Bridgewater & Ors v Leahy

[1998] HCATrans 243

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B12 of 1998

B e t w e e n -

DESLEY FAY BRIDGEWATER, JOAN MARGARET O’NEILL, JUNE LORRAINE ASHTON, SHIRLEY JOY LEAHY and STELLA YORK

Appellants

and

KEVIN LEAHY

First Respondent

NEIL WILLIAM YORK and BERYL ELIZABETH YORK

Second Respondents

GLEESON CJ
GAUDRON J
GUMMOW J
KIRBY J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON TUESDAY, 23 JUNE 1998, AT 12.22 PM

Copyright in the High Court of Australia

MR D.B. FRASER, QC:   May it please the Court, I appear with my learned friend, MR T.W. QUINN, for the appellants. (instructed by Morrow & Associates)

MR S.C. WILLIAMS, QC:   May it please the Court, I appear with my learned friend,  MR R.T. WHITEFORD, for the second respondents. (instructed by Heiser Bayly & Mortensen)

GLEESON CJ:   Yes, Mr Williams.  The Court has been notified by the solicitors for the first respondent, advising that the first respondent submits to any order of the Court, save as to costs.  Yes, Mr Fraser.

MR FRASER:   Your Honours, there is one preliminary matter and that is referable to some supplementary submissions that were prepared and provided yesterday, both to our learned friends and to the Court.  They exceeded three pages in length, but were responsive to a number of matters raised by the respondents’ outline.  In the circumstances, we seek leave to rely upon those submissions before your Honours.  I understand the papers have been provided to your Honours by the Registrar.

GLEESON CJ:   Yes, we have that.  Is that leave opposed?

MR WILLIAMS:   No, your Honour.  We see it as somewhat expedient, but we have some matters to raise in relation to those submissions.

GLEESON CJ:   Very well, you have that leave.  Yes, Mr Fraser.

MR FRASER:   Your Honours, it may be convenient at the outset to put your Honours into the position of understanding a little of the properties with which this appeal is concerned.  Your Honours, we have provided, as part of the appeal record, a map, which was exhibit 1 below, which has some brightly coloured markings to indicate the various parts of the property near Wallumbilla with which this appeal is concerned.

GUMMOW J:   This is all very interesting, but we have not been supplied with exhibit 77, the title documents.  What is sought in this case ultimately is referable to the state of the title.  Will we be supplied with the actual certificates of title?  I would like to see them.  I have grown suspicious when I am told what they say without seeing them.

MR FRASER:   Your Honour, I believe the copies of the exhibits are in Court so we can make them available after lunch.

GLEESON CJ:   You can seeto  uplifting them?

MR FRASER:   We can uplift the originals or simply provide copies if that suits.

GLEESON CJ:   All right.  I realise that other things apart from area may be relevant, Mr Fraser, but approximately what proportion of the land, the subject of the option, granted by the will, did the land the subject of the 1998 transactions have?

MR FRASER:   In terms of area, I cannot tell your Honour that without doing a calculation, but ‑ ‑ ‑

GLEESON CJ:   Well, do not take time to do that.

MR FRASER:   But your Honour, it is readily apparent from looking at the map.  The parcels of land in blue, pink and yellow were the parcels that were the subject of inter vivos disposition.

GLEESON CJ:   Is Injune on this map or is it somewhere else?

MR FRASER:   No, your Honour, Injune is to the west, which is going left on this map, and north about an hour and forty minutes away.  There is another property referred to, Maynards, which is to the right of Hemples, but not shown on the map.  That is that pink property.

GLEESON CJ:   So, blue, yellow and pink are the inter vivos?

MR FRASER:   And all of them are the dispositions under the will; all of the property of the deceased’s will would have been disposed of under the option as originally structured.  The only other property was an interest in a house in Wallumbilla, which was sold for $20,000 by the widow in 1989, after Bill died.

GLEESON CJ:   So, the land above the Western Railway line on this plan was ultimately the land which, after the death of the testator, the respondent, Neil York, acquired for $200,000?

MR FRASER:   Together with the other land immediately to the south of the railway line, the two other green blocks; they were not part of the inter vivos disposition.

GLEESON CJ:   Putting it slightly differently, the land on this map in green was the land for which he ultimately paid $200,000?

MR FRASER:   Yes, your Honour, together with the interest in the partnership that Bill had had.

GUMMOW J:   What were the assets of the partnership?

MR FRASER:   Your Honour, the assets comprised tackle, plant and equipment, essentially, and whatever loans had been made.  Unfortunately the figures shown in returns were a bit rubbery, it seems, because of the relationship between them and having to put them forward to the tax department.  We have extracted from the last return that was tended the amount which was shown as Bill’s estates interest by the end of the financial year 1989 and that showed the sum of about $95,000 as his interest in the partnership.  To perhaps assist a little further on this, an exercise of identifying the amounts involved, the value of Bill’s interest in the land that was eventually obtained under the will was of the order of $150,393.50, being half of the amount which is shown at page 586 of the record in volume 3.  The reference to the partnership accounts being rubbery can be found at volume 2 page 318 line 40 and following.

GLEESON CJ:   Does that mean that the land which Neil York acquired under the option for $200,000 was worth about $153,000?

MR FRASER:   Yes, your Honour, and the partnership value, as best as we can ascertain, according to the returns, was another $95,000 odd, taking the total to about $245,000.

GLEESON CJ:   Thank you.

MR FRASER:   Your Honours, I can perhaps assist further with some factual matters as to the size of the estate.  At the time of the 1985 will, it appears as though the total value of Bill’s net worth was of the order of about $850,000, and that is made up of the value of his interest in the lands, of which is $694,922, the value of the house property at Wallumbilla, which for these purposes I have included as $20,000, being the amount for which it was eventually sold, an IBD, an interest bearing deposit of $60,000.00 - now that assumes that the IBD that was present after his death had been present at that time; there is no evidence either way of it, but there is evidence that he was renewing an IBD with the local bank manager, so it seems a fair inference - and the bit which is a little bit rubbery is the value of the partnership interest.  The evidence showed that the value of a one-third share, at the time when Neil came into the partnership, was of the order of $76,000, so presumably it is somewhere between that figure and the figure of $95,000 or thereabouts.

Now, by the time of the inter vivos disposition Bill’s total assets had grown to about $1,022,660 and that is made up of the land which was sold by the inter vivos disposition, Bill’s interest in that was $696,811; the balance land, which became the subject of the option, I have given your Honour the figures for that; that is $150,393.50; his interest in the partnership- - -

KIRBY J:   Where are you reading at the moment?

MR FRASER:   I am sorry, your Honour.  I am reading from my notes at the moment, and I could give your Honours the references to the transcript shortly.

GUMMOW J:   So the $696,811 is, what is in here, moneys due, but unpaid?

MR FRASER:   No, that is the total value of Bill’s interest in the lands which he transferred inter vivos to Neil.

GUMMOW J:   I see.

MR FRASER:   So of that, $150,000 was paid, the balance being forgiven by a deed of forgiveness.

GLEESON CJ:   And the relief that you seek is that Neil be ordered to pay the balance?

MR FRASER:   Yes, your Honour.

GLEESON CJ:   And everything else remains in place?

MR FRASER:   Yes, your Honour.  To complete the calculation, I have added to the figure of $696, 811 for the land, the balance land of $150,393.50 and the value of the partnership at $95,456, the interest bearing deposit of $60,000 and the house property at $20,000.  That, your Honour, gives the Court some idea of the size or the relative size of the estate and what Neil had to dispose of.

At this point it may be convenient to mention that if nothing had happened after the 1985 will had been entered into, his widow, Stella, would have received the house worth about $20,000 and a $60,000 IBD, it seems.

GLEESON CJ:   Yes, that is different from what the trial judge said; he said that she had received money in the bank worth about $150,000.  Where did that come from?

MR FRASER:   That was the $150,000 which Mr Pack arranged to be transferred to Bill’s account towards the end of November 1988, in payment of the amount that Neil had agreed to pay for the inter vivos transfers.  So, that fund then went to Stella’s credit, as it were, ultimately, because it went to the bank and the will disposed of his estate by reference to the house and moneys at bank going to Stella.

GLEESON CJ:   So what the trial judge said was accurate, looking backwards on the events?

MR FRASER:   Yes.

GAUDRON J:   But she would also have had rights under your testator’s family maintenance legislation, had she not?

MR FRASER:   Yes, your Honour, she would have.

GAUDRON J:   With respect to the whole of the real estate?

MR FRASER:   Yes, had the property not passed under the inter vivos disposition, yes, your Honour, and in relation to the land, the subject of the option, each of those parcels would have been available for a claim.

GLEESON CJ:   This is the Succession Act?

MR FRASER:   Yes, your Honour, section 41 of our Succession Act; a copy has been put in the material.

GLEESON CJ:   There is no provision in that Act for, as it were, undoing something that is done within a short time that may circumvent the operation here?

MR FRASER:   No, your Honour.  There have been a series of cases about it, identifying when the property ceases to be part of the estate in terms of what the executor has done.  I think in Easterbrook v Young in New South Wales, it was a case which established that you could claw back under the New South Wales legislation.  In Queensland, although ‑ ‑ ‑

GUMMOW J:   They are about distributions, you are being asked to the other direction.

MR FRASER:   I am sorry.

GUMMOW J:   In New South Wales there is a notional estate provision.

MR FRASER:   We do not have such a provision here, your Honour.

GLEESON CJ:   What precisely is the legislation of which you have been speaking?

MR FRASER:   The Succession Act 1981, section 41.

GLEESON CJ:   Thank you.

MR FRASER:   It is actually referred to in the notice of appeal, your Honour.

GLEESON CJ:   Thank you. 

KIRBY J:   Is there de facto legislation in Queensland that, as it were, protects de facto relationships?

MR FRASER:   There is provision for a claim to be made by a dependent, where there is an established relationship of five years of that nature.

KIRBY J:   So, that would mean that, in effect, a person in a de facto relationship can secure relief that a spouse cannot.  If the inter vivos gift has been made, it takes it out of the estate?

MR FRASER:   I am sorry.  In answering your Honour’s question, I thought your Honour was inquiring whether the legislation, the Succession Act provisions have been extended to de facto spouses.  They will be in the same position as anyone else in terms of what is available for attack.

KIRBY J:   So people can, as it were, walk out of the protective provisions of the Succession Act by inter vivos gifts, unless equity comes to their relief?

MR FRASER:   Yes, your Honour.  Your Honours, in our written submissions, we started by posing a number of questions and like any good examiner we are able to answer the questions with the responses which are set out thereafter.  It is probably convenient to take your Honours to page 2 of the submissions and to address your Honours by reference generally to the scheme set out by the submissions.  One of the issues in this case which has emerged in the courts below and is raised by our learned friends, is the issue of causation in these types of cases.

GUMMOW J:   I would have thought that was the last thing this case is about, frankly.

MR FRASER:   Yes, your Honour, but is does seem however to have played a role in the findings, which seem to have been directed to whether or not Neil, as it were, overtly took unconscientious advantage over Bill.

GUMMOW J:   Well, that is right; I would not call that a causation issue.

KIRBY J:   In the logic of your case, taking up Justice Gummow’s point, do you not have conceptually to establish first of all the unconscientiousness and the question of causation and whether Bill would have done what he did anyway, because he was an opinionated sort of a chap, really comes at the end after you have established a foundation for your grant, or are you, just for your protection, content to rely on your written submissions in that regard?

MR FRASER:   Well, your Honour, my response to that is that we rather thought the first inquiry would be to identify the nature of the relationship and, although the nature of the transaction may inform the nature of the relationship, it is still necessarily the first port of call.

GUMMOW J:   Well, do you say there was a fiduciary relationship?

MR FRASER:   Yes, your Honour.

GUMMOW J:   Between whom?

MR FRASER:   Between Neil and Bill.

GAUDRON J:   And that arises out of their partnership and his management of the partnership affairs, does it?

MR FRASER:   Yes, your Honour, and the circumstance that Bill reverted to Neil for advice about matters of importance to him.

GLEESON CJ:   Do you, anywhere in these written submissions, summarise the matters that you say give rise to the fiduciary relationship?

MR FRASER:   Yes, your Honour, we do.

GUMMOW J:   And the content of it, what the content of the relationship is.  Justice Gaudron asked about the partnership.  Well prima facie, that does not seem much to do with this.

MR FRASER:   Well it may in so far as the factual circumstances were under the partnership.  Neil was living on Bill’s property and running Bill’s property for him, so if anyone knew the worth of Bill’s property it was Neil, arising from that relationship.

GLEESON CJ:   Neil and Bill.

MR FRASER:   Yes.

GAUDRON J:   Although had he not ceased to play an effective role in the partnership business towards the end.

MR FRASER:   From about 1981 onwards he apparently adopted the position that he was getting too old for it and he passed the reins over to Neil to run the partnership.  He was living in Wallumbilla, in the little house in Wallumbilla, and by early 1988 Bill had lost his driver’s licence and could not get it ‑ ‑ ‑

GUMMOW J:   That seems to be a crucial event in your case, does it not?

MR FRASER:   Well, it is an event which a lot of the evidence has been given with reference to, your Honour, and so far as it being crucial, we submit that it is not critical that he lost his licence in 1988, but rather that it simply demonstrated the process that he became increasingly reliant upon Neil for any input or any knowledge about the circumstances of the property.

GLEESON CJ:   One thing I would like to be clear about is the extent to which you challenge findings of fact made in the courts below.

MR FRASER:   Your Honour, in so far as the primary judge is concerned, we do not seek to controvert any finding of primary fact made by his Honour.

GUMMOW J:   Well, did he deal with the fiduciary relationship you just mentioned?

MR FRASER:   He did, your Honour; he said that - he dealt with it in the terms of the will.  He said, in the terms of the will it is one step removed from what occurred there, but he did not deal with it so far as the unconscionable or the inter vivos transaction was concerned.  Your Honours, I was going to ‑ ‑ ‑

GUMMOW J:   So you say it is fiduciary relationship; do you say that there was a relationship of influence, which was of undue influence, as well, and thirdly, do you say that, even if neither one nor two, there was three, which was some unconscientious taking advantage of this man’s weakness at a particular time, of catching a bargain?

MR FRASER:   Yes, your Honour.  So far as the second category is concerned, the second and third are so closely linked that I hesitate to say we have ‑ ‑ ‑

GUMMOW J:   I am not sure they are.  That arises from the misreading of Amadio’s Case.  In Amadio’s Case there was no plea of undue influence.

MR FRASER:   Well, we had a plea of undue influence.

GUMMOW J:   It was a South Australian pleading enterprise.

MR FRASER:   Your Honour, perhaps I should respond to the question from Justice Kirby as to where we have summarised the various aspects of the relationship.  That appears at page 10 of our submissions.

GUMMOW J:   Where you run them all together.  It is one of the difficulties I had in understanding the case.

MR FRASER:   Yes, your Honour.  And the other reference is at page 16 in paragraph 3.16 on that page.

GUMMOW J:   Undoubtedly the solicitor had fiduciary relationships and they seem to conflict.

MR FRASER:   There is an express finding to that effect, your Honour.  I was also going to give your Honours the reference in the supplementary submissions to the evidence of dependence upon Neil by Bill, and that is at page 7, where we have responded to the second respondent’s outline and starts at about point 5 of our supplementary submissions.  To those matters we should add a reference to another circumstance of reliance, and that is to be found in the record at volume 2 page 263 at lines 31 to 46, about Bill’s reliance upon Neil to properly identify what property he had, which should be included in the will.  There is a passage of evidence from Neil, whom the trial judge accepted, that while Neil was waiting outside the solicitor’s office, he was called in to confirm that Bill had correctly identified all of his property.  Bill had gone to the solicitors and had had, as the trial judge describes it, the wit to take his rates notices with him.  Neil was called in and it was discovered, and Neil identified, that one particular property had not been included in the list that was given.  That was Lot 40V and that was then corrected for the ultimate will which was drawn up.  So that is another aspect of the case that we point to, so far as reliance.  It does, in our submission, speak volumes that when Bill was engaging in a private function of making his own will, he was concerned to seek Neil’s assistance to confirm that he correctly identified and located all of his properties.

KIRBY J:   That would not be so odd, would it?  I suppose one would expect a testator to know his principal property, but this after all was his manager and the person who was looking after his properties.

MR FRASER:   Well, I suppose at the end of the day it comes back to the issue of knowledge of the property and it does show that the manager was able to recall more precisely all of the properties on that particular occasion ‑ ‑ ‑

KIRBY J:   But you never challenged the testamentary capacity?

MR FRASER:   No, your Honour.

KIRBY J:   And you have abandoned the challenge to the undue influence.

MR FRASER:   The only reliance we can place upon that passage of evidence and indeed, the conversation immediately preceding it, so far as the relationship is concerned, is that it simply demonstrates that Bill looked to Neil for advice and guidance.  The particular conversation about what he should leave his daughters, and then Bill having identified that he thought he would leave them $100,000, Neil responding that it should be $200,000, Bill’s response that he had told Mum that he would be fair, is a very telling indication of the extent of the extent of their relationship, because, whatever might be expected of the ordinary manager/proprietor relationship, one would not have thought it would extend to such matters.

GLEESON CJ:   The essence of your case comes to this, does it not, whichever legal tag you put on it, you are saying that Neil took advantage of Bill?

MR FRASER:   Yes, your Honour.  Our point is that we submit that it does not have to be shown that he did that with any mala fides in mind; simply that he did it in fact.

GLEESON CJ:   Is this a convenient time?  The Court will adjourn until 2 o’clock.

AT 12.47 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.17 PM:

GLEESON CJ:   Yes, Mr Fraser.

MR FRASER:   Your Honour, during the break we made copies of exhibit 77 from our resources.  They have been checked with the original exhibit which itself comprised copies of certificates of title.  I have available duplicate copies of the various certificates of title for each member of the Court, if that is desired.

GUMMOW J:   Do they show any supervening third party registered interests?

MR FRASER:   No, your Honour.

GUMMOW J:   Thank you.

MR FRASER:   I am not sure how many copies your Honours require altogether - I have five or seven ‑ ‑ ‑

GAUDRON J:   We can take it from those documents as they are coming to us that at no relevant time was the land encumbered by way of mortgage to a bank or other financial institution or anything like that?

MR FRASER:   Your Honour, there was in existence a mortgage, but it had been discharged, and ‑ ‑ ‑

GAUDRON J:   When?

MR FRASER:   I will put it this way:  in our submission, nothing turns on that, on the existence of a blot on the title.  I said “discharged”; I think satisfied is a more accurate way of describing the state of play.

GUMMOW J:   By when?

MR FRASER:   By the date of the transfers being effected, your Honour.

GLEESON CJ:   What about by the date of the hearing?  Would there have been anything to prevent relief, if relief were to be granted in the form of setting aside the entire 1998 transaction?

MR FRASER:   I do not know the answer to that question, your Honour.

GLEESON CJ:   I see.

MR FRASER:   Your Honour, can I say that there is a summary of the various certificates of title in the appeal record in volume 3 at page 581, where the valuations have been set out.  All the references to the lot numbers and plans are set out between page 581 and 584.  I am just reminded about the mortgages.  There was a mortgage entered into over the property Risby, which was the property which was owned as tenants in common by Bill and Neil - that was the yellow property towards the south‑west.  That property was mortgaged by Bill and Neil to provide funds for the purchase of the Injune property.  When the Injune property was sold, it appears that the proceeds, in part, went to discharge the mortgage over the Risby property.

KIRBY J:   Is the story behind Injune that Bill - and I mean no disrespect by calling him Bill - was upset that Neil would be going off there and looking after Injune instead of looking after the family estate?

MR FRASER:   Yes, he was concerned that if Bill left to look after the Injune property ‑ ‑ ‑

KIRBY J:   Is that not a legitimate interest or a legitimate concern of a testator who has put his life into his family farming property?

MR FRASER:   Well, it would be, in our respectful submission, quite an illegitimate interest for a testator to pursue, to, in effect, bribe a manager to stay looking after all his affairs by giving him the whole of his property, or the bulk of his property, in order to secure the services of that manager.  That would seem to be somewhat at odds with the general interests of a testator.

KIRBY J:   In the million-odd estate, the widow ended up only with the house, did she?

MR FRASER:   She received the house, the IBD and the $150,000, making a total, it seems, of the order of $230,000.

KIRBY J:   The $150,000 had not been depleted in the time between payment and ‑ ‑ ‑

MR FRASER:   No, it seems not to.  The evidence puts it on the basis as still being present at that time, yes, your Honour.

GAUDRON J:   It was not paid until November, was it?

MR FRASER:   28 November 1998, yes.  Settlement provided under the contracts was, I think, 9 September but the investments of Neil, it seems, did not fall due in terms of being an IBD of his own being rolled over until, I think, 18 November and the precise way in which that occurred was left in mystery.  Mr Pack, the solicitor, had no notes or recollection as to how the instructions were given for that payment to occur.

KIRBY J:   Did you bring a claim under the Succession Act in so far as you could pursue it?

MR FRASER:   A claim was brought, your Honour, but it was struck out for want of prosecution by the time of the trial.

KIRBY J:   That point was emphasised during the special leave application, I think, that you could have pursued that.

MR FRASER:   Well, against the result which eventually transpired in the trial, there would have been little point in pursuing it but, at the time of the trial, it had already been struck out, yes, your Honour.

GAUDRON J:   That was brought by whom?

MR FRASER:   All of the applicants, your Honour.

GAUDRON J:   All of the applicants.  Is it possible to bring a second one?

MR FRASER:   It would be out of time.  Leave is possible but, unless the property is in the estate, there is no point.  The considerations as to the granting of leave will involve, of course, discretionary matters.

KIRBY J:   If we are left to the realm of inference, does the Act, as you understand it, operate only on the estate minus the inter vivos payments?

MR FRASER:   Yes, your Honour.

KIRBY J:   So that all that would be left would be the residue of the estate after that was deducted?

MR FRASER:   There would be a difficulty now, because the option in the will provided for the purchase of the partnership.  It is quite plain that the partnership interest is gone because the three partners did not continue.  Bill died and Sam, as I recall matters, also transferred his interest as well.  I may have to be checked about that, but the partnership does not seem to have survived.  So the interest in the partnership may be very difficult to ascertain as to precisely what it was worth.  I have given the reference in the record to exhibit 47, which establishes an account struck of $95,000, at least by the person who prepared those partnership accounts.

GLEESON CJ:   I think you were going to tell us what are the grounds upon which you say that your clients are entitled to set aside part of the 1988 transaction.

MR FRASER:   Yes, your Honour.  Before going to that, I was asked before the break what is the subject matter or the scope of the fiduciary obligation.  In that respect, we submit that the traditional approach set out by Justice Dixon in Birtchnell v Equity Trustees, Executors and Agency Co (1929) 42 CLR 384, and the relevant passage is at page 408, is a persistence in that respect. It is referred to by our learned friends and I think the passage actually appears in their outline. It is at about line 8 of that page:

The subject matter over which the fiduciary obligations extend is determined by the character of the venture or undertaking for which the partnership exists, and this is to be ascertained, not merely from the express agreement of the parties, whether embodied in written instruments or not, but also from the course of dealing actually pursued by the firm.  Once the subject matter of the mutual confidence is so determined, it ought not to be difficult to apply the clear and inflexible doctrines which determine the accountability of fiduciaries for gains obtained in dealings with third parties.

In this case there was no written partnership agreement, but the evidence establishes that the partnership ran its cattle over all of the properties ‑ ‑ ‑

GUMMOW J:   Is it a partnership at will?

MR FRASER:   I suppose it must have been.  There was no agreement to the contrary.  So, the partnership ran all of its cattle over all of its properties.  It seems that no account was taken over who owned which property in the sense of paying rent.  There is a reference in the books to a payment for agistment but Neil described that as being an illusory entry.  It was put in for tax purposes.  That related to his property at Injune.  I cannot tell the Court whether the Injune property was involved in the partnership so far as running cattle over it is concerned, although it did seem that it probably was not, because Neil gave evidence that when Bill gave his agreement to the mortgage over Risby to purchase the Injune property, he was to receive no benefit out of that at all.  That would rather suggest that Injune was not included in the operations.

CALLINAN J:   Were matters formalised to some extent in 1981?  I had the impression that ‑ ‑ ‑

MR FRASER:   Your Honour, what occurred then was that previously the partnership had been carried out between the two elderly men, Bill and Sam, Sam being Neil’s father, and in 1981 that partnership, which was called York Bros, really ceased active operations and the ‑ ‑ ‑

CALLINAN J:   It became the Mount Leigh Pastoral Company.

MR FRASER:   Yes, your Honour, they transferred the assets of the former partnership into the new partnership and at that stage Neil, who had been working for the old partnership, received an advancement to the extent of approximately $76,000, because he received a third share of a partnership, the value of which was found by his Honour to be something of the order of $220,000-odd.

CALLINAN J:   But he had been working for very low wages before that.

MR FRASER:   It seems that initially he did.  The evidence is not particularly clear as to the wages thereafter.  Once he became the manager, he was all found on the property, on the property described as Hemples.

CALLINAN J:   The land remained in the names of the father and brother, or father and uncle?

MR FRASER:   That is correct, your Honour, save for Risby which was purchased in the name of Neil, as well - Neil and Bill.  Your Honours, to go then to the scope of the particular obligations here, it is our submission that the fiduciary obligation, the scope of it, extended beyond simply the partnership matters and the matters which one would think arise generally out of managing the partnership for interest.  It would naturally extend, in our submission, to the land because of the arrangements between the parties.

In this case it went further than that because, as the evidence shows, Bill and Neil were in a relationship of confidence and trust in which Bill sought advice and received it not just as to general matters but also as to the particular matters in question here, that is, the disposition of his assets.  He, quite plainly, sought advice from Neil before making his will.  The inter vivos transaction is, in our submission, in the same category.  The way that Bill responded to the statement by Neil, the request by Neil to transfer the property, in our submission ‑ ‑ ‑

GUMMOW J:   The partnership is going to come to an end with his death.

MR FRASER:   Yes, your Honour, it would.  It would have to be wound up, of course, but it would come to an end, yes.  But the way that the inter vivos approach was made is set out in our outline at page 6 in paragraph 2.8 and, rather than taking your Honours to the record, I will take your Honours to the outline.  Perhaps the first point to be made is that the initiation of the transaction clearly comes from Neil.  He had some money spare and he thought it was one way to go, and he was asked:

In what terms did you ask him?  What did you say to him?...I just said, “Would you like to sell me your part south of the line, Bill?”

Why pick on south of the line?...Well, the other home - other two home blocks they were very - Bill treasured Tookes and Dad liked the home block.

Your Honour, I am not quite sure which block is Tookes, but it is one of the green blocks above the line, that is, to the north of the line.  Then going further:

And what was Bill’s response to your suggestion that he might sell you south of the line?... He said I had better do it before “this bloody - before someone causes bloody trouble.”

Now, in our submission, he is really picking up on what Neil suggested and responding by saying, “Yes, I’d better do that”.  He seems to have taken that as an invitation by Neil to carry forward a transaction in a particular way, and he seems to have ascribed a reason for it, which is not entirely clear, and it is not made clear by the evidence as to why he thought someone might cause “bloody trouble”.  Then there is this question of the sum of money ‑ ‑ ‑

KIRBY J:   It was said in the submissions for the respondent that he was a man given to swearing in this way, and that this is just his funny way of expressing himself.  Some people, especially country people, can sometimes have an endearing mode of expressing themselves which is slightly different from city slickers.

MR FRASER:   Well, your Honour, if that is all that accounts for the use of the language that he used, it seems a little irrational.

GLEESON CJ:   What do you seem to make of it?

MR FRASER:   Your Honour, we submit that what it shows is that a proposition was put up by Neil, Bill acceded to it thinking that Neil was putting it up as a good idea before someone caused trouble.  We cannot say what was in his mind.  What we can say, what we do submit, is that to that point there is no suggestion he knew what his property was worth.  He did not know what the values were worth, according to the evidence, even though later on a valuer, who was commissioned by Neil to carry out valuations of the property, did so and spoke to Bill.  He was not asked whether or not he ever told Bill what the values of the properties were.

So far as that is concerned, that passage of the evidence did not occur during the cross-examination by Mr Williams for Neil and for the second respondents, after he had asked questions as to what input Bill had given to the valuations to the valuer, and received information that absolutely no input had been given by Bill into the valuations.

GLEESON CJ:   At the time of this transaction in 1988, was there stamp duty in Queensland on conveyances of land?

MR FRASER:   Yes, your Honour.

GLEESON CJ:   Was duty payable at a higher rate if the land were transferred at an undervalue or a gift?

MR FRASER:   The theory was that you would pay stamp duty on the market value and, if it were transferred for nominal consideration, a valuation should be obtained, something of that order.

CALLINAN J:   More than merely a nominal valuation if there were any - if the same names - if it was an apparent relationship, the Stamp Commissioner would almost invariably demand a valuation.

MR FRASER:   Yes, I was really trying to inform the Court that if it did not appear to be just an ordinary commercial transaction, then it was certainly common to arrange for some evidence of value to be obtained.

GLEESON CJ:   Yes, but it was the reason for the demand of a valuation to extract more revenue.  In New South Wales there used to be something called “sixth schedule duty” which would apply to a transfer of land at an undervalue, so conveyancers would arrange valuations of the land to prove to the commissioner that they did not have to pay the higher rate of duty.  Did that apply here?

MR FRASER:   No, not that I am aware, your Honour.  No, I do not believe so.

CALLINAN J:   There was no penalty rate or anything of that kind; it would just be on market value, but you would need to satisfy a suspicious commissioner in circumstances of this kind that it really was market value.

MR FRASER:    Yes, I think that was as far as it went in Queensland at that time, your Honour.  Your Honours, while I am on the topic of the conversation, it seems, with respect, that the only inference that is available from the conversation is that it was taken by Bill to be advice, that is, it was a good idea.  Now, one aspect of this is really quite significant and it seems that when Bill first inquired of Neil how much he should leave his daughters and nominated the figure of $100,000 and Bill responded by saying he should leave them twice as much or $200,000, at that stage Bill did not discuss with Neil why Neil said $200,000.  There was no expansion beyond simply that communication, but Neil’s view was informed, according to Neil’s evidence, by what he perceived the value of Bill’s properties to be and he said that he thought they were worth about $400,000 at that time. 

We have given the references to this part of the evidence in our supplementary outline at page 2, under the reference paragraphs 2.18 and 2.19, and the references in the transcript in the record are at volume 2, page 297.  May I ask your Honours to take up that book.  This is during the cross‑examination of Neil by the appellant’s counsel.  About line 20 it starts:

Anyway, you have no doubt in your mind at all that the figure of 200,000 came from you?-- That is correct.

And Bill thought that was very fair?-- That’s as I gathered.

Yes.  Just as a sideline, did you think it was pretty fair, too?-- Well, at that time, it was - it wasn’t the value of the properties.  It was probably half, I thought.

So you had some appreciation of the value of all the property at that time?-- Yes, I did.

And you thought you were advising Bill to give the girls half the value of the property?-- No, I wasn’t advising Bill at all.

Then it goes on.  Later he resiled a little.  He says he did not know why he did.

GLEESON CJ:   It was Bill who took the initiative in that will transaction, was it not?

MR FRASER:   Yes, your Honour.

GLEESON CJ:   There was no suggestion that it was Neil’s idea that he be given this option?

MR FRASER:   No, your Honour, there is no evidence to that effect at all.  Bill rang Neil and said he wanted to see a solicitor to make a will.

GLEESON CJ:   The only contribution that Neil made to that dealing is the one that you are now telling us about.  Whilst they were waiting to see the solicitor Bill asked Neil for his opinion on how much he should leave his daughters.

MR FRASER:   Yes, your Honour.  In fact, there were a number of other events.  Bill asked Neil to arrange for a solicitor and Neil arranged for an appointment with Neil’s solicitors.  Bill was driven to the solicitor by Neil and during the course of taking instructions the solicitor, who was Mr Pack - this was the first occasion upon which Mr Pack had met Bill - Neil was then called in to confirm that all the properties had been dealt with in the will and that is when he identified that there was one missing at lot 40.

GUMMOW J:   How long had this solicitor been acting for the nephew?  Is there any evidence of that?

MR FRASER:   Mr Pack personally had not acted for Neil but his firm had acted since the purchase by Neil and his wife of the property at Injune, which I think was in 1981, so to this point it was about four years.

GUMMOW J:   What about the uncle?  Did he have any family solicitor that he used from time to time?

MR FRASER:   He and Bill both went to the other firm of solicitors in town, McCawley and Hurley, I think it was, and that firm had the titles and all that sort of thing.  At a later stage Mr Pack has to obtain an authorisation to get the title deeds.

GUMMOW J:   Justice Callinan refers me to 298.

MR FRASER:   Yes, your Honour.  McCawley and Hurley are the solicitors - 298 line 40.

CALLINAN J:   Mr Fraser, was there any Law Society ruling or any Law Society requirement or directive that, in the case of a person going to a solicitor who was going to act for both parties, that that solicitor should send one of the people away to have the transaction checked, the way in which banks and the like are now doing as a matter of course?

MR FRASER:   Your Honour, I do not know the answer to that question.  I am certainly aware of a number of authorities to that effect but, so far as a particular requirement of the Law Society, my recollection is that there was at least one reference in their ethical rules to the undesirability of the practice but I do not know that there was any prohibition upon it being done in their rules.  I think there may have been a loading in the statutory insurance scheme if you did it but no ethic of constraint, as it were, provided by the rules of the society.  I should mention that context if it needs to be added that there is an express finding by the trial judge as to conflict of interest in what Mr Pack ‑ ‑ ‑

GUMMOW J:   Well, it is obvious.

MR FRASER:   Yes, your Honour.  Your Honours, the point that I was really coming to so far as taking your Honours to that passage is concerned is that what occurred in the inter vivos transaction was really Neil building on what had occurred so far as the will was concerned because it is apparent from Neil’s evidence that when they went from the solicitor’s that day to return home Bill told him what was in the will, that is that he had given him the option to buy all of his property for $200,000.  Later on when we come to the inter vivos transaction, Neil suggests that the property be transferred inter vivos, and he does so for this reason:  he said that it seemed more equitable and he put that in the context of property values having risen.

If I can take your Honours to that passage again in the outline, it is at page 7 of the appellants’ outline, the last passage at the top of the page:

Now, why did you offer to pay $150,000 which was then in your bank for land which you knew was subject to the dispositions in Bill’s will?.. Well, I thought land had increased in value in that time and - well, land had increased in value and therefore it was more - it was getting more equitable.

Now, at this point, Neil does not suggest that he discussed with Bill the value of the land.  In fact, he says that he never did and by this stage, he knows that Bill has relied upon him for his advice as to what he should give to his daughters.  The thought processes, at least in so far as they were carried on by Neil, to that point were that was half the value of the property. 

In fact, the evidence shows that the properties were worth something of the order of $690,000 at that point, quite a significant amount more than $400,000 and, instead of going back to Bill with that information, what he did was he decided to build on what had occurred to date upon his own views of what was fair, what was more equitable, and it can only be referable, that particular observation, to what was in the will by way of the option and what the daughters and the widow would get out of the whole transaction.  Bear in mind at this point that Neil knew all there was to know about the partnership affairs and the land and thereafter he actually got valuations as to the land which showed that they had gone up perhaps even more than he had possibly imagined.

Now, it appears in this respect that Bill was mistaken in relying upon Neil’s fairness in so far as Neil made a considered judgment of what would be a fair thing, and Neil must have appreciated that the view he had expressed and the advice he had given was, in effect, vitiated by a misapprehension as to what the land was worth, yet, instead of doing anything appropriate about it, he simply built on it himself.  This may simply reflect the relationship that the two gentlemen had but it is not, in our submission, something that is conscientious.  At that point what Neil should have done, knowing that he was being relied upon to give advice, knowing that Bill had followed advice, was to arrange for Bill to be independently advised and be given full information about the value of the property.

GLEESON CJ:   We know that Bill regarded Neil as a son.  In your submission, would it have made any difference to the outcome of this case if Neil had, in fact, been his son?

MR FRASER:   Your Honour, in our submission, no, because of the difficulty that Neil would have of showing that it was fair, just and reasonable - the result in the end - and that flows from a number of features.  Assume everything was the same but he was the son, if he treated his mother in this way, by cutting her out so very substantially, or at least procuring - well, not procuring, let us rephrase that - by taking a benefit from Bill which had that effect, then that would be unconscionable. 

The way we have addressed it in our submissions is to submit that, while there may be, perhaps, a higher threshold imposed as to - actually, it should be the other way around - a lower threshold imposed as to when it becomes fair, just and reasonable where there is a family relationship involved, at some point conscience revolts and says, well, that is just far too much.  That is beyond the realms of what is proportionate, what is appropriate, and this situation clearly is, in our submission.  Neil got, by far, the greater proportion of all of Bill’s assets, and at the expense of the other members of the family.

GUMMOW J:   But is that not really what the testator and donor intended?  That seems to have been his cast of mind.

MR FRASER:   Well, he had a desire, it seems, to keep the property together.  Your Honour, perhaps I can approach it this way; we submit that so far as an inter vivos transaction is concerned - - -

GUMMOW J:   I mean, maybe he was importuned by his nephew, but is it really suggested he would not have done it anyway?

MR FRASER:   Well, we submit it cannot be suggested he would have decided to pass these parcels of land inter vivos to Neil without the prompting of Neil.  I mean, it just seems inconceivable that he would have thought - - -

GLEESON CJ:   But there is a finding of fact that, if he had taken independent advice, it is likely that he would have done the same thing, and you do not seek to set aside that finding of fact, as I understand it.

MR FRASER:   Well, we submit that is really not a finding of fact, it is really speculation as to what may or may not have happened and we submit, further, that it is - - -

GLEESON CJ:   It is not really speculation.  It is closely bound up with the matter that was just mentioned by Justice Gummow.  It is closely bound up with the judge’s appreciation, from the evidence, of why Bill was behaving in this way, and of his appreciation, from the evidence, of Bill’s mental capacity.

MR FRASER:   If we approach it from the other viewpoint; assume there was a relationship of special disability and Neil had to show, according to the classical - or the statement, at least, by Justice Deane in Amadio - - -

GUMMOW J:   But there is no disability at this time, is there?

MR FRASER:   At the time of the - - -

GUMMOW J:   When does the disability start?  That is another - that is not a fiduciary ‑ ‑ ‑

MR FRASER:   Well, it must start when Bill looks to Neil for advice, and is dependent upon him, and has complete - - -

GUMMOW J:   Why is he dependent upon him?

MR FRASER:   Because he cannot run his property, so he relies upon Neil.  He relies upon Neil to work out what is fair to give to his daughters.  He does not know - well, I suppose to this extent, he is not involved in the legal transactions or dealing with the accounts.  He simply does not know what is happening to his affairs in so far as - except so far as Neil tells him and runs them for him.  There are a number of passages dealing with the dependence, in fact, of Bill upon Neil and we have given the references to that in both of the outlines.  But most significantly, I suppose, in this respect, there is evidence that he misapprehended the value of the property from Mr Leahy.

GAUDRON J:   Your response, then, arose in relation to the question whether Bill would have done the same if he had had independent advice.  The point really is that Neil did not have to accept this beneficence, did he?

MR FRASER:   Or retain it.  Same thing, really.

GAUDRON J:   Or retain it.  And the difficulty seems to me that he thereby deprived the wife and children of what otherwise would be their opportunities under the Testators Family Maintenance Act.

MR FRASER:   That was a direct consequence of accepting the benefit, and in circumstances where he knew that what he was building on had been premised upon incorrect advice - at least from Neil’s point of view - as to what he thought was a fair thing.

GLEESON CJ:   If this transaction in 1988 had never occurred, if it had never entered the mind of either Bill or Neil to do it, where would that have left the widow and daughters?

MR FRASER:   There would have been a Testators Family Maintenance application, which would have been processed in the usual way, and the widow would have been, in our respectful submission, bound to succeed; a widow of 53 years with $20,000 - - -

GLEESON CJ:   I want to understand that a little better, because it bears on the relief that you are seeking.  What would have been the effect of the operation of the option?

MR FRASER:   It was a bequest in the will.  The will could have been altered, or construed to - the way we do it up here is to order that the last testament be read and construed as if that provision was not in there and, instead, another provision was in there.  So, the option could have been recast.  There is a principle that you try to do as little damage to the will of the testator as can conveniently be done but, in a case like this, it would have to be substantially changed.

GLEESON CJ:   Well, then, why were you not applying to set aside the entire 1988 transaction?

MR FRASER:   Because, your Honour, by the time of trial, the Testators Family Maintenance application had been dismissed for want of prosecution, and the circumstances of the parties had changed so very significantly.

GLEESON CJ:   So that, it was, as it were, the collateral fact that the Testators Family Maintenance application had not been pursued that rendered appropriate, or rendered desirable, from your point of view, the particular form or relief which you were seeking, which was to set aside a part of a transaction which owed its origin to an almost accidental decision by the solicitor as to how to document it.

MR FRASER:   With respect, your Honour, it is a little more than that.  I mean, no matter how it had been structured, at the end of the day it would have involved a transfer at an under value.  So, whether, in those circumstances, there would have been any impediment to seeking relief that the market value be paid is another question which is addressed in the outlines.  It would not really turn upon the actual documents which were adopted to structure the transaction, in our submission.

GLEESON CJ:   One thing we know for sure is that Bill never intended to seek, and Neil never intended to pay, full market value for these properties that were transferred in 1988.  To give you the relief that you are seeking certainly defeats the intention of both the parties to the transaction.

MR FRASER:   It does to a certain extent, except that the evidence also shows - well, sorry, it does to that extent, your Honour.  But our submission is that the evidence shows that, after the inter vivos transactions, the market value for the land increased very considerably yet again.  So, there is no unfairness, in that sense, to asking for market value to be paid at this late stage, because there is no disadvantage flowing from that.  Put it this way; the alternate approach has the effect that Neil, in effect, profits by the unconscionability, if that be found against - - -

GLEESON CJ:   Only because of your client’s delay, or decision not to pursue the Testators Family Maintenance application.

MR FRASER:   Well, I suppose I should respond by saying that the respondents applied to have it struck out, and did so successfully and, at that stage, of course, the question of what property was within the estate was still being debated because the matter did not come on for trial until several years after the death.

CALLINAN J:   Mr Fraser, what was the age difference between the testator and the widow?

MR FRASER:   She was 84 at the time of trial, so I think about four years, or thereabouts, your Honour.

CALLINAN J:   It would be highly unlikely, would it not, having regard to her age, that, on an application under the Succession Act, she would have got very much more than a life interest?  Is that not right?

MR FRASER:   It would depend upon the evidence which would be adduced, but one would expect that she would receive some provision by way of capital beyond simply the house at Wallumbilla to provide for her, and together with sufficient to secure an adequate income for her.

CALLINAN J:   Well, a life interest would do that, would it not?  She had the right to income from the properties, for example.

MR FRASER:   One would expect that provision would be made to supply a capital sum for comfortable accommodation for her, or something of that order.  But, of course, she was not the only applicant.  The daughters would have been involved in that.

CALLINAN J:   No, I know, but the daughters were all married adults, were they not?

MR FRASER:   Yes.  I think the evidence shows two of them lived in Wallumbilla, and we have some evidence that the valuer’s house was sold for $65,000.  That was the best property in Wallumbilla, so one may infer from that that their circumstances were not particularly comfortable.  There was very limited evidence about the relative positions of the daughters.

GAUDRON J:   Well, at some stage, though, you will, I suppose, address the question how it can be that a transaction of this kind can be set aside in part, and whether, if one were to come to the view that it could be set aside in whole, whether that is, in fact, what you want.

MR FRASER:   Yes.  I will have to come to that, your Honour, thank you.  I do not know that I should come to it immediately, because there are some other matters that I should address at this stage. 

Your Honours, I started to take your Honours to the reference about the evidence.  The point we really make about the stage at which the inter vivos transaction occurred was that, by the time the solicitors’ meeting took place, by the time of 19 July 1988, Neil had the valuations showing how much the land was worth and did nothing by way of informing Bill what the information showed.

GAUDRON J:   Does the evidence show when he got those valuations?

MR FRASER:   Some time in May, I think, your Honour.  Our submission on that is that it is not enough to have told Bill, in the solicitor’s office, when he is there, to execute all the documents - a pile of documents involving transfers, contracts and the deed of forgiveness - it was incumbent upon Neil to keep Bill informed at all material times, and the first material time, so far as that goes, was when he received the valuations.

GAUDRON J:   Does the evidence disclose when the solicitor got the valuations?

MR FRASER:   The solicitor did not procure the valuations.  That was done by Neil.  He arranged them.  But I do not know that the evidence shows when Mr Pack received them, but he certainly had them in the office when the documents were signed.  That is as far as it goes, I think.  Your Honours, I was going to go - - -

GLEESON CJ:   Just before you pass from that point.  I had the impression ‑ correct me if I am wrong - that that figure of $150,000 was rather arbitrary and was the amount of money that Neil had available as a result of the sale of the Injune property.  What I wanted to ask you is this; is there anything in the evidence that permits us to infer what figure might have been substituted for the figure of $150,000 if the land were worth the amount shown in the valuations rather than what Neil thought it was worth?  To put the same question another way, is there any evidence of what Neil thought the land was worth before he got the valuations?

MR FRASER:   Yes, your Honour, he thought they were worth about $600,000.  There is evidence of that, and we have given the reference in that same - - -

GLEESON CJ:   What does the valuation show the land was worth?

MR FRASER:   $696,811, I think it was, from memory.

GLEESON CJ:   I am sorry, the difference between what the valuations showed the land was worth and what Neil thought the land was worth at the time he offered $150,000 was about $90,000?

MR FRASER:   About $96,000, yes, your Honour.  But the major difference was the difference back at the time when the will was made.  The evidence shows that the land that Bill had was worth, in total, something of the order of $694,000.

GLEESON CJ:   Then, I was under a wrong impression.  You are not suggesting that it would have come as a very pleasant surprise to Neil when he got these valuations.  They showed that the land was worth about 10 per cent more than he had thought it was worth.

MR FRASER:   Something of that order, your Honour, from the time when he asked Bill to go ahead with the transaction.  But from the time when the will was made, they showed that, from Neil’s perception of the land being worth $400,000, that it had increased very considerably from that point.  In fact, in total, they were worth, by that stage, more than $800,000 - that is, all the lands.  The reference to $696,000 is to the land south of the railway line that was the subject of the inter vivos disposition.  So, over a period of three years, if one accepts Neil, his perceptions had been so far out that the land ‑ ‑ ‑

GLEESON CJ:   But there was not much difference between what Bill thought the land south of the railway line was worth when he offered $150,000 for it than what the valuations showed the land to be worth.

MR FRASER:   Your Honour, there is no evidence what Bill thought the land was worth at that time.

GLEESON CJ:   I thought you told me he thought it was worth $600,000.

MR FRASER:   Neil thought it was worth $600,000.

GLEESON CJ:   I am sorry, my mistake.  There is no evidence that the land was shown by the valuations to be worth much more than Neil thought it was worth when he offered $150,000 for it.

MR FRASER:   No, your Honour, no.  I was going to take your Honours, then, to one aspect of the transaction which was not addressed by the trial judge, or, indeed, by the members of the Court of Appeal, and that is this issue of whether the documents were appropriate to give effect to the transaction.  Your Honour, can I ask your Honours to take up our supplementary submission at page 4?  Our submission is that, because of the way the contracts were filled out, because of the prices that were put on the documents, the result of the Deed of Forgiveness was that the consideration which Neil would be required to pay was only $106,400 and not the $150,000 that was the deal they had done privately, and that it follows, as we have described at page 4 of the supplementary submissions ‑ ‑ ‑

GLEESON CJ:   Well, this demonstrates that what we have so far been describing as the 1988 transaction was, itself, only part of a larger transaction, which also involved Sam.

MR FRASER:   With respect, no, your Honour.  Simply, this aspect demonstrates that the documents that were signed on the day did not give effect to the agreement that Bill thought he had made.  See, the significance of the date upon which the documents were executed is that the trial judge thought they were a good day, when he described Bill as having good days and bad days.  We do not have any finding as to Bill’s state on the day he made the agreement of $150,000, but we do have the evidence of Dr Hatcher as to Bill’s capacity on that day.

GUMMOW J:   Well, it is the capacity to know what he was doing and to make an informed decision about disposition of the property.  I can understand that as a testamentary capacity point ‑ ‑ ‑

MR FRASER:   That was all that Mr Pack was concerned to address.  He was not concerned about anything else, it was just testamentary to capacity, and the trial judge found that Mr Pack had briefed Dr Hatcher about that.

GUMMOW J:   But this is speaking of July 1988?

MR FRASER:   Yes, your Honour, 19 July 1988.

KIRBY J:   The primary judge found that this was executed on a good day though, did he not?

MR FRASER:   Yes, your Honour.

KIRBY J:   That was done by inference from Dr Hatcher’s evidence.

MR FRASER:   Yes, your Honour.

GLEESON CJ:   Presumably one of the people who was in the best position to give evidence about Bill’s capacity was one of the plaintiffs, his wife, and she had nothing to say.

MR FRASER:   Well, she may have had something to say.  The evidence goes so far as to say she was frail, suffering from diabetes, but there was no medical certificate produced to say she could not have been at court and, I suppose, in short, our response is there is really little that needed to be added, by way of the description of the relationship between Neil and Bill.  It came sufficiently well from all the other witnesses who gave evidence as to the quality of the relationship and, indeed, from Neil himself.  So, to the extent that inferences might have been drawn, had the evidence not fallen out that way then, of course, inferences perhaps might have been.  The trial judge noticeably did not make any express inferences in consequences of the failure to call Stella.

I was going to take your Honours to volume 3 of the appeal book to indicate another feature, which really makes the point that I am trying to make now.  This is at page 529 of volume 3 of the appeal book.  This is a diary note, or a memo of some kind, prepared by Mr Pack in part.  I think the evidence is the figures were written out by his secretary, and your Honour can see that it really mirrors what I have set out in the second table on page 4, showing the amount of the purchase price that Bill was to receive under the contracts, the total, and the amount of the Deed of Forgiveness of $546,000, and then the balance, and then the words below that:

Irrespective, Neil agreed to pay $150,000 -

and something:

Today to be put on I.B.D.

Now, the point that we make about this is that it can hardly have been the well‑informed action of Bill, in executing these documents, if they did not give effect to the transaction that, by all accounts, he was to embark upon on that day.

GLEESON CJ:   What do you take to be the meaning of those words:

Irrespective Neil agreed to pay $150,000.

MR FRASER:   Your Honour, that is the reference to the instructions that Neil was to pay $150,000 for the properties.

GLEESON CJ:   And how much did he pay?

MR FRASER:   Mr Pack ended up transferring $150,000 to Bill’s account.

GLEESON CJ:   So, he did pay $150,000?

MR FRASER:   He eventually did but, under the instruments which were prepared to effect the transaction, he was not obliged to.

GLEESON CJ:   Yes, but what follows from that?

MR FRASER:   It follows that it can hardly be suggested, in our submission, that signing these contracts, and to the explanation that was given, was a sufficient explanation, because this discrepancy was not adverted to or picked up at that stage.

GLEESON CJ:   Well, it looks as though it was.  Is that not the point of the word “irrespective”?  Is not that Mr Pack’s note saying regardless of what these figures show, Neil is going to pay $150,000 to Bill?

MR FRASER:   This was picked up towards the end of November 1988, but not at the time of the signing of the documents.  Bill did not have any involvement in this.  This is Mr Pack’s note of how he is going to effect the transaction, in effect, by paying the money across.  But there is no suggestion that Bill gave any instructions about this, and the only evidence is that Neil thinks that his wife arranged for the money to be paid across.

GLEESON CJ:   At all events, we know that Mr Pack noted that, regardless of what the calculation showed, Neil was going to pay $150,000.

MR FRASER:   Yes.

GLEESON CJ:   And we know that Neil, in fact, paid $150,000.

MR FRASER:   Yes, your Honour, and regardless of what the documents showed was to happen, Neil had agreed to pay $150,000, eventually.  He did not pay it, of course, in terms of the agreements.  Your Honours, some point is made against us of the ability of Bill to resile from the transaction, and one of the matters raised is the discussion which occurred in the solicitor’s office shortly before the money was paid over; that is, on 24 November 1988.  Your Honours, we have detailed our response to the point made against us, and that is at page 5 of our supplementary submissions, in paragraph 2.38.

It really flows, in our submission, from the absence of any independence of advice.  Mr Pack’s interest was simply to put the transaction through and he acted, in our submission, without any particular regard for Bill’s interests.  The obvious conflict which was present in theory occurred in practice as well, because nothing was done about this.  No instructions were sought about the various matters that were raised during the period after the signing of the documents, and more significantly, of course, no advice of any independent nature concerned with Bill’s interests was given to him before he signed the contracts.  Scant regard was paid to his interests, in our submission, by Mr Pack.

Now, your Honours, the trial judge did not draw any great comfort from what occurred on 24 November, and we address that at page 6 under the heading 2.46.  We do make the submission that it is difficult to see that Bill made any informed decision, at that stage, particularly having regard to the absence of any advice about matters that were really relevant to his interests at that time, and to the noticeable depreciation of his mental capacity, which was even commented on by Neil by that stage.

CALLINAN J:   Mr Fraser, I have just looked at the cross‑examination of Dr Hatcher at pages 243 and 244 and it is extremely brief, and I cannot see anywhere that it was put to Dr Hatcher that the testator was in such a condition as would in any way at all be suggestive of any impairment at all.  It just was not put.  It was a very short cross-examination and the examination achieved is quite extensive and I think establishes no mental incapacity at all - no impairment.

MR FRASER:   Your Honour, we do not controvert the conclusion that he had testamentary capacity.

CALLINAN J:   No, I am not talking about testamentary capacity.  I am talking about any form of impairment at all that might make him especially susceptible as a matter of health, not having regard to any relationships, but there is no medical evidence at all, indeed the medical evidence is the other way, of any susceptibility that I can see, and then it is not challenged.

MR FRASER:   Your Honour, perhaps one matter was challenged.  The important feature about it is that Dr Hatcher was not told that Bill was going to be making a gift of the large part of his estate.

CALLINAN J:   But he was told that the matter about which there was a concern involved a large sum of money.

MR FRASER:   Yes, your Honour.

CALLINAN J:   He was told that.

MR FRASER:   At page 245, your Honour, at about line 8, he said, this is what Mr Pack said:

this is my understanding of what was said to me, that he told me that there was a large amount of money involved and that he wanted to make sure that it was done correctly for the person he was doing it for.

And then the next question:

Did he say anything about a large amount of that money being forgiven?-- No.

I mean that, in our submission, is a relevant consideration if one comes to the situation where one relies upon a medical practitioner to canvass issues of independence and the relationship ‑ ‑ ‑

CALLINAN J:   I do not think it has anything to do at all with the matter that I put to you, that there was no challenge made to the medical evidence which seemed to establish no impairment at all.

MR FRASER:   Your Honour, the only challenge was the shortness of the visit, that is all that can be said in that respect, that they were for 10 minutes between the two elderly gentlemen.  Dr Hatcher did know Sam, he had seen Sam before, he was his regular doctor, but he had never seen Bill before.  Our point is simply this, that in an examination which lasted that long, it is difficult to conceptualise that Dr Hatcher could have been playing any sensible role of providing an independent sounding board for Bill as to ‑ ‑ ‑

CALLINAN J:   But why was that not put?  It was not put.

MR FRASER:   Well, perhaps because it is not a matter that Dr Hatcher was really briefed on.  He was only briefed about capacity.  He was asked to provide an assessment of Bill’s capacity to enter into a legal transaction on that day and he did so.

CALLINAN J:   Involving a large sum of money.

MR FRASER:   Yes.  Well, one would have thought that the question of capacity in that sense for the doctor would have been quite a different issue than the issue that would have been raised for an independent solicitor investigating the same matter, and perhaps that is the reason why nothing was embarked upon so far as questions of independence are concerned.  There really is no reason to ask him, “Well did you examine him to see just whether or not he had a relationship with Neil under which he was under a special disability?”.  I mean, it is just the nature of the reason that he went there.

Your Honours, there is a specific finding that he was briefed on that issue of capacity only because that is what Mr Pack was concerned about.  Perhaps finally in response, your Honour, there is really - nothing seems to, or no consequence in our submission would flow.  All that can be said is there was no independent advice and no suggestion that there was any taking up with Bill what his own interests dictated at that point by either Mr Pack or by Dr Hatcher.

CALLINAN J:   No, I understand that.  It just would have improved your case a little ‑ ‑ ‑

MR FRASER:   Certainly, your Honour.

CALLINAN J:    ‑ ‑ ‑if there had been any finding or any basis for a finding of some degree of impairment falling short of an absence of testamentary capacity.

MR FRASER:   Your Honour, our case at its highest rests in so far as that is concerned upon the trial judge’s finding that Bill had suffered a probable mental decline and had good days and bad days and we have addressed the evidence about that and his Honour’s findings at page 5, this is of the supplementary submissions.  The point is taken against us that his Honour’s reference to Bill having good days and bad days was so far as his health was concerned.  At page 5 under the heading paragraph 2.37, we have traced his Honour’s findings and the other evidence that was before his Honour which really makes it quite plain that his Honour was referring to mental deterioration, in particular the first passage at page 607 of the judgment which we have extracted makes it quite plain that when his Honour was talking about good days and bad days, he is talking about mental deterioration.

GUMMOW J:   Now, in Blomley v Ryan 99 CLR 405 there is a paragraph where Justice Fullagar says:

The circumstances adversely affecting a party, which may induce a court of equity.....to set a transaction aside -

include:

poverty.....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.

It seems to be a helpful passage.  Now, where do you say you fit in there, if anywhere?

MR FRASER:   We say that Bill - - -

GUMMOW J:   This is an Amadio-type case, the one his Honour is talking about.

MR FRASER:   Yes, your Honour, I appreciate this.  This was the drunken vendor.

GUMMOW J:   Yes, another - - -

MR FRASER:   Another western Queenslander....., yes.  Your Honour, we submit that he suffers from a serious disadvantage because of a relationship with Neil under which, because of his increasing age and infirmity, he has become to rely and depend upon Neil and to take Neil’s advice.

GLEESON CJ:   But Mr Fraser, the problem seems to be this, primogeniture, I realise this is a system that some people think is monstrously unfair, but the idea of leaving your property intact to your son, often to the manifest disadvantage of your daughters, is one that is easily understood by many people and they fix on it with a determination.  It was the element of unfairness to third parties to this transaction that you seem to fasten on.  This old man was determined, apparently, that his rural holdings would go intact to the person he regarded and treated as a son, and as between the two of them, the transaction was relatively easily understood, was it not, particularly against the will that had already been made.  The problem with this case - and I am not suggesting it produces a result one way or the other, we have to work that - but the problem with this case is the effect that this transaction that they both wanted to happen had on third parties.

MR FRASER:   Well, your Honour, perhaps the answer to that lies in deciding whether or not, if one assumes the relationship exists, the result - the question of whether it is fair, just and reasonable - is an objective standard or a subject of a standard because if Bill’s wish, in fact, is what counts, and that counts alone, then he had a desire which might be achieved by leaving all the property to Neil.  But if the test is an objective one, then it does not matter that subjectively he had a desire because, at the end of the day, Black Acre has no feelings and the interests of a person are really to be seen as referable to making a fair and adequate disposition of his estate because that is, after all, that is what the Testators Family Maintenance legislation does.  It sets a norm.

GLEESON CJ:   And that is the artificiality of this type of proceeding, is it not?  The remedy that the legislation provided in this kind of circumstance was a remedy that ultimately was not pursued.

MR FRASER:   It was a remedy that was, in effect, taken away from us, taken away from the applicants.

GLEESON CJ:   Then on the question of remedy, is this a convenient time for you to you to let us know whether you say, assuming we are with you so far, we can and should set aside part only of this transaction.

MR FRASER:   Your Honour, can I come to that just after making one reference on that question that I pose of whether it is an objective or a subjective standard.  The only reference we could find on the point was in Goldsworthy v Brickell and that is case No 20 in our list. It is in volume 1 of the two volumes of authorities we have provided to the Court. May we take your Honours to that case. It is a case which was dealt with as an undue influence case about a disposition - sorry, a tenancy between a farmer and a farm manager and, your Honours, it may be convenient if I just invite your Honours to read the headnote for the facts.

GUMMOW J:   What does it all come down to?

MR FRASER:   It comes down to this.  In the course of his reasons, Lord Justice Nourse at page 400 addressed the argument for the defendant, for the farm manager, and he identified the propositions which were advanced at about point E on page 400, and the first proposition was:

since the plaintiff’s case has throughout been one of dishonest persuasion, it can only succeed if there is proved to have been some form of dishonesty or conscious abuse of power by the defendant.  Secondly, the plaintiff must prove a relationship which can properly be described as one of domination of the plaintiff by the defendant.  Thirdly, the judge’s findings as to the situation, physical and mental condition, character and disposition of the plaintiff in 1976-77 are wholly inconsistent with the existence of such a relationship.  Fourthly, the transaction effected by the tenancy and partnership agreements was not manifestly and unfairly disadvantageous to the plaintiff.

And his Honour dealt with the fourth of the propositions at page 408 at about point D.  He started dealing with them a little earlier but the way he addresses it, perhaps starting at B.

The short answer to these submissions is that all the advantages of the arrangement could have been secured to the plaintiff without any of the disadvantages, not by granting a tenancy to the defendant alone or even to the plaintiff and defendant jointly -

and then going on.  Then at the bottom of that paragraph:

I do not think that that consideration -

that is the consideration that the plaintiff had no interest in the value of his estate after his death ‑

although it may be material for other purposes, is of any weight in relation to the fourth proposition.  The test there must be an objective one.

Now, if that proposition holds good for a case of a relationship of this kind and what is required to be shown then, in our submission, it is no answer to say that it achieved - or it is no answer to say that he would not be concerned what happened after his death to those who were dependent upon his bounty.

If it is an objective test, it must be an objective test applied to Bill in all the circumstances of the case, including the relative claims upon him by those members of his immediate family, and also his own interests.  Because, ultimately, in this case, it is our submission that it was unconscionable for Neil to retain the benefit if its only justification is to keep the property together.  And there were many other ways in which this objective could have been achieved. 

The other aspect of it is, it can only apply for so long.  I mean, how long can Bill keep the property together, a property of this kind.  He did not own all of it in the first place, and there is nothing at all to stop Neil selling any part of it or all of it at any time.  Indeed, one part of it was the subject of an option to a fertiliser company which was entered into before Bill’s death.  So it is difficult to see that the desire, or view by Bill that he would like to keep his interests or keep the farm together, can override objective standards of what is appropriate in those circumstances.  In other words, he cannot subjectively ignore what he is bound by the standards of the society to do. 

You can test it another way.  Assume that Stella had found out that Bill was proposing to dispose of the bulk of his estate at a gross undervalue and receive particularly aggressive advice from a solicitor, perhaps not in Wallumbilla but somewhere in one of the big cities.  She could go to the Family Court and get an injunction straight away without filing for divorce, the law has been changed about that, to get an order to restrain the disposition.  She has rights in relation to that property.  It is the secrecy of the transaction that defeats that and it is the fact that it occurs and takes it away from the estate that defeats the Testators Family Maintenance legislation.

GUMMOW J:   What is the section that confers those rights under the Family Law Act?

MR FRASER:   Section 79, your Honour.

GUMMOW J:   Yes, I understand that.  But without any matrimonial proceeding being on foot.

MR FRASER:   I will have to give your Honour a note of the precise section, I ‑ ‑ ‑

GAUDRON J:   It is the definition of matrimonial cause, I think.  There is a special provision that does not require there to be proceedings for dissolution of marriage.

MR FRASER:   As I recall, matters - certainly when I was at the junior bar, you had to have an application for divorce initially, but then the law was changed many years ago to allow that procedure to occur.

GUMMOW J:   It is a law with respect to marriage rather than a law with respect to divorce.  That is the way it is supported.

MR FRASER:   Yes, your Honour.  Your Honours, I will now go to the question of relief and I know that there has been some.....on the path to get there.  We submit, your Honours, that the power of the Court of Equity to grant relief is really not to be fettered by the circumstance of the nature of the head of equitable jurisdiction under which it grants relief.  Really, if a Court of Equity has the ability to provide remedies where some action is against conscience, whether it is the consequence of undue influence, mistake, unconscionable dealing, or the like, it really does not confine the remedies and, we submit, that that is the effect of what is said in Vadasz’s Case, your Honour.  And we have given, or your Honours have I think ‑ ‑ ‑

GAUDRON J:   But is not Vadasz against you in this sense?  If you were granted relief with respect to the forgiveness of the debt only, you would have a transaction that is wildly different from what the parties intended at that stage, and we have absolutely no basis for knowing that it is one that Neil would have gone along with at the time.

MR FRASER:   Well, your Honour, the alternative is that Neil has engaged in unconscionable dealing and the consequence is nothing.  All he would have to do is to, perhaps, account for the use of the property over the period for ‑ ‑ ‑

GLEESON CJ:   The other alternative is to set aside the whole transaction.  We are not engaged on some punitive expedition here.

MR FRASER:   Certainly not, your Honour.  We do not suggest that.

GLEESON CJ:   Well, if there is any relief available at all in respect of this transaction, on the face of it, it ought to be to set aside the transaction.

MR FRASER:   Your Honour, I suppose the response that we make is that it depends on the circumstances, and the circumstances are that Neil, if one likes to adopt the old expression, snatched at a bargain.  If he did so with a view - or it does not really matter about his motive - if he did so, then to say that the consequence is that because over the course of the litigation - and there were a number of unsuccessful aspects so far as the appellants were concerned, we failed at trial and failed before the Court of Appeal - to say that over the course of the litigation he has lost rights under the Testators Family Maintenance legislation and, therefore, that is all he was entitled to, really does not seem to do equity to the appellants if they succeed now in establishing unconscionable dealing.

GAUDRON J:   What would happen then is that they would be able to pursue their rights under the Testators Family Maintenance Act that they would have been able to pursue if the transaction had not been entered into.

MR FRASER:   Your Honour, one application had been struck out.  I suppose, your Honour, it would depend to an extent on the response which was made to such an application.  As I ‑ ‑ ‑

GAUDRON J:   Can applications be brought?

CALLINAN J:   Out of time?

GAUDRON J:   Out of time.

MR FRASER:   They can, your Honour, but there is a discretionary bar if the circumstances have changed.  And I do not know the answer to the question of whether a second application can be brought.  Indeed, it seems, with respect, that it is unlikely because the law provides that where one application is brought, it is brought on behalf of all of the possible applicants.

CALLINAN J:   And realistically, when you have let a claim die, and it is years and years since it lapsed, you would be very lucky, I think, to get a court to exercise its discretion in your favour.

MR FRASER:   Your Honour, it would be difficult to persuade a court now to proceed with such a claim.

GLEESON CJ:   Let me give you one small example of the sort of problem that arises.  You demonstrated to us about 20 minutes ago that the actual amount that Neil paid to Bill was more than he contracted to pay.

MR FRASER:   Yes, your Honour.

GLEESON CJ:   That he contracted to pay about $105,000 and then he actually paid $150,000.  When the court sets aside the deed of forgiveness of debt, does it give Neil credit for that overpayment that he made?

MR FRASER:   Your Honour, we submit, yes, it should in that context because we receive that payment.  We do not seek any relief beyond the payment of $546,000 which is the amount of the deed of gift; that the problem only emerges because of the contracts.  So, in effect, Neil paid more under one contract than he was required to, so it does not affect the amount of the deed of gift.  We have addressed that in our supplementary submissions, your Honour.

GLEESON CJ:   I am not sure that answers my question.  Orders that Justice Fitzgerald proposed in the Court of Appeal would not have given Neil credit for the overpayment he made, would it?

MR FRASER:   On the structure proposed by the precedent below, it would have not mattered that the contract price had been wrong and that more had been paid than was required to be paid because setting aside the deed of gift would simply have the effect of requiring the payment of the deed of gift.  I mean, Neil has the title to the transactions.  We do not seek any further relief other than payment of the amount of the deed of gift.  Your Honour, if I can take your Honours to ‑ ‑ ‑

GLEESON CJ:   But what you are effectively seeking is this:  you are seeking to make Neil pay the full market price for land which Bill intended he should have at less than its market value and which he only ever offered to buy for less than its market value.

MR FRASER:   Well, if the intention of Bill was generated under circumstances where it was not his independently formed intention, then so far as that goes, it really does not count, in our respectful submission, for very much in the overall scheme of things because if the transaction was voidable as to the whole or part of it, then that was the consequence of not having Bill’s informed intention and consent to the transaction.

GLEESON CJ:   The consequence of that would be to set the transaction aside, would it not?

MR FRASER:   Well, if one set aside the ‑ ‑ ‑

GLEESON CJ:   Not to turn the transaction into something different from that which Bill or Neil never intended.

MR FRASER:   Your Honour, one way of perhaps looking at it -aand it is a difficult exercise here - is to say, well have a look at the basis upon which Neil proceeded in assessing what should be paid to the daughters, which Bill accepted, under the will, and say what is the difference between that in so far as Neil’s concept of fairness and which was relied upon by Bill, so to that extent he, I suppose, acted as his consultant or agent in that respect, and say how much is the difference between the two.  And then that might be a measure of how the transaction, the inter vivos transaction has benefited Neil unconscionably.

GLEESON CJ:   Do you ask any form of relief other than the setting aside of part of the transaction?  In other words, do you seek any other form of relief from this Court than that which would have been granted by the President of the Court of Appeal?

MR FRASER:   Your Honour, the answer is yes, of course we do, to this extent.  If it is unjust to give us the relief that we seek, because it does not amount to putting the transactions appropriately to pieces, then we ask for what relief we may be entitled to in the circumstances and that relief is ultimately a matter for the discretion of the Court.

GUMMOW J:   You have to propound us an order.

MR FRASER:   Yes.  Your Honour, we do have in our notice of appeal a claim that the deed of gift be set aside or that there be a payment.  We could ask your Honours for a payment of something less than that sum under cover of the relief that is sought.  You do not always get the payment that you ask for.

GAUDRON J:   All of this falls into the residue, does it?

MR FRASER:   Your Honour, so far as that is concerned, it would but ‑ ‑ ‑

GAUDRON J:   Or does it pass on intestacy, is there an intestacy as to some part of residue?

MR FRASER:   No, your Honour.  There is a clause disposing of the residue so it would fall into residue.  I have taken instructions about that.  There is no conflict between the beneficiaries or the appellants in that respect.

GLEESON CJ:   Well, then as I understand it so far, you ask for either the setting aside of the deed of forgiveness or the payment of the full amount forgiven.

MR FRASER:   Yes, your Honour.

GLEESON CJ:   Or the payment of some lesser amount than the full amount forgiven.  Do you ask for any other alternative form of relief?

MR FRASER:   Your Honour, as a final alternative we would ask for the setting aside of the whole of the transaction and an account for the use of the land between the date of the inter vivos disposition and the date of death.

GUMMOW J:   How would that work out in terms of the will, that last step, what would happen?

MR FRASER:   That would mean that that was an asset of the estate.  The account would have to be carried out by Neil to the estate.

GUMMOW J:   Yes, but the transaction is set aside, so to what further assets does the rule now speak?

GLEESON CJ:   .....option.

MR FRASER:   It would be a personalty, your Honour, there would be an obligation to make a payment ultimately after the taking of the account by Neil which would fall into residue.  So far as the balance would ‑ ‑ ‑

GUMMOW J:   But the option has been exercised, as the Chief Justice said.

MR FRASER:   Yes, your Honour, the option has been exercised.

GUMMOW J:   Over what ‑ ‑ ‑

MR FRASER:   Over the whole of the land that was under the option.  They purported to exercise the option, as I understand it, over all the land, your Honour.

GLEESON CJ:   The land the subject of the option.  The parcels of land the subject of the option which were described in the will.

MR FRASER:   Yes, your Honour.

GLEESON CJ:   And they include the land that was the subject of the 1988 transaction.

MR FRASER:   Yes, your Honour.

GLEESON CJ:   So, Neil has exercised his option to buy that land and has paid for it.

MR FRASER:   Yes, your Honour, he has.  So the effect of an account would be simply to enlarge the estate by the amount which the account was struck at and would leave the appellants to their chances with Testators Family Maintenance application.

GLEESON CJ:   And Neil would be entitled to his $150,000 back.

MR FRASER:   Yes, your Honour.

CALLINAN J:   There would be have to be major accounts taken, would there not?

MR FRASER:   If the avoiding was to the present time, yes, your Honour.

CALLINAN J:   With a significant allowance, one would have thought, for Neil’s management of the property.

MR FRASER:   Yes, your Honour.

GLEESON CJ:   Is this a possible form of relief that has been even mentioned in the courts below.

MR FRASER:   Yes, and account was sought, your Honour.

GLEESON CJ:   Setting aside the entire transaction, I mean.

MR FRASER:   Yes, your Honour, that was one of the forms of relief.  I can check that, but I am sure it is in the notice of appeal to the Court of Appeal, I think, your Honour, that is set out.  I can check that.  Yes; the reconveyance of the property was sought in the statement of claim originally, your Honour.  In the Court of Appeal, in paragraph 9(a) sought:

a declaration that the transfers dated 19 July, 1988 are of no effect and are liable to be set aside;

(b)  the action be remitted to the Supreme Court for further consideration of the relief to be granted as a consequence;

or for equitable damages.

GLEESON CJ:   What would they be?

MR FRASER:   The only area where I can assist there is, really, along the lines I canvassed before, that if he unconscionably took a benefit where he knew that the amount set in the disposition as built on by the inter vivos transaction was wrong ‑ ‑ ‑ 

GUMMOW J:   That is what profit he has made.  That is not what damages are.  The question is what you have lost.

MR FRASER:   Yes, your Honour.  It is a very unusual situation.

GAUDRON J:   What you have is the opportunity to bring a TFM Act, really, a TFM application.  That really is what your damages are, and that is something that really cannot be assessed on an action such as this.

MR FRASER:   No, your Honour, the evidence is not there.  If we were suing a solicitor for failing to bring a TFM action, we advance, really, all the evidence on the TFM, yes.

GAUDRON J:   It does not necessarily seem too far from the reality in this case.

MR FRASER:   Yes, of all the participants in the transaction, there is one obvious candidate, one may say. 

Your Honours, the relief that was sought in the Court of Appeal was quite extensive, as I have just taken your Honours to, and the relief in the original statement of claim was similarly extensive.  I just want to take your Honours to two cases on the point where we submit that it is appropriate to require a market value to be paid in circumstances where a transaction is entered into under circumstances of duress or under circumstances which the Court will not countenance. 

It comes from the Admiralty jurisdiction, and we have referred to it in our outline at page 17.  The case is Akerblom v Price.  Your Honours will find that in volume 2, case No 30.  Your Honours, in the Court of Appeal the reference is Akerblom v Price, Potter, Walker & Co (1881) 7 QBD 129, and the references are at page 132 to 133. This is described as a rule for the administration of maritime law, and certainly one hesitates to draw too much support in that appeal for these types of situations, but the statement is as follows:

The fundamental rule of administration of maritime law in all courts of maritime jurisdiction is that, whenever the Court is called upon to decide between contending parties, upon claims arising with regard to the infinite number of marine casualties, which are generally of so urgent a character that the parties cannot be truly said to be on equal terms as to any agreement they make with regard to them, the Court will try to discover what in the widest sense of the terms is under the particular circumstances of the particular case fair and just between the parties.  If the parties have made no agreement, the Court will decide primarily what is fair and just.  The rule cannot be laid down in less large terms because of the endless variety of circumstances which constitute maritime casualties.

Then it goes further:

If the parties have made an agreement, the Court will enforce it, unless it be manifestly unfair and unjust; but if it be manifestly unfair and unjust, the Court will disregard it and decree what is fair and just.  This is the great fundamental rule.

GLEESON CJ:   The next sentence is of some importance in the present case, is it not?

MR FRASER:   Yes, your Honour.

In order to apply it to particular instances, the Court will consider what fair and reasonable persons in the position of the parties respectively would do or ought to have done under the circumstances.

GLEESON CJ:   The circumstances including the will.

MR FRASER:   Yes, your Honour.  The other case we rely on in this respect is the decision in Lydney and Wigpool Iron Ore Company v Bird (1886) 33 Ch D 83 at 94. Your Honour, this is case No 29. It immediately precedes the one to which I just referred the Court. It deals with relations between persons in a fiduciary relationship, and we submit that if our contentions are made good as to the relationship here, that it did have such characteristics, and that accordingly this relief is available. The passage is at page 94 and there is a discussion about the ability of the court to dismantle a transaction in part. This is at point 3:

Under these circumstances he cannot retain the sum so got.  Although not an agent of the company nor a trustee for it before its formation, the old familiar principles of the law of agency and of trusteeship have been extended, and very properly extended, to meet such cases; and using the word “promoter” to describe a person acting as James Bird did, it is perfectly well settled that a promoter of a company is accountable to it for all moneys secretly obtained by him from it just as if the relationship of principal and agent or of trustee and cestui que trust had really existed between them and the company when the money was so obtained.  Nor in such a case is it necessary for the company to rescind the whole transaction of which the payment by the company of the money in question is found to be part.

Reference to some cases:

are all illustrations of the foregoing principle, and in none of them was the whole transaction set aside.  In re Cape Breton Company is not opposed to these decisions.

And for particular reasons.  On our submission, there is authority which supports the proposition that if a transaction is induced in breach of fiduciary duty, then the innocent party is not required to set aside the whole of it but may take an account so as to achieve the market value.

The submissions, otherwise, are fully detailed in the various written outlines, or the two written outlines put forward by the appellants.  Unless there is anything further.

GLEESON CJ:   Thank you, Mr Fraser.  Yes, Mr Williams.

MR WILLIAMS:   Your Honours, may we deal with the last matter raised first, and that is the question of remedy.  We submit that by reason of the way in which this matter has been conducted to date, including the failure to prosecute the TFM application, that the result proposed by the appellants is really the best possible result they could have achieved had the subject assets been brought back into the estate and a TFM application successfully prosecuted.  In other words, they could not get more than the whole estate on the TFM application.

The result would be that your Honours are asked, in the pursuit of practical justice between the parties, to effectively deprive the respondent, Neil York, of his defences and arguments available in that TFM application which were in essence - but this is not well defined in the evidence because of course these matters were not canvassed - but it was clear, as has been commented upon today, that there was an intention by the deceased to provide a substantial benefit to Neil York.  The question of dependants, of the daughters and/or the wife, was not clearly defined at all in the material before the primary judge, but there is one passage in the evidence which gives your Honours some indication that the dependants, as they would be called in that application, would not have had an easy passage in establishing that they were entitled to every penny in the estate.

I will take your Honours to that evidence in some detail on another matter, but in essence the deceased indicated in the course of a conversation with the solicitor in November 1988, shortly before he died, but on a date on which he had a certificate from a Dr Carlisle to the effect he had testamentary capacity and in the presence of his daughter, Shirley, and his executor, Kevin Leahy, who berated him - at least Shirley did - in relation to the extent to which he had benefited Neil York in the inter vivos transactions and under the will and the York family generally in ‑ ‑ ‑

KIRBY J:   This is when they accidentally found out, when the executor went along with his wife to the solicitor and suddenly found out what he was doing?

MR WILLIAMS:   Yes, they found out on that day, your Honour.  The solicitor thought that there was to be a change in the will.

KIRBY J:   This is after a certain lack of candour on the part of your client and his wife?

MR WILLIAMS:   Yes, and the deceased himself, your Honour, who kept the matter to himself.  At that time and in the course of an interview - a transcript of the solicitor’s notes is available as exhibit 71, and I will be taking your Honours to those - the deceased indicated that in the course of his life he had provided financial assistance to his children.  In relation to one daughter, I think Joan, he indicated that he had purchased a hairdressing salon for her.  Another daughter he had bought a house.  For Shirley he had bought land and cattle.  There had been inter vivos dispositions by the testator in favour of his daughters.

At the time that the deceased died and at the relevant times, his daughters were all adults, married and in possession of some assets.  The question of need would have loomed large in any TFM application.  Importantly in this context, there is the question which arises following the disclosure of the terms of the will to members of the family soon after it occurred.  There was a disclosure by the deceased of the 1985 will some time thereafter, within about 12 months, to various members of the family and to Kevin Leahy, the executor.

There is evidence in so far as Shirley is concerned at page 100 of the appeal books, lines 40 to 55 and following and at 117, line 20, that Shirley’s understanding of what the deceased told her was that Neil was to have under the will an option to buy Hemples for $200,000.  Now, Hemples was Wonga Park.  As it was described in the evidence, it was the jewel in the crown and, in terms of the evaluations to which our learned friend has already taken your Honours, it comprised, at pages 581 and 582 of the appeal record, both freehold and leasehold.  The freehold interest was held by Bill jointly with Sam and the leasehold was held by Bill York alone.  The freehold interest was valued at $147,447 in 1985 at the time the will was executed.  A half interest therefore was about $74,000.  At the same time the leasehold portion owned exclusively by Bill is valued at $437,000 at page 583. 

The consequence was that the deceased made known to his family and to his executor that land to an approximate value of $500,000 was to be given to Neil under an option for which he would pay $200,000.  Shirley was taken to that in evidence and at the second reference I gave your Honours, page 117, line 20 of the appeal books, she was asked:

Now, you thought the $200,000 -

that is the option -

wasn’t enough for Hemple’s at the time?

Of course, the option did encompass more, but Shirley’s understanding was that it encompassed only Hemples.  It was in terms of Hemples or Wonga Park - the names are interchangeable - about five‑sixths of the value of the land approximately at that time, according to the valuations.  Shirley answered at line 21:

I thought it wasn’t enough, but if that was dad’s wish, to make an option for that particular property to Neil, I thought that was fair.

GLEESON CJ:   What page was that?

MR WILLIAMS:   Page 117, lines 20 to 30.  I went on:

You accepted that he was intending to benefit Neil by putting in that amount of $200,000?-- On the property of Hemple’s only.

Yes?-- Yes.

You understood that he was intending to give Neil at least a discount?-- Yes.

And that was in recognition of his relationship with Neil -

and then there was an objection with which I did not persist.

KIRBY J:   This of course is only one of the daughters.

MR WILLIAMS:   That is one, your Honour.

KIRBY J:   This is the daughter who married the ‑ ‑ ‑

MR WILLIAMS:   Married the executor.

KIRBY J:   The executor, who is also a farmer.

MR WILLIAMS:   Yes.

KIRBY J:   He might be closer to the farming culture, one might say.

MR WILLIAMS:   That is possible, your Honour, yes.  At page 84 of the appeal record Joan gave evidence in relation to this aspect and in relation to the will at about line 35:

When did you find out about the terms of the will?-- I can’t really remember.

You knew about it at least 12 months before he died?-- Well, yeah, probably.

Did you speak to him about it?-- No, not really.

You knew that Neil was gaining most or all of your father’s land?‑‑ Yes, I did.

Under the will?-- Yes, I verbally believe that.

And you knew that at the time, you knew it before your father died, that that was the arrangement that he wanted to implement?-- Yeah.

You didn’t talk to him about it?-- No, not really.  If I did talk to him he just would turn off, anyway, he wouldn’t discuss anything about it.

He wasn’t one to discuss business with -----?-- No, no.

----- with his daughters?-- No, he never did.

Your Honours, there ‑ ‑ ‑

GUMMOW J:   He discussed things with his son-in-law though.

MR WILLIAMS:   With Kevin Leahy, he certainly did, your Honour.  We have that reference in our submission.  Indeed, Kevin Leahy went so far as to say that if Bill discussed business matters with anyone, it was with him.  That would be, we submit, to Neil’s exclusion.  It is our submission that it is an important consideration in terms of remedy that the family were well aware that by the will Neil was to benefit substantially in terms of the land and that none of the members of the family took issue with the testator in relation to what they thought was a more limited option but nevertheless one of very substantial benefit.  The jewel in the crown was to go for an undervalue and they all knew that.

GAUDRON J:   Was the wife aware?

MR WILLIAMS:   Your Honour, the wife did not give evidence, which is a point ‑ ‑ ‑

GAUDRON J:   Well, there you are.  What difference could it make to the daughters that they were aware?  What could they do?  This person who apparently treated all women as second‑class citizens or worse.

MR WILLIAMS:   Your Honour, that was unfortunately his attitude.

GAUDRON J:   Indeed unfortunate.  If I may take you back to something you said earlier, Mr Williams, when you mentioned that they were all married.  I mean, I know that used to be a matter taken into account, but in my experience it is no great advantage these days for a woman to be married - financially.  In many cases it is a financial disadvantage.  This Court has recently had to deal with what is referred to as sexually transmitted debt.  The fact that they are married may be a question that cuts both ways.

MR WILLIAMS:   I certainly take your Honour’s point.  I am sure I will get the same message at home shortly.  Your Honours, the evidence in relation to the wife is very, very limited because she did not give evidence.  There is only one line in hundreds of pages of transcript which indicate that the wife knew the terms of the will.  Bill York, on the footpath outside the solicitor’s office asking Neil, “What should I give my girls, $100,000?”.  “No, you should give them twice that much”, and the deceased’s answer, “I told mum you would be bloody fair”.

KIRBY J:   That is his wife?

MR WILLIAMS:   “Mum” is his wife.

KIRBY J:   And he is talking to ‑ ‑ ‑

MR WILLIAMS:   To Neil.  “And I told mum you would be bloody fair” about the disposition to the daughters in the will.  It is plain from that that the wife ‑ ‑ ‑

KIRBY J:   The fact that he says that does not prove that it is the fact.

MR WILLIAMS:   Well, it is the best evidence there is, your Honour, unfortunately.  It is evidence from which the Court would draw an inference that the wife knew the terms of the will prior to the instructions even having been given to the solicitor.

GAUDRON J:   Well, she may have known that there was going to be an option.  That is as much of an inference as you can make from that.

MR WILLIAMS:   Yes.  One must be careful in relation to the option because, of course, Neil was not aware at that time that he was to benefit under the will at all.  He simply drove his uncle in to the solicitor’s office, having made an appointment at his request for a solicitor to prepare his new will.  There was no discussion in relation to the benefit Neil was to obtain under the will until the drive home.  Now, when Neil was asked on the footpath “How much should I give my girls?”, he was proposing a figure presumably as a division of Bill’s property between wife and daughters.  That is advancing an amount as a specific bequest to daughters.

Your Honours, we submit it is very important in the context of a determination of what amounts to practical justice that members of the family, appellants, who gave evidence before the primary judge and who are still pressing the case ‑ ‑ ‑

GAUDRON J:   I do not see what relevance it has at all, I am afraid.  If you wish to persuade me, you should.  I mean, the will is there.  They may well have operated or they may have been advised, “Well, don’t make his last days a misery.  Pursue your rights under the Testator’s Family Maintenance Act”, if they knew the terms of the will.

MR WILLIAMS:   Your Honour, the effect of that evidence in ‑ ‑ ‑

GAUDRON J:   The real problem in this case is not the terms of the will but the terms of the sale which took the property out of the deceased’s hands and ultimately took it out of the estate.

MR WILLIAMS:   Yes.  Your Honour, I think we are at cross‑purposes in this respect.  I am dealing at the moment purely with the question of remedy, and in terms of remedy I am attempting to predict what the outcome of the TFM application would have been to indicate to your Honours ‑ ‑ ‑

GAUDRON J:   Well, why would you do that?

MR WILLIAMS:   Because, your Honour, that was the remedy that was available to the appellants which they did not pursue.  They could have kept their TFM application on foot.

GAUDRON J:   But you are trying to persuade us that it would be of no value at all?

MR WILLIAMS:   No, your Honour, I am attempting to persuade your Honours that in the event they had done what they should have done, kept the TFM application on foot ‑ ‑ ‑

GAUDRON J:   But your clients apparently moved to strike it out, did they?

MR WILLIAMS:   They did, your Honour.

GAUDRON J:   Well, now it gets a bit more complicated.  You cannot just say they did not keep it alive when your clients obviously sought to take an advantage by having it struck out.  Your client could have left it alive if he had any tenderness for the rights of these people.  It does not sound all that persuasive when it comes from you now that they should have kept it alive.

MR WILLIAMS:   Your Honour, can I put it in this context.  At that point in time the TFM application was the only litigation on foot.  The TFM application was struck out for want of prosecution.  As appears from the order which is before your Honours, the order of Master White, which is exhibit 35 at page 563 of the record, Mr Whiteford of counsel, my learned junior, appeared for the present respondents and solicitors appeared for the other parties.

GLEESON CJ:   Mr Williams, this is a very minor point and has nothing to do with the outcome of this appeal, but it is so that we do not commit some solecism in any judgment.  You keep calling it a TFM application.  Is that right?  That was the relevant legislation:  Testator’s Family Maintenance Act?

MR WILLIAMS:   Testator’s Family Maintenance Act, your Honour.

CALLINAN J:   It is now the Succession Act which incorporated the provisions from the old ‑ ‑ ‑

MR WILLIAMS:   Of the Testators ‑ ‑ ‑

GLEESON CJ:   You were just referring to some earlier legislation?

MR WILLIAMS:   Yes.

GLEESON CJ:   I understand.

MR WILLIAMS:   I am sorry, I should refer to it as ‑ ‑ ‑

GLEESON CJ:   No, that is all right.  There are probably plenty of people who still thought that ‑ ‑ ‑

KIRBY J:   I am afraid everybody in Queensland still calls it.....but it is the Succession Act.  There was a Testator’s Family Maintenance Act.

MR WILLIAMS:   There was, your Honour, incorporated then into the Succession Act, but in parlance up here they are known as TFM applications.

KIRBY J:   It generally takes lawyers about 10 years to get ‑ ‑ ‑

MR WILLIAMS:   In my case somewhat longer, your Honour, apparently.

CALLINAN J:   Mr Williams, all of the appellants were applicants in that application, is that right?

MR WILLIAMS:   I believe so, your Honour, yes.  Your Honours, my understanding is that once such an application is made by any applicant it is made on behalf of all applicants - but we will check the specific order.

CALLINAN J:   No, the heading shows that they were all parties.

MR WILLIAMS:   Thank you, your Honour.  I was checking that.  May I pass from there to one matter raised in paragraph 14 of our written submission, and that is the principles upon which this Court acts in reviewing findings of fact.  As has become increasingly apparent during the course of argument, the questions your Honours are asked to determine here are essentially factual questions.  Your Honours have before you concurrent findings of fact and concurrent conclusions by the primary judge and two members of the Court of Appeal.

GAUDRON J:   Yes, except that there really does not seem to be anything that looks like a finding of fact in relation to this unconscientious claim or unconscionable conduct.  It is dealt with by the learned judge at first instance just in a paragraph.

MR WILLIAMS:   Yes.

GUMMOW J:   The findings on testamentary capacity seem to have been carried over to the other side of things but, in carrying them over to the other side of things, they would be a good response to a non est factum sort of claim, but they do not go to the rather more subtle elements involved in a Blomley v Ryan‑type case, which is by definition not a non est factum case.  That is just how it struck me.  I may be wrong about that.

MR WILLIAMS:   It does strike one in that way because his Honour said, in essence, from what I have said in relation to undue influence, there is no relationship of special disability.  But he does go on to refer to the relevant authorities and it should not ‑ ‑ ‑

GAUDRON J:   He does not refer to Blomley v Ryan.

MR WILLIAMS:   He refers to Louth v Diprose, your Honour, and to Amadio.

CALLINAN J:   Mr Williams, do you have Blomley v Ryan there?

MR WILLIAMS:   Yes, your Honour.

CALLINAN J:   I am going to draw your attention to what Sir Edward McTiernan said at page 386, referring to what was said by Lord Hardwicke in Earl of Aylesford v Morris, the first complete paragraph.  Do you see that?

MR WILLIAMS:   Yes, your Honour.

CALLINAN J:   You can see that his Lordship said that the presumption that arises that the transaction is unfair in the senses that have been discussed there has to be repelled:

by contrary evidence, proving it to have been in point of fact fair, just, and reasonable”.

I take that to mean fair, just and reasonable in all of the circumstances of the case.  I was going to suggest to you that you might think about that, perhaps, before we resume and you might tell us what circumstances you would point to to repel such a presumption on the assumption that it arises here.  I mean, some are obvious, I would have thought - the desire of Bill perhaps to keep his property intact and to ensure that it was husbanded, maintained by somebody whom he would trust to do that - but those matters may not be enough.  I would like to know for myself what you say are the circumstances that you would rely upon to repel any such presumption.

MR WILLIAMS:   Thank you, your Honour.

GLEESON CJ:   How long do counsel expect to require - I only ask that question for the benefit of the parties in the next case, so that we can fix a time.

MR WILLIAMS:   Your Honours, I would anticipate being approximately an hour, an hour and a half, depending on what is sometimes called in appellate courts here injury time.

GLEESON CJ:   Mr Fraser, what do you think you would require for reply?

MR FRASER:   It would depend on what my learned friend says, but I think I would be very short.

GLEESON CJ:   Perhaps we should say not before 11.30 for the next case.  Very well, we will adjourn until 10.15.

AT 4.15 PM THE MATTER WAS ADJOURNED
UNTIL WEDNESDAY, 24 JUNE 1998