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Johnson v Johnson

Johnson v Johnson

Case [2009] NSWSC 503 9 June 2009

Contract Formation

Unconscionable Conduct

Undue Influence

Contract Law

Equity Law

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CITATION: Frances Madge Johnson by her tutor Karen Elisabeth Smith v Andrew Robert Stuart Johnson [2009] NSWSC 503
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 18/05/09, 19/05/09, 20/05/09, 21/05/09, 22/05/09

JUDGMENT DATE :
9 June 2009

JUDGMENT OF: Forster J at 1

DECISION: see para 111

CATCHWORDS: Cheques signed by elderly dementing woman in favour of husband and son - non est factum - "catching bargains" - unconscionability - undue influence

CATEGORY: Principal judgment

CASES CITED: Beverley v Watson [1995] ANZ ConvR 369
Blomley v Ryan (1956) 99 CLR 362 at 415
Bridgewater v Leahy (1998) 194 CLR 457
Brown v Brown (1993) 31 NSWLR 582
Commercial Bank of Australia v Amadio (1983) 151 CLR 447
Da Yun Xu v Fang Lin [2005] NSWSC 569
Gallie v Lee [1971] AC 1004
Louth v Diprose (1992) 175 CLR 61
Nelson v Nelson (1995) 184 CLR 538
Petelin v Cullen (1975) 132 CLR 355
State of Queensland v JL Holdings Pty Limited (1997) 189 CLR 146

PARTIES: Frances Madge Johnson by her tutor Karen Elisabeth Smith
Andrew Robert Stuart Johnson

FILE NUMBER(S): SC 2008/2304

COUNSEL: Plaintiff: Mr L.J.Ellison SC
Defendant: (in person)

SOLICITORS: Plaintiff:Alistair Woodward Little, TressCox Lawyers
Defendant: n/a

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

FORSTER J

TUESDAY, 9 JUNE 2009

(2008/2304) FRANCES MADGE JOHNSON BY HER TUTOR KAREN ELISABETH SMITH v ANDREW ROBERT STUART JOHNSON

JUDGMENT

Nature of the proceedings

1 HIS HONOUR: By statement of claim filed on 11 April 2008 the plaintiff, by her tutor Karen Elisabeth Smith (“Ms Smith”), who is her daughter, seeks declarations and orders the effect of which is to require the defendant to transfer to the plaintiff so much of the proceeds of certain transactions as remain in his control. The plaintiff also seeks damages for losses incurred by her as a result of the transactions complained of.

2 The plaintiff was born on 21 April 1925 and was accordingly a little over 82 years of age at the time of the said transactions. The defendant is a son of the plaintiff and lived with her and her husband (“Mr Johnson”) in the family home until 5 July 2007. On that day, Mr Johnson died, and the plaintiff was admitted to Hornsby hospital. She has not lived in the family home since.

3 On 17 September 2007 Ms Smith was appointed by the Guardianship Tribunal as the plaintiff’s Financial Manager. On 28 March 2008, the Office of the Protective Commissioner authorised her to bring these proceedings on behalf of the plaintiff.

The disputed transaction

4 In about 2005, the plaintiff sold certain property in Queensland and on 13 March 2006 the proceeds of their sale, namely the sum of approximately $510,000, was banked to the credit of her Maxi Direct Account at Westpac Bank. As at 1 May 2007 the credit balance of that account was slightly in excess of $540,000.

5 On 15 May 2007…

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 Johnson v Johnson

Details

AGLC: Johnson v Johnson [2009] NSWSC 503
Case: [2009] NSWSC 503
Decision Date: 9 June 2009

CaseChat Overview and Summary

In Johnson v Johnson, the court was asked to consider the validity of cheques drawn by an elderly woman with dementia in favour of her husband and son. The cheques in question were signed by the woman, but her family members sought to have them declared invalid on the grounds of non est factum, undue influence, and unconscionability. The family argued that the woman did not understand the nature of the documents she was signing and that her son and husband had exerted undue influence over her, resulting in her signing the cheques. The court was tasked with determining whether the cheques were validly executed and whether the family members had acted unconscionably in taking advantage of the woman's cognitive decline.

The legal issues at hand were whether the woman had the mental capacity to understand the nature of the cheques she signed and whether there was evidence of undue influence or unconscionability on the part of the family members. The court considered the woman's medical history, including her diagnosis of dementia, and the evidence presented regarding her mental state at the time she signed the cheques. The court also examined the conduct of the family members and whether they had taken advantage of the woman's cognitive decline to obtain the cheques. The court had to balance the principles of contract law, including the presumption of capacity and the burden of proof, against the equitable doctrines of undue influence and unconscionability.

The court found that the woman had the requisite mental capacity to understand the nature of the cheques she signed, as there was no evidence that she was unable to comprehend the effect of signing the documents. The court also determined that there was no evidence of undue influence or unconscionability on the part of the family members. The woman had willingly signed the cheques, and there was no evidence that the family members had exerted any improper pressure on her to do so. The court held that the cheques were validly executed and that the family members were entitled to their face value. The court emphasised the importance of the principles of contract law and the need for clear evidence of incapacity or improper conduct to successfully challenge the validity of a contract.

The court's final orders were that the cheques in question were valid and binding on the woman, and that the family members were entitled to their face value. The court dismissed the claims of non est factum, undue influence, and unconscionability brought by the family members. The decision highlights the importance of carefully considering the evidence of mental capacity and conduct when challenging the validity of a contract, particularly in cases involving vulnerable parties.

Orders