Meiners v Gunn
[2018] WASC 319
•14 SEPTEMBER 2018
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: MEINERS -v- GUNN [2018] WASC 319
CORAM: ARCHER J
HEARD: 14 SEPTEMBER 2018
DELIVERED : 14 SEPTEMBER 2018
FILE NO/S: CIV 1228 of 2018
BETWEEN: HILDEGARD INGE MEINERS
Plaintiff
AND
DEBRA GUNN
Defendant
Catchwords:
Freezing order - O 52A - Turns on its own facts
Legislation:
Rules of the Supreme Court 1971 (WA), O 52A
Result:
Freezing order extended
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr T M Clavey |
| Defendant | : | In person |
Solicitors:
| Plaintiff | : | Douglas Cheveralls Lawyers |
| Defendant | : | In person |
Case(s) referred to in decision(s):
Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft mbH & Co KG, The Niedersachsen [1983] 2 Lloyd's Reports 600
Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Co Pty Ltd [2011] WASC 188
ARCHER J:
(This judgment was delivered extemporaneously on 14 September 2018 and has been edited from the transcript.)
Introduction
On 23 August 2018, I made freezing orders on the ex parte application of the plaintiff, Ms Meiners, against the defendant, Ms Gunn. Ms Meiners had also sought an ancillary order that Ms Gunn be required to make disclosure on affidavit as to her assets, including their value, location and details (disclosure orders). I was not prepared to make the proposed disclosure order on an ex parte basis. I considered that, because of the intrusive nature of a disclosure order, it was preferable to defer consideration of it until the return date.
I ordered that the freezing orders take effect upon Ms Meiners filing an undertaking as to damages and that they would continue up to and including the return date. I did not fix the amounts which Ms Gunn was permitted to spend under the freezing orders on ordinary living expenses and reasonable legal expenses despite the advantage to both parties of certainty. I preferred to wait until Ms Gunn had an opportunity to comment on what would be a reasonable amount for living expenses and to find out her intentions in relation to legal advice.
I gave oral reasons for my decision, which I did not publish, but which were subsequently provided to Ms Gunn along with the transcript of the hearing and a copy of the orders that I made. I directed that Ms Meiners serve on Ms Gunn the application and supporting affidavits by the next day, 24 August 2018. I set the return date as 28 August 2018.
On the return date of 28 August 2018, the parties appeared in court. Ms Gunn sought further time to assemble the evidence she wished to produce, and accordingly I adjourned the return date to today, 14 September 2018, and extended the freezing orders up to and including that date.
I also fixed the amounts which Ms Gunn was permitted to spend on ordinary living expenses and reasonable legal expenses. Ms Gunn had advised me that she did not spend money beyond her income and did not intend to get legal advice now or in the future.
I also made disclosure orders requiring Ms Gunn to provide information as to her financial position by 11 September 2018 in the form of the usual orders.
Ms Gunn opposes the extension of the freezing order. These are my reasons for extending them.
Substantive action
Ms Meiners has commenced an action against Ms Gunn seeking a declaration, among other things, that Ms Gunn holds a unit in Yokine (Yokine unit) on trust for her. Ms Gunn is the registered proprietor of the Yokine unit, and is the daughter of Ms Meiners.
Ms Meiners pleads by her substituted statement of claim that she was vulnerable for various reasons, including that she was in her late 70s and grieving the loss of her husband.
Ms Meiners claims that she relied on Ms Gunn for advice concerning the management of her assets and that she had trust and confidence in Ms Gunn. It is common ground that Ms Meiners had appointed Ms Gunn as an attorney and guardian pursuant to enduring powers of attorney and guardianship.
Ms Meiners claims that, in about February 2015, Ms Gunn advised and encouraged her to sell her home (the Armadale property). Ms Meiners claims that she listed the Armadale property for sale as a result. Ms Meiners further claims that, in about May or June of 2015, Ms Gunn advised and encouraged her to purchase a retirement village unit lease and to deal with the net proceeds of the sale of the Armadale property so as to protect Ms Meiners' pension entitlements. Ms Meiners claims Ms Gunn said various things about what would happen in the future if Ms Meiners sold the Armadale property, including that, if Ms Meiners did not like living in the retirement village unit, then Ms Gunn would use the proceeds from the sale of the Armadale property and a bank loan to buy a unit in which Ms Meiners could live.
Ms Meiners claims that this gave rise to a common intention held by the parties and a reasonable expectation on her part that the money from the sale of the Armadale property would be used by Ms Gunn to purchase a property to be enjoyed by Ms Meiners during her lifetime if she no longer wished to live in the retirement village unit and to provide Ms Gunn with a home after Ms Meiners' death.
Ms Meiners claims that, in reliance on the common intention, the expectation, and Ms Gunn's advice and encouragement, she signed a retirement village lease, sold the Armadale property, and transferred the excess cash, about $130,000, to Ms Gunn's Commonwealth Bank account (CBA account). It is common ground that that amount was transferred. Ms Meiners claims that, on or about 24 August 2015, Ms Gunn purchased the Yokine unit using about $100,000 of the funds provided to her by Ms Meiners and the proceeds of a bank loan (CBA home loan).
Ms Meiners claims Ms Gunn did not allow her to live in the Yokine unit and instead offered to buy Ms Meiners a property of her own. Ms Meiners claims that Ms Gunn said she was selling Ms Gunn's property in Cookernup, and, if Ms Meiners gave Ms Gunn the proceeds of the sale of the retirement village unit lease, Ms Gunn would combine the proceeds of sale of the two properties to buy a property for Ms Meiners to live in close to the Yokine unit.
Ms Meiners claims that, by saying those things, Ms Gunn represented to Ms Meiners that she would give effect to the common intention and that she intended to satisfy the expectation. Ms Meiners claims that, relying on those representations, she gave the net proceeds of the sale of the retirement village unit lease to Ms Gunn. It is common ground that Ms Meiners transferred a sum of money to Ms Gunn's CBA account; on Ms Meiners' case, it was nearly $250,000.
Ms Meiners claims that, in December 2015, Ms Gunn transferred about $230,000 out of the CBA account, putting about $200,000 into the CBA home loan and $14,500 into an unspecified bank account.
Ms Gunn asserts that Ms Meiners' money was a gift. Ms Meiners claims that it is unconscionable for Ms Gunn to maintain that position and to retain the benefits in light of the matters that she pleads. Ms Meiners claims an equitable interest and undue influence and claims it would be unconscionable for Ms Gunn to retain the money. In the alternative, Ms Meiners claims there was an agreement by conduct.
Ms Gunn's affidavit in opposition
Ms Gunn filed an affidavit in opposition to the freezing orders on 11 September 2018. It contained a mixture of evidence and submissions. Most of the affidavit dealt with the merits of Ms Meiners' substantive claim. The affidavit set out various matters which Ms Gunn submitted made Ms Meiners' claim implausible or weak.
Ms Gunn also submitted that the freezing order was unnecessary and unreasonable in several respects: first, because there was already a caveat over the Yokine unit; second, because Ms Gunn does not owe money to Ms Meiners as the sums transferred were gifts; third, because there are no funds to withdraw and no ability to draw down further on the mortgage; and fourth, because it is not possible to monitor the freezing orders as the funds have been withdrawn and the accounts have been closed.
In relation to the first point, the caveat over the Yokine unit gives no protection against the disbursement of other assets of Ms Gunn. Further, it gives inadequate protection if Ms Gunn was to choose to stop paying her mortgage.
The second point goes to the merits of Ms Meiners' substantive claim. While the strength of her claim is relevant to whether the freezing order should be extended, it is not possible in a hearing of this type to resolve contested accounts of events and conversations between mother and daughter on affidavit.
As to Ms Gunn's third and fourth points, these appear to be based on a misunderstanding of the nature of the freezing orders. I had attempted to explain to Ms Gunn on 28 August 2018 that the freezing orders applied to her money and other assets, whatever they were, in Australia. However, Ms Gunn appeared to continue to think that the orders only restricted her ability to use funds in the now closed accounts.
It is common ground that Ms Gunn is employed and receives a regular wage. Irrespective of her current asset position, she will continue to receive income which can be preserved if it is appropriate to continue the freezing orders, subject of course to her right to ordinary living expenses, reasonable legal costs and her right to pay her mortgage as required so as not to default.
In Ms Gunn's affidavit at [18] she deposed:
In accordance with P8(a), [which was the order requiring her to provide financial information], I confirm that the details provided by the plaintiff at RJ14 [which are bank statements of Ms Gunn's relating to her Commonwealth Bank account that had been closed] are the extent and all of the assets I hold within in Australia at the dates as listed. This includes moneys that had been held in trust for my grandchildren since 2011, which are contributed to from my pay every week. At the dates listed, no other bank accounts were held.
This did not comply with the disclosure orders, which required her to provide information as to all of her assets. I will say more about this later.
Ms Gunn also submitted in her affidavit[1] that there was no point in Ms Meiners proceeding with the substantive action, as even if Ms Meiners succeeded, the property would have to be sold and
her net result would be no more than $90,000. Legal fees will take $60,000 - $100,000. The plaintiff will be left with no asset, I would have no assets, and the plaintiff would still owe legal fees.
The plaintiff will not be able to purchase another home, but will, however, have more cash than she can reasonably spend in her lifetime.
… she will be leaving her daughter destitute.
[1] At [45] to [49].
Principles
The relevant principles to be applied are set out in Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Co Pty Ltd,[2] and in the cases cited in that case. The following summary comes primarily from Perdaman.
[2] Perdaman Chemicals & Fertilisers Pty Ltd v The Griffin Coal Mining Co Pty Ltd [2011] WASC 188.
The object of O 52A is to prevent the abuse or frustration of court processes. This does not necessarily involve an intention to produce those results.
An order should only be granted with a high degree of caution. It is a drastic remedy which should not be granted lightly.
In the present case, there are essentially two conditions that must be satisfied before the court's discretion to make a freezing order is enlivened. I must be satisfied that Ms Meiners has a 'good arguable case' against Ms Gunn on an accrued cause of action that is justiciable in the court; and that there is a danger that the prospective judgment will be wholly or partly unsatisfied because assets of Ms Gunn's might be removed or otherwise disposed of, dealt with, or diminished in value.
Satisfaction of the two conditions does not mean that a freezing order will be made as of right. The interim remedy is discretionary. The strength of the plaintiff's case, the danger of frustration of a prospective judgment, the balance of convenience, and any other relevant discretionary factors are all considered together in the exercise of the discretion whether to grant the order.
Good arguable case
The expression 'good arguable case' comes from a judgment of Mustill J, who expressed it as being 'in the sense of a case which is more than barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50% chance of success'.[3]
[3] Ninemia Maritime Corporation v Trave Schiffahrtsgesellschaft mbH & Co KG, The Niedersachsen [1983] 2 Lloyd's Reports 600, 605.
The requirement has been treated as equivalent to the general requirement that the plaintiff must establish that it has a reasonably arguable case on legal and factual matters.
Danger that a judgment will be unsatisfied
The danger that a prospective judgment will be wholly or partially unsatisfied may be inferred from the nature of the case. For example, if there is a good arguable case of fraud or dishonesty, then the court may infer a risk of dissipation of assets in the absence of a freezing order. Where that is not the case, there must be evidence to establish the danger of asset dissipation.
The relevant danger has been expressed as a 'real risk' that, by reason of dissipation, the judgment or prospective judgment will go unsatisfied. It is not enough for the applicant to simply assert a risk that the assets will be dissipated; the real risk of dissipation must be demonstrated by solid evidence.
Disposition
I am satisfied that Ms Meiners has demonstrated that she has a good arguable case against Ms Gunn on an accrued cause of action that is justiciable in this court.
In Ms Gunn's affidavit, she pointed to numerous matters which she said demonstrated the implausibility of Ms Meiners' claims. In particular, there were SAT proceedings in which Ms Gunn filed a statutory declaration purportedly signed by Ms Meiners to the effect that the first payment was a gift. Her affidavit includes numerous other examples that Ms Gunn submits demonstrate the illogicality of Ms Meiners' position.
In oral submissions, Ms Gunn summarised her points in this way: first, Ms Meiners has provided numerous affidavits and testamentary evidence which reveal changing positions; secondly, Ms Meiners has produced no supporting evidence of what she alleges Ms Gunn said; thirdly, the dates do not add up. In relation to the last point, Ms Gunn said that Ms Meiners sold her home in May 2015 and had already decided to buy a retirement village unit lease. Ms Gunn put an offer on the Yokine unit in June 2015. Ms Gunn's point was, among other things, that she could have bought the Yokine unit outright.
It is not possible to fully assess the merits of Ms Meiners' claim or Ms Gunn's challenges at this stage of the proceedings. There is sufficient material to satisfy me that Ms Meiners has a good arguable case. In addition to the disputed evidence of Ms Meiners, some of the undisputed facts support her claims.
In particular, the following does not appear to be in dispute: Ms Meiners is 82 years of age. After her husband passed away, she owned her home, the Armadale property, free of debt. Ms Meiners appointed her daughter, Ms Gunn, as an attorney and guardian pursuant to enduring powers of attorney and guardianship. Ms Meiners sold her home for $400,000. She directed that $130,000 of that be transferred to Ms Gunn. Ms Meiners purchased the retirement village unit lease. Ms Meiners sold the unit lease and the full sale price of approximately $242,000 was put into Ms Gunn's bank account.
I pause to add that Ms Gunn does not necessarily accept all of these things. Some of these things she says she does not know, but she does not dispute any of them, and they are all demonstrable by documentary evidence and matters that are not in dispute.
At this point, after selling the unit lease, Ms Meiners was not the registered proprietor of any property and had transferred, in effect, virtually the full sale price of the home she had owned outright. She remains without real property and has very limited assets.
Danger of dissipation
I am satisfied that Ms Meiners has demonstrated that there is a real risk that by reason of dissipation a prospective judgment will go unsatisfied.
In February 2018, Ms Meiners commenced an action seeking in effect the repayment of the money or recognition of her interest. Ms Meiners has a caveat over the Yokine unit.
On 30 July 2018, Ms Meiners' solicitors wrote to Ms Gunn's solicitors seeking an undertaking that Ms Gunn would not draw down on the mortgage redraw facility and would not default under the mortgage, otherwise Ms Meiners would seek a freezing order.
Ms Gunn deposes that, on the same day, 30 July 2018, her bank accounts were brought to a minimum balance, and she closed her accounts. She denies this was because of the letter sent to her solicitors that day. She says the letter was not sent to her until the next day, 31 July 2018. As I will discuss later, this appears to be a reference to a second letter that was sent directly to her after she had filed a notice on 31 July 2018 that she was now going to be acting for herself,.
Ms Gunn deposes that she closed her accounts
on 30 July 2018, after the second mediation, when it became clear that … [Ms Meiners] was preparing evidence for trial. I felt it was prudent to change bank accounts as [Ms Meiners] now had access to information that had been given for the purposes of mediation only.
Ms Gunn further deposed:
The money that was transferred from Commonwealth Bank account is money that has been held for and contributed to for my grandchildren since the day they were born and money for legal fees.
…
Putting the bank accounts at minimum balance was not done to abuse court process. It was done because I'm a single income household, have worked more than 40 years full time and believed that the plaintiff would use the information given to her for the purposes of mediation for other purposes. The bank statements are being used to invade my privacy and control my finances even though they have not been understood by the plaintiff and no money is owed to the plaintiff. The impact on my privacy is unreasonable in the circumstances.
From Ms Gunn's own affidavit, it appears that she moved money out of the bank accounts that were known to Ms Meiners so that Ms Meiners would not know where Ms Gunn's money was. I will say more about this in a moment.
Despite these admissions, Ms Gunn submitted that there was no evidence that funds had been transferred elsewhere. She deposed 'There was no need to transfer or hide moneys as the moneys were given by the plaintiff as gifts. Although not complete, the information at FO4 demonstrates that this claim is unlikely'. 'FO4' was a table showing, among other things, outgoings including renovations.
Despite being required by the disclosure orders to provide information as to her current assets in Australia, Ms Gunn said in her affidavit that her only assets were those that were in the closed bank accounts as at that date.
When this was explored in the course of today's hearing, Ms Gunn advised that she had opened a new bank account with the Commonwealth Bank (new CBA account) that was not one of the accounts that had previously been closed. She said that all of her wages went into the new CBA account and from that the mortgage was paid.
She advised that her assets were limited to the Yokine unit, a car worth about $8,000, this new CBA account and some superannuation. She said she had no other assets.
Subsequently, in the course of a different exchange, Ms Gunn mentioned that she had a Bankwest account. She said that she opened that on about 4 or 5 August 2018 and part of her wages go into that account and part of her wages go into the new CBA account to pay the mortgage.
In further exchanges, Ms Gunn then said that the $52,000 she had taken out of the now closed CBA accounts had been dispersed in the following ways.
First, she said she sent some of it overseas. This was the component that represented the money she says that she was holding on trust for her grandchildren. Prior to that time, the money had been in bank accounts in her name. She said that was because that was the bank's requirement but, she said, it was clearly identified that these were individual accounts for her four grandchildren - two actual grandchildren and two other children she treats as her grandchildren.
Second, she said the balance was buried in her garden. She was unable to tell me how much was in her garden initially and unable to provide an estimate but subsequently estimated the amount to be $50,000. It did seem to me at one point that she said the money was not literally buried in her garden, but when I asked for clarification on that, she confirmed that it was literally buried in her garden. I make nothing of that because I am not entirely sure I heard her correctly the first time, and it may be that I simply misheard her.
Ms Gunn's explanation for having the money in the garden was ultimately that she wanted to keep the money there for the legal fees that she would need in relation to the upcoming substantive trial. I had understood her to say on the last occasion that she had no intention of getting legal advice now or in the future, but she advised me today that that is not what she had said, and I have not gone back to the transcript to review that, so I take that no further either.
She said she was going to keep the money in her garden so that she would have it available to her to use for legal advice. She insisted that she understood she was not allowed to use the money inconsistently with the freezing order and that she understood that the freezing order limited her to be able to spend up to $5,000 on reasonable legal expenses unless she brought an application to extend or vary that amount. She said she did not want to take that money out and put it into a bank account because she needed it there so that she could sleep at night. It made her feel safe.
On further exploration with Ms Gunn, I was unable to obtain any further explanation as to why, given that she said she understood she could not use the money and it was subject to a freezing order, it would make her feel any more safe having the money buried in the garden rather than in a bank account.
Returning to the narrative of events, I mentioned that Ms Meiners' solicitors wrote to Ms Gunn's solicitors seeking an undertaking on 30 July 2018. The day after that, Ms Gunn filed a notice of change of representation, specifying that she would be acting in person. Ms Meiners' solicitors then wrote to her directly, the same day, seeking an undertaking. Ms Gunn replied by email asserting that the money was a gift.
The email is at page 32 of Ms Meiners' affidavit and began with Ms Gunn acknowledging that she was in receipt 'today', she says, of the letters dated 30 and 31 July 2018. She then wrote:
The money was a gift to me from your client, and as such I do not accept your client's spurious claims.
The gift has not been dissipated but has been spent in accordance with your client's verbal and written statements that the money was a non-repayable gift...
Ms Gunn further wrote:
To freeze my bank account … would potentially make me unable to pay the mortgage.
…
Should default on the mortgage and bankruptcy be the only option available to me, I will be forced to take that action, which will leave your client with little potential benefit and even the lawyers' fees may not be paid. … To be left with nothing at my age is irresponsible and unreasonable action to take, particularly when it will not improve your client's position. For your client to pursue a course of action in which she knowingly and willingly seeks to put her daughter into a catastrophic financial position shows the true parent/daughter relationship which exists between your client and me.
All parties are well aware that the funds your client is seeking will not be materialised whether I sell my home or not. … It is in your client's best interests to spend the last few years of her life without this conflict.
Although the bank evidence is not entirely clear, it appears that the bank closed Ms Gunn's bank accounts, as they then were, on 7 August 2018. The refusal to give an undertaking, the email from Ms Gunn, the closing of her accounts and her submissions today, including the revelation of the money buried in her garden, leads me to infer there is a real risk that, by reason of dissipation, the prospective judgment will go unsatisfied.
Discretion
The question of discretion remains. I must balance the nature and effect of the proposed freezing order on Ms Gunn with Ms Meiners' need for the order to avoid frustrating enforcement of a prospective judgment and determine what best serves the interests of justice.
In my view, it is appropriate to extend the orders despite the drastic nature of such orders.
The likely consequence to Ms Meiners if the assets are dissipated are significant. She no longer owns her own home, has very little savings, and is reliant on a pension and rent assistance.
Ms Gunn will not be unduly burdened by the restrictions, for the following reasons:
(1)Consistent with the standard form for freezing orders, the restraint is confined to a particular amount in terms of the unencumbered value of the assets that are the subject of the order.
(2)The freezing orders provide for the usual carve‑outs as to living expenses and reasonable legal expenses with liberty to apply at short notice.
(3)Ms Gunn advised me on the last occasion that she always lived within her wage, and on this occasion, Ms Gunn did not identify any specific prejudice which would be caused by the orders other than the inherent prejudice of such orders. Her submission was to the effect that the freezing orders had no effect, but they should not be there.
(4)I also note there is a capacity to apply to the court at short notice if something unexpected arises.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CG
ASSOCIATE TO THE HONOURABLE JUSTICE ARCHER19 OCTOBER 2018
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