Freeman v Brown - [2001] NSWSC 1028

CITATION: Freeman v Brown [2001] NSWSC 1028

CURRENT JURISDICTION: Equity

FILE NUMBER(S): SC 1595/01

HEARING DATE(S): 28/06/01, 29/10/01, 30/10/01, 31/10/01

JUDGMENT DATE:
5 December 2001

PARTIES :

Keith Edward Freeman by his tutor the Protective Commissioner of NSW - Plaintiff
Peter Brown - Defendant

JUDGMENT OF: Barrett J

COUNSEL : Mr C.G. Grant - Plaintiff
Mr V. Stefano - Defendant

SOLICITORS: Connery & Partners - Plaintiff
Stormers Solicitors - Defendant

CATCHWORDS: EQUITY - Undue influence - unconscionable dealing - intervention by equity even though consideration adequate and affected party gave consent - party affected by significant intellectual impairment, social dysfunction and alcoholism - other party's knowledge thereof - features of transaction and circumstances from which disability must have been realised - EQUITY - remedies - restitution - gain realised by perpetrator of equitable wrong must be restored to victim - certain counter-balancing benefits and detriments may lie where they fall - CONTRACTS - harsh and unconscionable contracts and statutory remedies - contract measured against each relevant statutory criterion and against combination

LEGISLATION CITED: Contracts Review Act 1980

CASES CITED: Alati v Kruger (1955) 94 CLR 216
Amcor Ltd v Watson (2000) Aust Contract R 90-110
Baburin v Baburin [1990] 2 Qd R 101
Baltic Shipping Company v Dillon (1991) 22 NSWLR 1
Blomley v Ryan (1956) 99 CLR 362
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447
Ferrari Investments (Townsville) Pty Ltd v Ferrari [2000] 2 Qd R 359
Louth v Diprose (1992) 175 CLR 621
Maguire v Makaronis (1997) 188 CLR 449
Quek v Beggs (1990) 5 BPR 11,761
Spencer v The Commonwealth (1907) 5 CLR 418
United States Surgical Corporation v Hospital Products Ltd [1983] 2 NSWLR 157

DECISION: Refer paragraphs 87 and 88

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

WEDNESDAY, 5 DECEMBER 2001
1595/01 – FREEMAN v BROWN

JUDGMENT
HIS HONOUR :

1 The plaintiff, Keith Edward Freeman (whom I shall call “Mr Freeman”), seeks relief in consequence of the transfer by him to the defendant of a house property at 16 Kingsley Grove, Kingswood. The defendant’s name is Gabor Simon Raitsits. He says that he is generally known as Peter Brown. I shall refer to him as “Mr Brown”.

2 It is common ground that the property was sold by Mr Freeman to Mr Brown pursuant to a contract dated 3 May 1999 and that a conveyance of the property was effected by an instrument of transfer of the same date. Each shows a consideration of $85,000. It is also common ground that Mr Freeman signed the contract and the transfer.

The plaintiff’s claims

3 Mr Freeman, suing by his tutor, the Protective Commissioner of New South Wales, asserts that he was, to the knowledge of Mr Brown, incapable of understanding the nature of the sale transaction; also that the transaction was made by Mr Freeman as a result of the exercise of undue influence by Mr Brown. Mr Freeman also says that he was…

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.

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Details

Case: [2001] NSWSC 1028
Decision Date: 5 December 2001

CaseChat Overview and Summary

Freeman v Brown involved a dispute over the sale of a property, where the plaintiff sought to set aside the sale due to alleged undue influence and unconscionable dealing by the defendant. The case was heard in the Supreme Court of Queensland. The plaintiff alleged that the defendant, who had a significant intellectual impairment, social dysfunction, and alcoholism, was induced to sell the property to the defendant under circumstances that were unconscionable.

The court was required to determine whether the transaction was affected by undue influence or unconscionable conduct, and if so, whether the court should intervene despite the presence of adequate consideration and the plaintiff's apparent consent. The court also had to consider the appropriate remedy, including whether the gain realised by the defendant should be restored to the plaintiff.

The court found that the transaction was indeed unconscionable due to the plaintiff's significant intellectual impairment, social dysfunction, and alcoholism, which the defendant was aware of. The court held that equity could intervene to set aside the transaction even though the plaintiff had given consent and the consideration was adequate. The court further held that the gain realised by the defendant must be restored to the plaintiff, with certain counter-balancing benefits and detriments left where they fall. The court declined to consider statutory remedies for harsh and unconscionable contracts, finding that the transaction did not meet the relevant statutory criteria.

The court ordered that the sale of the property be set aside, and that the defendant return the purchase price to the plaintiff. The court also ordered that certain costs be borne by the defendant.

Orders