Daunt v Daunt
[2013] VSC 706
•18 December 2013
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
S CI 2012 07213
| STEPHEN LEWIS DAUNT | Plaintiff |
| v | |
| MICHAEL TELFORD DAUNT | Defendant |
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JUDGE: | DALY AsJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 20 August, 16 September 2013, further written submissions on 30 September 2013 | |
DATE OF JUDGMENT: | 18 December 2013 | |
CASE MAY BE CITED AS: | Daunt v Daunt | |
MEDIUM NEUTRAL CITATION: | [2013] VSC 706 | |
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JUDGMENT
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CONSTRUCTIVE TRUST — Transfer of land from parent to adult child — Standing of disappointed contingent beneficiary — Fiduciary duty — Undue influence — Unconscionable conduct.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | In person | |
| For the Defendant | Mr G. Moore | Mr P. Maginn |
HER HONOUR:
The plaintiff, Mr Stephen Daunt, and the defendant, Mr Michael Daunt, are brothers. The statement of claim filed by the plaintiff on 28 December 2012 reads as follows:
I wish to bring a complaint against my twin brother, Michael Daunt, with regard to his fiduciary relationship with our parents.
He has breached fiduciary by unjust self enrichment.
He achieved unjust enrichment by placing himself in: a position of conflict of interest, a position of conflict of duty and a position of profit at the expense of his co‑beneficiaries and to the detriment of family relations.
In particular,
(1)he has made himself sole successor in title to our parents’ land whilst acting as fiduciary for them;
(2)he has made himself sole beneficiary to the remainder of their estate while asserting an enduring power of attorney;
(3)he has knowingly and intentionally contravened section 125B(b) of the Instruments Act 1958; and
(4)he has used this statute for the fraudulent purpose of transactions to defeat the claims of his co-beneficiaries.
I now request from the Court:
(1) an order for declaration of constructive trust;
(2) an order for account of profits; and
(3) an order for continuation of caveat.
The reference to a caveat above is in respect of a caveat lodged by the plaintiff over the title to the property at 95 Junction Road, Heathcote Junction (“Wandong property”). This proceeding was issued after the defendant made an application to Land Victoria under s 89A of the Transfer of Land Act 1958 (Vic) (“TLA”) for the removal of the caveat. The proceeding was issued within the time period specified by s 89A(3) of the TLA.
The transaction which is the subject of the plaintiff’s complaint is as follows: on 16 June 2010, the parties’ parents, Mrs Valerie Daunt (“Mrs Daunt”) and Mr Edward Daunt (“Mr Daunt senior”) executed a transfer of land in favour of the defendant and Mr Daunt senior (“Transfer of Land”). The consideration for the transfer was described as “I desire to make a gift”. The Transfer of Land includes a notation under the names of the transferees “Joint Property Ownership”. The signatures of Mrs Daunt, Mr Daunt senior, and the defendant on the Transfer of Land were witnessed by Ms Joy Lorraine Carbone, who is described in an affidavit sworn by the defendant on 20 March 2013 as a “longstanding family friend”.
The plaintiff lodged a caveat on the title to the Wandong property on 6 October 2011. Some weeks later, on 26 October 2011, Mr Daunt senior died. On 22 May 2012, the defendant was registered as the sole proprietor of the Wandong property by right of survivorship. He now lives at the Wandong property.
Prior to turning to the evidence and submissions of the parties with respect to the plaintiff’s claims, I should make some remarks about the procedural history of this proceeding and the manner in which the plaintiff elected to conduct his case. The defendant filed a “bare denial” defence on 30 January 2013. The proceeding was listed for directions before Lansdowne AsJ on 25 February 2013 and the plaintiff appeared in person at that hearing. Her Honour recorded in “Other Matters” the following:
1.The Defendant does not seek to take any pleading point in relation to the statement of claim but proposes that the Plaintiff’s case be elaborated by affidavit.
2.The Plaintiff does not wish to be legally represented in these proceedings.
Notwithstanding the above, the affidavit filed by the plaintiff on 27 February 2013 merely repeated the matters set out in his statement of claim. The defendant filed a number of affidavits in response, and on 17 April 2013 applied to strike out the statement of claim on the grounds that it:
(a)did not disclose a cause of action;
(b)was frivolous and/or vexatious; and/or
(c)was an abuse of process of the Court.
Upon the return date of the application, the proceeding was fixed for trial to commence upon 17 June 2013. The plaintiff informed the Court that he did not intend to call any witnesses.
The trial date of 17 June 2013 was later vacated, and the proceeding was re‑fixed for hearing on 20 August 2013. In the “Other Matters” section of the orders made on 26 June 2013, I made the following notation:
The plaintiff has informed the Court that he does not require any of the defendant’s witnesses to attend for cross‑examination.
While no transcript of the hearing before me on that day is available, the plaintiff was informed of his entitlement to require the people who had sworn affidavits on behalf of the defendant to attend to be cross-examined by him. However, the plaintiff did not wish to take this course, and indeed requested that the Court determine the matter on the papers. I declined to do so, and on 20 August 2013 I received written and oral submissions from the parties. At the commencement of the trial, the plaintiff confirmed that he did not wish to cross‑examine any of the defendant’s witnesses.[1]
[1]T1, 10-16.
At the conclusion of the hearing, it was apparent that the plaintiff was a little overwhelmed by the legal process, and I was concerned that he had not fully comprehended the oral and written submissions made by counsel on behalf of the defendant. Accordingly, I ordered that the plaintiff have a further opportunity to file and serve written submissions in response to the defendant’s submissions. In the end, a further brief hearing was convened on 16 September 2013.
The following documents were relied upon by the plaintiff in support of his claims (excluding those affidavits which related merely to his request for a resumed hearing date):
(a)an affidavit affirmed by him on 27 February 2013, essentially repeating the matters set out in his statement of claim;
(b)an affidavit affirmed by him on 7 May 2013 in response to the evidence filed on behalf of the defendant;
(c)an affidavit affirmed by him on 30 May 2013;
(d)an affidavit affirmed by him on 29 August 2013;
(e)an affidavit affirmed by him on 30 August 2013;
(f)brief written submissions handed up at trial;
(g)further written submissions filed on 29 September 2013;
(h)undated written submissions enclosing extracts from Wikipedia and a paper prepared by Associate Professor Peter Devonshire of the University of Auckland Faculty of Law titled “Account of Profits for Breach of Fiduciary Duty”; and
(i)a bundle of copies of letters from the plaintiff to the defendant (and their sister, Helen Rodgers) over the course of 2009 and 2010 with handwritten notations by the plaintiff.
The defendant relied upon the following affidavits and submissions:
(a)an affidavit sworn by the defendant on 20 March 2013;
(b)an affidavit sworn by Mr Paul Maginn, the defendant’s solicitor, on 15 April 2013 in support of the defendant’s strike out application;
(c)an affidavit sworn by Mrs Daunt on 20 March 2013;
(d)a further affidavit sworn by Mrs Daunt on 22 March 2013;
(e)an affidavit sworn by Ms Carbone on 23 March 2013;
(f)an affidavit sworn by the defendant in reply to the plaintiff’s affidavit of 30 May 2013;
(g)a draft unsworn affidavit of Mr McGinn sent to the defendant on or about 14 May 2013;
(h)a document headed “chronology” prepared by counsel for the plaintiff; and
(i)written submissions handed up at trial, along with various authorities relied upon by the defendant.
Much of the evidence relied upon by the plaintiff was really by way of submission, seeking to summarise the nature and scope of fiduciary duty, constructive trust, undue influence, unconscionable conduct, and the use of written instruments to commit fraud. However, the core of the plaintiff’s claim, as I discern it to be, is as follows:
(a)the defendant owed a fiduciary duty to his parents by reason of him being their power of attorney;
(b)the defendant misused his position as a fiduciary, and exercised undue influence over his parents, to procure the transfer of the Wandong property to himself; and
(c)the purpose of procuring the transfer was to defeat the legitimate claims of the co‑beneficiaries of his parents’ estate, being himself and his sister.
In his final written submissions filed on 29 September 2009, Mr Daunt succinctly summarised his position, as follows:
Stephen Daunt submits to the court that Michael Daunt actively procured a transfer of title to land.
The evidence and proof is:
1.Michael admits in his June 15th 2013 affidavit that he was active in the preparation of the transfer.
2.The transfer is in his handwriting.
3.He was present at the signing of the transfer by Valerie and Edward Daunt.
4.Michael invited a family friend to sign as witness.
5.The gift of Valerie’s equity was to Michael.
6.The joint tenancy of Edward’s equity was with Michael.
7.The total economic effect of the transfer was to benefit Michael and to defeat the claims of his co beneficiaries to an equitable share of the land.
As earlier indicated, the plaintiff’s affidavit of 27 February 2013 merely repeated the contents of his statement of claim. In his affidavit of 7 May 2013, the plaintiff deposed in relation to his mother’s evidence, in summary, as follows:
(a)Mrs Daunt is not a competent witness because she has memory loss;
(b)Mrs Daunt is unlikely to permit any cross‑examination or questioning from him;
(c)Mrs Daunt’s affidavits are composed by the defendant, printed or dictated by the defendant, and signed under his supervision; and
(d)her DVD testimony is scripted and produced by the defendant. Her compliance is the result of undue influence by the defendant. It was made under oath, and she is not aware of s 125B(b) (sic) of the Instruments Act 1958 (Vic).
In his affidavit of 30 May 2013, the plaintiff repeated his submissions that the Wandong property is held by the defendant subject to a constructive trust in favour of him (and presumably, Helen Rodgers) as a result of the defendant’s breach of fiduciary duty in procuring the transfer of Mrs Daunt’s interest in the Wandong property to him. Under the heading “Circumstantial evidence of constructive fraudulent conveyance”, the plaintiff deposed as follows:
1.The defendant became greatly enriched because of the transfer of land;
2.The co-beneficiaries were greatly disbenefited as a result of the transfer of title;
3.The transfer was made without consideration or price. It was described as a gift;
4.The parties to the transfer were family (father and mother to one child in preference to his two siblings);
5.The defendant has retained possession, benefit and use of the transferred land;
6.There has been the threat of litigation since the siblings were informed of the transfer by the defendant;
7.The financial situation of the defendant was greatly improved at the time of the transfer and has remained so after the transfer;
8.The enrichment of the defendant resulted from a series of transactions. Firstly as a gift with an implied carer agreement; secondly as a joint tenancy agreement with an implied sole succession agreement and thirdly, as an enduring power of attorney and executorship;
9.The defendant actively procured the transfer of title and subsequently actively procured a will for the surviving parent;
10.The chronology of events resulting in sole succession to title of the land by the defendant could only have happened under his management;
11.The exclusion of the defendant’s co-beneficiaries could only have happened under his management;
12.The transactions were kept secret by the defendant;
13.The defendant has acceded to the plaintiff’s claim that a fiduciary relationship exists between him and his parents;
14.The conduct of the defendant deviates from the usual course of attorneyship; and
15.The defendant has defied the principle that all children, regardless of their legitimacy or otherwise, have the same rights, and obligations in the law of succession, property and family provision.
Under the heading “Circumstantial Evidence of undue influence involving active procurement of will by the defendant, Michael Daunt”, the plaintiff made certain allegations regarding Mrs Daunt making a new will. However, given that Mrs Daunt no longer has an interest in the Wandong property, and there is no reference to Mrs Daunt’s will in the statement of claim, it is difficult to see how allegations of this nature are relevant to the relief claimed in this proceeding, except perhaps as being illustrative of the relationship between the defendant and Mrs Daunt and his involvement in her affairs.
The affidavit also comments upon a bundle of letters sent from the defendant to the plaintiff (and, in some cases, their sister) between 14 October 2009 and 12 June 2010. The letters are annotated by the plaintiff with various, often derogatory, comments and remarks. On occasion, the letters refer to letters sent by the plaintiff to the defendant, but none of these letters were included in the bundle provided to the Court.
The letters provided to the Court are illustrative of the circumstances leading up to the execution of the Transfer of Land on 16 June 2010. What can be gleaned from the contents of the letters is as follows:
(a)by October 2009, the defendant was concerned about some works which were required to be undertaken at the Wandong property in preparation for the forthcoming fire season (it appears that the property was under threat during the Black Saturday bushfires);
(b)the defendant was requesting whether the plaintiff could provide some assistance with various projects and maintenance issues at the Wandong property;
(c)it appears that there was a pre-existing estrangement between the brothers, and the plaintiff was only prepared to assist if the defendant was away from the property. The defendant offered to be absent, and indeed appeared to be seeking some “time out” from the role of being primary carer for their parents. In his letter of 23 October 2009, the plaintiff stated as follows:
If Mum and Dad are in agreement, you can collect their mail, pay bills and be a taxi driver and errand person. You can accompany Mum and Dad on their difficult appointments and sit with them in waiting rooms. You can do the paperwork with the clinics and Medicare. You can be accountable to the Hostel, the doctors, the hospitals and Government. You can have the enjoyment of taking them on outings to the shops and local parks etc. You can attend to their health challenges and research medical matters. You can take over maintenance of the property. You can be available for consultations with the Hostel and doctors if there is an emergency. I am not speculating. All the above things are what I am dealing with right now. Will you commit to the above activities if I go back to Mylestom?
(d)if the plaintiff stepped in to assist he would see that their parents were still in control of their affairs;
(e)in response to what must have been a suggestion by the plaintiff that the Wandong property be sold, the defendant expressed concerns regarding the poor return from a premature sale, and the impact of a sale upon their parents’ access to pensions and other government assistance;
(f)it appears that the plaintiff offered to provide assistance to his parents for a three to four week period in November to December 2009, and the defendant provided him with information about his parents’ current needs, along with a list of tasks that needed to be carried out at the Wandong property;
(g)it appears that the plaintiff attended at the Wandong property on 16 November 2009, but returned home that day rather than staying the three weeks he agreed to stay, which did not please his parents;
(h)on 30 March 2010 the defendant advised the plaintiff that Centrelink would be including the Wandong property (or the proceeds of any sale of the property) in their parents’ assets test as of February 2011, and asked whether he would be prepared to become a co-owner of the property;
(i)however, the proposal then became that the Wandong property be gifted to the parties and their sister as tenants in common, on the proviso that it would not be sold before their parents definitely no longer needed it;
(j)however, it appears that neither the plaintiff or the parties’ sister wanted to be involved in what was described as the “gifting proposal” for, among other reasons, the impact of any gift upon their own pension entitlements;
(k)ultimately, on 31 May 2010 the defendant provided his brother and sister with two weeks to either accept the gifting proposal or to make alternative proposals; and
(l)it appears that the plaintiff rejected the gifting proposal in early June 2010, not long before the execution of the Transfer of Land.
The plaintiff’s commentary upon these letters included the following remarks:
(a)the defendant has been the cause of the alienation and estrangement between Mrs Daunt, the plaintiff, and Helen Rodgers;
(b)the letters demonstrate bad faith and misrepresentations on the part of the defendant calculated to frustrate the plaintiff and Helen Rodgers, and to persuade their parents to act against their own interests; and
(c)the letters demonstrate the defendant’s strategy to justify his exploitation of his position to enrich himself by claiming the gifting proposal was to protect his parent’s pensions, and that the purported offer of shares to the plaintiff and Helen Rodgers did not satisfy the legal requirements for the making of a contract.
In his affidavit affirmed on 29 August 2013, the plaintiff comments upon a letter from his mother to him dated 6 December 2012. This letter states as follows:
Dear Stephen
It is not a matter of my allowing court proceedings. It is your caveat that is interfering with my freedom to acquire a new and more suitable place to live. Your talk of a “Constructive Trust” is irrelevant to my present situation. I have followed Centrelink’s advice regarding gifting. Ted’s advice was sort also. This is documented on a video. He made it very clear that he supported Michael having ownership of the Wandong property.
You now believe that you can overturn VCAT’s decision and the Public Advocate’s investigation. I am sure that this will not happen. I am told by a solicitor that it is very expensive to run a court case, especially through the Supreme Court. Goodness knows what you would end up having to pay.
Your conclusion that Michael is “pitting himself” against the law and “invites anarchy - quickly followed by chaos” causes me to feel that you need psychiatric help.
I hope that you will get on with your career in aviation and drop the time-wasting ideas of going to court.
Much love
Mum
In response, the plaintiff deposes as follows:
The letter reveals that our mother has a fixed false belief without hypothesis, having no foundation in reality. It has been, and presently is, persistently adhered to against all evidence and reason.
She believes that she “gifted” her equity in land.
She believes that it is still hers for to sell. She believes that revenue from sale of the whole property/land will be hers to apply to “acquire a new and more suitable place to live”. She believes that Michael is bound to do her bidding yet he has made himself sole successor in title to the land. Both Michael and Valerie deny emplied [sic] and/or constructive trust. And most disturbing of all is her belief that she and Michael have not committed a betrayal of Stephen.
Finally, in his affidavit affirmed on 30 August 2013, the plaintiff comments upon further correspondence between various family members, in particular, a letter from the defendant addressed “to the Rodgers family” dated 27 April 2012. In this letter, the defendant acknowledged receipt of a letter from Helen Rodgers to him dated 3 January 2012. He referred to the steps he had taken to inform her, the plaintiff, and other family members of Mr Daunt senior’s death. He referred to Helen Rodgers having chosen to cut all contact with him and Mrs Daunt, and stated as follows:
I have done the very best I can for my parents physical, mental and financial well‑being. The gifting process has worked. It has achieved the following outcomes as predicted by Centrelink.
1.Mum is now receiving close to a full pension and all the entitlements that go with it.
2.The Wandong property is secure and available for Mum to use as a holiday place or as permanent accommodation. This she has been doing for over three years and more so since Dad’s passing.
The letter concluded with some remarks about the caveat placed on the Wandong property by the plaintiff and Mrs Daunt’s general wellbeing. The letter was endorsed with a handwritten notation by Mrs Daunt, as follows:
I have read the above letter and totally agree with its contents. Everything it says is true and is carefully documented to my satisfaction.
This letter attached a letter from Dr Janis Baker addressed to “to whom it may concern” referring to Mrs Daunt, which first, stated that she was aware of the past history and present medical state of Mrs Daunt and that she has testamentary capacity and the ability to understand information and its implications; secondly, that Mrs Daunt had expressed a desire to accompany the defendant on an extended holiday on the north coast of Australia, and her opinion that Mrs Daunt’s relatively good physical and mental health supported her taking such a holiday. The affidavit also exhibited a hand written letter from Mrs Daunt to “Caeleste” (who is Helen Rodger’s daughter) regarding the support she had received from the defendant, the fact that Helen Rodgers was no longer a beneficiary of her will, and her reasons for that decision and her refusal to see that part of the family. The letter concluded as follows:
It is now totally up to Michael as to what help, if any, he gives to Helen and Stephen in the future.
In his affidavit of 30 August 2013, the plaintiff only commented upon the first letter referred to above. He deposed as follows:
Paragraph 1 … is a failed justification for leaving Helen and Stephen ignorant of their father’s death for three weeks.
Paragraph 2 reveals the alienation between siblings and it is further provocation in the unique style of Michael.
Paragraph 3 reveals Michael’s obfuscation of the truth. He has made himself sole successor in title to our parents’ land, yet he poses as a loyal son, full of merit, and playing the role of fiduciary.
Paragraph 4 is puffing and bluff.
Paragraph 5 is fake sentimentality. Our mother wanted freedom from our father.
The defendant, in his affidavit sworn on 20 March 2013, gave the following evidence in relation to the circumstances regarding the execution of the Transfer of Land:
(a)the Transfer of Land was signed by him and his parents in the presence of a longstanding family friend;
(b)at the time he signed the Transfer of Land, he did not hold a power of attorney on behalf of either of his parents;
(c)at the time the Transfer of Land was signed his parents were well aware that the effect of the transfer was that the Wandong property was likely to pass to him as the surviving joint tenant;
(d)Mr Daunt senior appointed both the defendant and Ms Carbone as attorneys with respect to financial matters on 19 July 2010. The Power of Attorney was prepared and witnessed by a solicitor;
(e)he exhibited a note prepared by Dr Janis Baker of the Broadford Medical Clinic regarding a consultation she had with Mr Daunt senior on 7 September 2010. This note, stated as follows:
This is to certify that I am aware of the past history and present medical state of Mr Daunt and that he has testamentary capacity and the ability to understand information and its implications.
On the 7th of September 2010, at Broadford Medical Clinic, I had the opportunity to discuss with Valerie and Ted Daunt the matter of Transfer of Land ownership at 95 Junction Road, Heathcote Junction from Edward (Ted) Daunt to his son Michael Daunt.
I have known Valerie, and her husband Ted, for many years now.
I am confident that both Valerie and Ted understood and were happy for this above mentioned Transfer of Land ownership to occur.
(f)on 30 May 2011, he made a video recording of a conversation he had with Mr Daunt senior in which Mr Daunt senior confirmed that he was content with his decision in connection with the transfer of land, and exhibited to his affidavit a copy of this recording;
(g)his mother, Mrs Daunt, has confirmed to him on many occasions that she agreed with the transfer. Her capacity to make decisions was challenged by the plaintiff in an application made by him to the Victorian Civil and Administrative Tribunal (“VCAT”). The defendant exhibited a copy of determination made by Senior Member Scott on 10 February 2011, which stated:
The application for an administration order and for orders with respect to an enduring power of attorney is dismissed for the following reasons:
The Tribunal is not satisfied that the proposed represented person has a disability; is unable by reason of that disability to make reasonable judgments about their estate; and needs and administrator;
(h)he exhibited a letter written by Mrs Daunt to VCAT dated 18 April 2011, which stated as follows:
In the past I have felt misunderstood and cajoled into saying things in an incomplete way. I hope my following statements leave no doubt.
I want the Wandong property to be totally under the control of my son Michael, to do with it what is necessary to keep it as a financial and physical resource for me and my husband.
As a consequence of the Joint Tenancy Agreement that exists between my son Michael and my husband the Wandong property will eventually belong to Michael. He will be free to do with it what he sees fit.
The remaining assets, comprising residential bonds and a bank deposit, will be dealt with in my will.
I realise that Helen and Stephen are not likely to be satisfied with this but it has been their choice to give us no help.
Mrs Daunt, in her affidavit sworn on 20 March 2013, deposed, in summary as follows:
(a)she was born on 16 August 1923, and believes she is in good health for her age;
(b)she signed the Transfer of Land on 16 June 2010 fully understanding the nature and effect of the document. She had discussed the proposal for the transfer with Mr Daunt senior on a number of occasions before signing the Transfer of Land. She had no doubt that Mr Daunt senior was well aware of the nature and effect of the Transfer of Land. They both understood the difference between a tenancy in common and a joint tenancy;
(c)the proposal for the transfer of her property arose out of her dealings with Centrelink. The transfer of her interest in the Wandong property to the defendant avoided the need for a forced sale of the Wandong property in poor market circumstances because her ongoing ownership of the Wandong property would have had an adverse impact upon her pension entitlements. The transfer to the defendant enabled her and, prior to his death, Mr Daunt senior, to enjoy the Wandong property as a welcome respite from institutional aged care accommodation;
(d)she and her husband were happy for the defendant to become the ultimate proprietor of the Wandong property, as in their later years he has provided for their care and has taken a close interest in them, in contrast to the distance and lack of interest shown by the plaintiff and their daughter Helen; and
(e)prior to executing the Transfer of Land she and Mr Daunt senior took steps to avoid any suggestion that she and Mr Daunt senior did not understand what they were doing when they signed the Transfer of Land. They visited their then local medical practitioner Dr David Doig. Mrs Daunt exhibited copies of certificates signed by Dr Doig with respect to her and Mr Daunt senior on 11 May 2010. The certificates stated, in respect of Mrs Daunt, as follows:
This is to certify that I am aware of the past history and present medical state of Mrs Daunt and that she has testomonary (sic) capacity and the ability to understand information and its implications.
The certificate in relation to Mr Daunt senior is in materially identical terms.
Prior to Dr Doig issuing the certificates referred to above, Mrs Daunt was assessed by Dr Brett Coulson, Consultant Psychiatrist of Old Age, upon referral by Dr Doig. Dr Coulson’s report dated 20 April 2010 canvassed a number of issues regarding Mrs Daunt’s presentation and mental and emotional health. It is apparent from this report that Mrs Daunt’s mental and emotional health was not, at that time, problem free. The report included the following statements:
The other issue is that she has three children and is mildly estranged from two of them though the staff report that they are concerned at how over‑involved her son Michael is with her care, although Mrs Daunt sees this as a good thing and she is very appreciative of his input in her care.
Mental state examination showed a reasonably well-presented elderly lady who had a mild wide-spaced gait. She was quite co-operative be it not mildly at times mildly overdramatic (sic). She would frequently talk about her distress at her family etc. There was neither evidence abnormal perceptions nor delusions and there was no other risk issues identified. On cognition, she scored 28/30 on Folstein MMSE and her planning and sequencing was reasonable and she was able to tend to the task. She had some minor insight into her affective state.
Overall, I feel there is no major psychiatric disorder present. Her mood is mildly decreased and there are some signs that are probably suggestive of a mild to moderate disorder, though there is no evidence of any psychosis or pervasive cognitive disorder and I spent some time explaining this. I do feel though that we have a lady with a interesting personality structure that is mildly entitled as well as dramatic, somewhere verging between histrionic and narcissistic with dependent traits. I suspect we may see that regressed and further exacerbated if there are any depressive symptoms.
It is apparent from the preamble to the report and the covering summary form to the report that Dr Doig’s purpose in seeking a report from Dr Coulson was not to obtain an opinion on the capacity of Mrs Daunt to make an informed decision regarding the transfer of her share of the Wandong property to the defendant, but rather that the purpose of the referral was because Dr Doig was concerned about the decline in her mood. The summary form included a statement:
She has been tearful, anxious and at times agitated. There was some concern that these symptoms may be in context of husband’s ill health with whom she shares accommodation at the ACF. There also appears to be some stressors in the family.
Accordingly, while Dr Coulson’s report is of some value in determining the issues in this proceeding, it does not directly address those issues that an assessment and report directed at establishing, by way of example, testamentary capacity, would have done.
Mrs Daunt swore a further affidavit on 22 March 2013, where she deposed, as follows:
At the time of my gifting my half of the property at 95 Junction Road, Heathcote Junction to my son Michael Daunt, there were no conditions or expectations placed on Michael by me, or my husband Edward Daunt, for him to ever hold the above mentioned property in trust for anyone.
I and my husband, Edward Daunt, have, through our understanding and use of Joint Tenancy, given Michael Daunt full title to the above mentioned property free of any requirement for him to make shares available to anyone.
Unusually, the attestation clause of the affidavit included the following declaration by the witness to the affidavit (a legal practitioner):
The deponent signed this affidavit in my presence. The deponent appears to be of sound mind and under no duress or undue influence.
Mr Paul Maginn, the solicitor for the defendant, swore an affidavit on 15 April 2013 in support of the defendant’s application to strike out the proceeding as an abuse of process. In his affidavit, he submitted that even if the plaintiff’s allegations were accepted, no legal entitlement or remedy is available to the plaintiff, and that the plaintiff is merely a disappointed potential beneficiary. No issue of testamentary capacity arises as the defendant became the sole proprietor of the Wandong property by right of survivorship. Finally, at the time that the Transfer of Land was executed, the defendant was not an attorney of his parents, as he was not appointed as such until 19 July 2010, some weeks after the Transfer of Land was executed.
Finally, the defendant swore a further affidavit on 30 May 2013, in which he deposed, in summary, as follows:
(a)his fiduciary relationship with his parents did not commence in January 2009, as alleged by the plaintiff. Enduring Powers of Attorney were not executed by his parents until 19 July 2010, and were prepared by lawyers in Seymour who were independent from him;
(b)he did not use the financial power entrusted by his parents to him in order to manage the financial affairs of his parents for his personal benefit;
(c)he was active in drafting and preparing the Transfer of Land, but he acted on the clear wishes of his parents. Neither of his parents were coerced into signing the Transfer of Land;
(d)his mother’s will was made by his mother at Seymour with the assistance of solicitors; and
(e)he believes that the decisions of his parents were based upon the conduct of the plaintiff, which caused alienation from his parents, and not by any conduct of his own.
For completeness, I have viewed and listened to the DVDs exhibited to the defendant’s and Mrs Daunt’s affidavits. It is apparent from the DVD Mr Daunt senior made in May 2011 that by that time Mr Daunt senior was in poor health. He seemed rather sleepy during the course of the short interview conducted by the defendant. He did however respond directly to the questions asked of him by the defendant regarding his understanding of the effect of the Transfer of Land and the meaning of a joint tenancy, saying, in response to a question about whether he understood what was meant by a joint tenancy, “I think so”.
The DVD of Mrs Daunt made on 31 October 2012 showed Mrs Daunt walking slowly along a veranda. Unfortunately, there was no video of her reading of the letter which is exhibit “VGD-3” to her affidavit. However, listening to her reading the letter, and hearing the brief remarks she made after the reading, only confirms my view that she is lucid and in possession of her faculties, notwithstanding her advanced age.
In the written and oral submissions made on his behalf, the defendant submitted, as follows:
(a)it is strongly arguable that, as a disappointed contingent beneficiary of the estate of Mrs Daunt, the plaintiff does not have standing to bring a proceeding which in effect seeks to impugn the Transfer of Land. In the event that any trust was imposed over the Wandong property by reason of the conduct of the defendant, any claim for such relief would need to be brought by or on behalf of Mrs Daunt, not the plaintiff;
(b)the allegations made by the plaintiff that the defendant had breached section 125B(5)(b) of the Instruments Act 1958 were entirely misconceived, as the Statement of Acceptance signed by the defendant on 19 July 2013 did contain the endorsement required by that provision of the Act. In any event, the granting by Mr Daunt senior and Mrs Daunt of an Enduring Power of Attorney to the defendant post-dated the Transfer of Land;
(c)while the defendant concedes that he owed his parents a fiduciary duty after 19 July 2010, by this time Mrs Daunt had already gifted her share of the Wandong property to the defendant. There was no evidence before the Court which would enable the Court to conclude the existence of a fiduciary duty before that date;
(d)even if such a fiduciary duty was found to have existed, the plaintiff would still have to show that the defendant procured the gift of Mrs Daunt’s share of the Wandong property by undue influence or unconscionable conduct;
(e)in relation to the plaintiff’s allegations of undue influence, counsel for the defendant relied upon the principles recently articulated by Kaye J in Christodoulou v Christodoulou,[2] and submitted that there was no evidence that the defendant enjoyed the type or degree of influence in his parents’ affairs such that a presumption of undue influence might arise;
(f)in any event, any presumption of undue influence would be clearly rebutted by the evidence relied upon by the defendant, including his own evidence, and the evidence of Mrs Daunt and Ms Carbone. The evidence demonstrates that both Mr Daunt senior and Mrs Daunt knew exactly what they were doing when they executed the Transfer of Land. They knew that they were making an absolute gift of the Wandong property to the defendant, and that is what they wanted to do; and
(g)similarly, the evidence does not support any conclusion that either Mr Daunt senior or Mrs Daunt suffered from any special disadvantage or disablement at the time of the Transfer of Land.
[2][2009] VSC 583, at [70].
In my view, the plaintiff’s claim must fail. First, I agree with the submissions made on behalf of the defendant that the plaintiff lacks standing to bring a proceeding in relation to the Transfer of Land. Any such claim can only be made by or on behalf of Mrs Daunt. It is apparent from her evidence that she has no intention or desire to bring such a claim.
The question of the standing of an actual or potential claimant under Part IV of the Administration and Probate Act 1958 (Vic) and its interstate equivalents has been the matter of some debate, and that debate has yet to be resolved in this jurisdiction. In Wood & Anor v McLean & Anor,[3] Sifris J held that a proceeding brought by two children of the deceased (who were not named beneficiaries in the deceased’s will) to set aside a transfer of a significant asset to their sister in the course of the deceased’s lifetime was bound to fail, on the basis that, even though they had commenced proceedings under Part IV of the Act, they did not have a sufficient interest in the estate of the deceased, because as mere claimants, they did not have any presently enforceable right. However, in Mataska v Browne,[4] McMillan J expressly disagreed with the reasoning of Sifris J,[5] and instead approved of the contrary view adopted by the Full Court of the Supreme Court of Queensland in Hogarth v Johnson.[6] While McMillan J stated that:
A contingent Part IV interest, without more, is insufficient to support standing.[7]
she found in an application by a child of the deceased to remove the executor of the deceased’s estate in circumstances where the executor was the sole beneficiary of the deceased’s estate, but also the recipient of a gift of the bulk of the assets of the deceased shortly prior to her death, a potential claimant under Part IV of the Act had sufficient standing to make the application for the removal of the executor, and the appointment of another executor for the purpose of investigating the circumstances in which the gift was made.
[3][2010] VSC 550.
[4][2013] VSC 62.
[5]at [52].
[6][1987] 2 Qd R 383.
[7]at [53].
For completeness, in granting leave to appeal the decision of Sifris J in Wood & Anor v McLean & Anor,[8] Redlich and Mandie JJA stated (omitting footnotes) as follows:
This appears to be a novel question and the parties have been unable to point to any direct authority one way or the other. A number of authorities recognise that, in special or exceptional circumstances, a beneficiary under a will may institute proceedings in his own name, joining the executor as a defendant, seeking some relief to protect the estate. Of course, the applicants are not beneficiaries.
Nevertheless, the question might be thought to arise as to whether, in all the circumstances, the applicants have a sufficient financial or economic interest, if no other, as to support a conclusion that they have standing to bring the proceeding. The possible relevance of what was said by Hargrave J in Russo v Russo as to parties with a ‘real financial interest’ having standing to apply for removal of an executor may also require to be considered. A subsidiary question might be thought to arise as to whether it would have been appropriate, rather than to permanently stay the proceeding, to defer the question of standing to the trial. We think that these questions need to be fully ventilated and that the decision below is attended by sufficient doubt as to justify a grant of leave to appeal. We are also satisfied that the applicants would be prejudiced if the decision below were left undisturbed as they would be denied the opportunity to advance their claims in the stayed proceeding. Indeed the contrary was not argued.
[8][2011] VSCA 37.
As the dispute in Wood v McLean was settled prior to the hearing of the full appeal, the conflict in the authorities on the standing of actual or potential claimants under Part IV of the Act to bring proceedings in respect of the administration of the relevant estate, particularly in relation to matters which would directly affect the size of the estate, remains unresolved, at least in Victoria. However, in the current case, the position of the plaintiff, and indeed that of Helen Rodgers, is well removed from the circumstances of the parties in the cases referred to above. There is no “estate”, as such, and there will not be one until after Mrs Daunt’s death.
Mrs Daunt’s will is not in evidence, but it can be safely assumed that the plaintiff, like Helen Rodgers, is not currently a beneficiary, and that in all likelihood, the defendant is the sole executor and beneficiary. But that could change. While Mrs Daunt is currently estranged from the plaintiff and Helen Rodgers, (and the bringing of this proceeding has no doubt not assisted in that regard), families in conflict do reconcile. There is no evidence of what assets remain in the possession of Mrs Daunt, or what might be in her estate by way of cash, or the proceeds of refunds of aged care accommodation bonds. There may well be sufficient assets to meet any legitimate claims of the plaintiff and his sister. While it is unlikely, the defendant might well through some misfortune predecease his mother, and there is no evidence as to his intentions regarding his own estate, or the Wandong property. Therefore, the plaintiff’s position in the current case is materially different from that of the plaintiff in Mataska v Browne, where McMillan J found that the plaintiff’s Part IV claim had a reasonable prospect of success,[9] and that the circumstances relied upon by the plaintiff in that case demonstrated that there should be a careful investigation as to whether the property transferred by the deceased to the executor prior to her death ought to form part of the estate.
[9]at [53].
Accordingly, I could dismiss this proceeding merely upon the ground that the plaintiff lacks standing, and on that ground alone. But to do so runs the risk, given the unsettled state of the authorities regarding the standing of contingent Part IV beneficiaries, of postponing the dispute between the parties regarding the bona fides of the Transfer of Land to a later date, that is, to a time after the death of Mrs Daunt, which might well be some years down the track. That cannot be in the interests of any of the parties.
So, regardless of the standing of the plaintiff, now is the opportune time to determine, on the basis of the evidence before the Court, whether the Transfer of Land ought to be set aside on the basis that the Transfer of Land was procured by the defendant’s breach of fiduciary duty, exertion of undue influence, or unconscionable conduct. The plaintiff and the defendant have filed and served extensive written evidence. The plaintiff has had the opportunity to cross-examine the defendant’s witnesses, and, for whatever reason, has chosen not to do so.
When considering each of the grounds supporting the plaintiff’s claim that the defendant had taken advantage of “his parents”, or acted in conflict with the interests of “his parents”, the real question is whether the defendant had engaged in wrongful conduct with respect to his mother, Mrs Daunt. Of course, Mr Daunt senior’s cooperation was required to give effect to the gifting proposal, and at a theoretical level he could be seen to have been disadvantaged by the transaction (in that he became a joint tenant with a person of a younger generation, rather than the same generation, thus reducing the probability of him becoming sole proprietor of the property by way of survivorship), but it is tolerably clear that by mid 2010, the state of his health was significantly poorer than that of Mrs Daunt, and, while there is no direct evidence on this point, as at June 2010 the parties might reasonably have expected that Mr Daunt senior would pre‑decease Mrs Daunt, as in fact occurred. However, he still retained a legal interest in the Wandong property after the Transfer of Land, with all of the rights that come with being the registered proprietor of the Wandong property.
Taking each of the grounds in turn, I agree that there is no factual basis for alleging that the defendant breached his fiduciary duty as power of attorney for his parents by procuring the Transfer of Land. In short, the Transfer of Land predated the defendant’s appointment as an attorney for each of his parents: the evidence suggests[10] that prior to that time Mr Daunt senior and Mrs Daunt held powers of attorney for each other. There is no overarching doctrine at law that an adult child otherwise owes a fiduciary duty to his or her parents.
[10]See the letter from the defendant to the plaintiff dated 30 March 2010.
In his oral submissions at trial, the plaintiff asserted that the defendant owed his parents a fiduciary duty from about January 2009, after his father had suffered from a life threatening illness, and not long before the Black Saturday bushfires. He submitted that from that time, the defendant took control of his parents’ affairs, and then owed his parents a fiduciary duty.
In my view, even though the evidence does show that the defendant was actively engaged in, and devoted substantial time to, assisting his parents, that does not, of itself, give rise to a fiduciary duty. Those matters are more relevant to determining whether, in all the circumstances, there was a relationship of the nature which would give rise to a presumption of undue influence.
Turning now to the question of whether the defendant procured the Transfer of Land by exerting undue influence, I respectfully adopt the principles recently articulated in Christodoulou v Christodoulou,[11] where Kaye J stated (footnotes omitted), relevantly, as follows:
The basic principles relating to the concept of undue influence are uncontroversial. In equity, a transaction, whereby a donor transfers property to a donee (or recipient), is voidable, if it is shown to be the result of undue influence exercised by the recipient over the mind of the donor. There are two categories of cases of undue influence. The first category of cases arises where it has been positively proven that the transaction in question was produced by actual influence exercised by the recipient over the donor. In opening, Mr Ehrlich made it clear that he was not making a case based on the exercise of any actual influence by the first defendant over the plaintiff. The second category of case is where there has been shown to be an antecedent relationship between the donor and the donee, which is such as to raise a presumption that the donee has relevant influence over the donor. In such a case, the court will set aside a voluntary gift, unless it is proven by the donee that the gift was a spontaneous act of the donor in exercise of an independent and informed will. In this category of case, the last has recognised particular relationships which automatically raise a presumption of influence, including the relationship of doctor and patient, solicitor and client, guardian and ward, and parent and child (where the gift is by the child to the parent). However, the classes of relationships, in which the presumption arises, are not fixed and inflexible. In essence, where there is found to be an antecedent relationship between the parties, which gives the recipient of the gift “authority or influence over the donor from the absence of which it is proper that he [or she] should be protected”, the law will presume that any gift by the donor to the donee was the result of undue influence exercised by the latter.
[11][2009] VSC 583, at [70].
The plaintiff alleges that the Transfer of Land was procured by the reason of actual undue influence on the part of the defendant. However, contrary to the submissions made by counsel on behalf of the defendant, it appears to me that this current case falls squarely in the second category of cases referred to above: that is, by reason of the facts and circumstances of the relationship between the defendant and his parents, there was an antecedent relationship between the defendant and his parents such as to raise presumption of undue influence which must be rebutted by the defendant in order to avoid the gift to him effected by the Transfer of Land being set aside.
The antecedent relationship does not arise merely by the defendant being the adult child of Mrs Daunt and Mr Daunt senior. That relationship is not one which automatically gives rise to a presumption of undue influence. However, in the current case, it is apparent that, at least in the period after the Black Saturday fires and his parents’ movement into institutional care, his parents had become increasingly dependent upon the defendant’s day to day assistance.
The extract from the letter from the defendant to the plaintiff of 23 October 2009 referred to in paragraph 19(c) above highlights the extent of the involvement of the defendant in his parents’ lives. The fact that the defendant undertook these tasks was not disputed by the plaintiff.
At the time that the Transfer of Land was executed, they were becoming increasingly anxious about the potential impact of their ongoing ownership of the Wandong property upon their financial security. It had become clear to them that neither the plaintiff nor Helen Rodgers were either willing or able to provide them with material and/or practical assistance, despite the defendant’s entreaties in his letters to them, and indeed, their lack of assistance was a major source of disgruntlement to Mrs Daunt in particular. There is evidence that at around the time of the Transfer of Land, she was psychologically and emotionally vulnerable, although not acutely so. It is, however, noteworthy that Dr Coulson’s report regarding Mrs Daunt following his assessment included a reference to the staff (presumably the staff at the aged care facility) expressing concern at the “over-involvement” of the defendant in Mrs Daunt’s care.
The finding that there is sufficient evidence to raise the presumption of undue inference is not intended as a criticism of the defendant or his conduct and motivations in assisting his parents. It is simply a recognition of their potential vulnerability to manipulation of them by him, such that it is necessary for him to demonstrate that the Transfer of Land was executed by his parents freely and willingly.
Accordingly, in my view, applying the legal principles referred to in paragraph 50 above to the current case, the onus rests with the defendant to establish that the execution of the Transfer of Land was “a spontaneous act in exercise of an independent and informed will” on the part of Mrs Daunt.
In my view, the defendant has discharged that onus. It is apparent from the evidence of Mrs Daunt that she voluntarily gifted her share of the Wandong property to Michael, with a full understanding of the consequences of the transaction, and a rational basis for embarking upon the transaction. There is, accordingly, no basis for setting aside the transaction on the basis of any undue influence exercised by the defendant.
Similarly, I do not see any basis for setting aside the Transfer of Land on the grounds of unconscionable conduct on the part of the defendant. Once again, the principles which form the basis for the doctrine of unconscionable conduct are well summarised by Kaye J in Christodoulou.[12] In order to establish unconscionable conduct on the part of the defendant, the onus is on the plaintiff who must establish that:
(a)his parents, and in particular, Mrs Daunt, were under a relevant special disability or disadvantage, which seriously affected their (her) ability to make a judgment as to their (her) own best interests; and
(b)the defendant knew, or ought to have known of that special disability and/or disadvantage, and that special disability or disadvantage affected his parents’, and in particular, his mother’s ability to make an appropriate judgment as to whether the transaction was in their (her) best interests.
[12]see [78]-[83].
If the plaintiff is able to establish both of the elements above, an inference may be able to be drawn that the Transfer of Land was procured by the unconscionable conduct of the defendant. In that case, the onus would shift to the defendant to establish that, in all of the circumstances, the gift from his mother to him of her interest in the Wandong property was fair, just, and reasonable.
I should emphasise that the determination of whether the transaction was fair, just and reasonable needs to be made considering the interests of Mrs Daunt, not other parties, such as the plaintiff or Helen Rodgers, although it might be that the fact the estrangement was caused, at least in part, by Mrs Daunt’s gift to the defendant is a factor which should be taken into account in the analysis.
In my view, the plaintiff’s claim with respect to unconscionable conduct falls at the first hurdle: that is, in my view, Mrs Daunt was under no special disadvantage when she made the gift of her share of the Wandong property to the defendant. True it is that there was some evidence that she was suffering from depression, but it was not particularly severe or disabling. Owing to the decision of the plaintiff not to require her to attend court for cross-examination, I did not have the opportunity to assess her presentation or demeanour, but her affidavits filed in this proceeding, and the correspondence exhibited to affidavits filed by her, the plaintiff, and the defendant are lucid and reasoned, some three years after the Transfer of Land. Most importantly, the issue of her capacity to make decisions in her own interests was the primary, if not sole issue before VCAT in February 2011, when Senior Member Scott rejected an application made by the plaintiff and Helen Rodgers for an administrator to be appointed to manage Mrs Daunt’s affairs. This determination was made only eight months after the execution of the Transfer of Land, and, if Mrs Daunt was suffering any relevant special disability or disadvantage at that time, no doubt that matter would have emerged during the course of that proceeding, noting that VCAT is a tribunal with specialist expertise in that field.
The position of Mr Daunt senior is a little different. While there was evidence that he was suffering from symptoms of dementia at the time of the Transfer of Land, there is also in evidence a contemporaneous certificate from a general practitioner who knew him well who said he had the ability to understand information and its implications.
However, in any event, the question of whether Mr Daunt senior was under a special disadvantage or disability is peripheral to the real issue in this proceeding, as Mr Daunt senior suffered no material financial disadvantage by reason of the execution of the Transfer of Land.
Of course, if Mrs Daunt was under any special disability or disadvantage, there would be no difficulty in conducing that the defendant, as his parents’ primary carer, would have been aware, or ought to have been aware of that disability or disadvantage in financial dealings with himself. But even if that was the case, and therefore a presumption of unconscientious conduct were to arise, the question remains as to whether the transaction was fair and reasonable in all of the circumstances.
In my view, on balance, and having regard to all of the circumstances, the transfer by Mrs Daunt of her interest in the Wandong property to the defendant was fair and reasonable, although I understand why the plaintiff (and Helen Rodgers) might disagree. But, again, it is not their interests I am required to consider, but rather, the interests of Mrs Daunt. Of course, the fact that the transfer of her interest in the Wandong property to the defendant was likely to further estrange her from her other children is one factor to be taken into account. However, the plaintiff and Helen Rodgers were invited to participate in the gifting proposal, but declined to do so. It is apparent from the evidence that Mr Daunt senior and Mrs Daunt were keen to find some mechanism for maintaining Mrs Daunt’s access to the Wandong property while maximising their ability to receive financial assistance from the Commonwealth Government, and it appears that objective has been achieved by reason of the Transfer of Land.
Finally, for completeness, I agree with the submissions of counsel for the defendant that the allegation that the defendant has used an instrument to commit fraud is totally misconceived, and groundless. In any event, s 125B(5)(b) of the Instruments Act 1958 (Vic) does not, of itself, impose any independent duties and obligations upon a person holding an enduring power of attorney: it merely prescribes what must be included in that person’s statement of acceptance.
Accordingly, the proceeding shall be dismissed, with costs, and I shall make orders to that effect, including an order directing the Registrar of Titles to remove the plaintiff’s caveat over the Wandong property.
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