Bridgewater v Leahy

Case [1998] HCA 66

HIGH COURT OF AUSTRALIA

GLEESON CJ,
GAUDRON, GUMMOW, KIRBY AND CALLINAN JJ

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

Bridgewater v Leahy (B12-1998) [1998] HCA 66
22 October 1998

ORDER

  1. Appeal allowed.

  1. The second respondents pay the appellants' costs of the appeal.

  1. Set aside the orders of the Court of Appeal of Queensland made on 14 March 1997.  In place of those orders:

(i)allow the appeal to that Court;

(ii)    set aside the orders made by de Jersey J on 23 August 1995 dismissing the plaintiffs' claims;

(iii)   set aside the orders as to costs made by de Jersey J on 15 September 1995;

(iv)    declare that the deed of forgiveness of debt made between William York of the one part and Neil William York and Beryl Elizabeth York of the other part, executed on 19 July 1988 ("the Deed"), has no effect as to the forgiveness of the amount to be declared in accordance with par 4(i) of these Orders;

2.

(v)     order the second respondents to pay the appellants' costs of the appeal to the Court of Appeal of Queensland and half the appellants' costs of all proceedings before de Jersey J.

  1. Remit the matter to a Judge of the Supreme Court of Queensland for: 

(i)      the determination, in accordance with the reasons for judgment of this Court, of the amount as to the forgiveness of which the Deed has no effect, and the making of an appropriate declaration;

(ii)    subject to any determination by the Supreme Court of Queensland, which is made by that Court after exercise of the liberty to apply provided in par 5 of these Orders and in accordance with the reasons for judgment of this Court, the making of a declaration that the estate of William York has a vendor's lien on each of:

(a)the property comprising the Perpetual Lease Selection at "Wonga Park", Wallumbilla and described in the transfer from William York to Neil William York and Beryl Elizabeth York executed on 19 July 1988;

(b)the property comprising the fee simple in "Wonga Park", Wallumbilla and described in the transfer from William York and Samuel York to Neil William York executed on 19 July 1988; and

(c)the property comprising the fee simple in "Risby", Wallumbilla and described in the transfer from William York and Neil William York to Neil William York executed on 19 July 1988,

to secure the amount the subject of the declaration made in accordance with par 4(i) of these Orders and interest at commercial rates allowed on that amount from time to time by the Supreme Court of Queensland from 28 November 1988.

  1. There be liberty to apply to the Supreme Court of Queensland.

  1. Reserve to the Supreme Court of Queensland the determination of the costs of any further proceedings in that Court.

3.

On appeal from the Supreme Court of Queensland

Representation:

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Bridgewater v Leahy [1998] HCA 66
Case
[1998] HCA 66
Decision Date

CaseChat Overview and Summary

The case of *Bridgewater v Leahy* involved an appeal to the High Court of Australia concerning the equitable setting aside of an inter vivos disposition of land. The appellants, the widow and daughters of the late William York ("Bill"), sought to challenge a deed of forgiveness of debt executed by Bill in favour of his nephew, Neil William York ("Neil"), and Neil's wife. The dispute centred on whether this transaction, alongside other dispositions, was unconscionable and should be set aside.

The High Court was required to determine whether the deed of forgiveness of debt was voidable on the grounds of unconscionable conduct. This involved considering whether Bill York was under a special disadvantage, such as emotional dependence on Neil, which was exploited by Neil to secure an improvident transaction. The Court also had to consider the principles of equity relating to unconscionable conduct, its distinction from undue influence, and the relevance of independent legal advice in such circumstances. Furthermore, the Court needed to determine the appropriate relief, including whether to set aside the deed and, if so, what conditions should be imposed, such as an allowance or a vendor's lien.

The High Court allowed the appeal, finding that the deed of forgiveness of debt was tainted by unconscionable conduct. The Court reasoned that Bill York, due to his emotional dependence on Neil and his desire to keep his rural holdings intact for his nephew, was under a special disadvantage. Neil, aware of this disadvantage, retained a benefit under the transaction that was unconscionable. The Court applied established equitable principles concerning unconscionable conduct, drawing on precedents such as *Wilton v Farnworth*, *Blomley v Ryan*, *Commercial Bank of Australia Ltd v Amadio*, and *Louth v Diprose*. The Court noted that while Bill had testamentary capacity and his will reflected his personal wishes, the inter vivos disposition of the debt forgiveness was a separate matter to be assessed for unconscionability.

In its orders, the High Court set aside the orders of the Court of Appeal of Queensland and the primary judge. It declared that the deed of forgiveness of debt had no effect regarding a specified amount to be determined by the Supreme Court of Queensland. The Court also ordered that the estate of William York have a vendor's lien on certain properties transferred to Neil York to secure the determined amount and interest. The matter was remitted to the Supreme Court of Queensland for further determination of the amount and for the making of appropriate declarations and orders.

Orders

Orders of the court

1.

Appeal allowed.

2.

The second respondents pay the appellants' costs of the appeal.

3.

Set aside the orders of the Court of Appeal of Queensland made on 14 March 1997. In place of those orders:

(i) allow the appeal to that Court;

(ii) set aside the orders made by de Jersey J on 23 August 1995 dismissing the plaintiffs' claims;

(iii) set aside the orders as to costs made by de Jersey J on 15 September 1995;

(iv) declare that the deed of forgiveness of debt made between William York of the one part and Neil William York and Beryl Elizabeth York of the other part, executed on 19 July 1988 ("the Deed"), has no effect as to the forgiveness of the amount to be declared in accordance with par 4(i) of these Orders;

2.

(v) order the second respondents to pay the appellants' costs of the appeal to the Court of Appeal of Queensland and half the appellants' costs of all proceedings before de Jersey J.

4.

Remit the matter to a Judge of the Supreme Court of Queensland for:

(i) the determination, in accordance with the reasons for judgment of this Court, of the amount as to the forgiveness of which the Deed has no effect, and the making of an appropriate declaration;

(ii) subject to any determination by the Supreme Court of Queensland, which is made by that Court after exercise of the liberty to apply provided in par 5 of these Orders and in accordance with the reasons for judgment of this Court, the making of a declaration that the estate of William York has a vendor's lien on each of:

(a) the property comprising the Perpetual Lease Selection at "Wonga Park", Wallumbilla and described in the transfer from William York to Neil William York and Beryl Elizabeth York executed on 19 July 1988;

(b) the property comprising the fee simple in "Wonga Park", Wallumbilla and described in the transfer from William York and Samuel York to Neil William York executed on 19 July 1988; and

(c) the property comprising the fee simple in "Risby", Wallumbilla and described in the transfer from William York and Neil William York to Neil William York executed on 19 July 1988,

to secure the amount the subject of the declaration made in accordance with par 4(i) of these Orders and interest at commercial rates allowed on that amount from time to time by the Supreme Court of Queensland from 28 November 1988.

5.

There be liberty to apply to the Supreme Court of Queensland.

6.

Reserve to the Supreme Court of Queensland the determination of the costs of any further proceedings in that Court.

3.

Background

Background to the litigation

The 1988 transaction can only be understood in a wider context. The provisions of the 1985 will formed an important part of that context.The background to the 1988 transaction Bill York, a grazier, was born in Wallumbilla, and lived there all his life. When he died, he was survived by his wife and his four daughters, all married women. The widow and daughters are the appellants. Bill York had a younger brother, Sam. The two brothers had substantial rural interests, including interests which they held in common. They carried on a grazing partnership on land, some of which had been passed down to them by their father. Bill York had no sons. The respondent, Neil York, was Sam's youngest son. Neil York worked on the properties for substantially the whole of his working life, and formed a close relationship with his uncle. In 1981 a new partnership was formed between Bill York, Sam York and Neil York. Neil was made a one-third partner, without any capital contribution. Some years earlier, Bill and Sam York had purchased a grazing property for Neil's two older brothers. Neil took over responsibility for the day to day management of the partnership business. de Jersey J found that "[t]here is no doubt that Bill greatly admired Neil, and fully trusted him. For his part, Neil appreciated the high regard his uncle felt for him." In April 1985, Bill York made his last will. He gave his house at Wallumbilla, his car, and his money in the bank (about $150,000) to his widow. The residue of his estate was left to his four daughters in equal shares. That provision, however, was subject to an important qualification. The testator gave Neil York an option to purchase all his pastoral holdings, together with his interest in the current grazing partnership, and livestock and machinery, for the sum of $200,000. In due course, Neil York exercised that option, and the four daughters each received $50,000 under the will. At the time of the making of the will the value of the land the subject of the option was $694,922. Thus, the will gave Neil York an option to purchase the whole of the testator's rural interests at a substantial undervalue. Bill York appointed Kevin Leahy, his son-in-law, as executor of his will. Kevin Leahy's wife is one of the appellants. He is a respondent, but has taken no active part in the proceedings. The will was made on the initiative of Bill York. It was prepared by a solicitor, Mr Pack of Taylor and Pack. Mr Taylor had previously acted for both Bill and Sam York. He was busy on the day Bill went to make his will, so the will was prepared by Mr Pack. Neil was not present when instructions were given by Bill to Mr Pack. He did not accompany his uncle when he later returned to sign the will. Bill York never discussed his business affairs with his wife or daughters. However, they became aware of the general nature of his will. At first instance, before de Jersey J, the appellants sought to challenge the validity of the option contained in the will on the grounds of undue influence and unconscionability. That claim was unsuccessful. It was not pursued on appeal. At the time he made his will in 1985, Bill York had full testamentary capacity. de Jersey J held that he was not acting under any pressure or any influence from Neil York; that, on the contrary, he had himself initiated the proposal reflected in the will; and that the manner in which he disposed of the estate reflected, and was entirely consistent with, his strongly felt personal wishes. He was fond of, and grateful to, his nephew, whom he regarded and treated as a son. The nephew had, over a long period, assisted in the development of his rural holdings and had devoted a major part of his working life to the York brothers' grazing business. Bill did not want the holdings to be broken up upon his death, but intended that they would pass, intact, to his nephew. Rightly or wrongly, he regarded the provision he was making for his widow, and his adult married daughters, as adequate. Whilst it was theoretically possible that Bill York might, at some time after April 1985, change his will, the circumstances were such that this was very unlikely.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

GLEESON CJ CALLINAN J (dissent) GAUDRON, GUMMOW AND KIRBY JJ (dissent)
This action was commenced in 1991, after the appellants' proceedings under the Succession Act were dismissed for want of prosecution. It was for the appellants to bring such evidence at first instance as was necessary to enable the court to grant appropriate relief. No reason has been shown why the appellants could not have led the evidence necessary for a determination of the appropriate relief, assuming an allowance of the kind now proposed to be a necessary condition of relief. There is no occasion for a fresh round of litigation. If the evidence necessary to enable this Court to grant appropriate equitable relief is missing, that is an additional reason for dismissing the appeal.Conclusion The appeal should be dismissed with costs. This appeal from the Queensland Court of Appeal (Macrossan CJ, Davies JA; Fitzgerald P dissenting) involves the application of principles with respect to the setting aside in equity of inter vivos dispositions tainted by unconscionable conduct. The principles are expounded and developed in the decisions of this Court in Wilton v Farnworth[18], Blomley v Ryan[19], Commercial Bank of Australia Ltd v Amadio[20] and Louth v Diprose[21].[18](1948) 76 CLR 646.[19](1956) 99 CLR 362.[20](1983) 151 CLR 447.[21](1992) 175 CLR 621. Mr William York ("Bill") was a grazier who owned substantial landholdings. He was born on 1 February 1904 and died, aged 85, in Roma Hospital on 22 April 1989, having made his last will and testament on 12 April 1985 ("the Will"). The Will provided for his residuary estate to pass to his daughters, subject to an option to purchase in favour of his nephew, Mr Neil York ("Neil"). The primary judge (de Jersey J) accepted evidence that Bill provided only very basic accommodation for his wife and daughters and that he was remarkably frugal. His Honour added:"There is no doubt in my mind that in view of the size of his estate, Bill could have treated [his wife] and his daughters more generously. That he did not do so is consistent, however, with the fairly ungenerous way he treated them throughout his life." The primary judge ordered a grant of probate of the Will in solemn form. His Honour dismissed a claim that the execution of the Will was procured by the exercise upon the testator of undue influence by Neil. This attack upon the Will was not renewed in the Court of Appeal but some reference to it assists an understanding of the issues before this Court.The issues The position taken by courts of probate has been that to show that a testator did not, by reason of undue influence, know and approve of the contents of the instrument propounded as a testamentary instrument, "there must be - to sum it up in a word - coercion"[22]. The traditional view, repeated by Sir Frederick Jordan[23], has been that a court of equity will not, on the ground of undue influence as developed by the Court of Chancery, set aside a grant made by a court of probate[24].[22]Wingrove v Wingrove (1885) 11 PD 81 at 82‑83. See also Baudains v Richardson [1906] AC 169 at 184‑185; Craig v Lamoureux [1920] AC 349 at 357; Winter v Crichton (1991) 23 NSWLR 116 at 121‑122.[23]In his "Chapters on Equity in New South Wales", reprinted in Jordan, Select Legal Papers, (1983) at 137.[24]Allen v M'Pherson (1847) 1 HLC 191 [9 ER 727]; cf Birmingham v Renfrew (1937) 57 CLR 666 at 674, 676, 683, 690.

Ratio Decidendi

Legal Principle Established

Established by: GLEESON CJ,

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