Birch v Birch

Case [2018] QSC 289

SUPREME COURT OF QUEENSLAND

CITATION:

Birch v Birch & Ors [2018] QSC 289

PARTIES:

SYLVIA BETTY BIRCH
(plaintiff)

v
DOUGLAS NORMAN BIRCH
(first defendant)
JUANITA ANNETTE BIRCH
(second defendant)
BIRCH PASTORAL PTY LTD (ACN 128 573 704) AS TRUSTEE FOR THE BIRCH PASTORAL TRUST

(third defendant)

FILE NO/S:

BS No 8333 of 2013

DIVISION:

Trial Division

PROCEEDING:

Claim

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

16 November 2018

DELIVERED AT:

Brisbane

HEARING DATE:

4, 5, 6, 7 December 2017

JUDGE:

Douglas J

ORDER:

The plaintiff’s claim is dismissed.

CATCHWORDS:

EQUITY – GENERAL PRINCIPLES – UNDUE INFLUENCE AND DURESS – PRESUMPTION OF UNDUE INFLUENCE FROM RELATIONSHIP OF PARTIES – OTHER RELATIONSHIPS – where the plaintiff transferred her interest in a rural property to the first defendant – where, at that time of the transfer, the first defendant held the plaintiff’s power of attorney – whether the transfer should be set aside – whether the transfer was the result of the plaintiff’s free exercise of her independent will – whether the plaintiff had received competent independent advice

EQUITY – GENERAL PRINCIPLES – FIDUCIARY OBLIGATIONS – FIDUCIARY DUTY – OTHER CASES – whether the first defendant’s acceptance of the transfer was a conflict transaction – whether the plaintiff gave informed consent to the transfer based on independent advice

EQUITY – GENERAL PRINCIPLES – UNCONSCIONABILITY, UNCONSCIONABLE DEALINGS AND OTHER FORMS OF EQUITABLE FRAUD – SPECIAL DISABILITY – whether the transfer should be set aside – whether the plaintiff was suffering from a special disability at the time of the transfer – whether the first defendant knew or ought to have known about any such disability

Powers of Attorney Act 1998 (Qld), s 87

Allcard v Skinner (1887) 36 Ch D 145, cited
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; [1983] HCA 14, cited
Hussey v Bauer [2011] QCA 91, applied
Huguenin v Baseley (1807) 14 Ves Jr 273; 33 ER 526, cited
Inche Noriah v Shaik Allie Bin Omar [1929] AC 127, cited
Jenyns v Public Curator (Qld) (1953) 90 CLR 113; [1953] HCA 2, cited
Johnson v Buttress (1936) 56 CLR 113; [1936] HCA 41, applied
Maguire v Makaronis (1997) 188 CLR 449; [1997] HCA 23, cited
Powell v Powell [1900] 1 Ch 243, cited
Quek v Beggs (1990) 5 BPR 97,405, cited
In re Coomber [1911] 1 Ch 723, cited
Smith v Glegg [2005] 1 Qd R 561; [2004] QSC 443, cited
Stivactas v Michaletos (No 2) (1993) NSW ConvR 55-683, cited
Whereat v Duff [1972] 2 NSWLR 147, cited

COUNSEL:

A J Greinke for the plaintiff
R M Treston QC with G J Barr for the first defendant

SOLICITORS:

Shine Lawyers for the plaintiff
Payne Butler Lang for the first defendant
No appearance for the second and third defendants

  1. The main issue in this case is whether the transfer of a one-third interest in a rural property by the plaintiff to her…

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AGLC
Birch v Birch [2018] QSC 289
Case
[2018] QSC 289
Decision Date

CaseChat Overview and Summary

The case of Birch v Birch revolves around the validity of a transfer of a one-third interest in a rural property from the plaintiff, Betty Birch, to her son, Doug Birch, the first defendant. The plaintiff contends that the transfer was influenced by undue pressure exerted by Doug Birch, who held her power of attorney at the time. The case was heard in the Supreme Court of Queensland, with Justice Byrne presiding. The central legal issues in the case were whether the transfer was a result of the plaintiff's free will, whether there was a conflict of interest on the part of Doug Birch, and whether the plaintiff had received independent advice before the transfer. The court had to determine if the transfer was procured by undue influence, unconscionability, or if there was any fiduciary breach by Doug Birch.

The court examined the relationship between the parties, the circumstances surrounding the transfer, and the capacity of Betty Birch to understand the implications of the transaction. The court also considered the evidence of independent legal advice provided to Betty Birch and the possibility of any special disability on her part that Doug Birch knew or ought to have known about. Ultimately, the court found that the transfer was not the result of undue influence or unconscionability, and that Doug Birch had not breached any fiduciary duty. The court held that Betty Birch had willingly transferred her interest in the property and had received independent legal advice.

The reasoning of the court was based on the evidence presented, including the medical opinion regarding Betty Birch's cognitive capacity and the timeline of events leading up to the transfer. The court dismissed the plaintiff's claim, finding that the transfer was valid and should not be set aside.

The final orders of the court were that the plaintiff's claim be dismissed, and no orders were made regarding costs.

Orders

Orders of the court

The plaintiff’s claim is dismissed.

Background

Background to the litigation

The main issue in this case is whether the transfer of a one-third interest in a rural property by the plaintiff to her son, the first defendant, should be set aside as having been procured by undue influence. There is a presumption of undue influence because the son held her power of attorney, therefore the onus lay on him to discharge that presumption. Background facts The background facts were usefully summarised by the first defendant’s counsel in their written submissions and were, generally speaking, uncontroversial. What follows is based on that summary. The plaintiff, Sylvia Betty Birch (“Betty Birch”), was born on 22 September 1929. On 28 July 1951 she married James Ernest Birch (“Jim Birch”) and their marriage continued until his death on 11 June 2011. They had six children:1.Colin James Birch born on 30 June 1952 (now deceased);2.Stanley John Birch born on 8 November 1954;3.Lindsay George Birch born on 19 November 1958;4.Geoffrey Michael Birch born on 20 December 1961;5.Douglas Norman Birch, the first defendant (“Doug Birch”), born on 9 December 1966;6.Sherilyn Gaye Birch born on 22 December 1969. In about 1982 Jim and Betty Birch purchased a leasehold property of approximately 8,077 hectares located at 1911 Nathan Gorge Road, Cracow known as “Fairyland”. Fairyland was a cattle farming property with two houses on it, the smaller of the two being described as the “cottage”. From the date of purchase of Fairyland, when Doug Birch was aged 16, he lived at Fairyland with his parents and provided labour to assist in the running of the cattle operations on the property. He spent some time working away from Fairyland but, in 1992, married Juanita Birch and they lived in the cottage at Fairyland. At that time, Jim and Betty Birch were living in the main house on Fairyland. Doug and Juanita Birch continued to live at Fairyland until 2007. Over that period Jim and Betty Birch were also living at Fairyland. By wills expressed in identical terms executed on 15 January 2004 each of Jim and Betty Birch dealt with Fairyland in the following way:1.Leaving a life interest to their spouse;2.Upon the death of their spouse, their interest was to go to Doug Birch subject to him paying each of his siblings $15,000. The 2004 wills were accompanied by a “Letter of Instructions” addressed to the children of Jim and Betty Birch which expressed the intention that both wills be construed together as one document. There are handwritten alterations to the 2004 letter that are not otherwise explained in evidence. In September 2004 a property known as “Rosevale” was purchased. Rosevale was initially purchased in the names of Doug and Juanita Birch as to 75% and Jim and Betty Birch as to 25%. The purchase price was $751,000, of which the parents contributed 25% of $671,000 or $167,750. Fairyland and Rosevale were separated by about 140 km. Since September 2004 Doug and Juanita Birch continued to work both Fairyland and Rosevale. Initially, they were residing at Fairyland and on 31 October 2007 Doug and Juanita moved to live at Rosevale. In 2006 Jim and Betty Birch transferred their 25% share in Rosevale to Doug and Juanita as a gift.

Evidence

Evidence Before The Court

There was a medical report dated 27 January 2015 from Professor Gerard Byrne, a consultant psychiatrist and Associate Professor of Psychiatry concerning Betty Birch’s capacity to understand financial matters among other things. His opinion was that she was not likely to have the capacity to understand complex transactions or their consequences because of her current level of cognitive impairment, apparently at the time of a long interview by him on 25 November 2014. He expressed the view that her legal interests might be better suited by a litigation guardian. The opinion does not address, however, her abilities in August 2011. There was no oral examination of Professor Byrne.Defence submissions about the Geoff, Colin and Stan Birch’s evidence Geoff Birch’s evidence was criticised by the defendant. Counsel made that submission particularly in dealing with his evidence that Betty Birch phoned him to ask him for his help in the new year of 2013 after a “tense” discussion said to have occurred on 12 October 2012. Ms Treston compared that with the chronology of events after that date showing Betty Birch writing to each of her children in November 2012 telling them that she had transferred the property to Doug Birch and was sending correspondence to them with the benefit of legal advice.[39] She then rang Bill Birch on 12 December 2012 distressed and crying at the correspondence she had received from Geoff Birch’s solicitors.[40] On 12 December 2012, Bill Birch wrote to Geoff and the other children asking them to leave their mother alone in ex 4. Counsel for the defendant also pointed to Geoff Birch writing to Bill Birch assertively criticising him for the transfer and conduct of the administration of his father’s estate on 1 January 2013 as a further step in the chronology making Geoff Birch’s evidence of his mother telephoning him to ask for his help shortly after then unbelievable. [39] See ex 1, p 221.[40] See exs 3 and 4. He was criticised as someone uncompromisingly seeking to assert his own rights rather than to vindicate his mother’s. He was also criticised for his apparent complicity in the instructions given to Ian Dempster by Colin Birch in ex 7. It also seems to me to be relevant to take into account his instructions on behalf of his mother not to waive privilege in respect of the possible evidence from Chris Parker, the solicitor at Charltons Lawyers whom Betty Birch consulted in November 2012. Colin Birch’s evidence was also criticised by reference to ex 7 and characterised as stemming from concern at the perceived preferential treatment given to Doug Birch. Ms Treston also submitted that Stan Birch’s evidence should not be accepted in any respect. He was described as aggressive to the point of belligerence, a fair view of his evidence. His views that Doug Birch had been manipulating things since 2008 I also accept were excessive and coloured by the same perception that Doug Birch was gaining an early inheritance under his father’s will although he had not received any advance whatever, the transfer by his mother being a separate and independent gift.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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