New South Wales
Court of Appeal
CITATION: Johnson v Smith [2010] NSWCA 306 HEARING DATE(S): 8 July 2010
JUDGMENT DATE:
17 November 2010JUDGMENT OF: Allsop P at [1]; Hodgson JA at [8]; Young JA at [11] DECISION: The appeal is dismissed with costs. CATCHWORDS: Equity- undue influence- whether son was in a position of influence and ascendency over mother- cheques bearing large sums signed by elderly woman in favour of son and late husband- son claiming that he holds funds beneficially as absolute gift- relationship of dependency and bonds of affection- mother suffering from special mental and physical disadvantage- progressive dementia- son principal carer- no independent legal or financial advice- no error in granting relief in circumstances- whether son exercised undue influence himself- son closely involved and received benefit. Equity- unconscionable conduct- whether transaction "fair just and reasonable"- whether honest subjective motivation determinative where son intending to act for the benefit of mother in carrying out transaction and retaining sums- not determinative where retention of benefit obtained from person with special disadvantage- detailed consideration unnecessary where assertion of absence of legally enforceable protection of mother's needs in transfer. LEGISLATION CITED: Family Provision Act 1982
Protected Estates Act 1983CATEGORY: Principal judgment CASES CITED: Allore v Jewell 94 US 506 (1876)
Bridgewater v Leahy [1998] HCA 66; 194 CLR 457
Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; 151 CLR 447
Earl of Aylesford v Morris (1873) LR 8 Ch App 484
Jones v Dunkel [1959] HCA 8; 101 CLR 298
Nichols v Jessup [1986] 1 NZLR 226
Re B [2000] NSWSC 44
Redgrave v Hurd (1881) 20 Ch D 1
Torrance v Bolton (1872-3) LR 8 Ch App 118PARTIES: Andrew Robert Stuart Johnson (Appellant)
Karen Elisabeth Smith (Tutor)
Frances Madge Johnson (Respondent)FILE NUMBER(S): CA 2009/298421 COUNSEL: A Crossland (Appellant)
L Ellison SC (Respondent)SOLICITORS: Appellant Self Represented
TressCox Lawyers (Respondent)LOWER COURT JURISDICTION: Supreme Court - Equity Division LOWER COURT FILE NUMBER(S): SC 2304/08 LOWER COURT JUDICIAL OFFICER: Forster J LOWER COURT DATE OF DECISION: 9 June 2009 LOWER COURT MEDIUM NEUTRAL CITATION: Frances Madge Johnson by her Tutor Karen Elisabeth Smith v Andrew Robert Stuart Johnson [2009] NSWSC 503
2009/298421
Wednesday 17 November 2010ALLSOP P
HODGSON JA
YOUNGJA
JOHNSON v SMITH
- Headnote
In May 2007, $540,000 was removed by internet transfer and then cheque deposit from the accounts of the respondent Frances Madge Johnson (Mrs Johnson). $270,000 ultimately found its way to a bank account opened in her son Andrew Robert Stuart Johnson, the appellant’s, name. The other half went into a bank account jointly held by the appellant and the late Mr Johnson, to which the appellant succeeded on the passing away of Mr Johnson. At the time of the transaction Mrs Johnson was elderly, suffering from progressive dementia with intermittent “good days” and “bad days”, and was dependent on the appellant as her principal carer. The family intended to remove the funds from Mrs Johnson’s name to ensure…
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- AGLC
- Johnson v Smith [2010] NSWCA 306
- Case
- [2010] NSWCA 306
- Decision Date
CaseChat Overview and Summary
This matter concerned an appeal from a decision concerning allegations of undue influence and unconscionable conduct. The dispute involved cheques for substantial sums drawn by an elderly mother in favour of her son and his late husband. The son contended that he held these funds as an absolute gift. The appeal was heard by Allsop P, Hodgson and Young JJA.
The central legal issues before the court were whether the son had exercised undue influence over his mother, and whether the transactions constituted unconscionable conduct. Specifically, the court was required to consider the nature of the relationship between the mother and son, the mother's mental and physical state, and whether the son was in a position of influence and ascendancy, particularly in the absence of independent legal or financial advice for the mother. The court also had to determine if the son's subjective motivation, even if intending to act for the mother's benefit, could negate the unconscionability of retaining the benefit obtained from a person suffering from a special disadvantage.
The court found that the mother suffered from a progressive dementia and was in a relationship of dependency and affection with her son, who was her principal carer. This created a situation of special mental and physical disadvantage. The court reasoned that the son was closely involved in the transactions and received a significant benefit. The absence of independent advice was a critical factor. The court held that even if the son subjectively intended to act for his mother's benefit, this did not render the retention of the benefit obtained from a person with a special disadvantage fair, just, and reasonable. The court concluded that there was no error in granting relief in these circumstances.
The appeal was dismissed with costs.
The central legal issues before the court were whether the son had exercised undue influence over his mother, and whether the transactions constituted unconscionable conduct. Specifically, the court was required to consider the nature of the relationship between the mother and son, the mother's mental and physical state, and whether the son was in a position of influence and ascendancy, particularly in the absence of independent legal or financial advice for the mother. The court also had to determine if the son's subjective motivation, even if intending to act for the mother's benefit, could negate the unconscionability of retaining the benefit obtained from a person suffering from a special disadvantage.
The court found that the mother suffered from a progressive dementia and was in a relationship of dependency and affection with her son, who was her principal carer. This created a situation of special mental and physical disadvantage. The court reasoned that the son was closely involved in the transactions and received a significant benefit. The absence of independent advice was a critical factor. The court held that even if the son subjectively intended to act for his mother's benefit, this did not render the retention of the benefit obtained from a person with a special disadvantage fair, just, and reasonable. The court concluded that there was no error in granting relief in these circumstances.
The appeal was dismissed with costs.
Orders
Orders of the court
The appeal is dismissed with costs.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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