25 October to 2 November 2010; 4 November to 2 December 2010; 23-24 June & 22 July 2011
Decision date:
23 August 2012
Jurisdiction:
Equity Division
Before:
Brereton J
Decision:
Plaintiff is entitled to have (a) transfer of shares to defendants set aside for undue influence or unconscionable dealing; (b) consent orders made by Family Court set aside pursuant to Family Law Act s79A
Catchwords:
PROPERTY - Transfers of property - undue influence - presumed undue influence - parent and child - evidence to rebut presumption - improvidence of transfer - divesting voting control of valuable company - whether explicable by ordinary motives - whether presumption rebutted
PROPERTY - Transfers of property - unconscionable dealing - whether transfer of shares procured by unconscionable dealing - relationship of special disadvantage - youth, inexperience, lack of knowledge, absence of advice, reliance on and trust and confidence in parent - whether defendant knew plaintiff was not in a position to look after his own interests
LACHES - whether plaintiff had relevant knowledge to justify commencement of proceedings
TRUSTS - breach of trust - transfer of shares held on trust
CORPORATIONS - oppressive conduct - whether defendants managed company so as to disproportionately benefit them and disadvantage plaintiff - failure to prove disproportionate benefits - whether defendants failed to provide information - no case of oppression made out
TRUSTS - dealing with trust property - whether wilful default on part of defendants - difference between account on basis of wilful default and common basis - wilful default requires evidence of failure to bring receipts to account - evidence of expenditure in breach of trust does not justify account on ground of wilful default - no evidence of wilful failure to get in an asset
CORPORATIONS - winding up - just and equitable ground - closely held family company - whether personal equitable obligations subsist between shareholders - whether objects can be carried out notwithstanding breakdown in relationships between directors - lack of clean hands on the part of the applicants for winding up - no basis for imposing equitable obligations in addition to legal rights of shareholders
FAMILY LAW - application to set aside consent orders under (Cth) Family Law Act 1975 - (Cth) Family Law Act 1975 s 79A - whether matrimonial cause - whether residuary beneficiary in unadministered estate affected by an order - whether orders made without jurisdiction - whether proceedings discontinued before orders made - denial of procedural fairness - whether plaintiff was entitled to notice as person affected - failure to give notice to plaintiff amounted to a miscarriage of justice - order to set aside consent orders
FAMILY LAW - application for another order under (Cth) Family Law Act 1975, s79A(1) - (Cth) Family Law Act 1975 s 79(8) - preconditions for making a property order after death of a party - where court would have made an order but for the…
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 Grace v Grace
Sign in free to access the full text
Details
AGLC
Grace v Grace [2012] NSWSC 976
Case
[2012] NSWSC 976
Decision Date
CaseChat Overview and Summary
In the case of Grace v Grace, the dispute involved the transfer of shares in a company from a parent to a child and the subsequent management of the company by the parent and other directors. The legal issues included whether the transfer was influenced by undue influence, unconscionable conduct, or oppressive management, as well as whether there was a breach of trust and if the defendants had failed to provide necessary information. The Family Law Act 1975 was also invoked for an application to set aside consent orders and to seek provision out of the deceased's estate under the Family Provision Act.
The court considered the presumption of undue influence in the context of a parent-child relationship and examined whether the evidence presented successfully rebutted this presumption. The court also evaluated whether the transfer was procured by unconscionable dealing and assessed if the defendants managed the company in a way that was oppressive to the plaintiff. Furthermore, the court analysed whether there was a breach of trust in the handling of trust property and if the defendants had acted in a way that constituted a wilful default.
In its reasoning, the court determined that the presumption of undue influence was not rebutted by the evidence provided, and thus the transfer of shares was valid. The court found no unconscionable conduct or oppressive management and concluded that there was no breach of trust or wilful default. The application to set aside consent orders was dismissed due to a failure to provide the plaintiff with notice as required by procedural fairness. The application for provision out of the deceased's estate was also dismissed, with the court finding that an extension of time to bring the claim was not warranted.
The final orders of the court were to dismiss all applications brought by the plaintiff and to affirm the validity of the share transfers and the actions of the defendants in managing the company.