Moser v Ky

[2021] NSWSC 1634

Supreme Court

New South Wales

Medium Neutral Citation:

Moser v Ky [2021] NSWSC 1634

Hearing dates:

22 and 23 November 2021

Decision date:

15 December 2021

Jurisdiction:

Equity - Expedition List

Before:

Sackar J

Decision:

See para [128]

Catchwords:

AGENCY — Power of attorney — Revocation — Declaration that revocation of Powers of Attorney and Enduring Guardianship effective in law

EQUITY — Equitable compensation — Whether the defendant holds monies given to him by the plaintiff — Whether monies given to the defendant were gifts — Presumption of gift not rebutted

EQUITY — Undue influence — Whether money given to the defendant in return for access to the plaintiff’s other funds transferred under undue influence

Legislation Cited:

Powers of Attorney Act 2003 (NSW) s.5

Cases Cited:

Antonio Di Liristi v NSW Public Trustee [2021] NSWSC 1347

Broadlands International Finance Ltd v Sly (1987) 4 BPR 9420

Commercial Bank of Australia v Amadio (1983) 151 CLR 447

George v Howard (1819) 7 Price 646 at 641; [1819] 146 ER 1089

Heydon v The Perpetual Executors, Trustees and Agency Company (WA) Limited (1930) 45 CLR 111

Hillston v Bar-Mordecai [2003] NSWSC 89

Quek v Beggs (1990) 5 BPR 11,761

Kordovoulos v Dixon-Hughes [2021] NSWSC 722

Spong v Spong (1914) 18 CLR 544

Thorne v Kennedy (2017) 263 CLR 85

Watkins v Combes (1922) 30 CLR 180

Category:

Principal judgment

Parties:

Karl Moser (plaintiff)
Malcolm (Mao) Ky (first defendant)
NSW Civil and Administrative Tribunal (second defendant) (submitting appearance)

Representation:

Counsel:
P Santucci (plaintiff)

Solicitors:
Low Doherty & Stratford (plaintiff)
Self represented (first defendant)

File Number(s):

2021/115485

Publication restriction:

n/a

Judgment

1. These proceedings were commenced by Summons dated 24 April 2021.

2. The first defendant appeared as a litigant-in-person. The second defendant, the NSW Civil and Administrative Tribunal, filed a submitting appearance and did not participate in the proceedings.

3. The two main issues to be determined are whether the plaintiff duly revoked the Powers of Attorney and Guardianship on 8 March 2021 (SOC [25]-[27]) and whether certain amounts of money paid to the defendant during 2020 and 2021 were procured by undue influence, unconscionable conduct, were otherwise in breach of fiduciary duties or give rise to a claim in restitution (SOC [7]-[17]).

4. The “2020 Payments” were said to be:

1. $5000 paid on 26 February 2020 (SOC 7(a));

2. $5000 paid on 3 March 2020 (SOC 7(b));

3. $2000 paid on 10 March 2020 (SOC 7(c));

4. $3000 paid on 8 April 2020 (SOC 7(d)).

5. The plaintiff accepted that there was no documentary evidence to support the $2000 payment in SOC[7](c) on 10 March 2020 and therefore this amount was not pressed (see T.6/7). This has the effect of reducing the 2020 Payments to a total of $13,000.

6. The “2021 Payment” was said to represent $48,510 which was withdrawn from the plaintiff’s bank account (held in joint names with the defendant) in favour of the defendant (SOC 10).

Background Facts

7. The plaintiff is an 87 year old man with no children, and no relatives living in Australia (Moser [1]-[2]).

8. In about 2018, the plaintiff met the defendant who was acting as his real estate agent assisting him in selling his unit in Ultimo to enable his move to a retirement village in Rooty Hill (Moser [16]).

9. Throughout 2018 -2019 the plaintiff and defendant were close friends (Moser [30]), the defendant was a source of company and drove the plaintiff to various places and on outings. The plaintiff confided in the defendant that he had no children (Moser [29]).

10. Aware of his age the plaintiff consented to the defendant becoming his Attorney and Guardian (Moser [32]). The defendant arranged for GKN law to prepare the documents (Moser [33]).

11. On 31 October 2018 the plaintiff executed:

1. Enduring Power of Attorney dated 31 October 2018 (CB 48-53);

2. Appointment of Enduring Guardian (CB 57-62);

3. An amended Will (CB 246-252);

12. The plaintiff was in a relationship with his former de facto Jean Gurney for about 11 years (Moser [21]). By 2014 Ms Gurney was starting to suffer dementia (Moser [25]). In 2017 Ms Gurney was relocated by her own children to live in a nursing home (Moser [26]). The plaintiff became involved in litigation with Ms Gurney’s family in respect of his relationship with her (Moser [27]).

13. Following the appointment of the defendant as attorney, the defendant took over communication with the plaintiff’s lawyer Mr Hertz (Moser [34]).

14. In June 2019 Mr Hertz, the solicitor acting for the plaintiff in the Gurney proceedings, arranged for the plaintiff to see a psychiatrist Dr Wijeratne (Moser [25]).

15. On 5 March 2020, an order was made appointing the defendant as the Case Guardian of those Family Court Proceedings (CB 826).

16. The plaintiff eventually appointed Low Doherty & Stratford to act on his behalf directly in the Family Court proceedings. When the issue was raised in this Court, the defendant refused to relinquish his position as Case Guardian in the Family Court (Transcript 24 May 2021, Kunc J, T5.30-7.15).

17. That necessitated the plaintiff bringing a contested application to remove the defendant as case guardian. On 25 August 2021 orders were made removing the defendant (CB 478).

18. On 7 October 2021, following the removal of the defendant the Family Court proceedings were settled (CB 482-483).

19. In February, March, April 2020 the plaintiff made cash payments to the defendant (Moser [40], SOC[7]).

20. Of the payments pleaded in SOC [7], the defendant has admitted receiving the 3 March 2020 payment of $5,000 but says that it was a gift and that he did not ask for it (Affidavit of Mr Ky dated 14 July 2021 [72] CB204).

21. In late March or early April 2020 the defendant arranged for the plaintiff’s superannuation in the amount of $458,195.58 to be paid into an ANZ bank account (Moser [48], statement at Annexure F CB83).

22. On 8 April 2020 $470,379.73 was withdrawn from account ending #40247 and paid into an ANZ term deposit account (Moser [54], Annexure G CB85). That term deposit was due to mature on 8 December 2020.

23. On 15 December 2020, the defendant opened a joint account in the name of the plaintiff and himself (Letter dated 15 December 2020 from ANZ to the defendant, Annexure H, CB88).

24. On 15 December 2020, the $474,659.33 was deposited from the term deposit account into the newly opened joint account (CB90).

25. In January 2021 the plaintiff attended a branch of the ANZ but was told he could not access the funds he has in that account without the defendant’s agreement as a co-signatory on the account (Moser [64]).

26. On 19 February 2021 $48,510 was withdrawn from the ANZ joint account and ultimately paid to the defendant (SOC[10], Annexure I, CB90).

27. The defendant admitted receiving the $48,510 (Transcript 20 April 2021 before Henry J, T8.40), and agreed to pay it into Court by consent.’

28. In early 2021, after being told he could not access the ANZ account without the defendant’s joint permission, the plaintiff arranged to see his regular doctor Dr Quereshi. Dr Quereshi referred him to a specialist geriatrician Dr Earnest Tam, and the plaintiff arranged for the appointment himself (Moser [65]).

29. Dr Tam assessed the plaintiff on 6 March 2021 (Affidavit of Dr Tam, affirmed 26 July 2021, [7], CB176, and Report of Dr Tam CB 188).

30. On 8 March 2021, the plaintiff executed the revocations of the enduring power of attorney and the guardianship prepared by a solicitor known as Clara Suasin (CB112-113).

31. On 11 March 2021 the plaintiff commenced NCAT proceedings (Moser [81] Annexure P CB 131).

32. In response, the defendant made two applications to NCAT (Moser [83], Annexure Q CB 142-154).

33. On 22 April 2021, the NCAT proceedings were listed for directions. The defendant objected to Mr Doherty appearing on behalf of the plaintiff in those proceedings (Moser [85]).

34. Earlier on 13 April and 16 April 2021 Low Doherty & Stratford had written to the defendant asking him to accept the revocations, and to obtain legal advice (Annexure U, CB 169-173).

35. The NCAT has filed a submitting appearance in the present proceeding (CB31).

The Supreme Court Proceedings

36. On 26 April 2021 the plaintiff approached the duty judge for short service of the Summons dated 26 April 2021 (CB1), and came back before the duty judge on 30 April 2021.

37. The Supreme Court was the appropriate forum in which all matters could be ventilated and equitable relief could be given in respect of claims for undue influence.

38. At the hearing before Henry J on 30 April 2021 the plaintiff sought orders restraining the defendant from holding himself out as guardian. Additionally, the plaintiff gave undertakings (that have been renewed on a number of occasions) that the plaintiff would not seek to alter conditions imposed by the ANZ on his bank accounts.

39. Also at the 30 April 2021 hearing before Henry J, her Honour directed the parties to attend mediation before 21 May 2021 (T24.20 CB416). The defendant failed to agree on a date for mediation, and the matter had to come before Kunc J on 24 May 2021 to extend the time for mediation to 24 June (CB 419).

40. Following the failed mediation on 24 June 2021 the matter returned before Kunc J on 28 June 2021 at which time Kunc J made orders for the filing of a defence and evidence by the defendant by 12 July 2021, and stood the matter into the expedition list on 7 July 2021(CB 436-437).

41. The plaintiff filed and served a statement of claim on 30 June 2021 (CB 7).

42. On 7 July 2021, I granted expedition and fixed the hearing date for 22 and 23 November 2021 (CB 443) and extended the date for the defendant’s evidence until 15 July 2021 (CB 441).

Legal Principles

Presumption of a gift

43. In the absence of circumstances, a voluntary delivery of at least chattels and arguably money gives rise to the presumption of a gift. In Heydon v The Perpetual Executors, Trustees and Agency Company (WA) Limited (1930) 45 CLR 111 (“Heydon”) the respondent as executor of an estate had brought a claim against the appellant for the recovery of money lent by the deceased to the appellant at her request and for money had and received by the appellant as trustee for the respondent. The appellant denied this claim and argued the money was given to her as a gift. The respondent argued that a voluntary payment to a stranger raises a presumption of resulting trust, but Dixon J (at 112) rejected that this presumption may be applied to the voluntary delivery of chattels. Rather, the delivery gives rise to the presumption that a gift was intended “in the absence of circumstances”. In support of this notion, his Honour quoted (at 113) Richard C.B in George v Howard (1819) 7 Price 646 at 641; [1819] 146 ER 1089 at 1090 who said “if I deliver money…to another, even although he should be a stranger, it would be prima facie a gift.”

44. Once this presumption arises, the onus falls on the plaintiff to prove on the evidence that the giving of money was something other than a gift (see Heydon at 113 in which the evidence did not support the plaintiff’s/respondent’s claim and the appeal was therefore allowed).

45. In Kordovoulos v Dixon-Hughes [2021] NSWSC 722 I expanded upon the case law surrounding this presumption (at [38]-[40]):

[38] In Joaquin v Hall [1976] VR 788 (“Joaquin v Hall”) the plaintiff’s cause of action was pleaded as an agreement for a loan of $7500 repayable on demand and breach of that agreement by failure to repay after demand. The defendant argued that the $7500 had been given as a gift. In coming to his decision, Jenkinson J (at 788-789) contrasted the English Court of Appeal’s decision in Seldon v Davidson [1968] 1 WLR 1083; [1968] 2 All ER 755 (“Seldon v Davidson”) where it was held that the burden of proof lay upon the defendant to prove the money was a gift rather than a loan with the contradictory position of the High Court of Australia in Heydon.

[39] In Joaquin v Hall, Jenkinson J commented (at 789) that the Court of Appeal in Seldon v Davidson appeared to treat the defence pleaded (that money had indeed changed hands) as a confession and avoidance. Importantly, Jenkinson J, however, found that the defence was a key aspect to the cause of action. Secondly, the presumption of an obligation to repay a payment to a stranger was rejected in Heydon. Ultimately, Jenkinson J concluded that “the burden of proof being on the plaintiff, he has in my judgment failed to discharge it.”

[40] The decision of Joaquin v Hall has been applied on numerous occasions in New South Wales. In Schmierer v Taouk (2004) 207 ALR 301; [2004] NSWSC 345, White J found (at [59]) that “the onus of establishing that all or part of the moneys paid by the company to the defendant, or was received by him to the use of the company, lay on the plaintiffs”. Numerous authorities were cited, including Joaquin v Hall and Heydon to support the notion that this onus is not discharged by mere proof of payment. This position was supported by the Court of Appeal in Gray v Gray (2004) 12 BPR 22,755; [2004] NSWCA 408 at [16] and has been applied in numerous subsequent cases (see, e.g., E Co v Q [2018] NSWSC 442 at [63]; Calokerinos (Executor of Estate of Sclavos v Yesilhat) [2017] NSWSC 666 at [791]; Voce v Deloraine [2012] NSWSC 1187 at [12]).

Undue influence

46. The High Court in Thorne v Kennedy (2017) 263 CLR 85 (“Thorne v Kennedy”) commented on the characterisation of undue influence (at [30], citations omitted):

In Allcard, Lindley LJ said that “no Court has ever attempted to define undue influence”. One reason for the difficulty of defining undue influence is that the label “undue influence” has been used to mean different things. It has been used to include abuse of confidence, misrepresentation, and the pressure which amounts to common law duress. Each of those concepts is better seen as distinct. Nevertheless, the boundaries, particularly between undue influence and duress, are blurred. One reason why there is no clear distinction is that undue influence can arise from widely different sources, one of which is excessive pressure. Importantly, however, since pressure is only one of the many sources for the influence that one person can have over another, it is not necessary that the pressure which contributes to a conclusion of undue influence be characterised as illegitimate or improper.

47. Their Honours continued, noting that a lack of free will was a common factor in descriptions of undue influence ([34]). They expanded upon the concept of “free” at [32]-[33] (citations omitted):

[32] The question whether a person’s act is “free” requires consideration of the extent to which the person was constrained in assessing alternatives and deciding between them. Pressure can deprive a person of free choice in this sense where it causes the person substantially to subordinate his or her will to that of the other party. It is not necessary for a conclusion that a person’s free will has been substantially subordinated to find that the party seeking relief was reduced entirely to an automaton or that the person became a “mere channel through which the will of the defendant operated”. Questions of degree are involved. But, at the very least, the judgmental capacity of the party seeking relief must be “markedly sub-standard” as a result of the effect upon the person’s mind of the will of another

[33] An example which illustrates the characterisation by a court of a lack of free will sufficient to amount to undue influence is the decision of this Court in Johnson v Buttress. In that case, Mr Buttress was a 67 year old man, who was “wholly illiterate, not very intelligent, and of little or no experience or capacity in business”. He made a voluntary transfer of land to a relative of his wife. The land was his only property and his only means of livelihood. When he made the transfer he did not understand that he had parted with the land irrevocably. After Mr Buttress died, the administrator of his estate brought an application to set aside the transfer. The trial judge set aside the transfer on the basis of undue influence. This decision was upheld in this Court. Although other members of the Court relied upon a presumption of undue influence, which is considered below, one member of the Court, Starke J, concluded that it was open to the trial judge to find that undue influence arose without any presumption. His Honour upheld the conclusion of the trial judge that the circumstances of the transfer invited the inference that it was “not the result of the free and deliberate judgment of the deceased”.

48. Undue influence may be proven by direct evidence of the circumstances of a particular transaction or by presumption (Thorne v Kennedy at [34]).

49. The relationship of principal and attorney does not, of itself, give rise to one of the existing categories of presumed undue influence (see Broadlands International Finance Ltd v Sly (1987) 4 BPR 9420, 9425).

50. One category of case of undue influence is that in which a donee has received a gift by encouragement or suggestion. As was explained by McLelland J in Quek v Beggs (1990) 5 BPR 11,761, once the relationship of ascendency has been established it will fall to the ascendant party to rebut the presumption of undue influence (at 11,765):

The donee may rebut the presumption of undue influence, when it arises, by proving that the donor (i) knew and understood what he or she was doing; and (ii) was acting independently of any influence arising from the ascendancy of the donee: see Lancashire Loans Ltd v Black [1934] 1 KB 380 at 409 ; West v Public Trustee [1942] SASR 109 at 119; Inche Noriah at 135; Wright v Carter [1903] 1 Ch 27 at 52, 57 .

It is not sufficient to prove only the first of these elements. In the frequently quoted words of Lord Eldon LC in Huguenin at 300 [ER 536], “The question is, not, whether she knew what she was doing … but how the intention was produced”, to which Sir John Romilly MR added in Hoghton v Hoghton (1852) 15 Beav 278 at 299 ; 51 ER 545 at 553 , “and though the donor was well aware of what he did, yet if his disposition to do it was produced by undue influence, the transaction would be set aside”. See also Harris v Jenkins (1922) 31 CLR 341 at 368 ; Bank of New South Wales v Rogers (1941) 65 CLR 42 at 54, 85 ; Zamet v Hyman [1961] 1 WLR 1442 at 1447 ; Whereat.

Nor in relation to the second element is it necessarily sufficient to prove that the proposal to make the gift came from the donor (Spong v Spong (1914) 18 CLR 544 at 549 ; Whereat at 169) or that the donee took no active steps to procure the gift: Allcard at 183–4, 185–6; Wright at 52–3.

51. Once the presumption of undue influence arises, the onus falls on the defendant to rebut it by establishing that the transaction occurred in the absence of influence.

52. In Spong v Spong (1914) 18 CLR 544, Rich J stated (at 552) that:

the question is, whether the person parting by way of gift, or entering into a contract, had a full and free opportunity of judging for himself. … ‘The principle applies to every case where influence is acquired and abused, where confidence is reposed and betrayed’.

53. The burden of rebutting the presumption is a ‘heavy one’ (Watkins v Combes (1922) 30 CLR 180 at 193 – 194 Issacs J). Evidence of independent, and competent legal advice is one way of rebutting the presumption of undue influence (Hillston v Bar-Mordecai [2003] NSWSC 89 at [35] (Bryson J)).

Unconscionable conduct

54. In Commercial Bank of Australia v Amadio (1983) 151 CLR 447 (“Amadio”) at 474 Deane J explained the jurisdiction for courts of equity to relieve against unconscionable transactions as follows (citations omitted):

The jurisdiction is long established as extending generally to circumstances in which (i) a party to a transaction was under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them and (ii) that disability was sufficiently evident to the stronger party to make it prima facie unfair or "unconscientious" that he procure, or accept, the weaker party's assent to the impugned transaction in the circumstances in which he procured or accepted it. Where such circumstances are shown to have existed, an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable: "the burthen of shewing the fairness of the transaction is thrown on the person who seeks to obtain the benefit of the contract" (see per Lord Hatherley, O'Rorke v. Bolingbroke; Fry v. Lane; Blomley v. Ryan).

55. The High Court has commented on the distinction between unconscionability and undue influence on numerous occasions. In Amadio, Deane J (at 474) described undue influence as looking “to the quality or the consent of the weaker party” while unconscionability:

looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity or good conscience that he should do so.

56. More recently in Thorne v Kennedy, the Court stated at [37]-[40] (citations omitted):

[37] There was no controversy on this appeal concerning the principles of unconscionable conduct in equity. Those principles were recently restated by this Court in Kakavas v Crown Melbourne Ltd.

[38] A conclusion of unconscionable conduct requires the innocent party to be subject to a special disadvantage “which seriously affects the ability of the innocent party to make a judgment as to [the innocent party's] own best interests”. The other party must also unconscientiously take advantage of that special disadvantage. This has been variously described as requiring “victimisation”, “unconscientious conduct”, or “exploitation”. Before there can be a finding of unconscientious taking of advantage, it is also generally necessary that the other party knew or ought to have known of the existence and effect of the special disadvantage.

[39] In Commercial Bank of Australia Ltd v Amadio, Deane J said that the equitable principles concerning relief against unconscionable conduct are closely related to those concerned with undue influence…

[40] Although undue influence and unconscionable conduct will overlap, they have distinct spheres of operation. One difference is that although one way in which the element of special disadvantage for a finding of unconscionable conduct can be established is by a finding of undue influence, there are many other circumstances that can amount to a special disadvantage which would not establish undue influence. A further difference between the doctrines is that although undue influence cases will often arise from the assertion of pressure by the other party which might amount to victimisation or exploitation, this is not always required. In Commercial Bank of Australia Ltd v Amadio, Mason J emphasised the difference between unconscionable conduct and undue influence as follows:

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.

Litigants-in-person

57. I recently summarised the principles in relation to self-represented litigants in Antonio Di Liristi v NSW Public Trustee [2021] NSWSC 1347 at [87]-[89]:

[87] Bound up with the obligation to act in a procedurally fair manner is the suite of obligations attending the manner in which courts deal with self-represented litigants (MZAIB v Minister for Immigration and Border Protection [2015] FCA 1392). Matters involving litigants-in-person may encounter a number of issues, as identified recently by the Full Court of the Federal Court (Markovic, Derrington and Anastassiou JJ) in Flightdeck Geelong Pty Ltd v All Options Pty Ltd [2020] FCAFC 138 (“Flightdeck”) (at [52]):

As acknowledged by the High Court in Neil v Nott (1994) 121 ALR 148 at 150; 68 ALJR 509, “[a] frequent consequence of self-representation is that the court must assume the burden of endeavouring to ascertain the rights of parties which are obfuscated by their own advocacy”. In addition, litigants-in-person commonly fail to lodge documents in the correct form, observe court formalities and procedures, understand the significance of court processes, put the relevant evidence or law before the Court; and understand the role of the Court in adjudicating the matter.

[88] In Hamod v State of New South Wales [2011] NSWCA 375 (“Hamod”), the New South Wales Court of Appeal set out the courts’ duty to unrepresented litigants at [309] – [316]. In essence, the overarching duty is to ensure that the trial is fair. The trial judge has an obligation to an unrepresented party to ensure that the unrepresented litigant has sufficient information about the practice and procedure of the court so far as is reasonably applicable for the purpose of ensuring a fair trial. The application of that principle will depend on the circumstances of the case. Also see Ekermawi v Administrative Decisions Tribunal of New South Wales [2009] NSWSC 143 at [53] and Pullin, Newnes and Murphy JJ in Moleirinho v Talbot & Olivier Lawyers Pty Ltd [2014] WASC 65 at [51]. In Stone v Braun [2015] WASCA 103, the Western Australia Court of Appeal found that an applicant had been denied procedural fairness in proceedings pursuant to the Family Provision Act 1972 (WA) where the master failed to alert the applicant to the distinction between evidence and submissions.

[89] The judge must put the unrepresented litigant in the position of being able to make an effective choice, however, their duty does not extend to advising on how the litigants’ rights should be exercised, giving judicial advice nor conducting the case on behalf of the unrepresented litigant (R v Gidley (1984) 3 NSWLR 168; MacPherson v The Queen (1981) 147 CLR 512;[1981] HCA 46 per Mason J at 534; Clark v State of New South Wales (No 2) [2006] NSWSC 914, cited in Hamod at [312]). Furthermore, a judge is entitled to reprimand a litigant-in-person if they are trifling with the court (Galea v Galea (1990) 19 NSWLR 263 at 283 per Meagher JA, cited in Hamod at [314]).

Submissions

Plaintiff’s submissions

Successful revocation of the power of attorney

58. The plaintiff submitted that on 8 March 2021 he executed documents that had the effect of revoking the powers. There are no formal requirements in the Power of Attorney Act 2003 (NSW) (“Power of Attorney Act”) for what such a revocation must contain. But these documents are written, have clear intent, and were signed by the plaintiff.

59. The plaintiff therefore argued that he is entitled to relief declaring the revocations to be valid and that none of the defendant’s defences to the claim should be accepted.

60. The plaintiff rejected the defendant’s argument that the plaintiff had breached s.5 of the Power of Attorney Act by revoking the powers on 8 March. The plaintiff submitted that s.5 defines the circumstances in which there may be a “Vacancy in the office of Attorney” and is a mechanical provision of the Act. It contains no substantive obligation capable of breach.

61. The argument that the defendant seems to be suggesting is that if the plaintiff was to revoke the Power of Attorney dated 31 October 2018, the Act ought to have had the effect of installing the defendant’s daughter, Sophie Ky, in the office of attorney as she is the named “Substitute Attorney” (see the Enduring Power of Attorney, CB16).

62. The plaintiff contends that the revocation of the 2018 Power of Attorney had the effect of revoking all appointments including the nomination of any substitute attorney.

63. The plaintiff rejected the defendant’s reliance on the report of Dr Wijeratne. First, the report ought not be admitted as it does not comply with the expert code of conduct, and UCPR r.31.23(3) and Dr Wijeratne is not an expert “witness” in these proceedings. Second, it would unlikely satisfy the business records rule under s.69 of the Evidence Act 1995 (NSW) (“Evidence Act”) because it was obtained in connection with the Family Court proceedings. Third, it ought to be admitted for limited purposes only, excluding as expert evidence (s.136 Evidence Act). Fourth, in any event, little weight should be given to it because of the significant time that had elapsed between the rendering of the report in June 2019 and the revocation in March 2021.

64. The plaintiff contrasted this with the evidence of Dr Earnest Tam who is a specialised geriatrician who assessed the plaintiff on 6 and 20 March 2021 (Affidavit of Dr Tam, [7] CB 176). That is, Dr Tam’s assessment occurred just two days before the revocation of the powers. The report of Dr Tam dated 20 March 2021 concluded (at CB 188 and following) that the plaintiff did “not demonstrate any cognitive impairment”, with a 30/30 Mini Mental State Examination score and good memory (CB 190). This evidence leaves no room for any suggestion that the plaintiff was unable to execute the revocation of the powers just two days later.

Payments to the defendant

65. The defendant admitted receipt of $48,510 and, following consent orders made by the Duty Judge, the funds were paid into Court by the defendant on 3 May 2021 (CB 496).

66. The defendant submitted that the payment of $48,510 was consented to by the plaintiff and is the subject of written acknowledgement (Affidavit of Ky 14 July 2021 [156(a)-(e)] CB216). The plaintiff disputed the documents the defendant relied upon, being a written document signed by the plaintiff dated 19 February 2021 in which the plaintiff states the amount is a “gift” (Moser, Annexure L, CB 101) and a text message chain commencing on 18 February 2021 (Moser, Annexure M, CB 105-106), in which the defendant provided a calculation that suggested he was entitled to $97,250 but was “only” asking the plaintiff for half that amount being roughly $48,000.

67. The plaintiff argued that even if the defendant could establish the payments were bona fide gifts, that would not protect them from being unwound if they were procured by undue influence or unconscionable conduct.

68. The plaintiff argued that while the relationship of principal and attorney does not fall into an existing category of presumed undue influence, the presumption arises on the facts of the case, being that a donee has received a gift by encouragement or suggestion. It is not denied the plaintiff was aware of what he was doing when discussing the “gift” of $48,510, but what will concern the Court in the present case is “how the intention was produced”.

69. The defendant was in an ascendant position as a fiduciary, holding a power of attorney to act on his behalf, maintaining a degree of control over the plaintiff’s physical access to the wider world (including the bank) by being the person who drove him, and by making himself a necessary signatory on the joint account so that the defendant had to agree to any withdrawal. This ascendancy would give rise to the presumption of undue influence. The onus then falls on the defendant to establish the transaction was made in the absence of any influence.

70. The plaintiff submitted that the defendant has not and cannot discharge the onus on the basis of the following facts:

1. There was no external advice provided to the plaintiff;

2. The defendant was in practical control of the plaintiff’s access to his superannuation;

3. It was the defendant who suggested the gift to the plaintiff;

4. The plaintiff had received help from the defendant out of what he thought was friendship;

5. The plaintiff stated that he agreed over text message to the gift because he felt under pressure (Moser [78]);

6. The text message immediately preceding the request for $48,000 by the defendant, is a request, by the plaintiff : “Alright how much money can i have need about $5500 hearing device plus hip replacement $8000 hip replacement plus spendings all together about $20000-that’s all then I come with to Canberra” (CB 104);

7. in response the defendant asks for money. The amount of the gift was framed as a discount, from an inflated claim to over $97,000 as the supposed value of the defendant’s time proposed after the fact (CB 105);

8. the plaintiff does not directly answer the text message and instead says “Still want to go to Canberra on Sunday? It’s alright with my car it’s ready” (CB 105);

9. Mr Ky then presses “Are you happy with the Gift I have requested?” (CB105);

10. The plaintiff then responds agreeing to give the money to the defendant (CB105);

11. it appears the defendant only gives his consent to the $20,000 after the plaintiff has agreed to the gift “Hi Frank, can we go to the Bank tomorrow so that make life easier, I want that Gift in Cheque for the record and you can withdraw $20,000 too and then do whatever you wishes”… And so that we don’t argue on Sunday” (CB108);

71. The plaintiff submitted that in these circumstances the Court would be comfortably satisfied that the payment was procured by the suggestion of the defendant and was the product of undue influence.

72. While the defendant has from time to time demonstrated his willingness to return the money to the plaintiff, this appears conditioned on the defendant remaining as the plaintiff’s attorney and guardian (see Transcript 30 April 2021, Henry J, T8.39 – T9.17 CB400-401). That cannot and should not happen and the funds should be paid out of Court to the plaintiff.

Alternative equitable claims breach of fiduciary duty and unconscionable conduct

73. In the alternative the plaintiff mounts his case as a breach of fiduciary duties. The same conduct of seeking and obtaining a payment to himself put the defendant in conflict with the duty he owed to the plaintiff, and also permitted him to profit from his position.

74. Further in the alternative, the plaintiff advances his case on the basis of unconscionable conduct. In the present case the Court would be satisfied that the defendant was in the ascendant position for the reasons given in respect of the claim in undue influence.

75. At the time of the 2020 Payments and the 2021 Payment, the defendant knew the plaintiff was at a special disadvantage by reason of the fact that:

1. the defendant knew he was one of the plaintiff’s only friends and that the plaintiff had no relatives in Australia, and had recently separated from his former de facto partner;

2. the defendant provided transportation to the plaintiff by driving him both for social outings, and to the attend on basic services like shopping and banking;

3. the defendant knew that the plaintiff had to ask the defendant to provide him access to some of his bank accounts;

4. as a result of the defendant being appointed case guardian in the family law proceedings, the defendant took over management of those proceedings and became the primary point of contact for the plaintiff’s solicitors.

76. Therefore it was unconscionable for the defendant to procure and retain the payments where the foundation of their relationship was friendship and support and the request for $48,000 was an abrupt change in the nature of the relationship. The request for a gift was presented to the plaintiff in terms intended to engender pity for the defendant who claimed to have forgone an income of $97,000 if he had worked as an uber driver. Moreover, the demand for a gift was made in response to a request from the plaintiff he access his money. Therefore the defendant used the plaintiff’s access to his funds and the trip to Canberra as a bargain chip to extract payment from the plaintiff. Accordingly, receipt of the 2021 Payment was unconscionable conduct and on that alternative basis the funds should be paid out of Court to the plaintiff.

77. Therefore the plaintiff’s case is that the 2020 Payments were also procured by undue influence. Applying the same principles stated above in respect of undue influence it appears that each of the payments came at the suggestion of the defendant, in light of the fact that the defendant was helping the plaintiff. Additionally, the defendant was the plaintiff’s power of attorney at that time, which gave rise to a fiduciary relationship. The plaintiff again alleges that procuring the 2020 Payments was a breach of fiduciary duties as the defendant was acting in conflict with the interests of the plaintiff and stood to profit from the payments. Finally, the receipt and retention of the 2020 Payments was unconscionable on the part of the defendant as he had represented himself to Mr Moser as a friend who was willing to assist him on the basis of friendship alone, rather than for financial gain.

78. The plaintiff therefore sought equitable compensation in the amount of $13,000.

Defendant’s submissions

Revocation of the power of attorney

79. The defendant submitted that the plaintiff had legally and validly executed and appointed the defendant as a Power of Attorney. The defendant and his family had a strong relationship with the plaintiff until the plaintiff met the “three alleged Asian women” who preyed on the plaintiff, causing the breakdown of the relationship between the plaintiff and defendant and subsequent revocation of the Power of Attorney on 8 March 2021.

80. The defendant submitted that the plaintiff had withdrawn most of the funds from his NAB account to create the illusion that he did not have enough money to spend. The motivation for this was said to be so that the plaintiff could claim he had insufficient funds due to the defendant’s denial of his access to the joint ANZ bank account.

81. The defendant alleged that the plaintiff’s angry demands to have access to the ANZ bank account in order to give money to the “alleged Asian ladies” are proof that he did not have mental capacity and did not understand the consequences of his actions.

82. It was submitted that the plaintiff instructing his GP, Dr Qureshi, not to disclose information to the defendant demonstrates that the plaintiff wanted to hide his true intentions from the defendant who may have interfered with the process of obtaining a mental capacity assessment.

83. The defendant submitted that the only reason the plaintiff received a mental capacity assessment from Dr Tam was for the purpose of accessing the ANZ bank account directly. It was further argued that as Dr Tam was aware of the plaintiff’s difficulties in accessing the money the report was therefore biased and written with the intention of facilitating this action.

84. The defendant submitted that the revocation of the power of attorney by the plaintiff was invalid because the solicitor involved had illegally appointed one of the “alleged Asian women”, a friend of hers, as the defendant’s replacement. The removal was also said to be grounded in the false finding of sufficient mental capacity by Dr Tam.

85. The plaintiff argued the report of Dr Wijerante from 6 April 2019 should be preferred. The report stated that the plaintiff lacked capacity and required a case guardian at that time.

Payments made to the defendant

86. The defendant accepted receipt of the first $5000 amount on 26 February 2020 but argued the plaintiff had offered to help the defendant and therefore he had the right to retain this amount. He denied receipt of the remaining 2020 amounts.

87. The defendant argued that he should be able to retain the $48,510 for the large amount of lost time and stress caused by the plaintiff’s actions.

Consideration

88. Having met only for the first time at the June of 2018, by 31 October of the same year the plaintiff had made the defendant his executor and trustee and sole beneficiary under his will. He also appointed the defendant his attorney and guardian at or about the same time.

89. The intensity of their initial relationship is now matched by the intensity of their dislike and distrust for each other.

90. I am satisfied that the plaintiff was in 2018 extremely lonely and hence vulnerable at the loss of the companionship of his long time de facto relationship with a woman called Jean Gurney. The defendant and his family rapidly and effectively filled that void.

91. The defendant made himself, for a time, indispensable. He took the plaintiff to outings and medical appointments but he seems to have become very controlling, indeed somewhat bizarrely proprietorial. He asserts he was concerned for the plaintiff’s well-being but I am satisfied that is an entirely insincere motive. Rather I am satisfied he is only concerned with the financial windfall he thought he had achieved by ingratiating himself with the plaintiff to his significant material advantage. He has become resentful the plaintiff no longer wants him in his life and wants to rid himself of the defendant.

88. The first question then is whether the purported revocation of the Power of Attorney on 8 March 2021 was effective in law.

89. There is no doubt in my mind on the totality of the evidence that on 8 March the plaintiff had capacity to understand what he was doing in relation to the Power of Attorney he had earlier made in favour of the defendant.

90. By 8 March 2021 he was heartily sick and tired of the defendant’s controlling behaviour and wanted to put an end to it.

91. Dr Tam is a highly qualified physician specialising in Geriatrics. He gave evidence before me and was cross examined by the defendant. In his report dated 20 March 2021 he said that he initially assessed the plaintiff on 6 March and arranged for a series of tests be carried out and reviewed again on 20 March, the day he prepared his report.

92. The tests carried out were comprehensive and included it seems a full battery of blood tests together with x-rays, and a CT brain scan.

93. Dr Tam found the plaintiff to be mentally clear and his neurological examination was described as normal. He scored 30/30 on the Mini Mental State examination. He did not exhibit any depression. He demonstrated good short term and long term memory. Dr Tam thought the plaintiff exhibited an ability to reason and deliberate about his choices. He also found the plaintiff had the ability to comprehend the context of conversations, was competent in making decisions in all areas of financial management and was capable of understanding and signing legal documents and a will.

94. It follows that on 8 March 2021 there is nothing to suggest he did not have capacity to understand precisely what he was doing in revoking the enduring Power of Attorney and enduring guardianship. Both documents were prepared by a solicitor for him who witnessed his signature.

95. There is no doubt the plaintiff was provoked to do so as a result of earlier discovering that the defendant had transferred a large amount of money into an account at the ANZ bank in December, which account the defendant managed to create as a joint account in his and the plaintiff’s names. His motive however in revoking the powers is not to the point if he had capacity to do so.

96. The revocations are expressed in clear terms and the language is unambiguous. The mere fact the defendant refuses to accept the revocations is also not to the point.

97. There are no formal requirements in the Power of Attorney Act for what such a revocation should contain. I see no reason in fact or in law why the revocations are not as a matter of fact and law valid and effective. I note that the plaintiff has appointed a new attorney.

98. The defendant has a number of responses, some of which are not easy to comprehend.

99. He accuses Dr Tam of lying in relation to precisely who attended with the plaintiff for his medical assessment. There is no substance in the point. It cannot logically affect Dr Tam’s assessment on the various tests he conducted or his opinion on the plaintiff’s capacity.

100. The defendant submits that the plaintiff as best I understand it wanted the assessment so he could access his money. There is no doubt the plaintiff had that in mind but as such that could not logically affect Dr Tam’s medical assessment.

101. The defendant would also seem to rely upon s.5 of the Power of Attorney Act. That provision deals with the question of when there is a vacancy in the office of attorney. It has no relevance here.

102. There was in the materials a report of a Dr Wijeratne who examined the plaintiff on or about 4 June 2019. The plaintiff objected to the report. Although it was before the court it did not purport to be an expert report, Dr Wijeratne was not called to give evidence. I gave it no weight for two reasons. First, it was from June 2019 whereas Dr Tam’s report was of very recent origin and provided a thorough analysis. Second, Dr Wijeratne was not called by the defendant for cross-examination.

103. In my view the plaintiff is therefore on the evidence entitled to the relief in prayers 1 and 2 of the Statement of claim.

104. In addition the plaintiff seeks damages, namely the return of certain monies he alleges he paid to the defendant in February, March and April 2020 and a payment made in 2021.

105. The plaintiff alleges he paid the defendant $5000 on 26 February, $5000 on 3 March and a further $3000 on 8 April, 2020. He had claimed a further $2000 in his statement of claim which he alleged he had paid to the defendant on 10 March 2020. He did not press that amount at trial. The defendant disputes all but one amount of $5000 which he says the plaintiff gave him to assist him but a motorcycle so he could do deliveries.

106. The plaintiff also asserted he was in effect forced to pay the defendant an amount of $48,510 on 19 February 2021. There is no dispute that that amount was paid by the plaintiff to the defendant on that day but the circumstances surrounding that payment are very much in dispute.

107. As to the amounts paid over in 2020 I am satisfied each of the amounts the plaintiff asserts he paid he did in fact pay to the defendant. The plaintiff had a habit of keeping a notebook in which he recorded all manner of personal notes (CB.1/71-72). In that notebook he has three entries for 26 February, 3 March and 8 April 2020. They appear to have been made contemporaneously on each of the days they indicate and they corroborate the plaintiff having given “Malcolm”, which is an obvious reference to the defendant, the amounts specified in the pleading.

108. Despite the defendant’s denial as to two of those amounts I accept the evidence of the plaintiff that he did in fact pay those amounts to the defendant as alleged.

109. But the plaintiff says nothing in my mind in his affidavit to suggest that these amounts were the subject of undue influence or in breach of the defendant’s fiduciary duty. The defendant asked for the amounts according to the plaintiff first because the defendant had spent time assisting the plaintiff in his family court proceedings, (CB.1/38) or according to the plaintiff for unspecified reasons.

110. The defendant however did agree that he did receive an amount of $5000 which he used to pay towards a loan he had taken out on a motorcycle.

111. There is no doubt the defendant did fuss over the plaintiff and drive him around from time to time, but on the plaintiff’s own version of events he simply gave the monies to the defendant at the defendant’s request in circumstances where on the evidence I consider it likely the plaintiff did it out of gratitude for the defendant’s efforts. I am not persuaded such amounts were paid as a result of any undue influence on the part of the defendant.

112. The same cannot be said for the $48,510. The background to this payment is important. I accept the plaintiff’s account that he and the defendant had a discussion about the plaintiff losing money with his money in his AMP Superannuation account. I also accept that he withdrew the money from AMP and deposited into an account at ANZ in his name only. That is made clear from the documents at CB.1/74 – 85.

113. I am also satisfied that the plaintiff was well aware that the term deposit he then had with ANZ was to be rolled over from about 8 December 2020.

114. I am also satisfied that the defendant attempted to persuade the plaintiff to purchase a house with him in Goulburn and the plaintiff refused and that the defendant was upset at the plaintiff’s refusal. At about that time the defendant also I am satisfied told the plaintiff his money was safe with him. The defendant also warned the plaintiff that his “Filipino girlfriend “just wanted his money.

115. I am satisfied that by using the power of attorney the defendant without the knowledge or consent of the plaintiff opened a bank account in the joint names of plaintiff and defendant, at ANZ on or about 15 December 2020 , (CB.1/88).

116. The plaintiff understandably became angry at not being able to access his money without the co-operation of the defendant.

117. After a discussion with Ms Ashleigh Russell at ANZ the plaintiff decided to subject himself to a medical examination of a specialist to confirm his capacity. Hence he saw Dr Tam on 6 March 2021.

118. Before that he and the defendant had I am satisfied numerous arguments with the defendant about what he had done and about the plaintiff accessing his money. At one stage he recorded a conversation with the defendant.

119. A discussion then ensued about some money the defendant said he had withdrawn from the joint account. The defendant prepared a document which he had the plaintiff sign, (CB.1/101). The defendant accepts that he prepared the document and only showed it to the plaintiff a short time before he had him signed it. The defendant also counter signed it. The document purports to record the plaintiff of his “own freewill” giving an amount of $48,500 to the defendant in recognition of the defendant’s “diligent and very honest hard work throughout the years”.

120. But the full context of this document is to be found in a series of text messages at CB.1/103 -110. They expose clearly the plaintiff pleading with the defendant to allow him access his money. The defendant responds with a calculation of how many days he has been “serving” the plaintiff. It is clear that the defendant indicated he was prepared to allow the plaintiff access to his funds provided the defendant was paid an amount of “$48,625” and that he would prepare a “Gift Agreement”.

121. I am satisfied that although on one view of the texts the plaintiff indicates he is happy with the “deal” and co-operates in signing the document I am equally satisfied he felt pressured to do so as he had no choice in the matter. The defendant’s behaviour was both dishonest and dishonourable. He thought his dominion over the plaintiff was placed in jeopardy by the liaison between the plaintiff and his new female friend and he thought it time to extract his just rewards. In doing what he did in the way he did it, namely first to in effect secure control of the plaintiff’s funds and then demand the payment of the $48,510 he engaged in unconscionable conduct and/or undue influence.

122. He had known from the very outset of his contact with the plaintiff that the plaintiff although he had his mental faculties was desperately lonely and vulnerable. He swiftly gained the plaintiff’s affection and trust. He rapidly became the executor and trustee of the plaintiff’s estate and his sole beneficiary. The plaintiff’s error was to show respect and attention to another person and I am satisfied the defendant became angry and jealous. He felt he had lost control over the plaintiff and the most effective way to control him was wrongly to invoke the power of attorney to secure control of the plaintiff’s money and hence his life.

123. It would be wholly improper for the defendant to be able to retain the $48,510. It was not a disposition of the plaintiff’s property by his own freewill. Quite the opposite. The defendant should repay those funds.

124. I would therefore make the declarations sought, being that the Powers of Attorney and Guardianship were validly revoked by the plaintiff on 8 March 2021. I would make further orders that the defendant take all necessary steps to remove his name from, and renounce any authority to operate, any bank account in the name of the plaintiff, including any account held jointly with the defendant. I would not award the 2020 Payments to the plaintiff as I regard those as gifts or at the very least the presumption that they are has not been adequately rebutted. However, the amount of $48,510 falls into an entirely different category and was procured as a result of undue influence and/or unconscionable conduct in the circumstances as outlined above. Therefore it should be repaid to the plaintiff with interest.

Decision last updated: 15 December 2021