Ferrari v Ferrari - [2000] WASC 30

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: FERRARI -v- FERRARI & ORS [2000] WASC 30

CORAM: MASTER SANDERSON

HEARD: 9 FEBRUARY 2000

DELIVERED : 17 FEBRUARY 2000

FILE NO/S: CIV 2164 of 1999

BETWEEN: ATTILIO FERRARI
Plaintiff
AND
PETER FERRARI
SERGIO FERRARI
First Defendants
REGISTRAR OF TITLES
Second Defendant

Catchwords:

Property law - Application for removal of caveat - Turns on its own facts

Legislation:

Transfer of Land Act 1893, s 138

Result:

Order caveat be removed

Representation:

Counsel:

Plaintiff:     Mr M Curwood
First Defendants           :     Mr R R Cywicki
Second Defendant         :     Mr R R Cywicki

Solicitors:

Plaintiff:     Arns & Associates
First Defendants           :     E N Stamatiou & Co
Second Defendant         :     E N Stamatiou & Co

Case(s) referred to in judgment(s):

Custom Credit Corporation Limited v Ravi Nominees Pty Ltd (1992) 8 WAR 42
Ex parte Kojak Constructions Pty Ltd [1981] Qd R 339
Gibbons v Wright (1954) 91 CLR 423
Jandric v Jandric [1999] WASC 22
Johnson v Buttress (1936) 56 CLR 113
Porter v McDonald [1984] WAR 271
Ridge v Incentive Programs Pty Ltd (In Liq) (1984) QConvR 54‑172
Southern Rolled Oats Pty Ltd v Bride, unreported; SCt of WA; Library No 7552; 9 March 1989
The Commercial Bank of Australia Limited v Amadio (1983) 151 CLR 447
Webster v Banning Holdings Pty Ltd, unreported; SCt of WA; Library No 8458; 4 July 1990

Case(s) also cited:

Bank of New South Wales v Rogers (1941) 65 CLR 42
Beverley v Watson, unreported; SCt of WA; Library No 940502; 14 September 1994
Cwalinski v Cwalinski [1958] Tas SR 56
Eng Mee Yong v Letchumanan [1980] AC 331
Giumelli v Giumelli (1999) 73 ALJR 547
Louth v Diprose (1992) 175 CLR 621
Milnefeeds Pty Ltd v Bride (1993) 10 WAR 542
Noriah v Omar [1929] AC 127
Re Estate of Vitalina Ferrari (Dec); Ex parte The Public Trustee as Plenary Administrator of the Estate of Vitalina Ferrari [1999] WASC 50

MASTER SANDERSON: This is the plaintiff's application seeking removal of a caveat lodged over a property at 31 Dangan Street, Perth ("the Property") of which he is the registered proprietor. The application is brought under s 138 of the Transfer of Land Act 1893. Actions of this nature are not generally within the power of a Master: see O 60 r 1(1)(a)(iv). It appears that by an administrative oversight within the court the matter was brought on in Master's chambers. However, all parties to the proceedings consented to my dealing with the matter, pursuant to the provisions of O 60 r (1B)(a).
At the commencement of the hearing counsel for the plaintiff raised numerous objections to an affidavit sworn jointly by the first defendants on 3 February 2000. Many of these objections were based on the affidavit material containing hearsay. This, then, raised the question of whether this application was for interlocutory or final relief. If the application is for interlocutory relief then it may contain statements of information or belief under O 37 r 6(2)(a). On the one hand a decision in these proceedings either to order the removal of the caveat or allow it to remain will finally determine that question - subject to a right of appeal. The plaintiff has issued an originating summons which seeks only the removal of the caveat. On the other hand, the first defendants have issued separate proceedings (CIV 2204 of 1999) which seek to establish the basis for the lodging of the caveat. The issues between the parties in these separate proceedings will resolve the dispute between them in a way which will not be achieved by this application. In my view, properly considered, these proceedings are interlocutory in nature. The position might be different if separate proceedings had not been initiated: see Ex parte Kojak Constructions Pty Ltd [1981] Qd R 339; Ridge v Incentive Programs Pty Ltd (In Liq) (1984) QConvR 54‑172; Webster v Banning Holdings Pty Ltd, unreported; SCt of WA; Library No 8458; 4 July 1990. It is clear that s 138 of the Transfer of Land Act contemplates a summary application for the removal of the caveat. This adds further support to the view that statements of information and belief are permissible in the affidavits filed by the parties.
Apart from objections dealing with hearsay evidence, counsel for the plaintiff submitted that large parts of the affidavit material were speculative, conclusionary, argumentative or irrelevant. Many of counsel's objections were well taken. It will be sufficient if I give but one example of the material to which objection is taken. Paragraph 11 is in the following terms:
"11.Further in this regard, our mother had by 16 June 1996, become so weak and feeble, that very little pressure exerted upon her by the Plaintiff, would have been sufficient to bring about the change in her intentions. At the time that the Plaintiff must have made the representations to her, the mere talking to her at that stage of illness and pressing something upon her would have been such to so fatigue her brain that our mother would have been induced, for quietness sake to do anything."
The specific objection by the plaintiff to that paragraph is that it is speculative, conclusionary and argumentative. Clearly, that is so. Even putting the paragraph in context and allowing for the fact that the deponents had the opportunity to view their mother's condition does not justify the terms in which the paragraph is couched. Assumptions are made for which there is no justification. In part, the paragraph lapses into what might be described as a medical assessment of their mother's physical condition. The paragraph is clearly inadmissible. However, rather than strike out all of the paragraphs to which objection was taken and deal with each of the objections seriatim, I indicated to the parties that I would consider objections raised to particular paragraphs if and when reliance was to be placed on those paragraphs. Both counsel indicated they were happy with this course of action.
The facts in this case are relatively simple. The plaintiff is the son of Vitalina Ferrari. The first defendants are two of his brothers. Vitalina Ferrari, ("the deceased") died on 14 August 1999. The plaintiff was appointed executor of her will. Probate of that will was granted on 10 September 1999. The will, which is very simple, devised all the deceased's property, real and personal, to her executor to be divided equally between the deceased's five sons. There is no issue between the parties as to the validity of the will.
The deceased and her late husband purchased the Property on 18 January 1965. The deceased lived in the Property with her late husband until his death in 1993 and thereafter until late 1997. From 1974 the plaintiff also resided in the Property. During that period none of the deceased's other sons resided in the Property for any period of time, although, of course, they visited their parents from time to time.
On 18 June 1996 the deceased entered into a deed of gift ("the Deed") pursuant to which she created a life interest for the Property for herself with the Property to pass to the plaintiff on her death. The circumstances in which the deceased entered into the Deed are set out in par 19 through to par 28 of the plaintiff's affidavit sworn 1 November 1999. The position can be summarised in the following way. The deceased turned 80 on 15 October 1995. The plaintiff organised a party to celebrate the occasion. During the course of the celebrations a question arose between the brothers as to the contents of the deceased's will. The first defendants wanted to know the contents of the will. The plaintiff thought the contents of the will were a matter solely for the deceased and, unless she agreed, no one should read her will. An argument ensued which culminated a week or so later in a brawl between the plaintiff and his brother Peter. Perhaps not surprisingly, this led to a rift within the family.
The plaintiff says that in April or May 1996 the deceased indicated to him that she wanted to change her will. She asked him to arrange for her to see a lawyer. The plaintiff arranged for her to see one Agostino Irdi ("Irdi") who practices in Leederville. The plaintiff and the deceased went to see Irdi on 1 May 1996. The plaintiff says the deceased explained to Irdi that she wished to change her will. Irdi explained that if the will was changed an argument could ensue between the surviving children. He suggested the deceased hold a life interest in the Property with the remainder to the plaintiff. He then recommended that the deceased see another lawyer and mentioned Mr Salvatore Martella ("Martella"). The deceased spoke limited English. Both Irdi and Martella are fluent in Italian and discussions between the deceased and the two solicitors were conducted in the deceased's native tongue. The appointment with Martella was made around a week after the appointment with Irdi.
The plaintiff drove the deceased to the appointment with Martella. However he did not attend any of the interviews Martella held with the deceased. He was aware of what was intended but he says that he never discussed the contents of the Deed with his mother. As to the deceased's state of mind at the time she entered into the Deed, the plaintiff says (at par 28):
"28.Certainly at the time the deed of gift was written out I have no doubt that my mother knew what she was doing and had full mental capacity. I base this on the fact that she was always very coherent when she spoke to me; she never forgot things and she still attended to things she had been doing her whole life, such as shopping, cleaning, washing and cooking."
The plaintiff does say that after the signing of the Deed the deceased's health and her mental capacity started to deteriorate. He suggests the position was exacerbated by the death of his brother Frank in October 1996. The deceased was admitted to hospital in August 1997 and thereafter she moved to a nursing home. The plaintiff says that it was after this hospitalisation in August 1996 that the deceased's memory deteriorated significantly. A Guardianship order in respect of the deceased was made in January 1998.
In support of the application the plaintiff has filed an affidavit of Irdi sworn 1 November 1999 and an affidavit of Martella sworn 18 November 1999. Essentially, Irdi confirms what was said by the plaintiff in his affidavit. Although Irdi's affidavit does not say as much, it would appear that his firm had acted for the plaintiff prior to the deceased seeking advice. Irdi says that he indicated to the deceased that he would prepare documentation creating the life interest and passing the Property to the plaintiff but the deceased should then obtain independent advice about the transaction. This need for independent advice led Irdi to arrange for the deceased to see Martella. Prior to this appointment, Irdi drew up the Deed and forwarded it by post to Martella. The Deed was amended by Martella and when it had been signed by the deceased in Martella's presence it was forwarded to Irdi who witnessed the plaintiff's signature. It was Irdi who arranged for stamping of the document and lodging of the necessary documents with the second defendant. Irdi confirms that at all times he conversed with the deceased in Italian. He also confirms that the deceased appeared to understand and appreciate the nature of the transaction proposed by the Deed.
Martella's affidavit recounts that he saw the deceased at his office on 13 May 1996. She was accompanied by the plaintiff. Martella spoke to the deceased alone, having requested the plaintiff to leave his office and remain in the waiting room. He spoke to the deceased in Italian. Martella recommended some changes to the Deed as drafted by Irdi and he explained the effect of the Deed to her. He says (par 6):
"6.… I was certain about the capacity of Mrs Ferrari. I based this on how she spoke to me and responded to what I said. I formed the view that Mrs Ferrari gave me instructions voluntarily and without any duress or coercion on the part of Attilio."
Martella goes on to say that despite his certainty as to the deceased's capacity he nonetheless contacted her general practitioner, Dr V H Pham. Doctor Pham advised Martella that he was of the view that the deceased was of sound mind.
Martella met the deceased again on 14 June 1996. By that time he had amended the Deed. He went through the Deed clause by clause with the deceased and interpreted each clause into Italian. He advised the deceased of the effect of the Deed and outlined her legal rights. After this was done the deceased signed the Deed. Martella says that he is of the view that the deceased had a full understanding of the legal implications of the Deed. Martella witnessed the deceased's signature.
As I have indicated above, in separate proceedings the first defendants have sought to have the Deed set aside. The basis upon which they found their cause of action is set out in par 8, par 9 and par 10 of their statement of claim. These paragraphs read as follows:
"8.The Deceased at the time when the Deed was executed was not of sound mind, memory and understanding.
Particulars
At the time the Deceased executed the Deed she was of the age of 81 years, suffering from pathologies including but not limited to Delirium and Alzheimer's‑type dementia and had a history of cognitive impairment, congestive cardiac failure, cardiomyopathy and Parkinson's disease. These pathologies manifested themselves in a number of behavioural problems including but not limited to grabbing onto people, pacing, general restlessness and repetitive sentences. Furthermore she was disorientated for time and place, unable to write a sentence or copy a shape and unaware of her memory problems or need for care.
9.Further to the matters pleaded at paragraph 8 hereof, the execution of the Deed was attained under the undue influence of the Defendant in that:
(a)the Deceased was by reason of the matters pleaded at paragraph 8 hereof particularly vulnerable to representations made to her by the Defendant to the effect that he was owed a greater consideration than that by her previous testamentary intention pleaded at paragraph 7 hereof;
(b)the Deceased further by reason of the matters pleaded at paragraph 8 hereof, had become so weak and feeble, that very little pressure exerted upon her by the said representations made to her by the Defendant, was sufficient to bring about the change in her intentions;
(c)the Deceased further by reason of the matters pleaded at paragraph 8 hereof was in such a state of mind at the time the Defendant made the said representations to her, that the mere talking to her at that stage of illness and pressing something upon her would have been such to so fatigue her brain that the Deceased would have been induced, for quietness sake to so anything;
(d)the Defendant caused the Deed and the sail will pleaded at paragraph 2 hereof to be drawn contrary to the Deceased's testamentary intention as pleaded at paragraph 7 hereof;
(e)the Defendant caused the Deed to be presented to the deceased and thereupon further made use of the Deceased's confused state and reliance upon his advices to execute the Deed and in these and the premises pleaded above, coerced the Deceased to execute the Deed contrary to the Deceased's own wishes.
10.Further to the matters pleaded at paragraph 9 hereof, the Deed was procured by the unconscionable conduct of the Defendant in that:
(a)the relationship between the Deceased and the Defendant was to the knowledge of the Defendant, such that the Deceased was at a special disadvantage in dealing with him;
(b)the Defendant unconscionable exploited his said advantage; and
(c)the will of the Deceased was consequently overborne such that the Deceased was unable to make a worthwhile judgment as to what was in her best interests and the interests of all of her children.
Particulars
(i)The Plaintiffs here repeat the matters pleaded at paragraph 10 hereof;
(ii)The Deceased spoke a dialect of the Italian language known as Bergamasco and although she could speak the formal Italian language to a limited extent, she could not have understood the language of the Deed as that could not be translated to her in Bergamasco and in any event the Deceased had very limited education by which to understand the language and terms of the Deed;
(iii)The Defendant made little or no financial contribution to the Property whereas the Plaintiffs made significant financial and non‑financial contributions to the Property;
(iv)The Deceased had no greater love and affection for the Defendant than she had for her other sons including the Plaintiffs."
The affidavit of the first defendants recounts in some detail the family history up to and including the death of the deceased. For present purposes, it is unnecessary to recount this history in any detail. It will suffice to say that, even prior to the death of their father, the first defendants were concerned that the plaintiff was exerting his influence over his parents to benefit himself and to the detriment of both the parents and the siblings. Further, after the death of their father the defendants say that the plaintiff adopted an aggressive and domineering attitude towards their mother who was in large measure dependent upon him. In par 23(ee) the first defendants deal with their mother's mental condition. In essence, they suggest that she was vague and often disorientated both in time and place. It has to be said that there is little in the first defendants' evidence which establishes, one way or the other, the deceased's mental state. In part, that is to be expected. The first defendants did not live with the deceased and saw her, at best, on a weekly basis. However, whilst understanding the evidentiary difficulties faced by the first defendants, the facts upon which they rely to support their contention of mental incapacity are thin. Reliance is placed upon two medical reports prepared by Dr Jon Spear. These reports are to be found as Annexures "PF4" and "PF5" to the first defendants' affidavit. Doctor Spear is described as a consultant psychiatrist. His first report is dated 24 September 1997 and the second report is dated 19 November 1998. Doctor Spear first saw the deceased on 24 September 1997. Doctor Spear found her to have a moderate degree of cognitive impairment and to be disorientated for time and place. He also found her behaviour to be generally appropriate as was her mood. She was not thought disordered. Doctor Spear offers no indication of how long the deceased may have been suffering from mental problems.
In his subsequent report, Dr Spear was asked specifically to address how long the deceased may have had impaired understanding. In particular, he was asked as to her capacity on 18 June 1996. He says:
" … However, I do believe there is doubt over her ability to give testamentary capacity at that time. Because of her language difficulties I am unsure whether she would have been able to appreciate a complex legal document and therefore any testamentary capacity at that time may have been invalid unless an interpreter was with her to explain the contents of the Will."
Doctor Spear goes on to review his earlier examination of the deceased. He then offers the opinion that the deceased "may well have been demented in 1995". It is not entirely clear on what basis he reached that conclusion. Nor is it entirely clear whether he regards the existence of dementia as relevant to the deceased's testamentary capacity in June 1996.
If the first defendants are able to establish that, for one reason or another, the Deed should be set aside the Property will form part of the residuary estate of the deceased. That being the case, they say that, as beneficiaries under the will they have a sufficient interest in the Property to justify the caveat. Furthermore, the first defendants say that they have an equitable interest in the Property. This claim, which is not raised in the proceedings to which I have referred, is based upon contributions the first defendants say they made from time to time to the acquisition of the Property. In support of the proposition, reference is made to par 23(h), (i) and (r) and par 24(b) of the affidavit of the first defendants. Paragraph 23(h) and (i) deal with matters dating back to 1960 and 1972. Essentially, it is said that the secondnamed first defendant contributed his pay packet to the family between 1960 and 1972 and only received a small allowance. It is said that the firstnamed first defendant did the same between 1960 and 1962. Paragraph 23(r) details work done by a brother, Mario, on the Property. Paragraph 24(b) repeats the evidence as to the firstnamed first defendants' financial contribution to the family. The paragraph concludes:
"It was always understood that, as a family unit, we would pool our financial resources to pay the family's expenses. Although the firstnamed First Defendant never lived at the Property, during the time that our father was saving the deposit for the Property, he was contributing his entire pay packet to the family finances. Although the Property was in our parents' names, we all contributed to it and viewed it as the family property which, in due course, would one day become our inheritance."

This application is brought under s 138 of the Transfer of Land Act. The estate or interest in land being claimed by the first defendants, according to the caveat itself, is as follows:
"Equitable interest in land, firstly as a contributor to the maintenance and development of the property and secondly as a beneficiary under the will of the former registered proprietor, the late Vittalina Ferrari."
As the interest claimed by the caveat is, at least in part, as beneficiaries claiming under a will, the caveat is not a "Section 138A caveat" and s 138 of the Transfer of Land Act applies. The test to be applied on an application such as this has been clearly established by a number of cases. The onus lies on the caveator. He must establish that there is a serious question to be tried and that the balance of convenience favours the retention of the caveat. This exercise of discretion takes into account those matters which would be relevant on the application for an interlocutory injunction. The caveat will not be removed unless the claim to an estate or interest in land appears to be without foundation. These principles emerge, I think, from the following cases: Custom Credit Corporation Limited v Ravi Nominees Pty Ltd (1992) 8 WAR 42 per Owen J at 48 ‑ 49; Porter v McDonald [1984] WAR 271; Southern Rolled Oats Pty Ltd v Bride, unreported; SCt of WA; Library No 7552; 9 March 1989. The first question then is whether, as between the plaintiff and the first defendants, there is a serious question to be tried.
I will deal first with the question of the capacity of the deceased as at the date she entered into the Deed. In Gibbons v Wright (1954) 91 CLR 423 Dixon CJ, Kitto and Taylor JJ dealt with the requirement of capacity in the following way at 437:
"The law does not prescribe any fixed standard of sanity as requisite for the validity of all transactions. It requires, in relation to each particular matter or piece of business transacted, that each party shall have such soundness of mind as to be capable of understanding the general nature of what he is doing by his participation."
Measured against that test, it is difficult to see that there is any evidence that the deceased lacked capacity at the time she entered into the transaction. The only evidence of her mental state at the time of the transaction is provided by the plaintiff, Irdi and Martella. There is nothing in this material at all which would support the first defendants' case.
The basis for setting aside a transaction for undue influence was considered by the High Court in Johnson v Buttress (1936) 56 CLR 113. Latham CJ put the position as follows at 119:
"The jurisdiction of a court of equity to set aside gifts inter vivos which have been procured by undue influence is exercised where undue influence is proved as a fact, or where, undue influence being presumed from relations existing between the parties, the presumption has not been rebutted. Where certain special relations exist undue influence is presumed in the case of such gifts. These relations include those of parent and child, guardian and ward, trustee and cestui que trust, solicitor and client, physician and patient and cases of religious influence. The relations mentioned, however, do not constitute an exhaustive list of the cases in which undue influence will be presumed from personal relations. Wherever the relation between donor and donee is such that the latter is in a position to exercise dominion over the former by reason of the trust and confidence reposed in the latter, the presumption of undue influence is raised."
It is doubtful whether the relationship of parent and child in a case such as this is sufficient to give rise to a presumption of undue influence. If it does not, then, on the evidence available, there is no basis upon which there could be a finding of undue influence and in my view there is no serious question to be tried. Assuming that there is a presumption in favour of undue influence, then in my view the evidence establishes that the presumption has been rebutted. Of course, it is not for me to finally determine that question and I would not presume to do so. However, the evidence of the plaintiff, Irdi and Martello, taken together, satisfies me that there is no serious question to be tried on this issue.
A transaction is unconscionable and liable to be set aside where the transaction is entered into in circumstances which seriously affect the ability of one party to make a judgment as to his or her own best interests and when the other party knows or ought to know of the existence of that condition or circumstance and its affect on the innocent party: see The Commercial Bank of Australia Limited v Amadio (1983) 151 CLR 447 per Mason J at 467. In the light of the evidence of the plaintiff, Irdi and Martella I am not satisfied that there are circumstances surrounding the deed of gift which seriously affected the ability of the deceased to make a judgment. In all, I am not satisfied that there is a serious question to be tried.
In relation to the first defendants' claims that they have an interest in the Property, presumably by way of constructive trust, by virtue of their contribution to the Property, the evidence is weak. When money was contributed it appears to have been contributed to the family and not specifically directed towards acquisition, maintenance or improvement of the Property. The position can be contrasted with the facts in Jandric v Jandric [1999] WASC 22. In that case, the facts showed that the caveator had contributed a significant amount of money and much time and effort to development of the property. The parties had lived together in the property, first as husband and wife and then after they were divorced in a de facto relationship. Commissioner Buss QC determined that the caveator had arguably an interest in the land and there was a serious question to be tried. Here the contribution of the first defendants is problematical and I am not satisfied that there is a serious question to be tried.
In all the circumstances, then, I am not satisfied that the first defendants meet the test that would justify this caveat remaining on the Property. Subject to hearing from the parties, I propose to make orders in terms of the chamber summons.