Paroz v Paroz & Ors

[2011] HCATrans 205

[2011] HCATrans 205

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B2 of 2011

B e t w e e n -

LESLIE ROLAND PAROZ

Applicant

and

IAN LESLIE PAROZ

First Respondent

JENNIFER MARGARET PAROZ

Second Respondent

LEWIS MARTIN PAROZ

Third Respondent

KAREN ANN PAROZ

Fourth Respondent

Application for special leave to appeal

HAYNE J
BELL J

TRANSCRIPT OF PROCEEDINGS

FROM CANBERRA BY VIDEO LINK TO BRISBANE

ON FRIDAY, 12 AUGUST 2011, AT 11.12 AM

Copyright in the High Court of Australia

____________________

MR R.N. TRAVES, SC:   May it please the Court, I appear with MR M.T. HICKEY for the applicant.  (instructed by DownieLaw)

MR A.P.J. COLLINS:   May it please the Court, I appear for the respondent.  (instructed by Ernst & Young Law)

MR TRAVES:   Your Honours, it is necessary that we obtain an extension of time to file the application.  I am told by Mr Collins that that is not opposed.

HAYNE J:   Yes, you have that leave.  Yes, Mr Traves.

MR TRAVES:   Thank you, your Honours.  Your Honours, this application concerns the principles to be applied to a claim based on unconscionable conduct for a constructive trust or for equitable compensation where a party alleges a special disadvantage continuing over a lengthy period of time.  The special disadvantage complained of was the applicant’s strong emotional attachment to and affinity for a family farming business operated by way of partnership and the land upon it which it had been undertaken, as a consequence of his special disadvantage, he agreed to work over the years for a wage that was relatively low.  The respondents knew of the applicant’s attachment to the farming business and the family farms and, of course, knew what he was paid.  There was no doubt that over the 30 or so years the applicant worked that the land the farms were situated on had increased significantly in value and that the respondents took the advantage of that.

His Honour correctly elucidated the principle that in a case of unconscionable conduct the question is not whether the applicant knew what he was doing, had done or proposed to do, but how the intention was produced or, if we may adopt the words of Justice Deane in Amadio, drawing a distinction between undue influence and unconscionable conduct; undue influence looks to the quality of the consent or assent of the weaker party while unconscionable conduct looks to the attempted enforcement or retention of the benefit of a dealing with the person under a special disability.

In finding that the applicant did not suffer from a special disadvantage, however, his Honour and the Appeal Court, we would submit, erroneously placed weight on the fact of decisions made by the applicant in what we would contend were matters unrelated to the critical question, namely, whether the applicant’s disabling condition or circumstance was one which seriously affected his ability to make a judgment as to his own best interests to do with the wages he would insist upon for working on the farm.  Thus his Honour, in finding that there was no special disability, referred to and placed reliance upon a decision, for example, to maintain stock numbers on the farm, a decision to purchase other farms with his brothers, to enter into a lease and a series of decisions resulting in the undertaking of no till farming in or about 1996.  These decisions, we would submit, are irrelevant to the consideration of whether there was a special disadvantage.

We would contend that the fact of and indeed the capacity to make decisions in other areas which reflect a capacity for independent decision‑making is irrelevant to the issue of whether, in reaching decisions about his continuing involvement on a farm at low wages, the applicant suffered from a special disability.  That is so, we would submit, because, as the cases make clear, the issue is not whether the applicant understood what he was doing nor whether he acted independently – we distinguish in this respect undue influence – but rather the circumstances which brought him to the point at which he made decisions without proper regard for his own interests.  Thus, as the majority in Bridgewater v Leahy emphasised, the primary judge’s conclusion that the uncle had the capacity then to know what he was doing and to make informed decisions about the disposition of his property was no answer to the claim to set aside the transaction.  The issue was rather how that intention was produced.

To come to the point, the reasoning of the trial judge presents, in our submission, a non sequitur.  While the cases show the capacity to make a decision or to understand what is being done may exist notwithstanding a special disadvantage, his Honour has used the fact of and implicit capacity of the applicant to make other decisions to infer that special disadvantage did not exist in respect of the decision to work for low wages which give rise to the complaint.  To put it another way, if special disadvantage assumes the capacity to make and understand the immediate decision, how can the capacity to understand and to make other decision be relevant? 

We would submit that to proceed in the manner in which his Honour did, and the Court of Appeal did, is to confuse the ability or capacity to make a decision with the essential element of an argument based on unconscionable conduct, namely, whether a decision which was understood, indeed intended, was made because the person by reason of a special

disadvantage was unable, in making a decision, properly to act in his own interests.  That is the point we would seek to agitate. 

Finally, the matter is, in our submission, of public importance because it concerns the proper approach to a claim of unconscionable conduct over an extended period of time not confined to a single transaction as cases like Bridgewater v Leahy, Blomley v Ryan and Berbatis were, nor circumstances including promises that property ultimately be divided in a particular manner or way, such as Giumelli’s Case.  Those are our submissions.

HAYNE J:   Thank you very much, Mr Traves.  Yes, we need not trouble you, Mr Collins. 

An appeal to this Court would enjoy insufficient prospects of success to warrant a grant of special leave to appeal.  Special leave is refused.

MR COLLINS:   Your Honour, we seek the costs of the special leave and of the leave to extend time.

HAYNE J:   Is there anything you can say in opposition to that, Mr Traves?

MR TRAVES:   No, there is not.  Thank you.

HAYNE J:   With costs.  The Court will adjourn to reconstitute.

AT 11.19 AM THE MATTER WAS CONCLUDED