Kwan v Kwan

[2008] NSWSC 465

CITATION:	Kwan v Kwan [2008] NSWSC 465
HEARING DATE(S):	14/04/2008, 15/04/08
JUDGMENT DATE :	8 July 2008
JURISDICTION:	Equity Division
JUDGMENT OF:	Macready AsJ at 1
CATCHWORDS:	Equity. Trusts. Resulting trusts in respect of use by mother of son's interest in property. - Family Provision. Application by son. Majority of estate transferred to another son before date of death. Order for provision and designation of property as notional estate.
PARTIES:	Tony Thomas Kwan v Kent Benjamin Kwan
FILE NUMBER(S):	SC 3444/2006
COUNSEL:	Mr J Loofs for plaintiff Mr D Alexander for defendant
SOLICITORS:	Craddock Murray Neumann for plaintiff Lai & Co for defendant

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Associate Justice Macready

Tuesday 8 July 2008

3444/06 - TONY THOMAS KWAN v KENT BENJAMIN KWAN

JUDGMENT

1 HIS HONOUR: This is the hearing of proceedings in which the plaintiff seeks to enforce trusts in respect of various properties which had been held in the family that was constituted by the plaintiff, his mother and his brother, the defendant. In the event that such claim is unsuccessful the plaintiff also claims under the Family Provision Act 1982 in respect of the estate of his mother Eppie Mei Luen Kwan who died on 4 January 2005.

Family History

2 The deceased and her husband met in 1959 and they were married in Hong Kong in April 1961. In 1963 they moved to the Solomon Islands and set up a trading store. They had three children Josephine Ruhlum Cavedon, born April 1965 and now resident in Switzerland; the plaintiff Tony Thomas Kwan born December 1966 and the defendant Kent Benjamin Kwan born February 1970.

3 In 1976 the family moved to Australia from the Solomon Islands in order to avoid the approaching independence of that country. Before the move the deceased had come to Australia on a visit. As a result she and her husband had arranged the purchase in 1973 of a property at Boonal Street, Baulkham Hills.

4 Shortly after their arrival they moved to and purchased a property at Parraweena Road, Baulkham Hills. In 1981 the deceased and her husband purchased a property at Donald Street, North Ryde and the family moved there in 1982. The deceased and her husband separated in the same year. She and the children remained at Donald Street and her husband moved to live at their rented Chinese take away shop.

5 On 27 July 1984 the deceased and her husband entered into a maintenance agreement which was a deed under s 86 of the Family Law Act 1975. At that stage the deceased and her husband owned four premises.

1. Donald Street, North Ryde which was held as joint tenants subject to a mortgage.
2. Boonal Street, Baulkham Hills which was held as joint tenants unencumbered.
3. Parraweena Road, Baulkham Hills which was held as joint tenants unencumbered.
4. Blenheim Road, North Ryde which was held as joint tenants between the deceased and her two sons Tony and Kent subject to a mortgage.

6 The operative terms of the deed were that the Donald Street property was to be transferred to the deceased and her three children as joint tenants subject to the mortgage. The deceased was to meet the outgoings.

7 On 1 August 1985 the deceased and her husband entered into a second deed of settlement which was also a deed under s 86 of the Family Law Act 1975. The deed made reference to the same property the difference being that the Donald Street property was to be transferred to the deceased and not to the children. At this time Tony was 17 years of age and in his HSC year and Kent was 14 years of age. Tony recalls his mother saying to him at this time that she would manage his finances as this would be in his best interests. At his mother’s request he signed income tax returns which from time to time she had had prepared.

8 In October 1984 James Kwan married his second wife Flora Cardona. In 1988 James purchased a property in Lancelot Street using the proceeds of sale of the Boonal Street property which was held for him, his wife and his daughter, Josephine.

9 In 1988 pursuant to the second deed James Kwan transferred his interest in Donald Street to the deceased.

10 In 1988 James Kwan James also transferred his interest in Parraweena Road to the deceased which she sold in 1989. The same year she purchased a property at Squire Street, Ryde which she held for a further two years before selling it in 1992. In 1989 the deceased had moved out of Donald Street and moved in with her de facto John Lowe.

11 In December 1992 after the sale of Squire Street, Ryde the deceased purchased a property at Lancaster Avenue, Melrose Park for $258,000. The children Josephine, Tony and Kent moved to Lancaster Avenue where they paid rent to their mother. In 1996 at the request of the deceased Tony paid Council and water rates for Lancaster Avenue. This continued until Kent completed his university degree.

12 In 1996 Josephine moved out of Lancaster Avenue and went to live in Switzerland. In 1997 Tony started work with Promptus. This prompted his mother to suggest to him that he might invest in property. According to Tony, the following occurred around this time:

“33. In August 1997 I started work at Promptus Communications Pty Ltd ("Promptus") as a technical support engineer on a salary of $65,000. Soon after I started work at Promptus I had a conversation with my mother to the following effect:

My mother said: "Your salary is higher now. You are paying too much tax. I want you to invest in a property. I will find an investment unit for you and arrange a loan from the Commonwealth Bank."

I said: "Okay, but I can only afford to pay $1,000 per month in repayments."”

13 Tony and his mother arranged a bank loan against the Donald Street property from the Commonwealth Bank at North Ryde for $220,000. The deceased found a unit at Fontenoy Road, Macquarie Park which she said was to be auctioned and should sell for between $180,000 and $220,000. Tony responded that if his mother could buy it for less than $200,000 then she could buy it for him.

14 At the auction in December 1997 the deceased purchased Fontenoy Road for $188,000 which she transferred into her name. Tony was not aware that the deceased had transferred the property into her name. He thought it would have been in his name as it was said to have been purchased for him and he was repaying the loan. At this stage it seems that the deceased was saying to Josephine that Tony was not able to save money. It appears that for this reason she had purchased the Fontenoy Road unit in her name and had made arrangements for Tony to pay for it.

15 After the family had moved to Lancaster Avenue, Donald Street was rented. In October 1997 unknown to Tony and prior to purchasing the Fontenoy Road unit his mother had transferred a one half interest in Donald Street to Tony. Tony became aware of this in late December 1997 when he received a letter from the Bank referring to the transfer. He then had a conversation with his mother as follows:

42. I only became aware my mother had transferred to me a one half share interest in Donald Street when I received a letter from the Commonwealth Bank in December 1997. Document 15 is a copy of letter from the Commonwealth Bank dated 24 December 1997. When I received that letter I had a conversation with my mother to the following effect:

"What's going on? I agreed to take out a loan to buy a unit not a one half share interest in the Donald Street property."

My mother said: "You were going to change your mind about the investment. It's for your own good."

16 In January 1998 Tony commenced making repayments of the loan which was taken out to purchase the unit at Fontenoy Road at the rate of $1,455 per month. In April 1998 he had another conversation with his mother to the following effect:

“I said: "When we discussed taking out the loan I told you I could only afford to repay $1,000 per month. I still don't understand why you did what you did and bought the Fontenoy unit in your name and transferred half of the Donald Street property to me. That was never the agreement. Beside one half of Donald Street property is not worth $190,000"

My mother said: "I'll pay whatever is necessary off the loan to bring your repayments down to $1,000 a month.”

17 After this conversation his mother paid $57,426 to the Bank as a partial repayment of the loan. Tony paid loan repayments of $1,000 per month from May 1998 being the amount that he had expected to pay when he originally applied for the loan.

18 In May 1998 Tony drove his mother to the International Airport. He and his mother had the following conversation:

My mother said "I want you to transfer Blenheim Road to me and Kent. That will make it easier to sell. You're paying too much tax. I want you to sign this transfer which Kent and I have already signed."

I said "Why would it make easier to sell?"
My mother said: "You're too busy. Trust me to organise your affairs. You'll get your share."

19 In May 1998 as a dutiful son Tony signed the transfer which his mother gave to him at that time. The transfer had been signed by his mother and brother Kent.

20 In September 1998 after discussion with his mother Tony withdrew $47,000 from his loan for a new Subaru car. Although it was registered in his mother’s name he paid all the expenses. At that stage he increased his repayments for the unit to $2,000 per month. In late August 1999 Tony and his future wife, Sybylla visited the deceased. Tony had a conversation with his mother to the following effect:

I said: "We want to buy a house or unit to live in after we marry in March next year. Can I get my finance resolved with you?"

My mother said: "I don't want to sell 24 Donald St at the moment. You can continue living in 26 Lancaster Ave. You only need to pay all the house related expenses."

21 Thereafter Tony and Sybylla continued to draw down funds for renovations to Lancaster Avenue. After their marriage in March 2000 Tony had a conversation with his mother when she said words to the following effect.

“I’m thinking of selling the shop at Blenheim Road. The tenants who are running a Chinese Takeaway are paying me rent of $500 a week cash. But there is no contract. If their business is not good and they move out I’m worried I won’t be able to rent it out.”

22 In September 2000 the deceased and Kent purchased 8 Sinfield Street, Ermington for $315,000. They did not tell Tony of the purchase. In October 2000 Kent and his mother sold the Blenheim Road property for $335,000 and again they did not tell Tony of the sale. According to Tony’s evidence he was expecting to have received some funds from the sale of the property. This was not surprising as he was originally one of the owners.

23 In December 2000 the deceased sold the unit at Fontenoy Road for $240,000 and did not tell Tony of the sale. According to Kent when his mother arranged the transfer of Blenheim Road she had asked him to sign the transfer papers to enable her to take Tony’s name off the Blenheim Road property. In September 2000 when the deceased and Kent purchased the first Sinfield Street property she told Kent that she wanted to sell Blenheim Road to pay for the Sinfield property. She said to him:

“As Tony has half of Donald Street you should have the Sinfield property.”

24 In December 2000 the property next door to Sinfield Street, Ermington was for sale. According to Kent the deceased rang him to ask if he could provide the deposit. According to Kent his conversation with the deceased was as follows:

“I asked Josephine and Tony whether they were interested as well. They both said they were not.”

25 Kent agreed to the purchase and paid a deposit of $20,000 to secure the property. The second Sinfield Street property was bought for $298,000 and registered in the deceased’s and Kent’s names as joint tenants. The balance of the funds were borrowed from the Bank. At the date of the deceased’s death the loan was $205,000. Tony said he did not know that his mother and Kent had purchased that property at the time of purchase.

26 In about late January 2001 Tony recalls a conversation, in the presence of his wife, with his mother at Lancaster Avenue to the following effect:

My mother said: "I've sold the unit and bought a property in Sinfield Road, Ermington. The body corporate fees were too expensive on the unit."

I said: "When did you sell it? Why didn't you tell me? That unit was supposed to belong to me."

My mother said: "That's why I didn't tell you."

27 In February 2001 Tony had a further discussion with his mother when he reduced his loan repayments to the Commonwealth Bank to $1,500 per month.

28 In early 2001 at the request of his employer, Michael Smith, Tony invested $300,000 in his employer’s company, Promptus. This was arranged with his mother who obtained a loan from the ANZ Bank for $300,000 which was secured on the Lancaster Avenue property.

29 I will refer to this in more detail later but the arrangement was that Promptus would repay the loan payments on that loan at $2,100 per month.

30 Sometime in about March 2001 Tony had a conversation with his mother to the following effect:

My mother said: "I want to leave each of my son's a house. Which house do you want?"

I said "26 Lancaster Avenue. I'm living there. I'm comfortable there and I've spent a lot of money renovating it."

My mother said: "Okay."

31 A further conversation occurred in May 2001 between Tony and the deceased concerning the Sinfield properties to the following effect:

My mother said: "I don't want to live just by pensions. I want to live comfortably. I want to transfer my half share in the two properties at Sinfield Street to your name but you will have to be responsible to repay the outstanding loans until they are fully repaid. I will continue to receive all the rents."

I said: Why don't you transfer one of these properties to my name rather than a half share in each. Why make it complicated like you did with the Donald Street property and the unit. "

My mother said: "I bought the property at 10 Sinfield Street because the Real Estate agent told me that the area is due to be re­zoned, meaning that we could develop it to town houses or flats together with the property at 8 Sinfield Street. I may not be around by that time but I want you and Kent to do this. My plan is to leave you and Kent one house, and also 8 and 10 Sinfield to be developed when re-zoned. You might sell it if I transfer one house to your name only now."

32 In August 2001 Kent moved back to Sydney and he stayed with Tony at Lancaster Avenue for a short time. Tony gives an account of a conversation around this time with his mother to the following effect:

My mother said to me: "I want to sell the Donald Street property. I will pay off the remainder of your home loan and transfer the Lancaster Avenue property to you and you are to pay the stamp duty on the transfer. I will keep the balance of the money from the sale. "

I said: "Okay."

33 During this time Tony was discussing his investment in his employer’s company. Kent says there was a conversation which he placed in August or September 2001 when he overheard his mother asking Tony if he wanted to use Sinfield Street as security for the loan. According to Kent Tony replied, “No, those properties are Kent’s.” That conversation is denied by Tony.

34 On 15 March 2001 Donald Street was sold for $565,000. The loan of $165,400 was discharged on the sale. However, there was no transfer to Tony of Lancaster Avenue in accordance with what Tony said the deceased promised him.

35 It appears the deceased used the balance of the sale proceeds of Donald Street for the purchase of the property at Atkins Road, Ermington for $475,000. She purchased this property in Kent’s name and again she did not inform Tony about the purchase.

36 In April 2002 the deceased separated from Mr Lowe and she asked Tony, who then had no loan repayments, to pay her $1,000 a month until she received a pension. He agreed to her request and made $1,000 monthly payments between April 2002 and October 2002.

37 Shortly after the purchase of Atkins Road Tony became aware of the purchase. The deceased moved in to Atkins Road. At this time the deceased said to Tony:

“I won’t transfer the Lancaster Avenue property into your name. Sybylla would divorce you and she will get 70% of what you own. You can have it after I die.”

38 In June 2002 the deceased transferred the two Sinfield Street properties to Kent for a consideration of $1.00. Once again Tony was not told of the transfers.

39 It was in August 2002 when the deceased asked Tony for assistance to apply for the aged pension that she eventually told him that she had transferred the two Sinfield Street properties to Kent. Tony asked her why she had transferred three properties to Kent and she replied, “Kent is easier to ask to sign”. It appears the application for the aged pension was not successful and this led to a further request by the deceased to Tony for assistance.

40 In October 2002 Tony and the deceased had the following conversation:

I said: "What's happening to your pension?"

My mother: "I have been assessed by Centrelink. I am not entitled to the pension due to me selling and transferring properties. I have to wait for five years before I am entitled to the pension. I want you to continue to give me not less than $800 per month."

I said: "What about the rents on the two Sinfield Street properties?"
My mother: "I am still paying mortgages on those properties. Kent can't afford to pay the mortgages. I want you to help me out. You will be given your half share later. If you don't trust Kent, I can ask him to sign on a paper to say that you have a half share of those 2 properties. If I sell the 2 Sinfield properties, I will live like a queen. The real estate has offered me 1 million for these 2 properties, but Kent does not want to sell them."

I said: "When are you going to transfer Lancaster Avenue to me?"

My mother said: "I will transfer later."

I said: "I can't afford to keep giving you money. I have a family depending on me. You didn't keep your promise to transfer Lancaster Avenue to me. We have spent substantial amounts on renovations at Lancaster Avenue. I don't have any assets. If anything happens to me, what do I leave my wife and children? You have recently transferred three properties into Kent's name and now you want me to pay Kent's mortgages. My job is not stable. I have no savings. My wife is on maternity leave. If you are really in financial difficulty, of course I will help you but at the moment things are really tough. Sybylla is pregnant. We're going to have another child."

My mother: "You will do what I say if you respect me. You and your wife do not treat me with respect."

41 In February 2003 the deceased was thinking of selling Lancaster Avenue. When Tony became aware of this he had a conversation with the deceased in these terms:

I said: "Jo said you want to sell 26 Lancaster Avenue. "

My mother: "The house is yours. I won't sell it."

I said: "Well if that's the case why don't you transfer it to my name?"

My mother: "I want you to keep the house. You may sell it if I transfer to you now. "

42 In April or May 2003 there was a request from the deceased to move in with Tony and his family at Lancaster Avenue as she did not want to live on her own. The problem was that at this time that she and Sybylla did not get along with each other. As a result she did not move into Lancaster Avenue and instead discussed moving to Singapore to live with Kent. Although plans were made for this to happen this did not eventuate as the deceased was diagnosed with lung cancer and she could not leave Australia.

43 In January 2004 the deceased talked about what she proposed for Lancaster Avenue and she had a conversation with Tony in these terms:

My mother said: "I am not going to leave the Lancaster Avenue property to you in my will as Sybylla will divorce you and she will get 70% of what you own."
I said: “If you have a problem with Sybylla why don't you leave the property to my children. I will leave what I have to my children anyway”

My mother said: "I won't leave the property to them as Sybylla does not treat me with respect."

44 At the end of February 2004 the deceased and Kent moved into one of the Sinfield Street properties and two months later they moved into Atkins Road.

45 In September 2004 the deceased was admitted to Concord Hospital. She accused Tony of almost killing her by infecting her with a cold because she had travelled by public transport. Tony continued to visit and contact his mother despite the conversation making the relationship strained.

46 In August 2004 the deceased and Kent discussed the accident he had suffered as a child aged 9 years. Unknown to Kent his parents received some $20,000 in compensation which they had used to purchase Donald Street for about $45,000.

47 On 8 December 2004 the deceased made her last will and appointed Kent as her executor. In her will she gave the property at Lancaster Avenue upon trust for her son Tony subject to a direction in these terms:

“I direct that the trustees shall not transfer this property to Tony Thomas Kwan until both Tony’s children, Valerie Heather Kwan and Ethan Liam Kwan obtain 20 years of age.”

48 Kent acknowledges that this direction is not binding and that the property which was still in the deceased’s name at the date of her death should now be transferred to Tony.

49 In clause 4 of her will she gave Kent the Atkins Road property or any interest she had at the date of her death. It will be recalled that that property had already been purchased and transferred into Kent’s name. She gave her daughter, Josephine, what she described as her 30 percent share of an interest in the two properties in Sinfield Street, Ermington or any interest in those properties at the date of her death. It will be recalled that these properties were also transferred to Kent.

50 After giving her motor vehicle to Kent and her personal belongings to Josephine she gave the residue of her estate to her three children in equal shares.

51 At the date of death the deceased owned Lancaster Avenue with a mortgage of approximately $175,000. Her only other asset was a bank account of $6,000 and the car which passed to Kent and which he sold for $7,000.

Tony’s claims

52 It can be seen from the chronology that Tony’s claim concerns the Atkins Road property and the two Sinfield Street properties. His claim in respect of Lancaster Avenue is now subject to the question of any mortgage over it as it has been dealt with by the gift of that property by the deceased in her will.

53 The claims made by the plaintiff in his Statement of Claim relies on the first agreement being the 27 July 1984 deed entered into between the parents when they separated. It is now conceded that reliance is not placed on that deed as the evidence now discloses the second agreement which states that Donald Street was not held for the children but merely for the deceased.

54 After the execution of the deeds and the separation of the parents it is plain that the only interest that the plaintiff, Tony, had at that stage was a one third interest in the Blenheim Street property. It was placed in his name by his parents and the presumption of advancement would apply. There is no evidence to rebut the presumption and both parents acknowledged that ownership in the deeds.

55 Tony’s claim in respect of the properties is first a claim in respect of each identified property and, in default of those claims, a claim made under the principles of Baumgartner v Baumgartner (1987) 164 CLR 137. In summary the claims are:

1. In respect of the first Sinfield Street property that this was purchased with Tony’s share of the Blenheim Road property in which he had a one third interest. Questions which arise concern Tony’s agreement to transfer the property and his unwillingness to pay tax on the proceeds.
2. The second Sinfield Street property was purchased with the proceeds of the unit at Fontenoy Road and this raises questions as to whether Tony did have an equitable interest in Fontenoy Road as it was purchased in his mother’s name. Questions are said to arise as to whether Tony accepted Donald Street which had been transferred unknowingly to him by his mother, in lieu of Fontenoy Road. It can be noted that his brother Kent contributed part of the purchase price of this property.
3. Tony’s claim in respect of Atkins Road arises out of the fact that he owned a half share in Donald Street presumably transferred to him and in respect of which there is a presumption of advancement. The property was sold by his mother and used to purchase the Atkins Road property. The principal question is whether Tony accepted Lancaster Avenue in lieu of his entitlement to this property.

56 An alternative claim was put forward on the basis of a constructive trust in the nature referred to in Baumgartner v Baumgartner. This type of trust was recently discussed at length in West v Mead (2003) NSWSC 161 by Campbell J. In paragraphs 59 – 64 His Honour made the following comments:

[59] In accordance with this approach, a plaintiff needs to establish that there is indeed a joint endeavour between the parties, in which expenditure is shared for the common benefit. It is also necessary to identify what the scope of that joint endeavour is. It is a question of fact, for any couple, what the scope of the joint endeavour they are engaging in is. Further, for any couple, the scope of the joint endeavour they are engaged in might change from time to time. If, within the scope of a joint endeavour which lasts for years, an asset is acquired, as a result of contributions both parties have made, and for a purpose of the ongoing joint endeavour of the parties, this gives rise to the presumption that the beneficial interest ought be shared equally. That presumption can be displaced if one party is able to show that the contributions, both financial and non-financial, to that asset should be regarded as unequal. In practical terms, this way of proceeding will place the onus of attributing a value to non-financial contributions on the person who asserts that the title should be held unequally.
[60] A second way in which the principle that beneficial ownership should be proportionate to contributions, which underlies the law of resulting trusts, is transmuted in the Baumgartner type of constructive trust, is in another aspect (besides counting non-monetary contributions) of what counts as a contribution to the purchase price. The payment of mortgage instalments, after a property has been acquired using money borrowed and secured by mortgage, has been accepted as a “contribution”, in this context — Baumgartner at CLR 148; ALR 83–4. This is unlike the resulting trust principle, in accordance with which it is only in unusual situations that a payment of such mortgage instalments is regarded as a contribution. (References concerning this aspect of resulting trusts are collected in Black Uhlans Inc v New South Wales Crime Commission (2002) 12 BPR 22,421 ; [2002] NSWSC 1060 at [141]–[142].)
[61] Even if one bears in mind that mortgage instalments usually include a component of each of principal and interest, it is still possible for the mortgage instalment to be taken into account in deciding the terms of a constructive trust. Continual payment of the interest on the loan which finances the family home is every bit as much a part of the joint endeavour of maintaining the family unit and providing for its future as is meeting other recurrent but necessary expenses like buying the groceries. But the fact that part of the instalment is a payment of interest means that the beneficial interest in property acquired as a result of paying an instalment is not likely to be equal in value to the amount of the instalment paid. It is the proportions in which contributions to the purchase price are made which matter in determining beneficial ownership, not the absolute amount of such contributions.
[62] Another aspect of difference between the Baumgartner basis for a constructive trust, and a resulting trust, concerns the role which the intention of the parties plays. The Baumgartner type of constructive trust is imposed to prevent an unconscionable assertion of legal title, in circumstances where the parties had no explicit intention about how the legal title would be held in the circumstances which have arisen. By contrast, the presumption of a resulting trust is one which seeks to give effect to the intention of the parties, by making a presumption about what that intention was: Russell v Scott (1936) 55 CLR 440 at 451 ; authorities collected in Black Uhlans Inc v New South Wales Crime Commission at [133]–[136]. Even so, that is not to say that the intention of the parties has no role to play in whether a Baumgartner constructive trust should be held to exist. Part of the justification for imposing the Baumgartner constructive trust is that the parties have jointly been building up assets, on the basis that those assets will be available for the joint endeavour in future. Part of the reason why it can be unconscionable to let the legal title lie where it falls, if the relationship fails, is that each knew that the other was contributing to a common pool on the basis that the pool, and assets acquired from it, would be used for their ongoing common benefit. It is unconscionable for the party who ends up, at the end of the relationship, with a disproportionate share of the assets which were built up during the relationship, to keep those assets when he or she knew that that was the basis on which the assets were being built up.
[63] Another way in which the intention of the parties would be relevant would be if they had formed an express intention about what was to happen in the circumstance which has in fact arisen. If the parties have expressly contemplated the very situation which has arisen, and have, in advance, agreed how the assets built up as a result of their joint efforts should be divided in that situation, it would often be the case that there is nothing unconscionable in holding the parties to their agreement.
[64] A further way in which the intention of the parties is relevant is that the Baumgartner basis for a constructive trust arises only when there is a premature termination of the relationship. To decide whether this has happened, one must look at what the intention of the parties was, about how long their relationship would endure. To take an extreme example, if one of the partners makes clear that he or she is making no commitment whatever to the relationship, and is free to walk out at any time and keep any property he or she has acquired during the relationship, it is hard to see how there is anything unconscionable in the property interests lying where they fall when the relationship ends.”

57 The problem about this later claim is whether there were any joint endeavours.

58 In submissions it was expressed to be a joint endeavour by maximising the family’s wealth which came to an end on the death of the deceased.

59 There were certainly no discussions between the parties concerning such an endeavour. The evidence is replete with individual discussion between the deceased and her children about what she would do with each child. The evidence shows that in respect of discussions with Tony the deceased was more concerned with manipulating him to her own advantage and there were different courses she took in respect of his interest depending on her view of his wife.

60 In respect of the discussions with Kent such joint endeavours the deceased had with him were for the benefit of Kent to the detriment of his brother, Tony.

61 The May 2001 conversation I have referred to in par 31 above although expressing a view of her plan also made plain that Tony was not then to have an interest in such plan. It was never a plan to maximise their joint wealth. It was a plan for the deceased to keep control while she was alive.

62 In my view there is no basis for this claim.

The first Sinfield property

63 In the amended statement of claim the plaintiff alleges in paragraph 44 that at the time he transferred his interest in Blenheim Road a constructive trust arose for his benefit, commensurate with his one third interest in the property before transfer.

64 After the sale of Blenheim Road for $335,000 it was alleged that the proceeds were used to purchase the first Sinfield Street property (which had been purchased slightly before the sale) and that the trust attached to that property including when the deceased gave it to Kent.

65 The first thing to observe is that the plaintiff Tony did have a one third interest in Blenheim Road as I have mentioned in paragraph 54 above. In 1996, before the transfer, he did have discussions about his ownership of the property and complained to his mother that she asked him to pay the tax on the income but did not let him have a share of the income. He suggested to her that she take his name off the title but nothing transpired from this discussion.

66 The submissions made to me did not discuss the basis upon which it was said that circumstances had arisen which required the imposition of a constructive trust. There are many well-known circumstances in which equity will act in this way. They were elegantly described by Mason J in Commercial Bank of Australia Ltd v Amadio (1982) 151 CLR 447 at 461 in these terms:

“Historically, courts have exercised jurisdiction to set aside contracts and other dealings on a variety of equitable grounds. They include fraud, misrepresentation, breach of fiduciary duty, undue influence and unconscionable conduct. In one sense they all constitute species of unconscionable conduct on the part of a party who stands to receive a benefit under a transaction which, in the eye of equity, cannot be enforced because to do so would be inconsistent with equity and good conscience. But relief on the ground of "unconscionable conduct" is usually taken to refer to the class of case in which a party makes unconscientious use of his superior position or bargaining power to the detriment of a party who suffers from some special disability or is placed in some special situation of disadvantage, e.g., a catching bargain with an expectant heir or an unfair contract made by taking advantage of a person who is seriously affected by intoxicating drink. Although unconscionable conduct in this narrow sense bears some resemblance to the doctrine of undue influence, there is a difference between the two. In the latter the will of the innocent party is not independent and voluntary because it is overborne. In the former the will of the innocent party, even if independent and voluntary, is the result of the disadvantageous position in which he is placed and of the other party unconscientiously taking advantage of that position.
There is no reason for thinking that the two remedies are mutually exclusive in the sense that only one of them is available in a particular situation to the exclusion of the other. Relief on the ground of unconscionable conduct will be granted when unconscientious advantage is taken of an innocent party whose will is overborne so that it is not independent and voluntary, just as it will be granted when such advantage is taken of an innocent party who, though not deprived of an independent and voluntary will, is unable to make a worthwhile judgment as to what is in his best interest.
It goes almost without saying that it is impossible to describe definitively all the situations in which relief will be granted on the ground of unconscionable conduct. As Fullagar J. said in Blomley v Ryan (1956) 99 CLR 362 at p. 405:

"The circumstances adversely affecting a party, which may induce a court of equity either to refuse its aid or to set a transaction aside, are of great variety and can hardly be satisfactorily classified. Among them are poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary. The common characteristic seems to be that they have the effect of placing one party at a serious disadvantage vis-a-vis the other."
Likewise Kitto J [at 415] spoke of it as "a well-known head of equity" which—
" ... applies whenever one party to a transaction is at a special disadvantage in dealing with the other party because illness, ignorance, inexperience, impaired faculties, financial need or other circumstances affect his ability to conserve his own interests, and the other party unconscientiously takes advantage of the opportunity thus placed in his hands" .
It is not to be thought that relief will be granted only in the particular situations mentioned by their Honours. It is made plain enough, especially by Fullagar J., that the situations mentioned are no more than particular exemplifications of an underlying general principle which may be invoked whenever one party by reason of some condition of circumstance is placed at a special disadvantage vis-a-vis another and unfair or unconscientious advantage is then taken of the opportunity thereby created. I qualify the word "disadvantage" by the adjective "special" in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasize that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party. ”

67 The pleading of the constructive trust, which is said to have arisen on the execution of the transfer, is set out in paragraph 42 to 45 of the amended statement of claim. In particular, in paragraph 43 the procurement of the plaintiff’s consent to the transfer was said to be unconscionable because the relationship between the deceased and the plaintiff was one in which the plaintiff was compliant with the wishes of the deceased, and accustomed to act in accordance with her directions; and because of the representations which I have set out the conversation referred to in paragraph 18 above. Other circumstances pleaded included that the direction to sign the transfer was without any prior discussion or warning to the plaintiff and that the consideration expressed in the transfer did not reflect the value of his interest in the property. There is no suggestion in the evidence that any consideration was paid and presumably the consideration expressed in the transfer was for stamp duty purposes.

68 In respect of the deceased's intention at the time of the transfer it is notable that she said to her son Kent when she asked him to sign the transfer papers “ I wanted to take Tony's name off the Blenheim Road property”. On this evidence it is plain that the deceased intend to deceive her son Tony so that she could obtain control of the Blenheim Road property. In reaching this conclusion I am conscious that I do not have the benefit of the deceased’s evidence on the point. The principle exemplified by Plunkett v Bull (1915) 19 CLR 544 is that in a claim based on communications with a deceased person, the court will treat uncorroborated evidence of such communications with considerable caution, and will regard of particular significance the failure of the claimant to bring forward corroborative evidence which was, or ought to have been, available.

69 In this case there was no corroborative evidence which could be brought forward and I am satisfied that the plaintiff and his brother the defendant gave evidence in a clear an appropriate manner which I can accept.

70 In his evidence the plaintiff did not say why he signed the transfer, nor did he give any explanation for having signed it such as that he felt overborne by his mother. At the time of the transfer the plaintiff was 32 years of age and had recently met his future wife whom he had introduced to the deceased. He and his brother were living at the Lancaster Avenue property and his mother was living elsewhere with her de facto partner.

71 The plaintiff and the deceased were in the relationship of parent and child and in that relationship there is a presumption of undue influence. As illustrated in Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies, 4th ed (2002) at paragraph 15-075 how long that influence can be regarded as continuing will depend upon each particular case. Useful is the conclusion of Roper J in Lamotte v Lamotte (1942) 42 SR (NSW) 99 in these terms:

“I have some doubt whether a presumption of influence arises as between parent and child when the child is 43 years of age and the parent 75, or if it arises whether it is not rebutted by the mere proof of the ages. The cases dealing with the presumption of parental influence are almost all cases when the transaction was affected shortly after the child attained its majority and the consequent capacity to make a binding gift and the relationship giving rise to the presumption is frequently spoken of as that between parent and young child: cf Lancaster Loans Ltd v Black [1934] 1 KB 380 at 404 [; [1933] All ER Rep 201 at 208]; Powell v Powell [1900] 1 Ch 243 at 246. On the whole, however, I think that the parental influence is presumed to continue until the “emancipation” of the child: see [W Ashburner, Ashburner’s Principles of Equity, 2nd ed, D Browne (ed) Butterworths, London, 1933, p303] that emancipation is not presumed merely from the attainment of any particular age, and that the onus of establishing it is on the parent. “The donee must shew (and the onus is on him) that the donor either was emancipated, or was placed, by the possession of independent advice, in a position equivalent to emancipation”: per Farwell J in Powell v Powell [1900] 1 Ch [243] at 245-6. The latter half of this proposition has been disapproved by the Privy Council: Inche Noriah v Shaik Allie Bin Omar [1929] AC 127 {; [1928] All ER Rep 189]; but I take the earlier to apply to every case where the relationship of parent and child exists and that the ages of the parties is simply one of the matter to be taken into consideration in dealing with the question of emancipation. If emancipation is established then the gift has to be dealt with on the same footing as any other gift. “A child may make a gift to a parent, and such a gift is good if it is not tainted by parental influence. A child is presumed to be under the exercise of parental influence as long as the domination of the parent lasts. Whilst that domination lasts, it lies on the parent maintaining the gift to disprove the exercise of parental influence, by showing that the child had independent advice, or in some other way. When the parental influence is disproved, or that influence has ceased, a gift from a child stands on the same footing as any other gift; and the question to be determined is, whether there was a deliberate, unbiased intention on the part of the child to give to the parent”: Wright v Vanderplank (1856) 8 De G M & G 133 at 146 [; 44 ER 340 at 345]. The existence of a proper feeling of respect and regard for the parent does not necessarily indicate the continued existence of the parental influence which gives rise to the presumption in question. “A man of mature age and experience can make a gift to his father or mother because he stands free of all overriding influence except such as may spring from what I may call filial piety”: Powell v Powell [1900] 1 Ch [243] at 245 .”

72 The evidence shows, in my view, that the plaintiff was at the time of the transfer a person who was compliant with the wishes of his mother and he only changed later in his life after he married and had the responsibility of a wife and children. It was clear from the terms of the discussion that according to his mother the plaintiff was still to receive his share of the proceeds once the proposed sale had gone ahead. This of course did not occur and his mother hid the sale from him for some time. There is no evidence to rebut the presumption of influence in this case

73 The transfer was a transfer from all three owners to the deceased and Kent. Kent was not a party to the conversation between his mother and Tony but he knew that his mother wanted to take Tony's name off the title to the property although he believed this was due to Tony not wanting to have his name on the title. There was no consideration paid and the transfer was a gift.

74 It seems from evidence of conversations with the deceased that she used the proceeds of sale for the purpose of purchasing the first Sinfield property, which was purchased shortly before the sale of Blenheim Avenue. Subsequently she made a gift of her interest in the first Sinfield property to Kent who still retains the property.

75 Cope in Duress, Undue Influence and Unconscientious Bargains (1985) at 222 states ”a volunteer must always disgorge any benefits acquired by undue influence unless the benefit was received from or through a bona fide purchaser for value without notice”. This principle was stated in the English case of Bainbrigge v Browne (1881) 18 Ch. D., at 196- 97 and adopted by Starke J in Bank of New South Wales v Rogers (1941) 65 CLR 42 at 51- 2;

“The inference of undue influence operates not only "against the person who is able to exercise the influence", but "against every volunteer who claimed under him, and also against every person who claimed under him with notice of the equity thereby created, or with notice of the circumstances from which the court infers the equity… (Bainbrigge v. Browne)”

76 In his later work Cope explains the position further;

“The third party may also be required on occasions to restore the property, particularly where the third party is a volunteer or has notice of the influence. Again it would seem that where the third party is liable to restore the property, the third party is chargeable as a constructive trustee of the property” M Cope, Constructive Trusts (1992) at 492.

77 As Kent received this interest in property without having given valuable consideration he is a volunteer and it is appropriate to declare a constructive trust over the first Sinfield property as to a one third share in favour of the plaintiff.

The second Sinfield Street property

78 This claim depends on the circumstances surrounding the purchase of the Fontenoy Road property as the proceeds of the sale of that property were used for the purchase of the second Sinfield Street property.

79 The plaintiff has never held a legal interest in the property at Fontenoy Road. It was purchased in his mother's name and the plaintiff contributed none of the funds for the actual purchase. He did contribute funds by repayment of the Commonwealth Bank loan, which was used to purchase the property. The conversation in which the matter was raised with the plaintiff by the deceased is set out in paragraph 12 above. What happened thereafter was that the deceased found the unit, went to the auction and purchased it in her own name. After this the parties signed the mortgage and started making payments.

80 As is apparent from my earlier observations the deceased changed her mind after the conversation and made a gift to Tony of one half of the Donald Street property. This was done prior to her attending the auction to purchase the Fontenoy Road property. As there is a presumption of advancement between mother and child, Tony held a beneficial and legal half interest in the property by this stage; see Nelson v Nelson (1995) 184 CLR 538 at 548-549, 576, 585-586 and 601. After the auction she obviously deceived Tony about which property he had an interest in, with Tony believing it was Fontenoy Road. It appears from a letter that Tony received from the bank dated 24 December 1997 that the mortgage in respect of which he was making repayments was not over Fontenoy Road but over Donald Street as an investment loan had been given, I infer from that letter, over Donald Street for the purpose of the purchase. The whole of the funds for the purchase appear to have been borrowed on the security of Donald Street, which was by now in their joint names. The initial approval for the loan was for $220,000, which was the upper end of the range that the deceased expected to pay. She ended up paying only $188,000 for the property and the bank reduced the loan after settlement. There is no evidence of a mortgage over Fontenoy Road. Thus both equally contributed to the purchase price of Fontenoy Road.

81 The claim in the pleading was for a resulting or a constructive trust. As there is no presumption of advancement between a child and a parent the property was held upon a resulting trust as to one half for the plaintiff.

82 The conversations, which are set out at paragraphs 15 and 16 above, which occurred in relation to the repayment of the loan do not indicate acceptance by Tony of the situation which had transpired namely that he had been given a half share of Donald Street in return for making repayments of the loan. They were a complaint about the fact that he had been deceived about the matter.

83 In December 2000 the deceased sold Fontenoy Road for $240,000. She and Kent purchased the second Sinfield Street property for $298,000 in January 2001. I accept Kent’s oral evidence that he provided a deposit of $30,000. He says that the bank provided the balance of the purchase monies. This is perhaps unlikely given the sale of Fontenoy Road a month or so earlier however the position was investigated in cross-examination of Kent.

84 He agreed that at the date of his mother's death the amount owing on a mortgage over both the first and second Sinfield Street properties was the sum of $205,000. By the time of the hearing this has reduced to a figure of $175,000. He was also cross-examined to suggest that a mortgage was in fact taken out to purchase the second Sinfield Street property in an amount of about $300,000. He was cross-examined about the reduction. His contribution of the deposit which he said was $30,000 brought the mortgage down to $270,000.

85 It was also suggested in cross-examination of Kent that his mother had some term deposits between 2001 and the date of her death in the amount of $300,000 and $100,000. He did not know. He conceded that any reduction by the date of death would have come from his mother or rents.

86 There is no evidence of the use of monies from the sale of Fontenoy Road for the purchase of the second Sinfield Street property and given the concessions as to the mortgage and the mention of term deposits it seems unlikely that I could conclude that the monies which the deceased received from the sale of Fontenoy Road were used by her in the purchase of the second Sinfield Street property.

87 There is thus no way of tracing the proceeds of the sale of Fontenoy Road and thus no constructive trust can be imposed.

The Atkins Road property

88 This claim is based upon the use by the deceased of the proceeds of the sale of Donald Street, which was held equally between her and Tony, for the purchase of the Atkins Road property.

89 As I set out in para 30, sometime in about March 2001 Tony had a conversation with his mother to the following effect:

My mother said: "I want to leave each of my son's a house. Which house do you want?"

I said "26 Lancaster Avenue. I'm living there. I'm comfortable there and I've spent a lot of money renovating it."

My mother said: "Okay."

90 In August 2001 Kent moved back to Sydney and he stayed with Tony at Lancaster Avenue for a short time. Tony gives an account of a conversation with his mother to the following effect:

My mother said to me: "I want to sell the Donald Street property. I will pay off the remainder of your home loan and transfer the Lancaster Avenue property to you and you are to pay the stamp duty on the transfer. I will keep the balance of the money from the sale. "

I said: "Okay."

91 On 15 March 2001 Donald Street was sold for $565,000. The loan of $165,400 discharged on the sale. However, there was no transfer to Tony of Lancaster Avenue in accordance with what Tony said the deceased promised him.

92 It appears the deceased used the balance of the sale proceeds of Donald Street for the purchase of the property at Atkins Road, Ermington for $475,000. She purchased this property in Kent’s name and again she did not inform Tony about the purchase.

93 The agreement which I refer to above and in paragraph 32 is for valuable consideration but there is no writing. The fact that the deceased did not before her death transfer Lancaster Avenue to Tony does not mean that the agreement can be ignored. What it does mean is that the focus of the Court's remedy would be to ensure that Tony had performance of the promise to transfer Lancaster Avenue to him. As he now has title to Lancaster Avenue under the will, this claim need not be considered further.

Family Provision Act claim

94 In applications under the Family Provision Act 1982 the High Court in Singer v Berghouse (1994) 181 CLR 201 has set out the two stage approach that a Court must take. At page 209-210 it said the following:-

"The first question is, was the provision (if any) made for the applicant 'inadequate for (his or her) proper maintenance, education and advancement in life'? The difference between 'adequate' and 'proper' and the interrelationship which exists between 'adequate provision' and 'proper maintenance' etc were explained in Bosch v Perpetual Trustee Co Limited . The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate or what, in all the circumstances, was the proper level of maintenance etc appropriate for the applicant having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon his or her bounty.
The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant. In saying that, we are mindful that there may be some circumstances in which a court could refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance. Take, for example, a case like Ellis v Leeder where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors."

The situation in life of Tony Kwan

95 Tony is 43 years of age, married and has two children. The eldest Valerie is now 6 and the youngest is now aged 5.

96 Tony's assets appear to be the following:

Lancaster Avenue Property $660,000
1/3 share first Sinfield Street Property $153,333
Investment in Promptus $300,000
Superannuation $62,866
Shares $5,105
Car with his wife $10,000
Total $1,191,304

97 Tony is unlikely to readily recover his investment in Promptus. However, the company is still meeting the repayments on the loan that Tony took out to make the investment. He has the following liabilities:

ANZ loan $258,544
Visas $16,755
Amex $4,500
Total $279,799

98 Tony’s wife has the following assets:

Investment property $410,000
Superannuation $117,029
Shares $52,630
Total $579,659

99 She has the following liabilities:

Home loan $140,910
Mastercard $8,999
Total $149,909

100 Tony recently purchased a business franchise which he runs from home and involves giving computer assistance. In his first year of income he had an income of $22,591. His wife does not work in paid employment. His current income does not meet his expenses and he has been living off borrowings with assistance from his wife.

101 Tony had a good relationship with his mother despite the circumstances and her manipulation of him from time to time. Until the end of his mother’s life he was always willing to comply with her requests. He is in reasonable health except for some back and tendon problems.

102 It is also necessary to consider the situation in life of others having a claim on the deceased’s bounty. These are the deceased’s other two children.

The situation in life of Ruhlum Josephine Cavedon

103 The deceased’s daughter left home and moved to Switzerland in 1995 with her husband. She does not place before the court her financial situation and accordingly the court can proceed on the basis that she does not wish the court to take this into account when considering the plaintiff’s claim.

The situation in life of Kent Benjamin Kwan

104 Kent is 37 years of age and lives with his partner. They do not have children. His assets are as follows:

Atkins Road Property $540,000

2/3 first Sinfield Street Property $306,667

Second Sinfield Street Property $460,000
Car $9,000
Bank $29,750
Shares $4,000
Total $1,349,417

105 His liabilities are:

Mortgage $174,000
Car loan $5500
Personal loan $35,000
Total $214,500

106 Kent had a good relationship with his mother and received the benefits I have outlined above. He works and receives an income (which includes the net rent from the Sinfield properties) totalling $95,000 per annum. His partner works as an accountant and her income is $50,000 per annum. They plan to marry next year and in due course to have children.

Consideration

107 It is necessary to see how Tony says he has been left without adequate and proper provision for his maintenance, education and advancement in life. Leaving aside claims to reflect his contributions to the estate of his mother, his submissions were that he should receive the following sums:

1. Provision of funds to discharge of the mortgage on Lancaster Avenue, $300,000.
2. Provision for the payment of care for Ethan in the sum of $392,349.
3. An amount of $200,000 for the maintenance and renovation of Lancaster Avenue.

108 It will be recalled that the mortgage on Lancaster Avenue came about because Tony wished to invest in his then employer’s company. Fortunately, that company is still making the loan repayments and from the evidence given by Tony it does not seem that the company’s main source of income is still available to it. However, if it were recoverable then he would be able to repay his home loan. Unfortunately, the evidence does not show whether this is likely.

109 So far as the renovations are concerned it seems that there is no objection to the estimates of the cost of the work which includes provision of an upstairs room. The total costs estimated were between $230,000 to $260,000 and in that context the claim is not excessive. However, whether it is appropriate for the claim to be met is another matter.

110 In his affidavit evidence Tony referred to his desire to educate his children in the Catholic school system at a cost of $190,000 and to replace a car for $29,000. These claims were not put forward in final submissions. In due course Kent would also be likely to have similar needs.

111 The most difficult matter which faces Tony in the immediate future is provision for his son Ethan. Ethan suffers from a severe receptive and expressive language disorder, a pragmatic language disorder and autism. There have been a number of opinions expressed as to what is necessary to assist Ethan. Initial information suggested that additional help at a cost of $25,000 to $40,000 a year during his primary schooling would be appropriate. However, more recent information supplied by Ms M Valero suggests that the costs of the necessary intensive therapy program would amount to $9,341 a month or $112,099 per year. The suggestion was that this program should be put in place for a year, with a six monthly review. The program is supplied by Austism Behavioral Intervention NSW. The evidence does not indicate how long it might take to treat Ethan and therefore the submission is that an amount for half of the primary school years, or 3 and ½ years would be appropriate. This would be a figure of $392,349.

112 The need for the renovations is to keep the house in good repair and to allow the family to remain there as any move would not be in Ethan’s interest.

113 The defendant suggested in submissions that it might be possible for Ethan to be cared for in the public system but the evidence does not detail the likelihood of that occurring. The plaintiff did not agree that these facilities might be available.

114 Kent is in a reasonably good financial position although he wishes to start a family in the near future. Tony’s needs are substantial. He has limited income and is in a difficult position in respect of his loan and the investment with Promptus. If he is unable to recoup this he will need to repay the mortgage which he cannot do on his present salary. It is plain that some renovation is necessary for his house and if possible he should have assistance in this early stage of his life when it is most important.

115 In these circumstances and having regard to the respective parties’ financial situation I think that the plaintiff, Tony, has been left without adequate and proper provision for his maintenance, education and advancement in life. He has some backup now as a result of my decision that he have a third interest in the first Sinfield property. It seems to me that if he were given the whole of that property it would provide a capital base which he could use to obtain the necessary funds he needs to look after Ethan and carry out his home renovation or, alternatively, to sell the property to provide him with the required assistance.

116 I propose that the plaintiff, Tony, receive free of encumbrance the entire first Sinfield Street property to which legal title is currently held by Kent although half may be part of the notional estate of the deceased.

Notional Estate

117 Section 23 of the Family Provision Act 1982 provides that if a court is satisfied that an order for provision should be made, then in certain circumstances the court may designate property as part of the notional estate. The relevant terms of s 23 are as follows:

“On an application in relation to a deceased person made by or on behalf of an eligible person, if the Court is satisfied:
(a) that an order for provision ought to be made on the application, and
(b) that, at any time before death, the deceased person entered into a prescribed transaction:
(i) which took effect within the period of 3 years before death and was entered into with the intention, wholly or in part, of denying or limiting, wholly or in part, provision for the maintenance, education or advancement in life of that or any other eligible person out of the deceased person’s estate or otherwise,
…

the Court may, subject to sections 26, 27 and 28, make an order designating as notional estate of the deceased person such property as it may specify, being property which is held by, or on trust for the disponee or, where there is more than one disponee, any of the disponees, whether or not that property was the subject of the prescribed transaction.”

118 The transfer of the first Sinfield Street property to Kent in June 2002 for one dollar falls under the meaning of ‘prescribed transaction’ as set out in s 22 of the Family Provision Act as it caused the property to be held by another person (s 22(a)(i)) and this was done without full valuable consideration (s 22 (b)). The first Sinfield Street property was transferred on 3 June 2002 and the deceased died on 4 January 2005, thus the transfer of the first Sinfield Street property by the deceased to the defendant took place more than one year before the death of the deceased but within the period of three years before her death.

119 Attention must first be drawn to the intention of the deceased. It is apparent from various statements made by deceased to the Josephine and Tony that she did not wish Tony to have legal title of any property in case he became divorced from his wife, Sybylla, and she gained control of his assets. Josephine refers to a conversation in 2003 relating to the Lancaster Avenue property when the deceased said to her words to the effect:

“I do not want to give the house to Tony if Sybylla will divorce him and obtain half the house. I do not want tony to sell the house as soon as he owns it.”

120 Similarly Tony refers to various conversations including one in about April 2002 when the deceased said to Tony words to the effect;

“I won’t transfer the 26 Lancaster Ave property into your name. Sybylla will divorce you and she will get 70% of what you own. You can have it after I die”.

121 Although this is once again a reference to the Lancaster Avenue property it appeared that the deceased was preoccupied with keeping any property beyond Tony’s control as she feared it would be taken by Sybylla in the event of a property settlement. According to Tony the following conversation also took place in January 2004:

“My mother said: "I am not going to leave the Lancaster Avenue property to you in my will as Sybylla will divorce you and she will get 70% of what you own."

I said: "If you have a problem with Sybylla why don't you leave the property to my children. I will leave what I have to my children anyway"

My mother said: "I won't leave the property to them as Sybylla does not treat me with respect."”

122 Tony refers to a conversation in August 2002 when the deceased told him the reason she had transferred the Sinfield Road properties and the Atkins Road property to Kent was that it ”was easier to ask him to sign”. In cross-examination Kent stated he believed the reason the deceased transferred the Sinfield properties to him in 2002 was partly to reduce her assets and get the pension and partly so that he would “take over the responsibility for the care and control of the properties”.

123 Josephine’s evidence refers to a conversation in 2002 in which the deceased said to her word to the effect:

“My relationship with Tony is deteriorating and it’s even worse with Sybylla.”

124 At the time the property was transferred to Kent, the deceased’s relationship with Tony was troubled. Tony felt he was being forced to choose between his wife and his mother. The evidence supports the fact that Tony and his mother had a strained relationship which was exacerbated by the bad relationship the deceased had with Tony’s wife Sybylla. The deceased clearly intended to maintain control of all the properties and to ensure that Sybylla had no claim on them regardless of how this would affect Tony. She transferred the properties to Kent, as in her words, he was “easier to ask him to sign”. This was a way of maintaining control of the properties while keeping them out of Tony’s and therefore Sybylla’s reach.

125 It can be reasonably inferred that the intention of the transfer of the first Sinfield property to Kent in June 2002 was at least in part to deny provision for the maintenance or advancement in life of the plaintiff and I am satisfied, therefore, that that transfer also constituted a prescribed transaction, within s 23 (b) (i) of the Family Provision Act.

Discretion to make a designating order

126 The discretionary power of the court to make an order designating property as notional estate of the deceased is subject to the provisions of s 27 of the Family Provision Act. Subsection (1) of that section obliges the Court not to make a designating order unless it has considered —

(a) the importance of not interfering with reasonable expectations in relation to property;
(b) the substantial justice and merits involved in making or refusing to make the order; and
(c) any other matter which it considers relevant in the circumstances.

127 The substantial justice and merits involved in making or refusing to make an order designating the first Sinfield Road property as part of the notional estate of the deceased include the the fact that a one third interest in the property was already held by the plaintff. It has been accepted that Tony has been left without adequate provision in light of his substantial needs, particularly in relation to his responsibilities to his children.

128 There is no evidence of promises made by the deceased which have misled Kent to his disadvantage. In my view there are no reasonable expectations which would prevent the making of the order.

129 Any order designating the defendant’s interest in first Sinfield Road property as part of the notional estate will clearly deprive the defendant of the benefit of this interest. As mentioned above, Kent is in a reasonably good financial situation. He holds the title to the second Sinfield Road property and the Atkins Road property in addition to other assets. In the exercise of the Court’s discretion it is appropriate to make an order that the first Sinfield property form part of the notional estate and that the plaintiff, Tony, receive full title to the first Sinfield Road property.

130 As far as costs are concerned, this dispute is in reality a dispute between two brothers over their mother’s estate. Kent and Tony have both been partially successful and they have both pressed substantial claims which were not completely successful.

131 In the circumstances, it is appropriate that Kent and Tony pay their own costs of the proceedings.

132 I direct the parties to bring in short minutes.

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