McKeering v Rattle
[1995] QSC 75
•5 May 1995
IN THE SUPREME COURT
OF QUEENSLAND
No. 1072 of 1992
Brisbane
Before the Hon. Justice White
[McKeering v. Rattle & Anor]
BETWEEN:
MARY KATHLEEN McKEERING
(Plaintiff)
AND:
ANDREW JAMES RATTLE
(First Defendant)
AND:
ANDREW JAMES RATTLE as Executor
of the Estate of Paul Murray McKeering(Second Defendant)
JUDGMENT - WHITE J
Judgment delivered 05/05/1995
CATCHWORDS: ELDERLY MOTHER - solicitor son - disposition of property in favour of son - intention - undue influence
Counsel:Mr AJH Morris QC for the plaintiff
Mr P Hackett for the defendants
Solicitors:Gilshenan and Luton for the plaintiff
McCrea Jones for the defendants
Hearing dates: 9 - 13 May 1994
IN THE SUPREME COURT
OF QUEENSLAND
No. 1072 of 1992
BETWEEN:
MARY KATHLEEN McKEERING
(Plaintiff)
AND:
ANDREW JAMES RATTLE
(First Defendant)
AND:
ANDREW JAMES RATTLE as Executor
of the Estate of Paul Murray McKeering(Second Defendant)
JUDGMENT - WHITE J
Judgment delivered 05/05/1995
The plaintiff, Mary Kathleen McKeering, (Mrs McKeering) commenced this action by writ issued 16 July 1992 against the first defendant, Andrew Rattle, in his personal capacity and as beneficiary of the late Paul Murray McKeering's estate and against him in his capacity as executor of Paul McKeering's estate as second defendant. Mrs McKeering died on 14 July 1994 two months after the trial concluded and the action is continued in the name of her estate.
Mrs McKeering was Paul McKeering's mother. He died on 20 April 1992. He had been a solicitor in practice in Queensland. The plaintiff alleges that Paul McKeering enjoyed Mrs McKeering's full trust and confidence, that he managed her financial affairs and advised her as her solicitor and that as a consequence obtained access to and expended her money for his own benefit and/or that of Andrew Rattle. Those benefits included purchasing real property registered in his name either alone or as co-tenant with the plaintiff or that of Andrew Rattle and certain motor vehicles. The plaintiff alleges that that property is held on trust for the plaintiff's estate or by virtue of the equitable doctrine of tracing. Alternatively, the plaintiff alleges that in procuring Mrs McKeering to draw cheques and make certain withdrawals Paul McKeering exerted undue influence on Mrs McKeering, acted unconscientiously and unjustly enriched himself and Andrew Rattle.
By his amended defence delivered 28 January 1994 Andrew Rattle in all his capacities alleges that all of the payments were made with Mrs McKeering's full knowledge and approval. In his capacity as personal representative Andrew Rattle has counter‑claimed on a quantum meruit for time and money expended in respect of the maintenance, improvement, acquisition and sale of certain of Mrs McKeering's properties.
In the course of these reasons I have made findings about amounts expended if it became necessary to have reference to them.
It is convenient to set out particulars in respect of some of the persons involved in this matter:•Mrs McKeering was born in 1907 and died on 14 July 1994, she was the mother of six children who were, at the relevant time, adults.
•Kevin McKeering (Mr McKeering), her husband, died on 30 May 1989 after a period of illness following a stroke some years previously.
•Paul McKeering their third son who died on 20 April 1992 of an AIDS related condition aged approximately 44 years. He had been a solicitor in practice in his own firm in Brisbane. He was unmarried and without children.
•Andrew Rattle, beneficiary and executor of Paul McKeering's estate and with whom he shared a relationship from towards the end of 1984. He was born 30 November 1967.
•Carmel Speedy ) Mrs McKeering's three daughters aged
)
•Aileen O'Gorman ) aged respectively approximately 52, 48
)
•Rosemary Stafford ) and 40 years. They each gave evidence in the plaintiff's case.
•Brian McKeering ) Mrs McKeering's other sons aged about
)
•Peter McKeering ) 56 and 50 who did not give evidence.
•Judith Ballard, Mr and Mrs McKeering's housekeeper from October 1988 to February 1989; April 1989 to 30 June 1989; August 1989 to September 1990. She gave evidence.
By order of Moynihan SJA, Mrs McKeering's cross‑examination was to be written questions and her answers recorded in writing (exs. 4 and 5). As a consequence it was submitted that she was a person whose presence was not required for cross‑examination pursuant to s. 92(2)(e) of the Evidence Act. Accordingly her statement constituting her evidence‑in‑chief was admitted (ex. 3) and a reference to her evidence is to this document. The effect of this was that Mrs McKeering gave no evidence before the Court in person and, to state the obvious, neither did Paul McKeering. This has had the consequence that an assessment of credit in respect of those two persons has had to be made by reference to contemporaneous documents and the evidence of others.
Background
Mrs McKeering grew up at 16 Harcourt Street, New Farm, ("Harcourt Street"). It had been owned by her parents. After she left school she stayed at home and looked after her sick mother. When she married Mr McKeering she lived there as did her father until he died. When her father died it is unclear as to whether the house was left to her or to her brother who was a priest, but he seems to have been the executor and in due course it became registered in her name.
The property, 19 Garfield Terrace, Surfers Paradise, ("Garfield Tce") was acquired more than 50 years ago as a holiday home for the McKeering family. It is not clear who purchased it initially. Mrs McKeering's brother seems to have been involved in the transaction but Mrs McKeering came to be registered as the owner. Prior to the sale of that property on 24 April 1989 Mr and Mrs McKeering did not have access to funds of any significance. Mr McKeering had retired at some unspecified time in the past and his occupation was not revealed in evidence. His income in his tax return to 30 June 1987 was shown to consist of a Department of Social Security payment in the sum of $19,613, an annuity or pension of $1,519 and interest from a credit union deposit of $120. Mrs McKeering had never worked outside the home in remunerative employment. There was some suggestion in the daughters' evidence of properties owned in or around New Farm from which rent was collected prior to the sale of Garfield Tce but there is nothing to be found in any income tax return that that was the case and neither was that reflected in any Land Tax Returns for relevant years, nor in the accountant's analysis of their financial affairs which was exhaustive. I proceed on the basis that Mr and Mrs McKeering's total income is reflected in Mr McKeering's tax returns and their assets as to real property in the Land Tax Returns.
Paul McKeering met Andrew Rattle in October 1984 when he was aged 16 and still at school. His father had died in May of that year. Paul McKeering was then about 36 years and a solicitor in sole practice in Bardon. They had met at the home of a mutual friend. Andrew Rattle said that he moved into a bedroom at Harcourt Street where Paul McKeering was then living with his parents at the end of November or early December 1984. Mrs McKeering has denied this. I accept Andrew Rattle as a reliable historian. It will become necessary to examine certain conversations central to the defence in detail in due course, but generally where there is conflict over matters of chronology, I prefer Andrew Rattle's evidence to that of Mrs McKeering. Prior to that Paul McKeering had lived in a family property at Kennigo Street, Spring Hill.
In December 1989, Mr and Mrs McKeering went to Garfield Tce for approximately three months as was their custom for the Christmas holidays, and Paul McKeering and Andrew Rattle remained at Harcourt Street. In March 1985 Paul McKeering purchased a house at 121 Annie Street, Torwood, for $95,000, and he and Andrew Rattle moved there immediately. They undertook extensive renovation work with the assistance of tradesmen paid for by Paul McKeering. They lived there for a year and it was sold in April 1986 for $140,000. They lived with Mr and Mrs McKeering at Harcourt Street for a few weeks following the sale. Paul McKeering then purchased a very dilapidated property at 54 Cockrane Street, Paddington, for $50,000. This was extensively renovated, the work being paid for by Paul McKeering. In September 1987 that house was sold for $130,000, and Paul McKeering and Andrew Rattle returned to Harcourt Street where they resided until Paul McKeering's death in April 1992.
Paul McKeering operated his own firm at Bardon from prior to these matters until June 1989 when his practice closed. He re‑opened it at 509 Brunswick Terrace, New Farm, in January 1990. In that month he was diagnosed as suffering from AIDS and his practice gradually dwindled as he became progressively more debilitated by the disease and he ceased practice by mid-1991. He was in any event by the time of his move to New Farm very involved with the properties the subject of this litigation. At all relevant times Andrew Rattle was employed full‑time in the travel industry. Carmel Speedy lived at Rathdowney at all relevant times; Aileen O'Gorman was at Armidale for 20 years until 1990 when she returned to Brisbane; Rosemary Stafford was in Sydney between January 1987 and December 1988 and for 1991.
The Return to Harcourt Street
According to Andrew Rattle, Mrs McKeering asked her son, Paul, to come home to live at Harcourt Street in the winter of 1987. This occurred whilst Andrew Rattle and Paul McKeering were dining with Mr and Mrs McKeering at Harcourt Street which they did approximately once a fortnight. Mrs McKeering has maintained that it was Paul who asked if he could come home to live but she does concede that she was pleased at that prospect. I accept that the request emanated from Mrs McKeering to her son. Judy Ballard, the housekeeper said that Mrs McKeering told her that she had asked him to come home because Mr McKeering was very sick. Mr McKeering was not well and she wished to have her son close. He was her favourite child and she appeared to have had very little to do with Peter and saw Brian only from time to time. Her daughters did not then live in Brisbane although she kept in regular contact with them by phone. She was in daily telephone contact with Paul, the calls coming before he left for his office in the morning. Sometimes she telephoned several times a day. Paul had lived at home in 1984 and again in 1986 for relatively brief periods and I doubt that the nature of the relationship between himself and Andrew Rattle was apparent to her then given the generation to which she belonged.
I accept that initially Mrs McKeering thought that they would occupy their previous bedrooms upstairs but Paul indicated to her that he would wish to construct a significant apartment under the house, if he were to return home to live. There was much criticism of Andrew Rattle by Mr Morris, who appeared for the plaintiff, that his account of the content of various conversations surrounding this move, involving Mr and Mrs McKeering and Paul, changed as the topic was revisited several times in cross‑examination. As far as Andrew Rattle was concerned, at the time, the important question was whether the move would be satisfactory for his relationship with Paul. He said that he loved Paul's parents and was happy to share a house with them. My impression was that as far as he was concerned the arrangements were between Paul and his parents once the issue of the effect of the move on the relationship between himself and Paul had been settled to their mutual satisfaction. Accordingly, I infer that there were conversations to which he was not a party in which the apartment and the move home was discussed and that he was present for only some conversations between Mr and Mrs McKeering and Paul concerning the apartment. I do accept that he was present prior to their return to Harcourt Street when Paul told his parents that he would use the funds from the sale of 54 Cockrane Street to pay for the renovations and that at least after they had moved back to Harcourt Street and before the work commenced, Mr and Mrs McKeering were shown some rough sketches from the architect for the apartment and the construction cost was mentioned as being in the vicinity of $70,000. I also accept that at or about this time Paul indicated to his parents his preparedness to pay for the construction of the apartment provided he received recompense for it. I accept Andrew Rattle's evidence that Mr McKeering made some mention that the only way that that could be done was by selling Garfield Tce. It was suggested that Mr McKeering, as a result of his stroke rarely spoke more than a few words at a time, and that in any event he was a reticent, proud man, and unlikely to discuss matters of finance. Judy Ballard, the housekeeper, said that Mr McKeering was a man of few words but that she had no difficulty in understanding him and, whilst she did not hear him discuss finance, she was often in the kitchen preparing meals. I accept that Andrew Rattle correctly recounted the tenor of Mr McKeering's words. I also accept that at about this time there were conversations between Paul and his parents at which Andrew Rattle was present, in which it was said by either or both of Mr and Mrs McKeering that Paul would get Harcourt Street in the event of their deaths, and that he could live there as long as he wished whilst they were alive. Although Mr and Mrs McKeering had five other children, these pronouncements were not unlikely against what must have been both their relief and pleasure that their son was to come home to live and relieve them of the anxiety of day-to-day upkeep of the home which was about 70 or 80 years old, and to be on hand to assist with Mr McKeering who, it seems, by this time rarely left the upstairs part of the Harcourt Street residence except to make the trip to the coast.
Construction of the Apartment at Harcourt Street
Mr and Mrs McKeering went to Garfield Tce for their usual summer holiday in November/December 1987 and construction on the apartment commenced. There are numerous photographs in evidence showing what was done together with architect's plans and statements by the builder. The total expenditure is said by the defendants to have been $130,000 and this is disputed only to the extent of some $10,000 going mainly to insufficiency of identification of fittings. The apartment is described by the valuer as having been built to a high standard, modern and well‑appointed and is said to have added $93,000 to the value of the property (ex. 29). Although not agreed there is no other valuation offered, the valuer was not required for cross‑examination and it seems reasonable and I accept it. Exhibits 44 and 44A deal in detail with the expenditure on the apartment; ex. 44A being the plaintiff's response to ex. 44. Of the amount alleged to be expended $10,820.86 is disputed. I generally accept Andrew Rattle's evidence on these matters. He impressed me as having a clear understanding of what work was being done on any of the properties at any given time. These were clearly matters in which he took a great interest. I would disallow items 14, 15, 19, 22, 25 and 30, on ex. 44A, amount to $3,754, leaving $126,246. If it were necessary to do so, the approach I would take would be to allow the value added to the property and so too with the other renovations upstairs.
Other renovations to Harcourt Street
Over many years prior to Paul McKeering permanently returning to Harcourt Street to live, he habitually undertook or organised the maintenance on his parent's home. Mr Noel Courtman, a builder whom I found a most reliable witness, said that Paul would telephone him whenever anything needed to be done at his mother's house and he would attend to it. This included small items such as changing tap washers, easing jammed doors and windows, and replacing shades over windows. This occurred every few weeks over many years and on those occasions and indeed whenever he was passing Harcourt Street, Mr Courtman said that he would call in and have a cup of tea and biscuit and chat with Mrs McKeering. Somewhat surprisingly, Mrs McKeering said that she had absolutely no recollection of a Noel Courtman. Mr Courtman said that on every occasion he was paid for his work by Paul McKeering.
In about 1983 Paul arranged for a new kitchen to be installed by Mr Barry Kirkham, a cabinet maker. He was paid by Paul. Mr Kirkham noticed painters at work on the interior. From about the middle of 1989 extensive renovation works were carried out upstairs at Harcourt Street organised by Paul. They included a complete renovation of an existing bathroom and refurbishment of another, associated verandah work, plastering of certain areas, new curtains and blinds, re‑upholstering of many pieces of furniture, internal painting of the house, new light fittings, new leadlights to many windows, new gardens including a fernery and pathways, and a new two‑car garage. Mrs McKeering said some renovation work had been done but that it was not as extensive as claimed and, it seemed to me, she sought to minimise this work. This also was the impression that I gained from her daughters. I accept Andrew Rattle's description of what was done after 1987. This was explained by reference to volumes of photographs and generally supported by the valuer, although his informant was Andrew Rattle and he was not familiar with the house prior to that inspection. The valuer attributed some $27,000 increased value to the property by virtue of the upstairs improvements and renovations. Andrew Rattle's schedule (ex. 43) calculates some $77,000 as having been spent by Paul McKeering and of that $30,772 is disputed by the plaintiff (ex. 43A). I would disallow item 9 ($5) and item 69 on ex. 43, amounting to $6,755, leaving $70,245.
Garfield Terrace House
The family holiday house was an old style weatherboard cottage on the beach front at Surfers Paradise. When the McKeering children married and had children of their own they would stay for part of the school holidays with their parents. The daughters' evidence was that their father was responsible for the maintenance and renovation work on that house. They had no direct evidence about this, it was merely an assumption on their part. Mrs McKeering could not recall her husband or herself ever asking Paul to care for, maintain, repair or upkeep or renovate Garfield Tce. She said that she did not see any major improvements to it save for the kitchen and the bathroom. She does concede that Paul moved the kitchen to the front of the house from the back and installed a bathroom adding that those improvements were "not substantial" and that he certainly did not pay $6,000 from his own moneys for it. The defence maintains that a great deal of the maintenance and renovation work carried out on the Garfield Tce house was undertaken or arranged and paid for by Paul McKeering.
A number of statements admitted by consent in the defence case support this. Mr Noel Lord lived next door at 17 Garfield Tce as the manager for the owners from 1983 to 1988. He noted that Paul McKeering would visit the property on most weekends during the year although less when his parents were down there for the three month period in the summer. He met Andrew Rattle in the course of these visits. He is able to recall that Paul McKeering would drive down from Brisbane during the week, mow the lawn, have a swim and return, or stay the evening and return the next day. He was seen by Mr Lord to be the only person to attend to the maintenance of lawns and gardens at the McKeering house. He noticed the new bathroom constructed and relocated in the upstairs portion of the house; a new kitchen installed on the beach side of the house; decking constructed on the beach side of the house; and the house painted both inside and out. Mr Lord arranged the painters and Paul paid them. Mr Courtman in oral evidence said he did work on Garfield Tce paid for by Paul. Mr Barry Kirkham's statement was also admitted by consent. He first met Paul McKeering in 1973 and did work for him on a family house at Kennigo Street, Spring Hill. In 1982 Paul asked him to build and install a new kitchen at Garfield Tce for which he charged approximately $2,500 and for which he was paid by Paul directly. Mr Kirkham recalls the rear deck being built and the inside of the property being extensively renovated. When he returned to the property to repair some drawers, Paul McKeering paid him for that job. He recalled the property being rewired and he assessed the amount of cabinet work and other renovations as costing approximately $20,000 to $40,000. A statement from Christopher Davis was admitted by consent. On occasions he stayed at Garfield Tce between 1980 and 1982 before it was renovated and in his opinion the state of the house before renovation was quite primitive. He said that he himself scrubbed ceilings for about a week, prior to the application of new paint and he described the extensive renovation work. He was aware of a number of stumps being replaced and new windows, sliding doors, carpets and curtains being installed. He met Mrs McKeering in 1983 and on other occasions. Mrs McKeering has no recollection of ever meeting Mr Davis, but I give this little weight as he was clearly Paul's friend.
There are other matters concerning Garfield Tce which were essentially matters of credit. Andrew Rattle said that he and Paul spent most weekends apart from the summer holiday weekends there. It was suggested to him that this was untrue. I accept that they did. This was supported by Mr Lord.
I accept that Paul McKeering over many years looked after the coast house for his parents and paid for work to be done on it after arranging for the tradesman and that his parents, particularly his father, acknowledged that. He regularly drove his parents down there. An estimate that he spent $32,500 of his own money on Garfield Tce is made. There is evidence to support this. It is against that background that the conversations with Mr and Mrs McKeering about the proceeds of the sale of the Garfield Tce house need to be considered.
In about February 1989 after Paul McKeering and Andrew Rattle had been living at Harcourt Street for about 16 months an offer by a developer to buy Garfield Tce had been received by Mr and Mrs McKeering for about $800,000. Figures of $1,000,000 were mentioned in conversations. Andrew Rattle said that the offer was being discussed at dinner upstairs at Harcourt Street attended by himself, Paul, and Mrs and Mrs McKeering. Judy Ballard was in the kitchen. The conversation was on the side verandah next to the kitchen. Mr McKeering said that he wanted Garfield Tce sold before he died and that he did not want disagreements. I accept that he said words, the effect of which was that Paul should be "paid back" for the apartment downstairs, for the years that he had looked after the coast house and for the work that was done on it. On the same occasion I accept that Mr McKeering said that Paul should really get half the proceeds of the sale of Garfield Tce in recognition of the fact that he was the only one of the children who had bothered to repair or look after that house. Mr Courtman recalled a conversation with Mrs McKeering to the effect that the coast house was Paul's or would be Paul's.
Garfield Tce sold on 24 April 1989 for $1.45 million.
The Funds From Garfield Terrace
The defence concedes that the funds for the purchase of all subsequent properties the subject of this action originated in this fund. These were:•44 Kingfisher Drive, Peregian Beach
Date of contract: 18 April 1989
Settlement date: 9 May 1989
Purchase price: $215,000 ($209.140.74 paid from Mrs McKeering's account)
Deposit: $3,000 on 19 April 1989 and $3,000 on 2 May 1989 from Paul McKeering
Registered owner: Paul McKeering
•515 Brunswick Street, New Farm (Backpacker's) (Foleys)
Purchase price: $120,000 paid from Mrs McKeering's account on 23 May 1989
Registered owner: Andrew Rattle
(Ex. 1, the accountant's report, suggests that there was under a contract of sale at some subsequent time for this property but it is accepted by the plaintiff that this error is attributable to the real estate agent's method of calculation of the value of the lease and it has not been the subject of a contract of sale in recent times.)
•66 Barker Street, New Farm (Flats)
Date: 11 September 1989
Purchase price: $420,000 ($206,763.81 from Mrs McKeering's account)
Registered owners: Mary and Paul McKeering as joint tenants inter se as to one half interest and Ray Westfield as to one half interest as tenants in common
Sale price: $615,000 ($306,779.18 to the McKeering interests, $226,779.18 deposited in Mrs McKeering's account, $80,000 deposited for Paul McKeering (said to be for renovations to the flats))
Date: 23 October 1990
•24 Henry Street, Woolloongabba (House)
Date of purchase: 11 September 1989
Price: $95,000 ($45,286.31 being McKeering share paid from Mrs McKeering's account)
Registered owner: Mary and Paul McKeering as joint tenants of one half interest and David Wobcke one half interest as tenants in common
Sale: 8 September 1991
Sale price: $109,887.34 (McKeering share of $54,974.14 (plus an extra $30.18), paid into Mrs McKeering's account).
•509 Brunswick Street, New Farm (Needham)
Date of purchase: 12 December 1989
Price: $210,000 (paid from Mrs McKeering's account)
Registered owner: Mary and Paul McKeering
•18 Harcourt Street, New Farm
Laneway purchased from Brisbane CC in July 1991 for $3,000
Registered owner: Mary McKeering
The properties at the time of Paul's death were:
•16 Harcourt Street, New Farm
Registered owner: Mary McKeering
•18 Harcourt Street, New Farm (Laneway)
Registered owner: Mary McKeering
•44 Kingfisher Drive, Peregian Beach
Registered owner: Paul McKeering
•515 Brunswick Street, New Farm
Registered owner: Mary and Paul McKeering as joint tenants, to Mrs McKeering absolutely by survivorship
•509 Brunswick Street, New Farm
Registered owner: Andrew Rattle
Valuations
The valuations for the above properties were not in contest although the value added to 16 Harcourt Street by the apartment below was and I have dealt with that above. I accept the reports tendered.
•16 Harcourt Street, New Farm - $340,000
•18 Harcourt Street, New Farm (Laneway)
Purchase price: $3,000 (this would most likely be sold with 16 Harcourt Street)
•44 Kingfisher Drive, Peregian - $320,000
•515 Brunswick Street, New Farm - $265,000
•509 Brunswick Street, New Farm - $225,000
The value of the properties (excluding Peregian Beach) had they been consolidated and the site developed for units was considered. The highest and best use for those properties is as separate dwellings.
Exhibit 28 is a sketch map of the New Farm properties and is appended to these reasons.
44 Kingfisher Drive, Peregian
A few days before the sale of Garfield Tce, Paul McKeering said to his mother (mostly likely his father was also present) that he wanted to buy himself a house on the Sunshine Coast since he would miss Garfield Tce. Andrew Rattle was extensively cross‑examined as to Mrs McKeering's precise words in response. I accept that Mrs McKeering said words, the effect of which was that she would purchase a house for Paul in that area. Paul McKeering and Andrew Rattle travelled that weekend to the north coast and found the Kingfisher Drive house. They returned and told Mrs McKeering about it and it was purchased shortly thereafter. Mrs McKeering did not see the house prior to purchase. Paul McKeering signed the contract of sale and it was registered in his name. The sale funds came from Mrs McKeering's account. Mrs McKeering said that Paul told her that the house was hers; that she never intended it as a gift to Paul or in satisfaction of any promise to pay him the proceeds of the sale of Garfield Tce. She says that she always told her children that it was her house and she was shocked to discover that she was not the registered proprietor on Paul's death. Judy Ballard said that Mrs McKeering clearly and unequivocally told her that Paul and Andrew owned the Peregian Beach house. She recalled that she and Mrs McKeering and Paul, who drove them, went for weekend visits to the house on about four occasions and Andrew Rattle was present. Paul and Andrew visited the house each weekend. On several occasions other family members did use the house and there was considerable evidence devoted to the question of whether permission was asked from Paul. Rosemary Stafford asked her mother who asked Paul if she could visit and keys were obtained from Paul. Aileen O'Gorman indicated a wish to stay up there and asked her mother, who asked Paul who refused to let his sister stay. I accept that Mrs McKeering became angry, came downstairs at Harcourt Street and remonstrated with Paul saying words, the effect of which was that she had bought the house for him and that the least he could do was to let his sister stay there. He eventually agreed but asked his sister to take their mother as well.
Extensive renovation and furnishing work was carried out on the house or arranged by Paul and Andrew. Andrew Rattle has estimated that $15,469.95 was spent on this work. There is contest as to $3,071.73. I accept Andrew Rattle's attribution of the work and items purchased for Peregian Beach. I conclude that at the time of purchase Mrs McKeering intended that it should be for Paul.
515 Brunswick Street, New Farm
Mrs McKeering had some attachment to this property which was across the laneway from her house. The Foley family had lived there possibly for as long as the McKeerings and they were friends. When it became available for sale in about April 1989, Andrew Rattle proposed to Paul that it be acquired as a backpackers' hostel. This proposal was put to Mrs McKeering and according to Andrew, she agreed. He says that Paul told his mother that he, Paul, wanted to buy it from his share of Garfield Tce and she acquiesced. Mrs McKeering maintains that when she signed the cheque to purchase this property she intended it for herself and that she signed the cheques to pay for renovations with the same understanding. The house was purchased in Andrew Rattle's name because, it seems, Paul McKeering was executor of the Foley estate. Andrew Rattle considered it as belonging to Paul and understood something of the ethics involved.
Judy Ballard said that Mrs McKeering told her that Paul and Andrew owned 515 Brunswick Street and she never asserted ownership to it. There was some evidence that Judy Ballard told Mrs McKeering that she was going to clean "Paul's house over the road" and Mrs McKeering replied that she worked for her and not for Paul. There was some ambiguity in this, since at that time 509 Brunswick Street had been acquired and Paul had established an office in it. The reference could have been to cleaning Paul's office. Paul McKeering received all the rents from this property.
Mr Harold Burnett, the McKeering's accountant, gave evidence that in 1991 when Paul McKeering brought in tax returns for preparation he had a blue property transfer form blank except for what he thought was Andrew Rattle's signature at the bottom. Paul McKeering told Mr Burnett that although the property was in Andrew Rattle's name "if he didn't do the right thing" the property would be transferred "back into his [Paul's] mother's name". There is no record of any other person seeing the form, it is not in evidence and Andrew Rattle says that he did not sign a blank transfer form. I accept that a conversation along the lines recounted by Mr Burnett occurred. By then Paul had been diagnosed as having AIDS for about a year or more and was getting sicker and would have expected that his mother would outlive him. She had previously been the sole beneficiary of his estate. When Paul McKeering was challenged by his sister, Rosemary, in March 1992 about the ownership of the property, he made some mention of a signed transfer and that "it would go back to mother". I conclude that at the time when it was acquired Mrs McKeering intended that it should be purchased for Paul and when she signed the cheques for renovation that was her continuing intention. Payments from Paul McKeering's funds are alleged by the defence to have been made in the sum of $13,825.04 in respect of this property. Of that $9,079.04 is disputed. I accept the amounts in ex. 42 but delete item 14 of $130 and add half of item 38 on ex. 41A for $3,124 making a sum of $16,819.
66 Barker Street, New Farm and 24 Henry Street, Woolloongabba
The registered ownership of these flats is set out above. Judy Ballard was taken by Paul with Mrs McKeering to see the extensive renovations to the Barker Street flats. Mrs McKeering told her that she owned the property and I would accept that that was her intention when she purchased that property and Henry Street. $80,000 of the sale price of Barker Street was paid to Paul McKeering for renovations. There is no supporting material in respect of them and in that case I am not prepared to allow it as a proper recoupment.
509 Brunswick Street, New Farm
Mrs McKeering had close ties with a family who had owned this house prior to Sue Needham. She asserted that she owned this property outright. This is consistent with what she told Judy Ballard. The rent was paid to her, sometimes in cash by the tenant of the flat. She has the whole of the beneficial interest by survivorship in this property and no loss is otherwise proved.
The defence alleges some $45,239.63 was expended by Paul McKeering on this property, of that $13,849.96 is disputed. I would disallow half of item 38, item 39 and item 41 amounting to $3,446.20. Item 14 from ex. 42A for $130 should be added. The amount is $41,923.
None of these properties are shown as owned by Mrs McKeering in the Land Tax Returns for 1989, the year of purchase. They were prepared by Paul McKeering, Mrs McKeering signed them, and there is no suggestion of duress alleged against Paul in respect of the obtaining of her signature.
Credit Issues
I have concluded that Mrs McKeering's evidence is not reliable and unless there is some independent evidence to support it I am not prepared to act upon it. Where there is a conflict between her statement and the evidence of Andrew Rattle, Judy Ballard, Noel Courtman and other defence witnesses I would accept them. They have no interest either financially or emotionally in this matter. David Wobcke's statement (ex. 53) that Mrs McKeering was not an astute business woman and did not know what was going on does not appear to be an opinion based on any facts which he knows and I would give it little weight, although other evidence would support the opinion that she was not an astute business woman. Her memory was clearly faulty, some instances are that she made assertions of ownership of properties in 1987, namely Kennigo Street and Charles Street which were not reflected in her own documents. No property searches were evidenced in respect of these properties which would support her assertions. Mrs McKeering could not remember at all Mr Courtman who had been a regular visitor to her home for many years to do jobs about the house. She has no memory of one or two witnesses but they were less likely to stay in her memory. She had no recollection of staying at the Hyatt Hotel in Canberra a few of years prior to her statement. The photograph of her outside the Hotel (ex. 25) shows an alert looking, very fashionably dressed woman not looking her years. She maintained that she had never been paid the last $100,000 from Garfield Tce which was clearly not true.
She appeared determined to minimise anything which Paul had done for her and her husband and to attribute wrongdoing to him sometimes obviously without foundation. I refer to her assertion that she believed that she brought the Mercedes and the Mazda motor vehicles for Paul when the evidence is that they were purchased by Paul on hire purchase. This was established in her own accountant's report (ex. 1).
Mrs McKeering was plainly a committed gambler in respect of horses. According to Judy Ballard, whilst she was there as housekeeper, Mrs McKeering went to the TAB almost six days a week and was out for much of the day visiting or at the TAB. This included the period when Mr McKeering was alive. Mrs McKeering studied the racing guide at home and listened to the races on the radio. This is confirmed by other witnesses. She attended the TAB at Surfers Paradise and at Peregian Beach, and attended interstate race meetings with Paul. Carmel Speedy was reluctant to concede this and maintained that her mother took a lesser interest in horse racing. Her daughter, Rosemary, described her as shrewd and the evidence would support this. Everyone agreed that Paul was her favourite child and the evidence, particularly of Rosemary and Aileen, suggests that he had a lovable personality and, until he became afflicted with his disease, was an affable man. There was also some evidence from Rosemary that when he could not get what he wanted he would threaten to and sometimes did disappear for periods of time.
The relationship between Paul and his mother was much more a day-to-day one than any of the witnesses on the plaintiff's side either would say or knew. Mrs McKeering was much given to using the telephone and was in regular daily or more frequent contact with Paul when he was not living at home. She called upon him for many little tasks. I suspect that she was rather demanding. Mr Miles described her as a "matriarch". Paul accompanied his mother on a number of interstate trips for which she paid and, although he no doubt experienced pleasure from them, nonetheless it seems clear that it was for her pleasure and their cost ought to remain with her.
There was no suggestion that Judy Ballard did not get on well with Mr and Mrs McKeering when she worked for them as their housekeeper and it was not suggested to her that her account of the daily routine in the household was incorrect. It was suggested by Mr Morris that Rosemary was responsible for engaging Judy Ballard but her evidence was that the agency had been contacted by Paul McKeering and it was through him that all the arrangements were made. She noticed that Paul and Andrew dined upstairs with Mr and Mrs McKeering several times a week, and after Mr McKeering's death, Mrs McKeering regularly ate downstairs with them. During her second period of employment with the McKeering's she noted that Paul would go in to see his father in the morning before he left for work and would come home at lunchtime to see him. If Mrs McKeering were at home he would talk to her but Mrs Ballard observed that often she would not then be home. She noted that Mrs McKeering would regularly go downstairs to Paul's flat in the morning before he went to work. She recalled that the only members of the family who used to visit Mr and Mrs McKeering frequently were Brian and his wife, Ines. When Rosemary and Aileen moved to Brisbane she recalled that they would see their mother about once a week which is consistent with their evidence.
Judy Ballard had a distinct recollection of Mrs McKeering signing cheques at Paul's request. She said that Paul would ask his mother for a cheque and she always inquired what it was for and for how much. She was quite firm that he would ask her for the cheque before it was written out, that she put her glasses on when she signed the cheque and had a conversation about the subject matter of the cheque. There was no suggestion that Paul stood over her, rushed in and demanded that she sign cheques already filled in or things of that kind which were put in cross‑examination, and which appeared in Mrs McKeering's statement.
Intention
I have concluded that Mrs McKeering and her husband intended to benefit Paul McKeering in a significant way to recompense him for all that he had done for them and to mark Mrs McKeering's fondness for him. There was no suggestion that she was a naive woman and I find it quite unlikely that in due course she did not understand the nature of the relationship between Paul and Andrew Rattle given the disparity of twenty years in their ages, their living and recreational arrangements, and that Andrew Rattle was not without immediate family in Brisbane.
Whilst Paul was well there were no difficulties although it is clear that Mrs McKeering was careful not to reveal to her daughters the extent of her generosity to Paul. She had paid out in excess of $50,000 on behalf of her son Peter, probably to avoid bankruptcy proceedings being taken against him, and she paid a number of his other smaller bills. She otherwise had not given gifts to her children apart from a far from new car to Brian and his wife. She was apparently fond of jewellery and bought herself some expensive pieces (ex. 35). This reserve about spending on others was said to indicate that she had not freely bestowed her largesse upon Paul. From the evidence I have concluded that Paul was regarded with favour by his parents beyond that of his siblings for substantial reasons which I have set out.
By the middle of 1991 Paul McKeering was clearly quite sick and this would have been apparent to Mrs McKeering much earlier than March 1992 when the rows occurred with Paul's sisters. Mrs McKeering may well have thought that she was still Paul's beneficiary as she had been under his will which she had had in her possession for a number of years. She became aware that Andrew Rattle was the registered proprietor of 515 Brunswick Street in about March 1992 and this would have been a significant shock to her.
I conclude that at the time when the Peregian Beach house and 515 Brunswick Street were acquired it was her intention freely given that this represented that part of the proceeds of the sale of Garfield Tce which she and her husband had resolved that Paul should have. Although Mr McKeering was sick when that occurred, there is no suggestion that he was mentally impaired or that he did not still occupy a significant place as head of the family. I also conclude that this would have extended to effecting necessary renovations.
I have concluded that she did not intend that he should be registered as part owner with her of the Barker Street flats, the Henry Street house or 509 Brunswick Street or have a beneficial interest in them. To the extent that Paul McKeering caused her to sign transfer documents which must have reflected that he was a co-tenant with her in respect of those properties, I am of the view that he acted improperly and did take advantage of his position as solicitor in controlling the formal documentation relating to the acquisition of those properties. There is however no evidence that she has suffered any loss as a consequence thereof by virtue of the sale of Barker Street and Henry Street. 509 Brunswick Street has passed to her on survivorship.
I do not accept that the payment to Paul of an amount of $80,000 from the proceeds of sale of the Barker Street flats properly reflects expenditure in the respect of renovations for which he paid. There is no supporting documentation, whilst all other renovation expenditure is well supported. This is a debt owing to the plaintiff by the second defendant.
Although I have accepted that there were conversations about leaving Harcourt Street to Paul at the time when the apartment was completed there was certainly no intention that that should benefit Andrew Rattle directly and he does not maintain any entitlement thereto. In any event any such testamentary promise whatever its standing lapsed upon the death of Paul McKeering. The payments made relating to Garfield Tce and 16 Harcourt Street were recompensed by the purchase of Peregian Beach and 515 Brunswick Street, and may not be separately recovered.
Mrs McKeering's 1991 Will
In February 1991 Paul McKeering hand wrote the draft for a new will for his mother which he gave to his then secretary, Elizabeth Nichols, to type. By that will Mrs McKeering left her entire estate with the exception of her jewellery which went to her daughter, Rosemary, to Paul. On Mrs Nichols' account, which I accept, she was telephoned by Paul to come across to the house the following day and witness his mother's will. When she arrived Mrs McKeering had the will out in front of her on the table. Her then housekeeper, Leanne Dallinger was also present. The witnessing of Mrs McKeering's signature took place. Mrs McKeering asked Elizabeth Nichols if she would like a cup of tea but she declined as she had work to do. The whole episode took about 10 minutes. Elizabeth Nichols made no reference to any agitation or distress on Mrs McKeering's part and no particular sense of urgency on the part of Paul McKeering. Mrs McKeering's account of how she came to sign the will was that Paul had earlier promised to take her to visit Rosemary in Sydney and he had threatened her that unless she signed the will he would not do so. She agreed that she read most of the will before she signed it and understood her testamentary intention. She said that she did not feel happy about the will and in March arranged with Rosemary to make an appointment with a solicitor to make a new will. She did this without Paul knowing but says that she told the rest of the family. Whilst Paul McKeering's conduct was highly reprehensible, what happened afterwards clearly demonstrates that Mrs McKeering was quite capable of asserting her own independence, for within a couple of weeks of signing the will she had privately made other arrangements.
Other Payments made for Paul McKeering
I accept that the following payments were made for the benefit of Paul McKeering by his mother and are a debt which his estate is liable to repay to the plaintiff:Tax Payment $58,000.00
Deposit on Mazda $ 5,071.42
Miscellaneous transfers to
Paul McKeering's account $190,809.00
Barker Street flats $80,000.00
$333,880.42
Miscellaneous Payments for Mrs McKeering
Exhibits 46 and 46A deal with a variety of payments made by Paul McKeering on behalf of his mother. The claim is for $41,121.43 and of that $7,319.91 is disputed. Some of the items in dispute relate to interstate trips, the cost of which should be borne by the plaintiff. I would disallow half of item 5, items 6 and 7. The amount allowed is $40,470.
Undue Influence
The question then is, was Mrs McKeering subject to actual or presumed influence when she formed and put into effect her intention to benefit Paul so as to cause the transactions to be set aside or the payments to be recovered.
Latham CJ in Johnson v. Buttress (1936) 56 C.L.R. 113 at p. 119 observed:
"The jurisdiction of a court of equity to set aside gifts inter vivos which have been procured by undue influence is exercised where undue influence is proved as a fact, or where, undue influence being presumed from the relations existing between the parties, the presumption has not been rebutted. Where certain special relations exist undue influence is presumed in the case of such gifts. These relations include those of parent and child, guardian and ward, trustee and cestui que trust, solicitor and client, physician and patient and cases of religious influence. The relations mentioned, however, do not constitute an exhaustive list of the cases in which undue influence will be presumed from personal relations. Whether the relation between donor and donee is such that the latter is in a position to exercise dominion over the former by reason of the trust and confidence reposed in the latter, the presumption of undue influence is raised (Dent v. Bennet (1839) 4 My. & Cr. 269; 41 E.R. 105; see also Smith v. Kay (1859) 7 H.L. 750; 11 E.R. 299."
In the same case Dixon J said at p. 134:
"The basis of the equitable jurisdiction to set aside an alienation of property on the ground of undue influence is the prevention of an unconscientious use of any capacity or opportunity that may exist or arise of affecting the alienor's will or freedom of judgment in reference to such a matter. The source of power to practise such a domination may be found in no antecedent relation but in a particular situation, or in the deliberate contrivance of the party. If this be so, facts must be proved showing that the transaction was the outcome of such an actual influence over the mind of the alienor that it cannot be considered his free act. But the parties may antecedently stand in a relation that gives to one an authority or influence over the other from the abuse of which it is proper that he should be protected. When they stand in such a relation, the party in the position of influence cannot maintain his beneficial title to property of substantial value made over to him by the other as a gift, unless he satisfies the court that he took no advantage of the donor, but that the gift was the independent and well‑understood act of a man in a position to exercise a free judgment based on information as full as that of the donee. This burden is imposed upon one of the parties to certain well‑known relations as soon as it appears that the relation existed and that he has obtained a substantial benefit from the other. A solicitor must thus justify the receipt of such a benefit from his client, a physician from his patient, a parent from his child, a guardian from his ward, and a man from the woman he has engaged to marry. The facts which must be proved in order to satisfy the court that the donor was freed from influence are, perhaps, not always the same in these different relationships, for the influence which grows out of them varies in kind and degree. But while in these and perhaps one or two other relationships their very nature imports influence, the doctrine which throws upon the recipient the burden of justifying the transaction is confined to no fixed category. Its rests upon a principle. It applies whenever one party occupies or assumes towards another a position naturally involving an ascendancy or influence over the other, or a dependence or trust on his part. One occupying such a position falls under a duty in which fiduciary characteristics may be seen. It is his duty to use his position of influence in the interest of no one but the man who is governed by his judgment, gives him his dependence and entrusts him with his welfare. When he takes from that man a substantial gift of property, it is incumbent upon him to show that it cannot be ascribed to the inequality between them which must arise from his special position. He may be taken to possess a peculiar knowledge not only of the disposition itself but of the circumstances which should affect its validity; he has chosen to accept a benefit which may well proceed from an abuse of the authority conceded to him, or the confidence reposed in him; and the relations between him and the donor are so close as to make it difficult to disentangle the inducements which led to the transaction. These considerations combine with reasons of policy to supply a firm foundation for the presumption against a voluntary disposition in his favour. But, except in the well‑recognized relations of influence, the circumstances relied upon to establish an antecedent relation between the parties of such a nature as to necessitate a justification of the transaction will be almost certain to cast upon it at least some measure of suspicion that active circumvention has been practised. This often will be so even when the case falls within the list of established relations of influence. Because of the presence of circumstances which might be regarded as presumptive proof of express influence, cases outside the list but nevertheless importing a special relationship of influence sometimes are treated as if they were not governed by the presumption but depended on an inference of fact. Scrutton L.J. has remarked on the inclination of common law judges 'to rely more on individual proof than on general presumption, while considering the nature of the relationship and the presence of independent advice as important, though not essential, matters to be considered on the question whether the transaction in question can be supported' (Lancashire Loans, Ltd v. Black (1934) 1 K.B. at p. 404)."
His Honour went on to note that where the transaction is not a gift but of purchase or other contract then somewhat different consideration might apply. In that circumstance adequacy of consideration becomes material and the Court examines the proprietary of what wears the appearance of a business dealing.
Some of the factors which a Court will considered as to whether the influence, if it be established is undue, are the age, education and physical condition of the alleged subservient party, the size of the gift, the circumstances surrounding the making of the gift or contract, the availability of independent advice, whether the gift was improvident in the sense that the donor gave away all or practically all of his or her property, from whom did the idea of the gift originate and whether the transaction was something which a right minded person might be expected to do.
Paul McKeering was a solicitor and in that capacity was entrusted by the his mother to attend to certain of her affairs. The deceased acted as solicitor for her in respect of the sale of the Garfield Tce property, the purchase of 515 Brunswick Street, the purchase and sale of Barker Street and Henry Street, the purchase of 509 Brunswick Street, and also in the purchase of the Peregian Beach house.
There is a presumption of influence which arises in the case of a gift to a solicitor from a client. In my view, however, it is not that relationship which was dominant between Paul McKeering and his parents, and particularly his mother. It was that position of solicitor which permitted him to be registered improperly as co‑owner of the properties which I have mentioned but that has nothing to do with the present question. It was in the relationship of favoured son and elderly parent(s) that Paul McKeering's influence was dominant. It may be unnecessary to decide that that is one of the relationships which, without more, raises a presumption of undue influence, see Whereat v. Duff (1973) 47 A.L.J.R. 540. I have concluded that there was a relationship of actual influence. The burden of proof resides in the defence in the presumptive relationship and in the plaintiff where actual influence is found and I have proceeded on the basis that the plaintiff carries the onus here.
The question then is whether the influence was undue. This is confined solely to the Peregian Beach property and 515 Brunswick Street and to the payment out of certain moneys for Paul McKeering's benefit. I have concluded that it was not in respect of the properties and their renovations but was with respect to the payment of other money. I have been assisted in reaching this conclusion by the evidence of those persons who stood outside the family.
I have concluded that notwithstanding her age, Mrs McKeering was a person of independence and strong will, and when necessary would seek independent advice as occurred with the will. The evidence supports the conclusion that Mrs McKeering was not open with her children particularly her daughters, with whom she clearly had a close and affectionate relationship, as to what she did on a day‑to‑day basis. She had the benefit of her husband's advice and even though he was sick, he was capable of participating in family discussions. I have accepted that it was his intention that Paul should benefit substantially from the proceeds of the sale of Garfield Tce. It is clear however that Mrs McKeering was not secretive about the transactions when it came to persons outside her family. She mentioned to Mr Courtman that Paul was to get something from Garfield Tce or that it was to be his, and that Paul owned Peregian Beach. She made it clear to Judy Ballard, her housekeeper, as to the ownership of the various properties.
I have indicated that the relationship between Paul McKeering and his parents was a close one and that he had done a great deal for them in the 10 years preceding his death. This was far from either known or appreciated by his sisters, although there is some suggestion that his brother, Brian, may have been aware of something of this since he seemed to have visited their parents more regularly than the three daughters. Paul was available to his parents to drive them to the coast and establish them there, to maintain the Garfield Tce property on a weekly basis, and to undertake important structural renovations and repairs to it for which he paid. Mr McKeering was clearly well aware of this and appreciated it. I have concluded that Mrs McKeering also was aware of this matter. The idea of recompensing Paul from the proceeds of Garfield Tce came from Mr and Mrs McKeering. They might have chosen to leave him Harcourt Street, as was mentioned, and have given him nothing else but in the event chose not to do so. Had that happened there would have been a different outcome. The preference for Paul over the other children was not without real foundation apart from natural love and affection. What he had done for them was not to be measured in repayment for the cost of nuts and bolts but involved far more as I have attempted to show. The idea of a half of Garfield Tce was therefore not lacking in right‑mindedness. It was not foolish indulgence. Neither, in my view, was it improvident as it did not represent the bulk of Mrs McKeering's estate or anything like it. There was no independent advice but in respect of these transactions it really was not called for. On the assumption that the plaintiff bears the onus that its influence was undue I have concluded that that has not been discharged with respect to the properties and their renovation but has with respect to the payment of other money. However on the assumption that the defence bears the onus of proving that the influence was not undue, I conclude that that onus has been satisfied in respect of the properties and their renovation but not the payments of other money.
Cars
Declarations were sought with respect to the Mercedes Benz and Mazda motor vehicles. They have been sold. I am satisfied that the evidence reveals that those motor vehicles were purchased by funds provided by Paul McKeering save for the deposit on the Mazda to which I have referred.
There was a suggestion that an Alpha Romeo vehicle owned by Andrew Rattle had been paid for from Mrs McKeering's funds. Mr Brockett's evidence of a loan repayment made to Mr and Mrs McKeering's Credit Union account in October 1987 in the sum of $15,736.91 (ex.11), that there was no source of funds available to them to pay this amount, together with the annotation on the cheque butt of the cheque which was used to pay $12,800 to the Albion Car Centre that it represented repayment for the Credit Union loan, satisfies me that there is no basis for any declaration or 4recoupment from the defendants in respect of this amount.
Furniture in Storage
The circumstances of Andrew Rattle leaving the apartment at 16 Harcourt Street following Paul McKeering's funeral are not particularly pleasant. In order to resolve the issues in the action it is unnecessary to recount them and I do not propose to do so. He was not permitted to take any items from the apartment and was required to put them into storage and to pay for that storage. The evidence overwhelmingly indicates that the items in the apartment belonged either to Paul McKeering or to Andrew Rattle and had done so in the case of many of them, well before they moved to Harcourt Street. The plaintiff did not discharge the onus in respect of any of them. At the end of the hearing an arrangement was reached that they would be released to the defendants. The plaintiff must pay the cost of storage with interest from the date of first payment.
Might I conclude by saying that the legal advisers for both sides undertook an enormous amount of detailed work in respect of this matter and presented it in a systematic fashion which was of great assistance.
The orders are that:
The second defendant pay the plaintiff the sum of $333,880.42 together with interest thereon from 1 January 1992 to judgment pursuant to the Common Law Practice Act.
The plaintiff pay to the first and second defendants the cost of storage of the furniture referred to in ex. 48 together with interest thereon from the date of first payment to judgment pursuant to the Common Law Practice Act.
The plaintiff pay to the second defendant the sum of $82,393 together with interest pursuant to the Common Law Practice Act from 20 April 1992 to date of judgment.
I give liberty to apply with respect to the making of any other orders which may be necessary consequent upon the reasons in this judgment.
I will hear submissions as to costs.
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