method of proof is by direct evidence of the circumstances of the particular transaction. That was the approach relied upon by the primary judge in this case. Another way in which undue influence can be proved is by presumption. This presumption was relied upon by Ms Thorne in this Court as an alternative. A presumption, in the sense used here, arises where common experience is that the existence of one fact means that another fact also exists. Common experience gives rise to a presumption that a transaction was not the exercise of a person's free will if (i) the person is proved to be in a particular relationship, and (ii) the transaction is one, commonly involving a 'substantial benefit' to another, which cannot be explained by "ordinary motives", or "is not readily explicable by the relationship of the parties". Although the classes are not closed, in Johnson v Buttress Latham CJ described the relationships that could give rise to the presumption as including parent and child, guardian and ward, trustee and beneficiary, solicitor and client, physician and patient, and cases of religious influence. Outside recognised categories, the presumption can also be raised by proof that the history of the particular relationship involved one party occupying a similar position of ascendency or influence, and the other a corresponding position of dependency or trust. In either case, the presumption is rebuttable by the other party proving that the particular transaction or transfer, in its particular circumstances, was nevertheless the result of the weaker party's free will.'
It is also useful to note what Brereton J stated in Tulloch v Braybon(No 2):[2]
In my opinion, these authorities show that more than mere confidence and reciprocal influence is required to establish a 'special relationship of influence' from the existence of which undue influence will be presumed unless rebutted; for a relationship to be brought within the doctrine, it must go beyond one of mere confidence and influence, to one involving dominion or ascendancy by one over the will of the other, and correlatively dependence and subjection on the part of the other. It is true that some cases suggest that it is not necessary to establish a relationship of actual dominion by one party over another and that it is enough to show that the party in whom trust and confidence is reposed is in a position to exert influence over the party who reposes it [see Goldsworthy v Brickell [1987] 1 Ch 378, 403 ‑ 404; Stivactas v Michaletos (No 2) (1993) NSW Conv R 55-683, 59,908 (Sheller JA). But more is required than the 'influence' that any person might have on another by making a recommendation or giving advice. What is required, as a minimum, is that one have some element of authority or superiority (which may be moral or practical as distinct from legal) over the other. Thus, in the case of a solicitor, and perhaps a doctor, it arises from his or her professional status and expertise in a field in which the client will typically be ignorant, founding an expectation that professional advice would ordinarily be followed; in the case of a spiritual adviser, from the religious imperative to follow spiritual advice; in the case of a parent, from that authority which a parent naturally has over a child. A real estate agent, or a stock and station agent, no doubt has an opportunity to influence a principal, but these are not viewed as necessarily relationships of influence, because such agents do not have the same standing and authority in respect of a client as do those in the traditional categories. A husband and a wife obviously are vis-à-vis each other in positions of trust and confidence and influence, but one does not ordinarily have over the other such authority as to make such relationships a presumed relationship of influence, nor (without more) a special relationship of influence. It is where the relationship is such that one party is seen or supposed to be in some way beholden, obliged, or disadvantaged in relation to the other that such relationships are presumed or can be proved, and dominion or ascendancy is at least usually an important factor. (emphasis added)
[2] Tulloch v Braybon(No 2) [2010] NSWSC 650 [51].
In Mercanti v Mercanti,[3] Le Miere J stated:
Undue influence may be cases of actual undue influence or presumed undue influence. In cases of actual undue influence it is necessary for the complainant, that is the person who wants to set aside the transaction, to prove that the wrongdoer exerted undue influence on the complainant to enter into the particular transaction. In cases of presumed undue influence the complainant only has to show, in the first instance, that there was a relationship of trust and confidence between the complainant and the wrongdoer of such a nature that it is fair to presume that the wrongdoer abused that relationship in procuring the complainant to enter into the transaction. Once the relationship has been proved the burden shifts to the wrongdoer to prove that the complainant entered into the transaction freely, for example by showing that the complainant had independent advice. A relationship of presumed undue influence can be proved in two ways. First, certain relationships as a matter of law raise the presumption that undue influence has been exercised. Secondly, if the complainant proves the actual existence of a relationship under which the complainant generally reposed trust and confidence in the wrongdoer, the existence of such relationship raises the presumption of undue influence.
The plaintiffs accept that the relationship of adult child and parent is not a category that creates a presumption of undue influence. The plaintiffs' case is that in fact there was an antecedent relationship between Michael and Tyrone, the nature of which was that Tyrone was in a position to exercise dominion, power or ascendency over Michael in relation to matters concerning the family business and the affairs of the two trusts.
A relationship of confidence is not a sufficient condition for undue influence to be presumed. Many parents would describe their relationship with their adult children as trusting and confidential. They are not relationships in which undue influence will be presumed. It is only where the trust and confidence reposed by one is such that there is also ascendency or dominion by the other over the will of the first that the presumption will arise: Tulloch (Dec) v Braybon (No 2) [2010] NSWSC 650 [77], [87] (Brereton J). In 2004 Tyrone had been general manager of the business for about eight years and a director of each of Slondia and Citycourt since 2001. From about 15 June 2004, that is the time that Michael instructed Mr Nettleton to appoint Tyrone as Appointor of each of the trusts, Michael appointed Tyrone managing director of each of Slondia and Citycourt. By that time Tyrone was making the senior management level decisions for the business. Those matters, and the evidence generally, establishes that Michael had a high level of trust in Tyrone. However, that is not the same thing as Tyrone having an ascendency or dominion over Michael and Michael having a correlative dependence or subjection to Tyrone. (emphasis added)
[3] Mercanti v Mercanti [2015] WASC 297 [152] ‑ [154].
There are two types of presumption in cases of undue influence.
The first is what might be called a status presumption, where it is only necessary to prove the status of the parties and undue influence will be presumed so as to require a rebuttal (eg a solicitor and client).
The other type of presumption is what might be called a special relationship presumption. In such a case undue influence will be presumed so as to require a rebuttal only where two matters are proven: firstly, the existence of influence and secondly the existence of dominion or ascending over another (i.e., it is only where the trust and confidence reposed by one is such that there is also ascendency or dominion by the other over the will of the first that the presumption will arise). It is only if both of those factors are established that a special relationship arises requiring rebuttal.
In the case of undue influence, since the will of the innocent party is overborne, dominion or ascendancy by one over the will of the other, and correlatively dependence and subjection on the part of the other must be shown.
The witnesses
Anna called four witnesses: Dr Marietta Smith; Max Turner; Wayne Matthews and Salvatore Martella. I found each of those witnesses to be honest and reliable witnesses. I accept each of them as witnesses who endeavoured to give their evidence as truthfully as possible and to the best of their recollection.
Dr Marietta Smith was a local GP who saw Joe on a number of occasions.
Max Turner was a farmer who owned the property across from the farm where Joe lived. He was a close friend of Joe's. Joe would spend several hours at Max Turner's house on Sundays.
Wayne Matthews was Max Turner's son inlaw. He was a neighbour and a friend of Joe's.
Salvatore Martella was a solicitor who prepared a will for Joe in 1991. Mr Martella was somewhat defensive in his evidence. The events about which he gave evidence occurred over 25 years ago. Inevitably, he was entirely reliant upon his notes.
The defendants combined called five witnesses: Tony Larussa, Alexandra Larussa, Amid Humd, Lindsay Stagoll and Greg Neaves. I found each of those witnesses to be honest and reliable witnesses. I accept each of them as witnesses who endeavoured to give their evidence as truthfully as possible and to the best of their recollection.
I note that there were some inconsistencies between the evidence given in the Will trial and the trial of this action but those inconsistencies were not such as to displace my overall impression of the witnesses as set out above.
Amid Humd holds a Graduate Diploma of Legal Practice. He drafted the Memorandum and associated documents[4].
[4] ts 412 ‑ 413, 24 October 2019.
Lindsay Stagoll was the accountant from Parkinson & Co who dealt with Joe and Tony from 2006 onwards[5].
[5] ts 432, 24 October 2019.
Greg Neaves was a stock agent who dealt with Joe and Tony for about 10 years prior to Joe's death.
I note that all of the witnesses' evidence was largely favourable to the defendants and did little, or nothing, to impeach the defendants' case.
There was extensive cross‑examination of Tony, Alexandra and Amid Humd.
The defendants also tendered an expert's report from Clifford Hobden verifying that it was Joe's signature on the Memorandum (exhibit 4). That evidence was unnecessary and the defendants should not have been put to the expense of obtaining an expert report by Anna.
The accountants
Joe and Tony's original accountants were Scolaro, Anthony & Co. Joe and Tony dealt with both John Scolaro and Rosana Bonavita at that firm.[6]
[6] See for example exhibit 1, page 57.
In about 2006, Joe and Tony transferred their accountancy work to Parkinson & Co.
The Larussa Pastoral Trust
The Trust was created on 24 July 2003 (exhibit 1, pages 72 - 89).
Larussa Pastoral Holdings Pty Ltd was incorporated on 24 July 2003 as trustee of the Trust (exhibit 1, pages 58 ‑ 71). The directors were Joe and Tony. They were also the shareholders. The beneficiaries of the Trust were Joe, Tony and Tony's family[7].
[7] ts 289, 22 October 2019.
The Larussa family background
Joe was born in Italy on 26 January 1941.
Joe emigrated to Australia in 1958.
Joe married Maria on 30 August 1969.
Joe and Maria had two children - Anna and Tony.
Joe and Maria never divorced but their relationship ended some time in 1990 as a result of Maria commencing a relationship with her present partner.[8]
[8] ts 225, 286, 22 October 2019.
Joe continued to work for Shell and then Pioneer Road Services following the separation. He retired in about 2000.[9]
[9] ts 288, 22 October 2019.
Tony's wife is Alexandra. Tony commenced living with Alexandra in about 1993. Tony married Alexandra on 1 September 1994.[10] They lived with Joe at his then address in Kingsway.[11] They have one child - a girl, Charli.
[10] ts 217, 22 October 2019.
[11] ts 214 ‑ 215, 22 October 2019.
Anna has two children - Francesca and Xavier.[12]
[12] ts 222, 22 October 2019.
The Larussa family relationships following the separation
Joe and Maria entered into a property settlement in the Family Court of Western Australia on 18 July 1991.[13]
[13] Exhibit 1, pages 1 ‑ 3.
As part of that property settlement control of a trust account jointly held by Joe and Maria for Anna was transferred to Maria and control of a trust account jointly held by Joe and Maria for Tony was transferred to Joe. This separation of control provides some evidence from an early date of an arrangement or understanding that Maria would provide for Anna and that Joe would provide for Tony.
Tony's evidence was that on the day Maria left the family home she said 'Now you look after your son and I will look after Anna'. Tony's evidence was that over the years Joe's main concern was that his wife and daughter did not get anymore of Joe and Tony's hard work.[14]
[14] ts 292, 22 October 2019.
Alexandra's evidence was that at some later point Joe stated that he would look after Tony and Maria could look after Anna.[15]
[15] ts 229 ‑ 230 22 October 2019.
Following the property settlement there was almost no contact between Joe and Tony and Maria and Anna.
Although Joe's 1991 will[16] provided for a one-third share to Anna, Chaney J found that that will was revoked. I do not find a will made in 1991 to be of any assistance in determining the relationship after that date. The will was subsequently revoked and Joe did not make a new will that provided for Anna.
[16] Exhibit 1, pages 590 ‑ 591.
Whether Joe formed the view that he should only provide for himself and Tony shortly after the separation or at a later date is largely irrelevant. By, at least, the early to mid‑2000s Joe was clearly of the view that he should not provide for Anna or Maria.
There was seemingly only one occasion when Joe and Maria met after the separation.
Joe and Maria meeting on only one occasion in over 20 years only emphasises how minimal the relationship was between Joe and Maria following the separation.
Tony's evidence was that following the separation Joe had a very adverse view of Maria and Anna.[17]
[17] ts 287, 22 October 2019.
When Joe spoke to Alexandra about Maria he referred to her in adverse terms.[18]
[18] ts 226, 22 October 2019.
Joe rarely spoke to Alexandra about Anna. The only occasion that Alexandra could remember was when Joe told her that Anna had visited him to ask for money to purchase a rental property.[19]
[19] ts 221, 223, 22 October 2019.
On a couple of occasions Alexandra asked Joe how Anna was but his response was dismissive.[20]
[20] ts 224, 22 October 2019.
Until very shortly before his death Joe remained concerned about how people might perceive him if he did not leave anything to Anna. I regard that as a reflection of Joe's concern as to how people might perceive him than as demonstrating any sense of obligation to Anna when regard is had to the evidence overall.
Joe had photos of Tony and his family in his house but he did not have photos of Anna and her family.[21]
[21] ts 224 ‑ 225, 22 October 2019.
When Tony and Alexandra married, neither Maria nor Anna attended the wedding (22 October 2010).
Alexandra did not meet Maria until the day of Joe's funeral. This is despite the fact that Tony and Alexandra had been in a relationship for over 20 years by this time.[22]
[22] ts 226, 22 October 2019.
Maria had never spent any time with her grand‑daughter Charli - Tony and Alexandra's child.[23]
[23] ts 226, 22 October 2019.
Tony's evidence was that he telephoned Anna on the day of Joe's death to inform her of Joe's death. Anna came to the Beeamullah farm on the day of Joe's death and asked about various business accounts. At Joe's funeral she asked Tony about mining activities on the property.[24] In the circumstances this demonstrates a degree of callousness on Anna's part. Her primary interest appears to have been in Joe's estate rather than in Joe or how Tony felt. Business matters could have waited.
[24] ts 310 ‑ 312, 23 October 2019.
Max Turner was called by Anna. He was a farmer. He lived opposite Joe for about 10 years. Max's evidence was that he had a strong relationship with Joe.[25] Joe used to go across to Max's almost every Sunday for a couple of hours.[26]
[25] Exhibit 1, pages 529 ‑ 533.
[26] ts 125, 21 October 2019.
Max only discovered that Joe had a daughter when he saw a woman and two children on Joe's farm and asked who they were.[27] At some time after Anna's visit Joe told Max that Anna had come to see him because she wanted to buy a house. Joe stated to Max 'that's not the way it works.[28] Other than on these occasions, Joe never mentioned his daughter or her children to Max.
[27] Exhibit 2, page 34.
[28] ts 122 ‑ 123, 21 October 2019.
Max had met Tony, his wife Alexandra and their daughter, Charli.[29] He had seen them at Joe's farm on a regular basis.
[29] ts 128, 21 October 2019.
Anna also called another neighbour, Wayne Matthews, Max Turner's son inlaw. Wayne described Joe as a good friend.[30] On 26 November, Joe went to Wayne's house and spoke to Wayne about what he could do with his will. Wayne's understanding was that Tony was to be left everything from Joe, and Anna would be getting everything from his wife.[31] Joe asked Wayne how he would go about changing his will and leaving something to his daughter. Wayne said he would contract his solicitor. On 27 November Joe saw Wayne and told him not to worry about the previous day's conversation as he had spoken to his daughter. This was the first occasion on which Joe had ever mentioned to Wayne that he had a daughter.[32]
[30] ts 140, 21 October 2019.
[31] Exhibit 2, pages 526 ‑ 527; ts 137, 21 October 2019.
[32] ts 142, 21 October 2019.
Wayne had met Tony's wife Alexandra and their daughter Charli. He had seen them at Joe's farm on a regular basis.[33]
[33] ts 142 ‑ 143, 21 October 2019.
Joe and Max had a close relationship. One would expect children and grandchildren to have been natural topics of conversation between them. One would have expected Joe to have mentioned Anna and her children to Max if Joe had any significant relationship with Anna and her children. I infer from Joe's failure to mention Anna or her family to Max that there was no significant relationship between Joe and Anna. Similarly one would have expected Joe to mention Anna and her children to Wayne.
Anna did not give evidence. I infer from that that she accepted that she could not have given evidence that there was a relationship of any sort between her and Maria with Joe and Tony.
I have no hesitation in finding that the Larussa family had divided into two factions consisting of Joe and Tony and Maria and Anna respectively from some time after Joe and Maria's separation and that those factions never reconciled. There was virtually no relationship between Joe and Tony with Maria and Anna. More importantly there was no relationship of any significance between Joe and Maria or Joe and Anna.
I find the fact that neither Maria nor Anna attended Tony's wedding and that they had not met Alexandra or Charli to be particularly telling. It speaks to the bitterness of the separation, a bitterness which lasted over the ensuing years.
I form this view:
(a)primarily, on the fact that as a matter of conduct there was virtually no contact between the two factions; and
(b)secondarily, on the oral evidence as to the relationship both from Tony and Alexandra and from the independent witnesses.
The significance of the lack of relationship between Joe and Maria and Anna is that it explains why Joe should have executed the Memorandum. There was no reason to order his affairs in such a way as to benefit Maria or Anna. In fact, I infer that the purpose of Joe entering into the Memorandum was to ensure that neither Anna nor Maria was able to receive anything from him.
Joe and Tony's business involvement
In 1995 Joe developed four residential units on the land at 17 Campion Avenue, Balcatta that had been transferred to Joe's sole name as part of the property settlement. Joe developed that property with Tony's assistance.[34] In late 2002 Joe sold those properties for $684,000.
[34] ts 288, 22 October 2019.
In about 1994 Tony and Alexandra moved to the farm in Three Springs.[35] In April 1997 Joe bought a farm, 'Wandoo Park', east of Eneabba for $455,000.
[35] ts 215, 22 October 2019.
On 1 July 2000 Joe and Tony entered into a share farming agreement for Wandoo Park.[36]
[36] Exhibit 1, page 32.
Sometime in the early 2000s the development of the land at 59 Kingsway, Landsdale took place. The land had been transferred to Joe's sole name as part of the Family Court property settlement in 1991.
Wandoo Park was sold on 23 December 2006[37]. Joe received the balance of $1,462,816 at settlement on 2 April 2007.
[37] Exhibit 1, pages 335 ‑ 337.
The Kingsway subdivision blocks were ultimately sold for approximately $5,900,000 between August 2004 and June 2005.
The proceeds of the Kingsway subdivision were lent to the Trust.
Tony's evidence was that he was doing the 'running around' in relation to the Kingsway subdivision. He did whatever his father requested or told him to do. He met with Wood & Grieve the engineers for the subdivision on a weekly basis. On most occasions his father attended unless he was busy doing something else. They also met the bank managers together.[38]
[38] ts 346 ‑ 348, 23 October 2019.
Tony did things such as sending Ms Bonavita GST lists,[39] town planner's invoices,[40] subdivision information[41] and copies of letters from BankWest[42]. He also took Joe's tax returns for him to sign on occasions[43] and drew cheques to pay tax.[44]
[39] Exhibit 1, pages 105 ‑ 110.
[40] Exhibit 1, page 116.
[41] Exhibit 1, pages 181 ‑ 185.
[42] Exhibit 1, pages 118 ‑ 119, 143 ‑ 145.
[43] ts 291, 22 October 2019.
[44] Exhibit 1, page 214.
Tony was undoubtedly involved in the subdivision of the Kingsway property.[45] However, it is clear that Tony thought that Joe would 'need to be a party to all these decisions'.[46] It remained Tony's view that Joe needed to be a party to all decisions.[47]
[45] See for example Ms Bonavita's notes of her telephone conversation with Tony on 23 June 2003, exhibit 1, page 52).
[46] Exhibit 1, page 53.
[47] ts 394, 23 October 2019.
Alexandra's evidence was that Tony was involved with Joe 'together' in the Kingsway development.[48]
[48] ts 256, 22 October 2019.
Tony also assisted Joe by making arrangements for payment of Joe's bills. Those bills were paid out of the business bank account to which Joe and Tony were signatories. Joe was not a signatory to Joe's personal account.[49] Tony's evidence was that he did whatever he could to help Joe or whatever Joe asked of him.
[49] ts 332 ‑ 333, 23 October 2019.
There is nothing to suggest that Tony's role was any more than that of a son assisting his father and acting as a fellow director of Larussa Pastoral Holdings Pty Ltd.
On 23 June 2003 Ms Bonavita had a long telephone conversation with Tony. Her notes relevantly record:[50]
Tony then asked which entity he should buy the land [at Muchea] under. Initially he said that he wanted it to be in his name only. He has issues with his father's daughter (Tony's sister) who has nothing to do with the family for many years. Apparently Joe split with his wife about 13 years ago and the unwritten arrangement between them is that whatever his wife has will go to the daughter and whatever Joe has will go to Tony. We talked about wills and what Tony would be entitled to if Joe passes away etc. I pointed out to Tony that what-ever verbal arrangement they had between themselves, it would not pass in a Court of Law. Joe would need to deal with these issues in his will or by gifting items e.g. liquid cash - to his son Tony during his lifetime.
Tony says that once they have organised where they are going with forming a Trust etc, Joe will look at his will.
3. EXISTING FARMING BUSINESS
I reiterated to Tony that the current share-farming arrangement that he has with his father and Alex is not a satisfactory one. When the volume was lower in terms of dollars it was probably okay, but now that there is a significant dollar activity, it really needs to be dealt with properly. We discussed Joe's transferring the business fully to a discretionary family trust - but then that could possibly be a problem with the market value of the cattle and the Section 70 election. I told him of John's suggestion that Joe transferred say two-thirds or whatever percentage he chooses to a discretionary family trust for which the primary beneficiary was Tony himself, with additional beneficiaries being Tony's children, Alex, Joe and the usual Aunties, Uncles, brothers, sisters, spouses etc. Tony understood this, but said that specifically his sister (Joe's daughter) would have to be excluded as a beneficiary.
I talked to Tony further about a corporate trustee, appointer/guardian, name of trust and various other issues that need to be dealt with. Tony said at this point he felt that he should come and see us with his father because they are things that he cannot decide on his own. His father would need to be party to all these decisions.
[50] Eexhibit 1, page 53.
It is clear from these notes that Tony understood, and believed, that Joe needed to be a party to all decisions concerning the Trust, the property etc. The notes do not paint a picture of a son manipulating or pressuring his father in any way. In fact, the notes paint a picture to the contrary.
Ms Bonavita's notes of 23 June 2003 also record a discussion with Tony concerning the subdivision of the Kingsway property.[51]
[51] Exhibit 1, page 52.
The need for Joe to be involved in decisions is confirmed by Ms Bonavita's notes of a meeting on 21 July 2003 between her, John Scolaro, Joe and Tony[52] which record both the signing of the documents for the creation of Larussa Pastoral Holdings Pty Ltd and the Trust and a discussion of the Landsdale (Kingsway) subdivision and other matters.
[52] Exhibit 1, page 57.
Ms Bonavita met Tony on 7 November 2005. Her notes[53] relevantly record:
I saw Tony today and gave him Joe's tax return for 05 to get signed and returned.
At the same time, I explained to Tony that Joe had a beneficiary loan account owing to him by Larussa Pastoral Trust of just over 5 million dollars. I explained to Tony that if his father was to pass away, the 5 million dollars would be treated as an asset and distributed to the beneficiaries of his will in accordance with the will.
Tony was very concerned about this and I did recommend to him that his father should have his will reviewed every couple of years. Tony said he wanted to see Rosemary Wheatley and I gave him her telephone number.
He will get his father to see her shortly and mention the beneficiary loan account at the same time.
[53] Exhibit 1, page 290.
Tony's evidence was that he spoke to his father about the loan account at the time but that they did not get around to doing anything about the loan account because they were too busy and just did not worry about it.[54]
[54] ts 361, 23 October 2019, ts 293, 22 October 2019.
In cross-examination it was put to Tony that he was the person who mostly dealt with accountants in getting the Trust set up. Tony agreed that he mostly spoke to the accountants because he was easier to contact - but a lot of the times he and Joe were present together at the accountants.[55]
[55] ts 343 ‑ 344, 23 October 2019.
Tony also made inquiries of the accountants about Joe's superannuation.[56] Tony's evidence was that he discussed the superannuation with the accountants as a result of Joe's instructions.[57]
[56] Exhibit 1, page 114.
[57] ts 339, 23 October 2019.
Lindsay Staggoll's evidence was that the main point of contact with the Larussa family was Tony but that Joe attended meetings when they were reviewing the financial statements and tax returns at the end of the year.[58]
[58] ts 437, 24 October 2019.
Tony's evidence was that Joe was a party to all of the decisions relating to 'the structure of the trust and so forth'.[59]
[59] ts 295, 22 October 2019.
Tony's evidence was that what he and Joe did they did as partners. Everything was discussed and open between he and Joe.
Neither Joe nor Tony took wages from the farming business. They used company funds to pay their expenses.[60]
[60] ts 290, 22 October 2019.
Mr Scolaro's notes of the meeting of 22 May 2000[61] record that Tony wanted to draw a wage but that Joe 'seemed to say let things be as they are and it seemed as if he didn't care to commence payment of wages'. The accounts do not record any payment of wages to Tony either then or later.
[61] Exhibit 1, page 34.
The fact that, despite Tony's wish to draw a wage, Joe did not support the payment of wages and that no wages were drawn supports an inference that Joe was the decision maker. It does not suggest that Tony was trying to overbear Joe's will.
On one occasion, some, but not all, of Joe's and Larussa Pastoral Holdings Pty Ltd's bank statements were sent to Tony by the accountants for safe keeping. I note that only selected pages were sent.[62] Tony did not remember why they were sent to him or what he did with them.[63] I do not attach any significance to the fact that some statements were sent to Tony.
[62] Exhibit 1, page 300.
[63] ts 336 ‑ 337.
Tony's evidence was that the decisions as to the structure of the Trust accounts and the distribution of profits each year was made by the accountants. Tony's evidence was that he left these matters to the accountants.[64]
[64] ts 289, 22 October 2019, ts 365, 23 October 2019.
Beermullah and Brera
For about 10 years prior to his death Joe lived on a property of about 1000 acres at Beermullah, near Gin Gin. He conducted a cattle business on that property. The farm was purchased by Larussa Pastoral Holdings for the Trust on 1 December 2003.
On 30 November 2004, Joe signed a contract for the purchase of a property at Breera, near Gin Gin, for $3,600,000.[65] Larussa Pastoral Holdings Pty Ltd made a declaration of trust in relation to that property on 31 December 2004.[66]
[65] Exhibit 1, pages 190 ‑ 193.
[66] Exhibit 1, pages 210 ‑ 212.
In 2005 Tony and Alexandra moved to Breera to be closer to Joe, Alexandra's family and schools for Charli.[67]
[67] ts 217, 22 October 2019.
Tony lived on and raised cattle at the Breera property.
In 2012 Alexandra and Charli moved to Ethel Street, North Perth for Charli's schooling.[68]
[68] ts 219, 22 October 2019.
The farms at Beermullah and Breera were about 20 minutes drive from each other (ts 217, 22 October 2019). Tony attended at Beermullah most days. Joe would go to Breera whenever Tony was ploughing, seeding etc. The farms were run as one property (ts 301 - 302, 22 October 2019).
As Joe grew older Tony did more of the heavy work on the farms.[69]
[69] ts 301, 22 October 2019.
Tony continued to assist Joe on his property after Joe's accident.[70]
[70] ts 117, 21 October 2019.
I note that Breera was referred to as Tony's and Beermullah as Joe's despite the fact that they were both owned by the Trust. Nothing turns on that.
Shortly after Joe and Maria separated Joe and Tony had a dispute that resulted in Tony working away for some months.[71] Other than that, Tony worked on Joe's properties and subsequently the Trust's properties for over 20 years.
[71] ts 293, 305, 22 October 2019.
By reason of the Memorandum the Trust assets would effectively pass under Tony's control on Joe's death. Tony's work for Joe, and the Trust, and his close relationship with Joe provided a cogent reason for Joe to provide for Tony, particularly when he had virtually no relationship with Maria or Anna.
Joe's personality
Max Turner described Joe as strong willed. Max accepted that it would be difficult to shift Joe's view once he held a firm view about something.[72]
[72] ts 125, 21 October 2019.
Wayne described Joe as a very hard working, honest man who was strong willed.[73]
[73] ts 141, 21 October 2019.
Joe's command of English
Joe was born in Italy. Italian was his native language.
Dr Smit's evidence was that she had no doubt that Joe understood any conversation they had.[74]
[74] ts 105 ‑ 106, 21 October 2019.
Max's evidence was that Joe had English language newspapers at his house. He described Joe as being able to talk about anything. This included politics, the farm and the local shire.[75]
[75] ts 125, 21 October 2019.
Max gave evidence that one occasion he went with Joe to fill in an accident report form at the police station because Joe was concerned about his spelling.[76] A concern with his spelling does not indicate that Joe had problems reading or understanding English.
[76] ts 130 ‑ 131, 21 October 2019.
Wayne's evidence was that he had no trouble communicating with Joe.
The only evidence that suggest that Joe might have had some issues with the English language arose from the events surrounding Joe's execution of his will over 20 years before his death. Salvatore Martella, a solicitor who prepared Joe's will, added an interpretation clause to Joe's will of 1 August 1991. Mr Martella swore an affidavit that was filed in the Will case.[77] The affidavit attached both Mr Martella's notes when he took instructions on 30 June 1991 and a copy of the will. Mr Martella's notes state 'no interpreter'. Mr Martella's evidence was that originally he did not think that it would be necessary to interpret the will. However, on the day it was executed he inserted an interpretation clause at the end of the will.[78] Mr Martella's believes that Joe gave his instructions to Mr Martella in English.[79] Mr Martella's evidence was that Joe 'spoke English fairly well'.[80] Mr Martella's evidence was that 'there's no doubt that I put this interpreter clause to make 100% sure he understood the whole will and that it - to protect the client'.[81] Mr Martella's evidence was that how they went about 'deciding to do an interpretative clause or not' was not 'overly clear'.[82]
[77] Exhibit 2, pages 583 ‑ 592.
[78] Exhibit 1, page 585.
[79] ts 149 ‑ 150, 21 October 2019.
[80] ts 153, 21 October 2019.
[81] ts 154, 21 October 2019.
[82] ts 155, 21 October 2019.
Although it was not put to Mr Martella I do note that the interpreter clause[83] states 'Italian being the customary language understood by him'. The evidence does not establish that in 1991 Italian was Joe's customary language. His customary language at that time was English.
[83] Exhibit 1, page 592.
Mr Martella was challenged as to the accuracy of the statement in the clause that he read over and translated [the will] in the Italian language to Joe. He conceded that he read portions of it to Joe and explained them.[84]
[84] ts 149 ‑ 152, 21 October 2019.
I conclude that the interpreter clause was inserted by Mr Martella as a matter of prudence and that it did not reflect any problems that Joe had with the English language. I reach that conclusion because Mr Martella originally took the instructions in English, produced the will in English, added a clause which was not entirely correct and stated that the interpreter clause was added to protect the client. Given that English was not Joe's native language it was prudent of Mr Martella to add an interpreter clause to the will to be absolutely sure. However, I do not find that the presence of that clause reflects any difficulties on Joe's part with the English language.
Gregory Neaves, a livestock agent who dealt with Joe and Tony, gave evidence that Joe did not have any problems completing the National Vendors' Declaration for livestock.[85] Mr Neaves described Joe as being able to get a very good deal in relation to his cattle.[86]
[85] ts 270 - 271 22 October 2019.
[86] ts 272, 22 October 2019.
Anthony Scolaro, Joe's then accountant had a conference with Joe, Tony and Alexandra on 22 May 2000.[87] In Mr Scolaro's notes of the meeting he stated that he explained to Joe what a balance sheet is 'in Italian'. Tony did not recall the conversation.[88] Neither Mr Scolaro nor Ms Bonavita were called by Anna to give evidence to explain why on this occasion there was an explanation in Italian.
[87] Exhibit 1, page 34.
[88] ts 336, 23 October 2019.
Lindsay Staggoll gave evidence that Joe spoke in English when he needed to and that he seemed to understand what was said to him in English.[89]
[89] ts 432, 24 October 2019.
It is clear that Joe signed a number of contracts for the sale of land throughout the period.[90]
[90] e.g. Exhibit 1, pages 39 ‑ 40.
Mr Humd's evidence is that Joe had a marked Italian accent but that when he spoke to him he clearly understood Joe and believed Joe understood him.[91]
[91] ts 402, 24 October 2019.
Joe was plainly a very successful and intelligent businessman. From the time he arrived in Australia in 1958 until shortly prior to his death he had built up assets of over $6,000,000 from investments in real estate through subdivision and the purchase of farming properties. Such documentation as was in evidence in this matter exhibits that those transactions were in English.
I find that Joe had a good command of the English language despite the fact that Italian was his first language. He had lived in Australia since 1958. Joe had been involved in commercial transactions relating to the subdivision and the sale and purchase of a number of properties. There is no basis for concluding that he did not have a good understanding of English.
Joe's relationship with Tony
Max knew Joe and Tony for about 10 years prior to Joe's death. He was aware that Tony worked on Joe's property. Max never saw Tony doing anything other than being a good son and helping his father.[92] Tony never gave Max the impression that Tony was 'bossing Joe around' or trying to influence him in some way whether in the farming sphere or otherwise.[93] His evidence was that Tony would not have been able to anyway (ts 118, 21 October 2019).
[92] ts 118, 21 October 2019.
[93] ts 116, 21 October 2019.
Max's evidence was that Joe was always talking about how hard Tony worked. Joe never ran Tony down to Max.[94] He accepted that Joe and Tony's relationship was the sort of relationship one would hope for between a father and a son.[95]
[94] ts 127, 21 October 2019.
[95] ts 128 ‑ 129, 21 October 2019.
Wayne never observed Tony putting pressure on Joe about anything. He accepted that Tony's relationship with Joe was a good one.[96]
[96] ts 141, 21 October 2019.
Alexandra's evidence was that Tony and Joe had 'a very close relationship. A father and son type relationship. They were like two peas in a pod. They were respectful. They were very similar, and they just - I never seen a relationship like that before. They were very, very close'.[97]
[97] ts 218, 22 October 2019.
When asked about how Joe and Tony interacted together Alexandra's evidence was 'father/son relationship. They did everything together. They were - they had mutual respect. And they, you know, neither was more dominant than the other. They were respectful and they were a team. They had the farm in common'. An exchange between Mr Juebner and Alexandra illustrates Joe and Tony's relationship:[98]
[98] ts 236, 22 October 2019.
JUEBNER, MR: Can I ask you this question; in the time that you've known Joe and Tony, have you ever seen Tony exert pressure on his dad? Never. It wasn't that type of relationship.
Did you ever see them disagree about anything? Many times.
Yes. And when you saw them disagree on things, how did that resolve itself; if it did resolve itself? Everything just went back to normal. It was like nothing. Disagreements on maybe where to move the cows, in which paddock. Maybe, 'No, don't put it there because we will leave the grass to grow a bit more in there'. And just those types of disagreements. But nothing to where they would hold a grudge or - it was - in all the years, I can honestly say in all the years I've known Joe and Tony, from the beginning to the end it was the same. Nothing changed.
And did Joe ever complain to you about pressure being put on him, by Tony? Never.
No? Never, ever did he speak like that.
…
JUEBNER, MR: What words did he say to you about Tony? If you can remember, like how did he express himself about how you - how he felt about Tony? He adored Tony. 'My son, he works hard'. He always used to say that to me. And, you know, 'you're a good woman' and 'you're good', and things like that. He …
He - but what did he say about Tony? That Tony was a hard worker.
Yes? And he was a great son, and I would always say to him, you're very lucky to have a son like that, Joe. Likewise, they were both very lucky to have each other.
Lindsay Staggoll's evidence was that he never observed Tony putting any pressure on Joe.[99]
[99] ts 437, 24 October 2019.
I accept that Joe had a high level of trust in Tony. Given that they worked together for over 20 years that is hardly surprising. There is no evidence to suggest that Tony had an ascendency or dominion over Joe. I accept that Joe was always involved in decisions concerning the subdivisions, the farming properties and the Trust. There is no evidence to suggest that Joe's decisions were ever made as a result of any pressure from Tony or that Tony had any dominance or authority over Joe.
Joe was a strong willed person and an able businessman. I find that Tony was not in a position to exercise dominion, power or ascendancy over Joe - either before or after the incident with the bull referred to below.
Joe's health
On 27 April 2013 Joe suffered a broken ankle as a result of an incident with a bull. On 3 May 2013 he had an operation on his ankle.[100]
[100] Exhibit 1, page 515.
Joe was in hospital for about three months as a result of his broken ankle. He was first admitted to Royal Perth Hospital, then to Shenton Park Rehabilitation Hospital and then to the Moora Hospital.[101]
[101] ts 234, 22 October 2019.
Following Joe's injury Tony looked after Beermullah with assistance from Max. Once Joe returned to live at Beermullah Tony made sure Joe did not do too much such as heavy lifting. After his discharge from hospital Joe became very frustrated that he couldn't do things like he used to.[102]
[102] ts 307 ‑ 308, 23 October 2019, ts 367, 23 October 2019, exhibit 1, page 530.
Tony drove Joe to his various medical appointments.[103]
[103] ts 358 ‑ 359, 23 October 2019.
Max Turner's evidence was that after Joe's accident he had a bit of trouble getting around. However, he continued to use his quad bike to get around the farm.[104] For example, Joe continued to check the water for the cattle.[105] Joe asked Max to help him install a new water trough the day before he died.[106]
[104] ts 118, 21 October 2019.
[105] ts 123, 21 October 2019, ts 129, 21 October 2019.
[106] Exhibit 1, page 531.
Joe was alleged to have trouble sleeping at night. He allegedly suffered from cirrhosis of the liver and kidney disease. He never told anyone about these matters.[107] There was no medical evidence about the effect of cirrhosis of the liver and kidney disease nor any evidence as to the impact that might have on Joe's cognitive capacity or his susceptibility to pressure. In the absence of such evidence I am unable to draw any inference as to what effect it might have had.
[107] ts 360, 23 October 2019.
The broad proposition that Joe might have had trouble sleeping at night does not assist me to form any view as to the effect on him.
Anna called Dr Smit. Joe attended Dr Smit on a number of occasions in August/October 2013 complaining of pain. Her progress notes appear in exhibit 1 at pages 515 - 516. Dr Smit saw Joe four days after he executed the Memorandum.
Dr Smit's notes record that on 10 October 2013 Joe stated 'Oh my G-- etc. Don't want to live as bull ruined my life'.[108]
[108] Exhibit 1, page 515.
Dr Smit's evidence was that she did not have any serious concerns about Joe's mental health. Her evidence was that if she had any specific concerns she would have made a note in the progress notes and referred him to a psychologist or for some other sort of treatment.[109]
[109] ts 106, 21 October 2019.
Joe did not express any suicidal thoughts to Anna.[110]
[110] ts 251 ‑ 252, 22 October 2019.
Joe said to Tony words to the effect that he wanted to take his life but Tony thought he was just frustrated with his leg.[111]
[111] ts 208, 23 October 2019.
The day before he died Joe said to Max words to the effect that he was going to hang himself and he felt like a cabbage. Max did not take those statements literally.[112] Similarly Wayne did not take Joe's statements seriously[113].
[112] ts 119, 21 October 2019, ts 124, 21 October 2019, ts 133, 21 October 2019, exhibit 1, page 531.
[113] ts 139, 21 October 2019.
Wayne saw Joe on the day of, or the day before, Joe's death. Joe appeared to be his normal self and gave Wayne no indication that he was depressed or planning to take his own life.[114]
[114] Exhibit 1, page 527.
There was nothing in Joe's behaviour or statements that was sufficient to seriously alert anyone to the fact that he was suicidal.
Joe's attitude to the Trust's debt to him
In relation to the Trust's debt to Joe, Alexandra's evidence was that 'Joe spoke about wanting to do something, wanted to make sure that Anna and Maria didn't get her hands on any more'. Joe stated this several times over the years in conversations involving him, Tony and Alexandra.[115] He stated that 'he wanted to fix the problem, and seek help from accountants'.[116]
[115] ts 227, 22 October 2019.
[116] ts 228, 22 October 2019.
Tony's evidence was that in the 12 months prior to the execution of the memorandum Joe was talking to Tony about taking the next steps sorting the debt out.[117]
[117] ts 295, 22 October 2019.
Mr Humd
Tony's evidence was that at the beginning of 2013 Joe said to him 'We need to sort out the beneficial loan account'.[118]
[118] ts 361, 23 October 2019.
In 2013 Mr Humd was in Perth attending a trial as instructing solicitor.[119] Tony first met Mr Humd at a friend's place at a barbecue or social event of some kind. Mr Humd said that he did trusts and they started discussing what Tony and Joe had been talking about.[120] Mr Humd's evidence is that he discussed the farming business, Tony relationship with his father and mother and trust related matters.[121]
[119] ts 401, 24 October 2019.
[120] ts 362, 369, 23 October 2019.
[121] ts 402, 24 October 2019.
Tony's first discussion with Mr Humd occurred when Joe was in hospital.[122]
[122] ts 362, 23 October 2019.
A week or two later there was a phone call between Mr Humd and Joe. Mr Humd had returned to Perth. Tony phoned Joe in Mr Humd's presence. Tony was either at Kingsway or in the city with Mr Humd. Mr Humd spoke to Joe. Tony was not particularly listening to what Mr Humd said to Joe. The phone was not on speaker.[123] Tony's evidence as to why he put Joe in contact with Mr Humd was 'Well my father - that's what he wanted to deal with [sorting out the beneficial loan account]. And that was one of the reasons more or less the restructuring and how everything should be set up to go forward in the future'.[124]
[123] ts 362, 369 ‑ 70, 23 October 2019, ts 402, 24 October 2019.
[124] ts 370, 23 October 2019.
When Mr Humd spoke to Joe on the telephone he took notes.[125]
[125] Exhibit 1, pages 486 ‑ 487; ts 403, 24 October 2019.
Mr Humd's evidence confirms that Joe was concerned about the exposure of the beneficial loan accounts to claims by Anna and/or Maria:
What, if anything did Mr Joe Larussa say to you about his desire to release any - well, it says "forgive debts". What did he say about - what did he say to you about forgiving debts? Well, we - the conversation took about 10 minutes. It wasn't extremely lengthy, but it was clear to me what he wanted to achieve.
And what was that? Well, the - I expressed the view, and afterwards commented by the accountants, that the beneficial loan accounts represented an exposure to the trust. And the purpose of a trust is to protect assets. This was a liability sitting there ready to be attacked, so was undesirable, in my view, that it remain, and I told him so. I - I think I said, "Look, the beneficial loan accounts have to go."
…
WILSON MR: Did Mr Larussa express to you any concern - this is Mr Joe Larussa. Did he express to you any concern about the connection between having an outstanding debt that the trust owed him and the possibility that that would become an asset liable to be taken by his estate in the event of his death? I - I expressed that to him. He agreed - agreed with it, but I'm simply saying that I said, 'One of the problems is that the beneficial loan accounts are an exposure. If you pass away, they're subject to an estate or they could be subject to any other actions you'.[126]
[126] ts 416 - 417, 24 October 2019.
…
And in your conversation with Mr Joe Larussa - ?---Yes.
---what did he express to you - insofar as these notes may have refreshed your memory, what did he express to you as his concerns about his asset exposure? He was concerned about his asset exposure. Mr Larussa, even though he had a hard accent and - and obviously worked hard, in my view, was - was not a foolish man, nor an uneducated one. He - he understood clearly what the issues were.
Did you know whether at any time prior to Tony Larussa seeing you he had---? Yes.
--- he had received any general advice about the fact that these debts that the trust allegedly owed to his father might expose the father to a claim by his - and his estate? That opinion was expressed by the accountants. They were very concerned about the exposure of the beneficial loan accounts - had been set up by a previous accountant.
Was that a factor discussed with you? Very briefly, yes.
Yes. And - now, in terms of documentation, were you asked - -? Yes.
…
Were you asked to prepare any, and if so, what documentation? Yes. Basically, both parties wanted the trust deed corrected, and asked me. And I said, 'My advice is to abolish the beneficial loan accounts and follow the advice of the accountants. They represent an exposure to recreate and revest the family trust deed with new beneficiaries'. And remove the class beneficiaries of which his wife - I'm sorry, his former wife and mother would have been entitled to.
Right. Did you ---
THE WITNESS: Because they were a class beneficiary.
WILSON, MR: Right. Did you give them - did you say to them anything about obtaining independent advice? Yes. I said, 'Look, we're in a difficult position because there's both of you. We can act for the company - the trustee company. But we can't act for every - individually. And I urge you very strongly, to seek independent legal advice'.
Right. Insofar as you took instructions from Tony and Joe in English, regarding the restructure of the trust they were seeking to implement---
THE WITNESS: Yes.
WILSON, MR: ---what would be, as far as you understood, the effect of the restructured trust deed, in terms of the requirement for Joe's consent, Tony's consent and the benefits that Joe would retain under the amended trust deed? Well both Mr Larussa and his son were directors of the trustee company. They were significant shareholders and equal stripes. They were also the named beneficiaries, and they were life guardians. So, effectively, their rights are preserved. Didn't matter if the corpus was increased by the beneficial loan accounts because both retained the effective veto power of the entire affairs of the trust.
Mr Humd's notes confirm Tony's evidence that Joe wished to forgive the Trust's debts.
It is apparent from Mr Humd's notes that the Memorandum was a temporary measure pending the establishment of a new trust.
Tony's evidence was that the CPCA was raised by Mr Humd not him[127].
[127] ts 375, 23 October 2019.
Mr Humd's evidence confirms Tony's evidence that the decision to refer to the CPCA, in the Memorandum came from Mr Humd. Joe had a personal concern about the government and his assets[128] but no particular concern about the CPCA.
[128] ts 423, 424, 425, 24 October 2019.
There is no evidence to suggest that Joe or Tony engaged in, or were suspected of any engagement in any criminal activity. But for Mr Humd's suggestion it is difficult to believe that the CPCA would ever have been referred to in the Memorandum.
The execution of the Memorandum of Release
Tony's evidence was that he received the Memorandum,[129] the minutes[130] and the 'Restructure' document[131] prepared by Mr Humd by post at his Gin Gin PO box. He then brought the documents to his Joe's farm and left them with him.[132]
[129] Exhibit 1, pages 512 ‑ 513.
[130] Exhibit 1, page 514.
[131] Exhibit 1, page 488.
[132] ts 298 ‑ 299, 22 October 2019.
A few days or a week afterwards, following a phone call from Mr Humd, Tony went to Joe and asked if he had read the documents. Joe said 'Oh well, I will sign them for you so you can send them back'.[133] The Memorandum was signed by Joe when he handed it back to Tony. Tony thinks he might have signed the Memorandum after he got it back from Joe.[134]
[133] ts 299, 22 October 2019.
[134] ts 300, 22 October 2019.
Because Alexandra had a copier and printer at the house in North Perth Tony decided to take the documents there to copy them. Joe went with him to see his grand‑daughter Charli.[135]
[135] ts 300, 22 October 2019.
Alexandra first saw the Memorandum[136] when Joe and Tony went to Alexandra's home for lunch or an early diner. Joe handed the Memorandum to Alexandra and asked her to read it and take a copy of it. The Memorandum had already been signed.
[136] Exhibit 1, pages 512 ‑ 513.
At North Perth Tony handed the documents, including the Memorandum, to Alexandra to copy them. By that stage Tony had signed the Memorandum. Alexandra sent the copies back to Dunns.[137]
[137] ts 300 ‑ 301, 22 October 2019.
Tony also handed her a document entitled Minutes of Meeting.[138] When Tony handed her the document it had not been signed. Tony said to Alexandra 'Alex have a read of this. It's just the minutes of meeting to say that we discussed the memorandum'. Alexandra looked at it and then Tony signed and dated it and Alexandra photocopied it. Alexandra's evidence was that after the Memorandum and minutes had been signed Joe gave Alexandra a gesture of relief and happiness.[139]
[138] Exhibit 1, page 514.
[139] ts 233, 22 October 2019.
Tony then asked her to post it to Dunns Corporate Counsel in Melbourne. Alexandra handed the original of the Memorandum to Joe and the original of the minutes to Tony. She posted copies to Dunns.[140]
[140] ts 231 ‑ 232, 22 October 2019.
Tony was not cross-examined about any discussion between he and Joe about the contents of the Memorandum or the circumstances in which he gave it to him.
Other minutes
Tony's evidence was that he did not prepare the minute dated 17 October 2013. Either the lawyers or accountants prepared it.[141] Tony's evidence was that he signed the minute of 10 July 2013[142] but that he did not think that there was an agreement dated 10 July 2013. Tony's evidence was that he would have showed it to Joe before Tony signed it. Tony did not have an actual recollection of either of those events (ts 380 ‑ 382, 23 October 2019). Although it is not entirely clear how those documents came to be signed it appears that Tony simply signed what was sent to him following a discussion with Joe and sent it back to the accountants or lawyers. There is no evidence of any memorandum other than that of 27 October being signed. I am satisfied that that was the only Memorandum signed.
[141] Exhibit 1, page 523; ts 379, 23 October 2019.
[142] Exhibit 1, page 481.
I am satisfied that the only relevant documents are the Memorandum signed by Joe and Tony and the minutes of 27 October signed by Tony.
Undue influence
Before turning to a discussion of the evidence it should be noted that the relationship of father and adult son is not a relationship that gives rise to a presumption of undue influence. To the extent that a relationship between a parent and a child gives rise to a presumption it arises when there is a gift from a child to a parent.[143] The presumption does not operate in reverse. Accordingly, it was necessary for Anna to make out a case based on the direct evidence of the circumstances of the particular transaction.[144] She had to prove the existence of the exercise of dominion or authority by Tony over Joe.
[143] Johnson v Buttress (134) Dixon J.
[144] Thorne v Kennedy [34].
Anna relied upon the following facts as a basis for a finding that a presumption of undue influence arose:
24.During the period from about April 2013 until his death, the Deceased -
24.1lived alone on a farm in the Beermullah district of WA;
24.2was 72 years of age, and was physically and mentally unwell;
Particulars
i.the Deceased sustained a fractured right ankle in April 2013 which caused ongoing pain and mobility problems;
ii.the Deceased had diverticulosis;
iii.the Deceased had liver disease;
iv.the Deceased had trouble sleeping, was anxious and suicidal and was finding it hard to cope.
24.3was largely unable to work his farm;
24.4depended upon the third defendant (who lived on a nearby farm) for assistance in the working of his farm and in the management of his affairs;
24.5had only a limited education and limited ability to read in the English language and required assistance from the third defendant or others to read documents written in the English language.
It is common ground that Joe lived alone at the time of his death. Normally, such an allegation is made as a basis for establishing that the person was socially isolated and thereby at risk of being subject to undue influence. The facts of this case are far from that. Joe visited Max on Sundays for a few hours on a regular basis. They discussed a wide range of topics. In addition, Joe was visited by Wayne on a regular basis. There is simply no evidence to support an allegation that Joe was socially isolated. Joe continued to be engaged with Max and Wayne until very shortly prior to his death - the day before. There is simply no basis for drawing any inference that Joe was socially isolated. There is no basis for concluding from that the fact that Joe lived alone that that made him in any way vulnerable to pressure from Tony or anyone else. There is no evidence that Tony sought to isolate Joe from others.
It is common ground that at the time of his death Joe was 72. There is no evidence to suggest that Joe's age was of itself a reason to conclude that he was susceptible to pressure.
Joe did suffer a fractured right ankle. He was encountering ongoing pain and mobility problems. However, the fracture had healed by at least 19 October 2013.[145] Dr Smit's report of 8 July 2016 describes Joe's pain as 'discomfort'. She explained to Joe that the discomfort was because of 'arthritic changes and that his ankle had healed'.
[145] Exhibit 1 page 616.
There is no medical evidence to establish that the discomfort arising from Joe's ankle was of such a degree as to enable an inference to be drawn that Joe was susceptible to pressure by anyone as a result of that pain. There is no evidence that he was taking opiates or any other medication that might have affected his mental capacity.
Joe did find his restricted mobility frustrating. He was restricted in his activities on the farm and was unable to drive. He used a hand controlled quad bike to travel around the farm. However, that does not provide any basis for a finding that he was thereby susceptible to pressure.
Anna pleaded that Joe had diverticulosis and liver disease. There was no medical evidence to support that allegation. The only evidence as to whether or not Joe had such diseases was Tony's evidence arising from the post-mortem report. The post-mortem report was not in evidence. Dr Smit did not detect these diseases and there is nothing in her evidence to suggest that Joe was suffering from a high level of pain as a result of these diseases, if, in fact, he suffered from them. It was common ground that none of the Larussa family, apart from perhaps Joe, were aware of the potential existence of such diseases during his lifetime. I infer that Joe may have been aware that he had liver disease from the fact that he gave up drinking alcohol about 18 months before his death.
There is no medical evidence to establish that any pain arising from Joe's diverticulosis and liver disease was of such a degree as to enable me to infer that he was susceptible to pressure by anyone as a result of that pain or that he was taking medication of a kind that would affect his mental capacity. Similarly, there is no evidence relating to his kidney disease. There is no evidence that Joe sought medication for any of these matters. He did not mention them to Dr Smit.
Joe may have had trouble sleeping. There is no evidence as to the extent to which he had trouble sleeping. There is no evidence that he was tired during the day or that the lack of sleep otherwise affected him.
There is no evidence that Joe was anxious.
The fact that Joe committed suicide and expressed suicidal thoughts obviously shows that he was suicidal. However, there is no evidence, medical or otherwise, as to the effect that that had on Joe's capacity to make decisions or on his susceptibility to dominion or authority.
The fact that a person is suicidal may or may not lead to an inference that they are rational or irrational. For example, Western Australia's voluntary euthanasia legislation now recognises that people may make a rational decision to end their life.
It is certainly the case that no one, including Dr Smit, took Joe's expression of suicidal thoughts seriously.
The execution of the Memorandum by Joe may have been done in contemplation of getting his affairs in order. I am in no position to draw that inference one way or the other.
Joe was largely unable to work his farm following his broken ankle because of restrictions on his mobility. However, the fact that Tony provided assistance in the working of the farm simply reflected the long term relationship and arrangements between Joe and Tony. They worked each other's farms when help was required.
There is no evidence that Joe required or received assistance in the management of his affairs other than Tony's assistance providing documents etc. prepared by their lawyer or accountants.
Joe had only a limited education. However, I am satisfied that he did not have a limited ability to read in the English language. I am satisfied that Joe did not require assistance from Tony or others to read documents written in the English language. Joe had English language newspapers in his house. Since he lived alone he plainly bought and read them. Joe was an intelligent man and an astute businessman. He made millions after arriving in Australia in 1958. Joe had a good command of the English language and the ability to read and comprehend English.
I am satisfied that Joe was not in a position of dependence upon Tony. Joe reposed no more trust and confidence in Tony than would be expected of a son with whom he had worked for over 20 years and a co‑director.
In addition to the pleaded facts Anna raised the following matters in her submissions:
Joe was in hospital when the third defendant raised the topic of the Memorandum;
Joe was substantially disadvantaged by the Memorandum (whereas the third defendant was substantially advantaged) because:
(a)although the Memorandum was said to be '… for certain mutual financial advantages …', there was a manifest lack of mutuality. The deceased was gifting the debt ($6,593,963) to the trust, whereas the third defendant was only gifting the sum of $103,872 to the trust;
(b)the effect of the Memorandum was that the debt immediately became unavailable for inclusion in the deceased's estate;
(c)it cannot be assumed that the deceased intended to irrevocably sign away the majority of his assets during his lifetime to the advantage of the third defendant in circumstances where firstly, that was inconsistent with arrangements that had been in place for many years; secondly, the Memorandum, although purporting to be revocable by either party, was not so, and thirdly, where the deceased has been found to have destroyed, by the mid or latter part of 2013, a will which had left the majority of his estate to the third defendant;
(d)the third defendant did not seek to advance the transaction until the deceased was in a position of increased vulnerability following a deterioration in his physical and mental condition, and without knowing whether the deceased had independent advice regarding a document that was complicated and difficult to follow.
Joe was in hospital when he spoke to Mr Humd. However, this was not the first time that the release of the debts had been raised. It had been raised but not acted upon as early as 2005. It was again raised in 2013 prior to Joe's accident. In any event, the mere fact that Joe was in hospital with a broken ankle says nothing about his capacity or susceptibility to pressure. Many people go into hospital for operations to repair fractures. There is no medical evidence as to Joe's state of mind when he was in hospital.
Unlike many undue influence cases, this is not a case of a person simply gifting an asset away. The asset was effectively transferred to a Trust of which Joe was a beneficiary, and a trustee company of which Joe was a director and shareholder.
Joe and Tony were both beneficiaries of the trust and could therefore receive economic benefits from the Trust. There is nothing to suggest that the conduct of the business of the Trust would have changed in any way after the debts to the Trust were released.
The alleged disadvantages all arose after Joe's death. Anna pleaded:
At the time of alleged execution of the Memorandum -
The plaintiff repeats par 24 above.
i.The Deceased and the third defendant were joint guardians of the Trust, and if one of them died then the survivor (or his appointee or legal representative) would thereafter be sole guardian;
ii.The Class 1 beneficiaries under the Trust were the Deceased, the third defendant and the children and spouse of the third defendant;
iii.The Deceased and the third defendant were the directors of the first defendant and if one of them died then the other could continue to conduct the affairs of the first defendant as sole director;
iv.In the event that the Deceased died, the third defendant would effectively have sole control over the Trust and its assets.
It is apparent from this pleading that the manifest disadvantage was to Joe's estate not to Joe during his lifetime. Joe would not have seen the fact that Maria and Anna were excluded from his estate as manifestly disadvantageous in any sense. That was what Joe wanted. The fact that the Memorandum was to Maria and Anna's manifest disadvantage as a potential beneficiary of Joe's estate is not the test.
There was an inequality in the amount of the debts released. However, it does not follow that there was a manifest disadvantage. Having regard to the fact that Joe wished to benefit Tony and exclude Anna and Maria, Joe doubtless saw it as being to his advantage to put the assets in a trust and to exclude them from Maria and Anna's reach.
The fact that the assets immediately became unavailable to Joe's estate is consistent with Joe's intention. The only disadvantage in that sense was to Maria and Anna persons whom Joe had had almost nothing to do with and who he wished to exclude.
Whatever arrangements had been in place, prior to the execution of the Memorandum, Joe plainly intended to change them. In particular, his will which left part of his estate to Anna was, as Chaney J found, revoked.
The evidence does not establish that Joe was in a position of increased vulnerability at the relevant time nor that Tony waited until then to act. That was never put to Tony in cross‑examination. It is an extraordinary submission to make in closing when it was not put in cross‑examination.
As Le Miere J stated in Mercanti, a relationship of confidence is not a sufficient condition for undue influence to be presumed. Many parents would describe their relationship with their adult children as trusting and confidential. I am satisfied that Joe's relationship with Tony was trusting and confidential. A relationship between a father and his adult son is not one where undue influence will be presumed.
There is no evidence that the trust and confidence reposed by Joe in Tony is such that there was also ascendency or dominion by Tony over Joe. Such documentary evidence as exists makes it clear that Tony wanted Joe to be involved in decision making concerning the properties and the Trust. Joe was involved in meetings with accountants. There is no suggestion in the evidence that Tony ever sought to exclude Joe from decision making or to influence Joe in a way that amounted to ascendency or dominion by Tony over Joe. The fact that Tony may have conveyed tax returns and other document to and from Joe or otherwise conveyed messages to him from the accountants is a long way from establishing a basis for a finding of ascendancy or dominion over Joe by Tony. The fact that Joe trusted Tony to convey documents and messages reflects trust and confidence but no more. It was simply a practical way of conveying document to Joe.
Tony was not cross‑examined as to the contents of his conversations with Joe other than in relation to when the Memorandum was signed. It was not put to Tony that he had exerted pressure on Joe in the signing of the Memorandum. It was never put to Tony that Joe did not wish to sign or that he did not understand what he was signing. It was not put to Tony or Alexandra that Joe demonstrated any uneasiness in signing the Memorandum.
No witness gave any evidence of Tony putting pressure on Joe or of Joe complaining about such pressure. Not a single question was directed to the existence of any such pressure in cross-examination.
I do not accept that the relationship between Joe and Tony gave rise to a presumptive relationship of undue influence.
I also find there is no basis for concluding that Joe's judgmental capacity was sub‑standard let alone markedly sub-standard.
A relationship of confidence is not a sufficient condition for undue influence to be presumed thus casting an evidentiary burden on the donee. It is only where there is proof of ascendency or dominion that such a presumption will arise.[146] There is no evidence to support a finding that there was any ascendancy or dominion by Tony over the will of Joe.[147] I find that Joe did not have and did not exercise ascendancy or dominion over the will of Joe.
[146] Mercanti [153] - [154]; Thorne v Kennedy [34].
[147] Tulloch [77].
Joe's execution of the Memorandum is explicable by the relationship between Joe and Tony, Joe's intention to benefit Tony and Joe's intention to exclude Maria and Anna. I find that the execution of the Memorandum by Joe was the result of the free exercise of his independent will.
I do not accept that the Memorandum was complicated and difficult to follow. Although the drafting was somewhat archaic the primary purpose was to release the Trust's debts to Joe and Tony. I do not accept that Joe would have had any difficulty in understanding those terms.
The purpose of cl 6 was to allow the debts to be reinstated in certain circumstances described as 'significant life events'. Again I do not accept that Joe would have had any difficulty in understanding cl 6. Clause 6 was a temporary measure due to the possibility of tax implications by reason of executing the Memorandum.
Unconscionable conduct
Anna submitted that the Memorandum was a result of unconscionable conduct by Tony on the basis that:
(a)Joe received no independent, fully informed advice about the Memorandum, including advice as to the true effect of cl 6;
(b)Joe, by reason of the matters pleaded in pars 23 to 28 above and the absence of independent advice, was under a special disability or disadvantage vis à vis the third defendant at the time of alleged execution of the Memorandum;
(c)Joe's special disability or disadvantage seriously affected his ability to make a judgment as to his best interests in relation to the Memorandum;
(d)in the above circumstances there was an absence of any reasonable degree of equality as between the Joe and Tony;
(e)if the Memorandum was duly executed by Joe, such execution was procured by Tony in circumstances where Joe -
(i)knew or ought to have known of Joe's special disability or disadvantage and the lack of equality between them and its effect on Joe, and
(ii)thereby took advantage of that special disability or disadvantage;
(iii)did not know whether Joe had obtained independent advice about the Memorandum.
Anna needed to establish that:
(a)Joe was under a special disadvantage that would have seriously affected his ability to make a judgment about executing the Memorandum;
(b)Tony knew about Joe's special disadvantage; and
(c)Tony unconscientiously took advantage of Joe's special disadvantage by getting him to execute the Memorandum.
For the reasons stated above in relation to undue influence, I do not accept that Joe was under any special disability or disadvantage.
It follows that I do not accept that Joe was under any disability or disadvantage that seriously affected his ability to make a judgment as to his best interests.
As the defendants contended it is extraordinary that, in a case of unconscionable conduct, it was not even put to Tony squarely in cross‑examination that Joe depended on him for the management of his financial affairs.
It was not put to any witness in cross‑examination that any of the matters alleged by Anna affected Joe's ability to make decisions in his best interest.
As the defendants submitted Joe had the opportunity, if he had wanted to, to seek out independent legal advice. Mr Humd advised Joe to do so. It is the absence of the opportunity to seek legal advice that is relevant to the question of unconscionable conduct. See Bridgewater v Leahy:[148]
Where the complaint is of unconscionable dealing, the point is rather different. As Manning J put it in Re Levey; Ex parte Official Assignee (87), 'the Court does not allow any person to take advantage of any known weakness of the vendor' and the Court asks whether that party had 'the opportunity' of professional advice as to 'the effect of what he [was] doing'. This denial of the opportunity to have 'the assistance of a disinterested legal adviser', rather than speculation as to what might have followed had it been pursued, is an element in the unconscientious conduct in respect of which equity intervenes to deny the entitlement of the disponee to retain the property in question, unless the disponee shows the disposition to have been 'fair, just and reasonable'.
[148] Bridgewater v Leahy [1998] HCA 66; (1998) 194 CLR 457 [100].
Tony provided the Memorandum to Joe and left it with him to consider. There is no evidence of Joe pressuring Tony pressuring Joe to sign it. Indeed the only reason Tony appears to have followed up the signature of the Memorandum was because Mr Humd rang him to see where it was. Several days later, Tony visited his father and took him to his house in North Perth where Joe was present when the Memorandum was copied. Tony's conduct is totally inconsistent with any pressure on Joe or taking any unconscientious advantage of him.
As the defendants submitted the execution of the Memorandum did not occur in a vacuum. It occurred only after Joe and Tony, as directors of Larussa Pastoral Pty Ltd, had received legal and financial advice about the loan accounts and how the loan balances could be re‑capitalised into the trust fund by forgiving the loans. The evidence was to the effect that Joe wanted to protect the assets and take steps that would protect them from claims by Maria and Anna and to benefit Tony.
There is no evidence that Tony was aware of anything impeding Joe's ability to make a judgment as to his own best interests.
I find Tony did not engage in unconscionable conduct in relation to Joe's execution of the Memorandum.
Public policy - legal principles
Anna submits that the Memorandum is unenforceable by reason of public policy. She contends that the purpose of cl 1.4, together with cl 6, is to defeat and avoid the operation of the CPCA.
Paragraph 33 of the statement of claim, which is denied pleads:
Further or alternatively, the Memorandum expressly provides, by clause 1.4 and clause 6, that if an application for a freezing order or other adverse order within the meaning of the Criminal Property Confiscation Act 2000 (WA) (Act) is made, that would be a 'Significant Life Event,' and a consequence of which would be that the Memorandum would cease to be revocable at the instance of a party thereto.
Paragraph 34 of the statement of claim, which is denied, pleads:
The purpose of the above provisions is that, if proceedings are brought under the Act, property that might otherwise be the subject of an order under the Act would be irrevocably placed beyond the reach of orders under the Act, with the intention of defeating, avoiding, preventing or impeding the operation of the Act.
Particulars
The pleaded purpose is to be inferred from the terms of the Memorandum and in particular clause 1.4 and clause 6 thereof.
Paragraph 35 of the statement of claim, which is denied, pleads:
In the premises, the Memorandum is a contract which tends to pervert or obstruct the course of justice, or otherwise interfere with or be prejudicial to the administration of justice, or tends to defeat the Act and by reason of which is unenforceable as being contrary to public policy.
A central issue relating to illegality - is whether it was the intention of the legislature by reason of the CPCA to render an agreement such as cl 6 of the Memorandum void.
The CPCA
The recital to the CPCA states:
An Act to provide for the confiscation in certain circumstances of property acquired as a result of criminal activity and property used for criminal activity, to provide for the reciprocal enforcement of certain Australian legislation relating to the confiscation of profits of crime and the confiscation of other property, and for connected purposes.
Section 141 of the CPCA provides:
Term used: confiscation offence
(1) In this Act, confiscation offence means -
(a)an offence against a law in force anywhere in Australia that is punishable by imprisonment for 2 years or more; or
(ba)any offence against a law in force anywhere in Australia, in any case where -
(i)the involvement or suspected involvement of a person in the commission of an offence, or the commission or suspected commission of an offence by a person, or the conviction of a person for an offence, is relevant for the purposes of any proceedings under this Act against that person or for the purposes of any provision of this Part or Parts 5, 6, 8, 10 or 11; and
(ii)at the time of the person's involvement or suspected involvement in the commission of the offence or, as the case requires, the time of the commission or suspected commission of the offence by the person, the person is or was a controlled person under a control order under the Criminal Organisations Control Act 2012;
or
(b)any other offence that is prescribed for the purposes of this definition.
Section 142 of the CPCA provides:
Term used: confiscable
Property is confiscable for the purposes of this Act if the property is -
(a)owned or effectively controlled, or has at any time been given away, by a person who has unexplained wealth; or
(b)owned or effectively controlled, or has at any time been given away, by a person who has acquired a criminal benefit; or
(c) crime-used property; or
(d) crime-derived property; or
(e)owned or effectively controlled, or has at any time been given away, by a declared drug trafficker.
Section 5 of the CPCA provides:
Application of Act to confiscable property
(1)This Act applies to a person's unexplained wealth whether any property, service, advantage or benefit that is a constituent of the person's wealth was acquired before or after the commencement of this Act.
(2)This act applies to criminal benefits, crime-used property and crime-derived property -
(a)whether the relevant confiscation offence was committed in Western Australia or elsewhere; and
(b)whether the relevant confiscation offence was committed before or after the commencement of this Act; and
(c)whether or not anyone has been charged with, or convicted of, the relevant confiscation offence; and
(d)if someone has been convicted of the relevant confiscation offence - whether the conviction took place before or after the commencement of this Act.
Section 15 of the CPCA provides:
Criminal benefits declarations, applying for
(1)The DPP or the CCC may apply to the court for a criminal benefits declaration.
(2)An application may be made in conjunction with an application for a freezing order, in proceedings for the hearing of an objection to confiscation, or at any other time.
[See also sections 11, 21 and 27]
Section 16 of the CPCA provides:
Criminal benefits declarations for crime-derived property, making
(1)On hearing an application under section 15(1), the court must declare that the respondent has acquired a criminal benefit if it is more likely than not that -
(a)the property, service, advantage or benefit described in the application is a constituent of the respondent's wealth; and
(b)the respondent is or was involved in the commission of a confiscation offence; and
(c)the property, service, advantage or benefit was wholly or partly derived or realised, directly or indirectly, as a result of the respondent's involvement in the commission of the confiscation offence, whether or not it was lawfully acquired.
(2)For the purposes of subsection (1)(b), if the respondent has been convicted of the confiscation offence, the respondent is conclusively presumed to have been involved in the commission of the offence.
Section 82 of the CPCA provides:
Crime-used property, release of
(1)The Court may set aside a freezing notice or freezing order for property that was frozen on the ground that it is crime-used if the objector establishes that it is more likely than not that the property is not crime-used.
Section 135 of the CPCA provides:
(1)The DPP or the CCC may apply to the court for an order under subsection (2).
(2)On hearing an application, if the court is satisfied that a person is carrying out, or has carried out, a sham transaction, the court may, to defeat the purpose of the transaction, by order -
(a)declare that the transaction is void in whole or in part; or
(b)vary the operation of the transaction in whole or in part.
Section 161 of the CPCA provides:
(1)For the purposes of this Act, a person carries out a sham transaction if -
(a)the person carries out a transaction within the meaning of subsection (2); and
(b)the transaction was carried out for the purpose of directly or indirectly defeating, avoiding, preventing or impeding the operation of this Act in any respect.
(2)For the purposes of subsection (1), the person carries out a transaction if the person carries out, makes, gives or designs -
(a)any agreement, arrangement, understanding, promise or undertaking, whether express or implied and whether or not enforceable, or intended to be enforceable, by legal proceedings; or
(b)any scheme, plan, proposal, action, course of action, or course of conduct.
The authorities
In Gnych v Polish Club Ltd the plurality stated:[149]
[149] Gnych v Polish Club Ltd [2015] HCA 23.
[35]In Equuscorp Pty Ltd v Haxton, French CJ, Crennan and Kiefel JJ explained that an agreement may be unenforceable for statutory illegality in three categories of case, where:
(i)the making of the agreement or the doing of an act essential to its formation is expressly prohibited absolutely or conditionally by the statute;
(ii)the making of the agreement is impliedly prohibited by statute. A particular case of an implied prohibition arises where the agreement is to do an act the doing of which is prohibited by the statute;
(iii)the agreement is not expressly or impliedly prohibited by a statute but is treated by the courts as unenforceable because it is 'contract associated with or in the furtherance of illegal purposes'.
In the third category of case, the court acts to uphold the policy of the law, which may make the agreement unenforceable. That policy does not impose the sanction of unenforceability on every agreement associated with or made in furtherance of illegal purposes. The court must discern from the scope and purpose of the relevant statute 'whether the legislative purpose will be fulfilled without regarding the contract or the trust as void and unenforceable'. (footnotes omitted.)
[36]There was some vacillation on the part of the appellants as to whether their argument included an invitation to the Court to deal with the present case as a case in the first or third category. In the end, little turns on this point because the consequence of illegality is a matter of statutory construction whatever category of illegality is involved.
[37]In this regard, in Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd , Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ cited with approval the observation by Mason J in Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd that:
'the question whether a contract prohibited by statute is void is, like the associated question whether the statute prohibits the contract, a question of statutory construction.'
[38]Their Honours went on to state that whether a statute which:
'contains a unilateral prohibition on entry into a contract … is void … depends upon the mischief which the statute is designed to prevent, its language, scope and purpose, the consequences for the innocent party, and any other relevant considerations. Ultimately, the question is one of statutory construction.' (footnotes omitted)
[39]That statement was, in turn, cited with approval by Gummow ACJ, Kirby, Hayne, Crennan and Kiefel JJ in Master Education Services Pty Ltd v Ketchell. (footnote omitted)
[40]Accordingly, the scope of the prohibition in s 92(1)(d) of the Liquor Act and the consequences of a contravention of the prohibition are to be determined by the language of s 92(1)(d) of the Liquor Act construed in the context of the Liquor Act as a whole. (footnote omitted)
Gageler J published a separate judgment. Like the majority, he allowed the appeal. He said at [68]:
Reference to the range of considerations which have been identified as significant in other statutory contexts is nevertheless important to ensuring consistency in the approach taken in the application of ordinary principles of statutory construction and, in turn, to maximising the predictability of the judgment that must be made in a novel statutory context. Amongst the most prominent and recurring of the considerations which have been recognised as bearing on the determination of the implied statutory consequences of making an agreement in breach of a statutory prohibition are: the statutory object of the particular prohibition; any positive effect of implying or not implying some further particular statutory consequence on fulfilment of the identified statutory object any negative effect of implying or not implying that further statutory consequence on the legitimate interests of one or more parties to the agreement or of third parties; and the extent to which the statutory imposing the prohibition expressly addresses the consequences of its breach.
and at [73]:
The consideration of public policy that a person ought not to be permitted by law to found a cause of action on an immoral or illegal act is the product of an earlier age. The broader consideration of public policy is now rarely recognised by the common law to have application in relation to illegality which arises under a modern regulatory statute. That is the import of the observation by Mason J in Yango that '[t]here is much to be said for the view that once a statutory penalty has been provided for an offence the rule of the common law in determining the legal consequences of commission of the offence is thereby diminished'. It is not the function of the common law to seek to improve on a regulatory scheme by supplementing the statutory sanctions for its breach. If a statute itself does not operate to deny legal operation to an agreement made in breach of one of its prohibitions, or to render that agreement unenforceable by reason of that breach, the coherence of the law is best served by a court respecting and enforcing that legislative choice. (footnote omitted.)
Gageler J also referred to the relevance of intention in relation to a breach. He said at [75]:
A court examining the application of that consideration of public policy to the enforcement of an agreement made in breach of a statutory prohibition will examine the intention of a person in entering into the agreement and in seeking to enforce the agreement. The court will recognise that 'whilst persons who deliberately set out to break the law cannot expect to be aided by a court, it is a different matter when the law is unwittingly broken'. The court will weigh the consequences of withholding a remedy to enforce the agreement in light of the objects or policies which the statute seeks to advance and the means which the statute has adopted to achieve that end. Ordinarily, it would be open to the court to conclude that withholding a common law remedy from a person whose intention was, and remained, to flout the statute was justified by reference to the narrower consideration of public policy only if the consequence of withholding the remedy could be determined by the court to be both proportionate to the seriousness of the illegality and not incongruous with the statutory scheme. The moulding of an equitable remedy, if sought, might involve other considerations and permit of greater flexibility. (footnotes omitted.)
It is useful to note what the majority said at [52].
The second flaw in this aspect of the reasoning of the Court of Appeal lies in the failure to recognise the important role assigned by the Liquor Act to the Authority in relation to the supervision and management of licensed premises. That role is inconsistent with the view that the regime established by the Liquor Act for the control of licensed premises requires that a contravention by a licensee of s 92(1)(d) automatically renders the lease which is granted void and unenforceable.
and at [57]:
Whether the licence should be cancelled is a matter for the Authority. The Authority might decide that the licence should be permitted to stand if it does not regard the current arrangements between the parties as unacceptable insofar as the public interest in the due observance of the standards required by the Liquor Act is concerned. If the Authority were to make such a determination, there would be no reason connected with the licence why the lease should not continue.
Gageler J said at [83] - [84]:
The second is the extensive range of discretionary powers expressly conferred on the Authority, though which the Authority remains capable of acting to ensure encouragement of responsible attitudes and minimisation of harm associated with the misuse of liquor, even if a grant of exclusive possession of part of licensed premises were to be made without the consent of the Authority. Those powers include taking administrative action to vary the boundaries of the licensed premises, or to cancel or suspend the licence or impose a condition of the licence. They also include commencing proceedings against the licensee which are capable of resulting in similar measures being imposed by a court in addition to the monetary penalty prescribed for breach of the prohibition in s 92(1)(d). In light of those powers, I do not think implication of a further statutory consequence of nullification of the purported lease to be warranted.
In my opinion, within a legislative regime which places emphases on the minimisation of formality and technicality, the statutory consequences of breach of the prohibition in s 92(1)(d) of the Liquor Act (in addition to the monetary penalty prescribed for its breach) are best seen to lie in exposing a lessee to the exercise of the extensive express discretionary powers of the Authority. (footnotes omitted.)
Analysis
It is clear that the basis of the CPCA applies to a respondent's involvement in criminal activity. It follows that in the absence of criminal activity the CPCA can have an application.
The CPCA gives the power to seek orders under the CPCA to the DPP or the CCC (eg s 11, s 15, s 21 and s 27). The CPCA thereby places the discretion whether or not to seek orders arising from criminal activity or crime-used activity squarely with the authority of the DPP or CCC.
In particular, the CPCA gives the power to seek an order relating to a sham transaction only to the DPP and the CCC. The consequences of a contravention of the CPCA Act in relation to a sham transaction, even if proven, rests only with the DPP and the CCC.
If the legislation wished any wider transactions to be void it could have so legislated. It did not.
Section 135 of the CPCA construed in the context of the CPCA as a whole tells against Anna's submission that cl 6 is void as being against public policy. The CPCA deals with sham transactions by giving a specific power to the DPP and the CCC to seek an order from the court if the DPP or CCC so choose. As a matter of construction the CPCA is not intended to confer any wider scope for illegality.
One can see why that would be the policy of the CPCA in a case such as this. There is no suggestion, nor any evidence, that either Joe or Tony or the Trust have been involved in any illegal conduct that would give rise to the operation of the CPCA. No prosecuting authority has sought to impeach the Memorandum. The fact is that without Mr Humd's suggestion there would have been no reference to the CPCA in the Memorandum. Neither Joe nor Tony had any intention to flout the law or to breach the CPCA.
I do not accept Anna's submission that the CPCA does not purport to limit or exclude what would otherwise be the duty of the courts, and the common law rights of parties, in respect of contracts which come before the courts. The CPCA provides a specific power to the DPP and the CCC to seek orders. The question is does the CPCA render such a clause valid as a matter of statutory construction - not has it failed to exclude the duty of the courts. A duty can only arise if it does so as a matter of statutory construction.
Recently in Civil and Allied Technical Construction Pty Ltd v A1 Quality Concrete Tanks Pty Ltd,[150] the Victorian Court of Appeal surveyed the many authorities concerning unlawful conduct and conduct contrary to public policy and stated:[151]
In that context, it seems to us that the authorities reviewed relevantly stand for the following propositions:
(1)A contract does not become unenforceable merely because something illegal is done in the course of its performance. St John Shipping, Fitzgerald.
(2)Where enforcement is said to be precluded on grounds of public policy, the illegality contended for must be of real significance in relation to the subject matter of the contract which is sought to be enforced. It cannot be a matter which is incidental or peripheral to the real purpose or object of the transaction. The illegal purpose must go to the substance of the transaction. Neal, Fitzgerald.
(3)The principle which precludes recovery on the basis of public policy is directed at preventing an affront to the public conscience or involving the court in upholding seriously anti‑social conduct which is illegal or gravely reprehensible. Fire and All Risks, Fitzgerald.
(4)In the modern context, courts should be slow to nullify a bargain on the basis of what may be properly characterised as regulatory non-compliance. St John Shipping, Fire and All Risks, Fitzgerald. (emphasis added)
[150] Civil and Allied Technical Construction Pty Ltd v A1 Quality Concrete Tanks Pty Ltd [2018] VSCA 157.
[151] Civil and Allied Technical Construction v A1 [119].
It was not submitted, nor could it be, that in the circumstances of this case the release of the Trust's debts could of itself constitute an illegality or be contrary to public policy.
The primary purpose of the Memorandum was to prevent Maria and Anna accessing Joe's assets. On no view could it be said that the central or primary purpose of the Memorandum was to preclude the operation of the CPCA.
Mr Humd explained the origin of cl 1.4 of the definition of 'Significant Life Event'. He made clear that it was in fact he, rather than Joe, who had suggested the clause. Joe had merely expressed a general desire to protect his assets from government interference but, given the particular knowledge which Mr Humd's firm had in this area of the law, Mr Humd included a reference to the CPCA as part of the definition.
In the absence of any criminal activity it cannot be said that a clause such as clause 6 tends to defeat the purpose of the CPCA.
There is no merit to the public policy argument made by Anna.
It is unnecessary to otherwise address Anna's submissions given my conclusion that as a matter of statutory construction cl 6 of the Memorandum is not rendered void and unenforceable by reason of the CPCA.
Conclusion
The plaintiff has failed to make out her case. Accordingly her case should be dismissed.
I will hear the parties as to final orders including costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MDM
Associate to the Honourable Justice Curthoys
23 DECEMBER 2019
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