Farrell v Stephenson - [2008] NSWSC 1350

CITATION: Farrell v Stephenson [2008] NSWSC 1350

HEARING DATE(S): 20-21 October 2008

JUDGMENT DATE :
17 December 2008

JURISDICTION: Equity Division

JUDGMENT OF: Young CJ in Eq

DECISION: Plaintiff's case dismissed with costs. In the cross-claim, order that transfers of the Nos 186 and 188 properties be set aside. Cross-Claimant entitled to proceeds of sale of the cross-defendants' Bilgola property.

CATCHWORDS: EQUITY [49]- Cross-claim alleges second and third defendants procured transfers of widow's properties to themselves with little or no consideration- Second and third defendants mortgaged those properties and used the money for a series of unsuccessful property investments- Widow never received independent legal advice- No defence to cross-claim ever pleaded- Held properties were obtained by equitable fraud and undue influence. SUCCESSION [26]- Testator's will left properties to the widow, but contained precatory terms that the widow bequeath those properties to the plaintiff and the second defendant upon her death- Whether widow is bound to make such bequests- Held that there is no evidence of a contractual obligation to make a will in the plaintiff's favour- Widow's solicitor's letter insufficient to amount to a declaration of trust nor a representation.

LEGISLATION CITED: Conveyancing Act 1919, s 23C

CATEGORY: Principal judgment

CASES CITED: Baird v Smee [2000] NSWCA 253
Bigg v Queensland Trustees Ltd [1990] 2 Qd R 11
Birmingham v Renfrew (1937) 57 CLR 666
Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130
Re Dale [1994] Ch 31
Stivactas v Michaletos (No 2) (NSWCA, 31/08/1993, unreported)

PARTIES: Judith Farrell (Plaintiff)
Kathleen Mary Stephenson by her Tutor the Protective Commissioner of New South Wales (First Defendant/Cross-Claimant)
Peter Michael Stephenson (Second Defendant/First Cross-Defendant)
Jetherwin Marie Stephenson (Third Defendant/Second Cross-Defendant)

FILE NUMBER(S): SC 4555/06

COUNSEL: M S Willmott SC and E Elbourne (Plaintiff)
A J McInerney and W A D Edwards (First Defendant/Cross Claimant)
In person (Second Defendant/First Cross-Defendant)
In person (Third Defendant/Second Cross-Defendant)

SOLICITORS: The Property Practice (Plaintiff)
Lee & Lyons (First Defendant/Cross-Claimant)
In person (Second Defendant/First Cross-Defendant)
In person (Third Defendant/Second Cross-Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG CJ in EQ

Wednesday 17 December 2008

4555/06 – FARRELL v STEPHENSON

JUDGMENT

1 HIS HONOUR: This is a dispute between members of the family of the late Michael Athol Norman Stephenson whom I will call “the testator”.

2 The plaintiff is the daughter of the testator by his first marriage. After the plaintiff’s mother had died, the testator married the first defendant who became his widow. The testator and his widow had a child together, the second defendant Peter. Peter is currently married to the third defendant known as “Jett”.

3 When he died on 16 May 2004, the testator was the registered proprietor in fee simple of a property at Beacon Hill which I will call No 186. He was also a joint tenant with the widow of No 188 in the same street and was joint tenant with the widow and two other people of some land at Sussex…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Farrell v Stephenson

Details

AGLC: Farrell v Stephenson [2008] NSWSC 1350
Case: [2008] NSWSC 1350
Decision Date: 17 December 2008

CaseChat Overview and Summary

Farrell v Stephenson is a case in which the widow of a deceased estate brought a cross-claim against the second and third defendants, alleging that they procured transfers of her properties to themselves with little or no consideration. The widow claimed that she was induced to transfer the properties by the defendants, who exerted undue influence over her. The second and third defendants, in turn, mortgaged the properties and used the money for a series of unsuccessful property investments. The widow had never received independent legal advice and no defence to the cross-claim was ever pleaded.

The court was required to decide whether the properties were obtained by equitable fraud and undue influence and whether the widow was bound to make certain bequests in the deceased's will. The court held that the properties were indeed obtained by equitable fraud and undue influence, as the widow was induced to transfer them to the second and third defendants without receiving independent legal advice. The court also found that there was no evidence of a contractual obligation to make a will in the plaintiff's favour, and that the widow's solicitor's letter did not amount to a declaration of trust or a representation.

The court's reasoning and outcome were based on the evidence presented and the applicable legal principles. The court found that the widow was induced to transfer the properties to the second and third defendants by their undue influence, and that the transfers were therefore obtained by equitable fraud. The court also found that there was no evidence of a contractual obligation to make a will in the plaintiff's favour, and that the widow's solicitor's letter did not amount to a declaration of trust or a representation.

The final orders of the court were that the properties obtained by the second and third defendants through equitable fraud and undue influence be returned to the widow. The court also found that the widow was not bound to make any bequests in the deceased's will, as there was no evidence of a contractual obligation to do so. The court's decision was based on the evidence presented and the applicable legal principles, and provides guidance for future cases involving similar issues of equity and succession.

Orders