Birch v Birch

Case [2020] QCA 31

SUPREME COURT OF QUEENSLAND

CITATION:

Birch v Birch [2020] QCA 31

PARTIES:

SYLVIA BETTY BIRCH by her litigation guardian GEOFFREY MICHAEL BIRCH
(appellant)
v
DOUGLAS NORMAN BIRCH
(respondent)

FILE NO/S:

Appeal No 13832 of 2018
SC No 8333 of 2013

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:


Supreme Court at Brisbane – [2018] QSC 289 (Douglas J)

DELIVERED ON:

28 February 2020

DELIVERED AT:

Brisbane

HEARING DATE:

18 July 2019

JUDGES:

Fraser and McMurdo JJA and Bradley J

ORDER:

Appeal dismissed with costs.

CATCHWORDS:

EQUITY – GENERAL PRINCIPLES – UNDUE INFLUENCE AND DURESS – PRESUMPTION OF UNDUE INFLUENCE FROM RELATIONSHIP OF PARTIES – OTHER PRESUMPTIONS OF UNDUE INFLUENCE – where the appellant claimed at first instance to have a transaction set aside on the basis of undue influence – where that transaction involved the appellant transferring to her respondent son a one-third interest in a property – where the respondent held from the appellant an enduring power of attorney at the time of transfer – where consequently there was a rebuttable presumption that the appellant was induced to make the transfer by the respondent’s undue influence – where the primary judge dismissed the claim, finding that the presumption was rebutted because the appellant received independent legal advice about the transaction and properly understood the legal and financial consequences of that transaction – whether the appellant received proper and independent legal advice – whether the appellant properly understood the consequences of the transaction – whether the nature of the relationship between the parties was such that the degree of influence presumed could not have been high – whether the presumption of undue influence was rebutted

Powers of Attorney Act 1998 (Qld), s 87

Johnson v Buttress (1936) 56 CLR 113; [1936] HCA 41, cited
Michaletos v Stivactas [1992] ANZ ConvR 90, cited
Powell v Powell [1900] 1 Ch 243, cited
Yerkey v Jones (1939) 63 CLR 649; [1939] HCA 3, cited

COUNSEL:

A J Greinke for the appellant
R M Treston QC, with G J Barr, for the respondent

SOLICITORS:

Shine Lawyers for the appellant
Payne Butler Lang for the respondent

  1. FRASER JA:  I agree with the reasons for judgment of McMurdo JA and the order proposed by his Honour.

  2. McMURDO JA:  The appellant, who is known as Betty Birch, is the mother of the respondent, who is known as Doug Birch.  She was born in 1929 and he was born, as her fifth child, in 1966.

  3. In August 2011, she transferred to him, as a gift, a one third interest in a grazing property called “Fairyland”. She did so having obtained legal advice and with a full capacity to understand what she was doing. However, Doug held from her an enduring power of attorney at this time, with the consequence that pursuant to s 87 of the Powers of Attorney Act 1998 (Qld), there is a rebuttable presumption that she was induced to do this by his undue influence. He did not act…

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Birch v Birch [2020] QCA 31
Case
[2020] QCA 31
Decision Date

CaseChat Overview and Summary

The case of Birch v Birch involved Betty Birch, the appellant, and her son Doug Birch, the respondent. Betty sought to have a transaction set aside on the grounds of undue influence. The transaction involved Betty transferring to Doug a one-third interest in a property known as Fairyland. At the time of the transfer, Doug held an enduring power of attorney over Betty. The court had to decide whether the presumption of undue influence was rebutted by the evidence presented. The primary judge dismissed the claim, finding that the presumption was rebutted as Betty had received independent legal advice and properly understood the legal and financial consequences of the transaction.

The legal issues that the court had to decide were whether Betty received proper and independent legal advice, whether she properly understood the consequences of the transaction, and whether the nature of the relationship between the parties was such that the degree of influence presumed could not have been high. The court had to assess the evidence presented and determine whether the presumption of undue influence was rebutted. The court found that the primary judge's findings were supported by the evidence and that the presumption of undue influence was rebutted.

The court's reasoning was that there was a rebuttable presumption of undue influence in a transaction between a principal and an attorney under an enduring power of attorney. However, the operation of this rule must have regard to the particular nature of the relationship between the parties. The court found that the primary judge had correctly assessed the evidence and had determined that the presumption of undue influence was rebutted. The court held that the appellant had not discharged the onus of proving that the transaction was the result of undue influence.

The court dismissed the appeal and ordered that costs be paid by the appellant. The court found that the primary judge's findings were supported by the evidence and that the presumption of undue influence was rebutted. The court held that the appellant had not discharged the onus of proving that the transaction was the result of undue influence. The court dismissed the appeal and ordered that costs be paid by the appellant.

Orders

Orders of the court

Appeal dismissed with costs.

Background

Background to the litigation

There was a counter-claim, which it would have been necessary for the trial judge to decide, had he upheld the claim against Doug. The counter-claim was based upon an argument that Doug’s parents, Betty and Jim Birch, made mutual wills intending, that on the death of the survivor of them, the whole of Fairyland would belong to him. On that basis, he sought equitable relief against the one-third share in Fairyland which, she claimed, should be restored to her. His Honour made findings which, had the claim against Doug succeeded, would have resulted in the counter-claim succeeding. In this Court, there is no challenge to his Honour’s findings in that respect, but there is an issue between the parties as to what relief would be appropriate if the counter-claim has to be considered.The background facts to the transaction Betty and Jim had six children, five sons born between 1952 and 1966, and a daughter born in 1969. At the time of the transaction, all six were alive, but the oldest, Colin Birch, is now deceased. Fairyland is a property of approximately 8,000 hectares, with two houses on it. After working there for years, Doug spent some time away before returning, in 1992, to live in the smaller house with his wife Juanita, and they stayed there until 2007. In January 2004, Jim and Betty made wills, under which, in each case, their one half interest in Fairyland was to be left to their spouse for a life interest, and upon the death of the spouse, to Doug on condition that he paid each of his siblings an amount of $15,000. At the same time, Betty and Jim wrote a letter, addressed to their children, in which they expressed their intention that the wills were to be construed together as one document. In September 2004, a property called “Rosevale” was purchased, for a price of $751,000. It was purchased by Doug and Juanita as to a 75 per cent interest, and Betty and Jim as to a 25 per cent interest. It appears that Betty and Jim contributed no more than 25 per cent of the price.[3] Both properties were worked by Doug and Juanita. In 2006, Betty and Jim transferred their interest in Rosevale to Doug and Juanita as a gift, and Doug and Juanita lived at Rosevale from October 2007.[3]Betty and Jim contributed 25 per cent of the value of the land, being 25 per cent of $671,000 or $167,750. Doug and Juanita contributed 75 per cent of the value of the land, being $503,250, plus $80,000 for equipment and similar property. By a contract made in November 2007, Betty and Jim purchased a house in Eidsvold as their new residence, and moved there in 2008. In January 2008, the Birch Pastoral Trust was constituted. This was a discretionary trust of which Birch Pastoral Pty Ltd was the trustee. It became the owners of the livestock and the machinery which was used in the grazing business which it conducted on Fairyland and Rosevale. In February 2008, Betty and Jim transferred a one-third share in Fairyland to Doug, as a gift. In November 2008, Betty and Jim made new wills, by which they dealt with Fairyland in the same way as they had in their 2004 wills, with one exception. Upon the death of the survivor, Doug was to pay to each of his siblings not a stated dollar amount, but an amount calculated as 6.66 per cent of the then value of Fairyland. Consequently, Doug then would pay to his siblings, in aggregate, one-third of the then value of Fairyland.

Evidence

Evidence Before The Court

On 31 July 2015, a judge ordered that Betty have leave to proceed by a litigation guardian. On 4 October 2017, a judge sanctioned the settlement of that part of the claim which related to the Trust, leaving the proceeding, as it had begun, as a claim for relief of the transfer of her interest in Fairyland.Other evidence I have referred to the evidence of Doug and Mr Laurentiussen. Understandably there was no testimony from Betty. Her version of events was contained in a statement taken by a solicitor at Wonderley & Hall, and dated 13 May 2013. Much of that statement was ruled inadmissible. It does not appear to have been prepared as a statement to be tendered as the evidence of Betty. In fact, as I have said earlier, she and Jim moved to live in Eidsvold in 2008. In her statement, she said that she did not know much about the Trust, because she was not told anything about it. She said that she received $2,000 per month as an income from the Trust. Betty there recalled going to see Mr Laurentiussen, but did not describe any advice given by him about the transfer of her interest in Fairyland. The statement then contained the following evidence:“80.When we walked out we had not had lunch. I thought I have to have something to eat because I am a diabetic. Doug was not talking and I knew he was cross about something and he said words to the effect “Dad did not leave me anything”. It never dawned on me for ages not until just recently that Jim did leave him something it was all that he had paid into the money into 'Rosevale' and the one third of ‘Fairyland’.81.I thought well Doug has to pay the others out. One million dollars is pretty hard to find so that if he had the 2 shares he would be able to raise the money. Now Doug is telling me he can't borrow the money.82.What I did in all innocence I thought I was doing the best thing for the whole family and I should not have done it because it I had known he would not be able to raise the money anyway I would not have given it to him.83.Doug had me in tears on the way home saying that his father did not do this and did not do that for him because he never left him any money.” The trial judge did not accept that evidence. In particular, he did not accept that Doug had her in tears on the way home, when saying that his father had not left him any money. His Honour said that this statement was inconsistent with her presentation to Mr Laurentiussen and inconsistent with the letter prepared by her, in consultation with Mr Parker, in November 2012.[19][19]Primary Judgment [108]. Evidence by Geoffrey Birch and Stan Birch (another of Betty’s sons), as to Betty’s state of mind in August 2011, was rejected by the trial judge.[20] Geoffrey testified that at some point, his mother had said that there had been some influence or pressure placed upon him by Doug, but he could not recall exactly when. Stan said that, in July 2011, his mother told him that she was thinking about transferring her one-third interest to Doug, which he advised her not to do. His evidence was that Betty seemed to be under the impression that, mistakenly, she thought that she would then be able to get a pension. He said that he advised her to look after her own interest and that she might not receive a pension, having given away so much property. He said that Betty then told him that Doug was pressuring her to make this transfer, claiming that he had received nothing in his father’s will, so that she should address the situation by giving her one-third interest to him. That evidence was not accepted by the trial judge.[20]Ibid.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

The remaining ground of appeal concerns the counter-claim. Of course, no order was made on the counter-claim, but it is said that whilst the judge was not incorrect in finding that there were mutual wills, Betty’s obligation was a “floating obligation” which would take effect only upon her death, a matter which is relevant to the relief which would be granted to Doug. As to the terms of that relief, with the agreement of the Court, the parties provided further submissions. Counsel for Betty provided a draft order with his submissions, which would provide for, amongst other things, a declaration that Betty be permitted to sell her interest in Fairyland (the interest which should be restored to her according to the claim), on condition that Doug be given a first right of refusal, the proceeds obtained from such a sale be held on trust to be used for her care and welfare and the discharge of her properly incurred debts, that she be otherwise restrained from giving away any part of those proceeds and that on her death, the balance of such proceeds be distributed as to one half to Doug, and as to the other half to her other children (in equal shares).[54][54]The proposed order would also provide that Doug pay to his siblings, for Jim’s one-third share in Fairyland, a total of one-sixth, rather than one-third, of the value of Fairyland.Consideration of the appellant’s arguments By s 87 of the Powers of Attorney Act 1998, there is a rebuttable presumption of undue influence in a transaction between a principal and an attorney under an enduring power of attorney. It is presumed that the principal entered into the transaction, under the influence of the attorney, in that it is presumed that, to adopt the words of Dixon J in Johnson v Buttress, there is a position “involving an ascendancy or influence over that other, or a dependence or trust on his part.”[55][55](1936) 56 CLR 113 at 135; [1936] HCA 41 cited above at [60]. Consequently, there is a presumed inequality between the parties, from which there is a presumed influence of one party over the other in a transaction between them. But the operation of this rule must have regard to the particular nature of that relationship between the parties, in assessing what is required to rebut the presumption. In Johnson v Buttress, Dixon J said:[56]“This burden is imposed upon one of the parties to certain well-known relations as soon it appears that the relation existed and that he has obtained a substantial benefit from the other. A solicitor must thus justify the receipt of such a benefit from his client, a physician from his patient, a parent from his child, a guardian from his ward, and a man from the woman he has engaged to marry. The facts which must be proved in order to satisfy the court that the donor was freed from influence are, perhaps, not always the same in these different relationships, for the influence which grows out of them varies in kind and degree.”(Emphasis added.)[56](1936) 56 CLR 113 at 134; [1936] HCA 41.