Re Mahoney

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

PROBATE LIST

S CI 2014 02187
SCI 2014 02185

GRAHAM GERARD MAHONEY (who sues both personally and as executor of the estate of MARGARET CATHERINE MAHONEY, deceased)	Plaintiff
v
BRIAN MICHAEL MAHONEY (who is sued both personally and as executor of the estate of MARGARET CATHERINE MAHONEY, deceased)	Defendant

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JUDGE:	MCMILLAN J
WHERE HELD:	Melbourne
DATES OF HEARING:	1, 2, 3 and 4 June 2015
DATE OF JUDGMENT:	30 October 2015
CASE MAY BE CITED AS:	Re Mahoney
MEDIUM NEUTRAL CITATION:	[2015] VSC 600

equity — Proprietary estoppel — Whether parent promised or represented certain assets to pass to the plaintiff and defendant in equal shares on her death — Whether promise or representations sufficiently certain — Whether the plaintiff reasonably relied on the promise or representations — Whether plaintiff acted to his detriment on the promise or representations— Guimelli v Guimelli (1999) 196 CLR 101 — Harrison v Harrison [2011] VSC 459 —Sidhu v Van Dyke (2014) 251 CLR 505.

unconscionable conduct — Where parent transferred certain assets to defendant during her lifetime — Whether parent under a special disability or disadvantage that made her vulnerable — Whether parent understood implications of the transfer of the assets — Bromley v Ryan (1956) 99 CLR 362 —Commonwealth Bank Of Australia Ltd v Amadio (1983) 151 CLR 447 — Louth v Diprose (1992) 175 CLR 621 — Daunt v Daunt [2015] VSCA 58 — Christodoulou v Christodoulou [2009] VSC 583.

undue influence — Whether defendant exerted undue influence over the deceased — Johnson v Buttress (1936) 56 CLR 113 — Bromley v Ryan (1956) 99 CLR 362— Christodoulou v Christodoulou [2009] VSC 583.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S Newton	Williams Hunt
For the Defendant	Ms C Sparke	David Joseph & Co Lawyers

TABLE OF CONTENTS

Introduction................................................................................................................................... 1
Plaintiff’s claim.............................................................................................................................. 3
The evidence.................................................................................................................................. 4
Mansfield Meat Supplies...................................................................................... 5
The common understanding................................................................................ 7
The work on the farm after Michael’s death....................................................... 8
The failure of Mansfield Meat Supplies............................................................. 9
The plaintiff’s conversation with the deceased in 1999 about working away from the farm................................................................................................................ 12
Defendant’s injury at the abattoir...................................................................... 13
Disagreement between the plaintiff and the defendant in 2001.................... 14
The deceased’s September 2001 will................................................................. 15
The defendant’s management of the farm........................................................ 16
The drought in Mansfield and the condition of the farm thereafter............. 17
The deceased’s accountant.................................................................................. 18
The defendant alleges the deceased was disappointed with the plaintiff in 2006 18
The transfer of the farm and the making of the deceased’s will................... 19
The deceased’s attendance at Centrelink.......................................................... 20
The deceased’s first meeting with Ms Leonard............................................... 21
The deceased’s second meeting with Ms Leonard......................................... 23
The deceased tells her accountant of the transfer of the farm to the defendant 25
The defendant’s WorkCover claim in 2006...................................................... 26
The defendant’s management of the farm after the transfer.......................... 27
The deceased’s mental condition....................................................................... 29
The deceased’s physical condition.................................................................... 30
The defendant tells Carmel and Valerie of the transfer of the farm............. 31
The deceased tells the plaintiff of the transfer of the farm............................. 31

Credibility of the witnesses....................................................................................................... 33
Proprietary estoppel................................................................................................................... 35
Did the deceased promise the plaintiff that she would confer an interest in the farm, livestock and chattels to him on her death?.................................... 39
Did the plaintiff act in reliance on the deceased’s promise?......................... 40
Did the plaintiff act reasonably in relying on the deceased’s promise?...... 40
Did the deceased know or intend that the plaintiff would rely on her promise to the plaintiff?................................................................................................ 41
Has the plaintiff suffered detriment as a consequence of the deceased’s failure to adhere to her promise?.................................................................................... 41
Conclusion on proprietary estoppel................................................................. 42

The plaintiff’s alternative claims.............................................................................................. 42
Unconscionability....................................................................................................................... 42
Was the deceased under a special disability vis-à-vis the defendant?........ 44
Did the special disability affect the deceased’s judgment as to what constituted her best interests?............................................................................................... 46
Was the defendant aware of the deceased’s special disability or the facts that would raise the possibility that she suffered from a special disability?.......... 47
Did the defendant take unfair advantage of the deceased’s special disability in entering in to the transfer of the farm, livestock and chattels?..................... 48
Conclusion on unconscionability...................................................................... 49

Undue influence.......................................................................................................................... 50
What was the nature of the relationship between the deceased and the defendant? 52
Was the transfer of the farm, livestock and chattels to the defendant the product of the free will of the deceased?................................................................... 53
Conclusion on undue influence......................................................................... 56

Conclusions, orders and costs................................................................................................... 56
A further matter........................................................................................................................... 57

HER HONOUR:

Introduction

Margaret Catherine Mahoney deceased died on 25 March 2013 aged 91 years (‘the deceased’ or ‘mother’). She was survived by six of her seven children.[1] The deceased’s husband, Michael Mahoney (‘Michael’ or ‘father’), also predeceased her.
[1]The defendant was born in 1952, Carmel was born in 1954, Lynette was born in 1959, Valerie was born in 1960, the plaintiff was born in 1961, and Dianne was born in 1963.

Her will dated 5 June 2006 (‘the will’) appointed three executors: her son, Graham Mahoney (‘the plaintiff’), her daughter, Carmel O’Shea (‘Carmel’) and her son, Brian Mahoney (‘the defendant’).

The deceased’s other children are Lynette Wilding (‘Lynette’), Valerie Mahoney (‘Valerie’) and Dianne Healey (‘Dianne’).

The deceased’s will provided as follows:

(a) a legacy of $1,000 to each of the deceased’s grandchildren;

(b) the proceeds of her Colonial Life Insurance Policy Number 1167353 in equal parts to Carmel, Lynette, Valerie, Dianne and the plaintiff;

(c) her 2001 Ford Laser Registration Number RJL 489 to Dianne; and

(d) her farm property known as ‘Springvale’ at Barwite via Mansfield (‘the farm’) and any chattels and livestock on the farm to the defendant;[2]

(e) the residue in equal parts to Carmel, Lynette, Valerie, Dianne and the plaintiff.

[2]The farm comprises the land contained in Certificates of Title Volume 7063 Folio 441, Volume 8152 Folio 672 and Volume 7367 Folio 399.

The will provided that if any of the deceased’s children pre-deceased her, any benefit to which they were entitled under the will would be gifted and bequeathed to their children as tenants in common in equal shares.

Notwithstanding the inclusion of the devise of the farm and the bequest of the chattels and livestock to the defendant in her will, on the same day that she signed her will, the deceased signed a transfer of land transferring the farm to the defendant in consideration of ‘natural love and affection’. In 2007, she transferred the livestock and chattels to the defendant for no consideration.

On 25 February 2014, probate of the deceased’s will was granted to the defendant and Carmel, with leave reserved to the plaintiff to come in and prove the deceased’s will.[3] The reason for leave being reserved to the plaintiff was explained in a letter by the defendant’s solicitor, which stated: ‘[d]ue to intractable family difficulties one of the executors…is seeking his own independent legal advice.’ The inventory of assets filed with this application for the grant showed assets totalling $349,412.95 comprising a life insurance policy, several term deposits and shareholdings in three companies. There were no liabilities at the date of death.
[3]Proceeding number S PRB 2014 01844.

On 12 May 2014, pursuant to the leave reserved, the plaintiff made application to be appointed as the executor of the estate, contending there were outstanding executorial duties in that the defendant and Carmel had filed an inventory of assets that failed to include the farm, said by the plaintiff to be valued at $1.8 million and held by the defendant on constructive or resulting trust for the estate.[4] The application also noted that the deceased had transferred the farm to the defendant during her lifetime.
[4]Proceeding number S PRB 2014 06817. The valuation was based on a valuation of the farm property.

The purpose of the plaintiff seeking a grant of probate pursuant to leave reserved was to issue proceedings against the defendant to recover the farm on behalf of the estate. As well, he foreshadowed making a claim against the estate seeking further provision, pursuant to s 91 of the Administration and Probate Act 1958 (‘the Act’).

On 19 June 2014, orders were made removing Carmel as a defendant to the proceeding and the usual procedural orders for mediation.

Plaintiff’s claim

The plaintiff contends there was a common understanding within the family that, on the death of the deceased, the plaintiff and the defendant would receive the farm, livestock and chattels with the residue of the estate, comprising money, being given to the four girls or their issue (‘the common understanding’).

On the basis of the common understanding, the plaintiff claims that the defendant holds the farm, the livestock and chattels on trust for the plaintiff as to one half or share thereof (‘the common intention trust’) and is estopped from denying the plaintiff’s entitlement.

In the alternative, the plaintiff claims the transfer of the farm, the livestock and chattels to the defendant was unconscionable or procured by the undue influence of the defendant. The plaintiff also claimed that, as a result of the transfer being procured by the undue influence of the defendant , the deceased was rendered incapable of carrying out the common understanding and exercising her freedom of testamentary disposition, in particular, her right to change her testamentary intentions at any time before her death.

If the plaintiff is successful in having the farm transferred into the estate, he claims, in the alternative, further provision against the estate pursuant to s 91 of the Act.

At trial, the parties agreed that the value of the farm was approximately $2.34 million. The current value of the livestock and chattels was not specifically referred to at trial, although the defendant said the value of the livestock at the time of the transfer to him was approximately $375,000.

The parties also agreed on the common understanding. Specifically, the defendant concedes there was the common understanding in the family that the plaintiff and the defendant would inherit the farm, livestock and chattels on the death of the survivor of his parents. This was said by his father from the time that he was young and, after his father’s death, by his mother. The difference in his position to that of the plaintiff and his sisters was that in May 2006, the deceased all of a sudden changed her mind about the common understanding and transferred the farm to him and subsequently the livestock and chattels because the plaintiff was never at the farm helping out during the drought.

The evidence

The deceased married Michael in 1946, when she was aged 24 years. Michael’s family were farmers in the Mansfield district. Michael’s brothers had farms that had either been bought for them or bequeathed to them by his parents whereas Michael had to pay for his own farm without assistance from his parents. As a result, Michael and the deceased held a firm view that ultimately, upon the death of the survivor of them, the farm, livestock and chattels would pass to the plaintiff and the defendant (‘the boys’) equally and their daughters (‘the girls’) would receive any money to be divided equally between them.

Michael worked hard to the purchase the family farm. He was a full-time farmer and the deceased worked full-time looking after the children and the home. All of the children helped with farm duties, such as feeding the dogs, milking cows and collecting eggs. Michael’s brothers assisted him with shearing and hay carting during the busy times, as he did for them on their properties. All the brothers worked together when necessary with no money changing hands.

After finishing secondary school, the girls moved to Melbourne for work or further study. The plaintiff and the defendant stayed in the area and worked on the farm, learning from their father. They did not expect wages in return for their work on the farm. The type of work included moving sheep, milking cows, collecting eggs, feeding dogs, drenching livestock, marking livestock and assisting their father and uncles with the shearing and fencing on the farm.

In 1968, when he was aged 16, the defendant took up an apprenticeship with a local butcher called Nolan’s Butchery (‘Nolan’s’). He continued to assist on the farm in his spare time. At that time, the plaintiff was 7 years old. When the plaintiff was around 12 or 13 years old, his father brought him a Honda 90 motorbike so he could help out with the farm chores.

In 1971, when he was aged 19, the defendant left home. The following year, he married his wife, Kathy. They have three children and live in Mansfield.

The plaintiff was the last to leave the farm. In 1984, when he was 23, he married his wife, Judy. They have a daughter and live in Mansfield.

Mansfield Meat Supplies

After completing his apprenticeship at Nolan’s, the defendant continued to worked there as a butcher. He subsequently became the manager of another butcher shop in Mansfield owned by Norford Management Pty Ltd (‘Norford’s).

While the plaintiff was still attending school, he worked at Norford’s in the school holidays. In 1976, when the plaintiff was aged 15, he took up the apprenticeship at Norford’s as he was not particularly interested in continuing at school.

Michael was always keen to set up the boys in a butcher shop business and the plaintiff’s apprenticeship was undertaken at Norford’s with a view to acquiring such a business.

In 1978, Norford’s butcher shop came up for sale. On 13 April 1978, the defendant signed a contract to purchase the butcher shop business and land from Norford’s. The plaintiff’s name was originally included in the contract of sale but had to be deleted as he was a still a minor and not able to purchase land. Although the plaintiff was too young legally to buy into the business and the property, both the plaintiff and the defendant contributed around $2,000 each of their own savings and entered into an equal partnership under the ownership of a company called Mansfield Meat Supplies Pty Ltd trading as Mansfield Meat Supplies (‘Mansfield Meat Supplies’). They paid $32,000 for the land, including the laneway next to the shop, and $28,000 for the business. Michael provided the balance of the purchase price of $54,000 by borrowing that amount from the bank secured by part of the farm. The evidence is unclear as to whether the mortgage taken out for the purchase was repaid before Michael died, with the inventory filed with the application for a grant of probate of Michael’s will listing an $8,000 loan to Mansfield Meat Supplies as an asset of his estate.

The butcher shop was open six days a week, from 9am to 5pm on weekdays and from 9am to midday on Saturdays. The defendant looked after the financial side of the business, paying the wages and doing the accounts. Both drew a wage from the business, with the defendant receiving $250 per week and, until he turned 21, the plaintiff receiving an apprentice’s wage. When he turned 21, the plaintiff also received $250 per week.

As a result of an arrangement between Michael and the boys, the meat sold at the shop was sourced, at least in part, from the farm, with the business paying market value for the farm stock. As noted by the plaintiff:

I suppose that Dad could see the potential if we both took it on. In four years’ time I’d be a qualified butcher, he could get…the meat off the farm and in through the butcher shop.

This arrangement and the common understanding was reflected in the advertising for Mansfield Meat Supplies with the business card stating:

Brian and Graham Mahoney
Quality meat direct from our farm

Meat was also sourced from the saleyards in and around Mansfield, including at Benalla and Shepparton. This arrangement continued over the 23 years that the plaintiff and the defendant operated Mansfield Meat Supplies.

As well as working at Mansfield Meat Supplies, the boys continued to help their father out on the farm, with the plaintiff doing the work during the week as he still lived at home and the defendant on the weekends.

In the early 1980s, the plaintiff and the defendant started buying their own cattle under the partnership name of ‘B & G Cattle’. They ran the stock on the farm, as well as in other paddocks leased by them. Their cattle on the farm were marked with a blue ear tag to distinguish them from their mother’s cattle, which had yellow ear tags.

In 1984, the plaintiff and the defendant expanded their business by purchasing abattoirs on the outskirts of Mansfield. A year later, on 6 June 1985, a piece of land adjoining the abattoir came up for sale and they purchased that as well.

The common understanding

For a number of years prior to his death in 1981, Michael was ill with cancer. During his illness, Michael was unable to work and he became reliant on the assistance of the boys to run the farm. Both of them were involved in managing the farm, including feeding stock, fixing fences, shearing and selling stock. From the time their father became ill, the boys managed the farm and the stock as well as working at Mansfield Meat Supplies.

On 31 August 1979, Michael and the deceased made mirror wills. Michael’s will appointed the deceased, the plaintiff and the defendant as his executors. He left his estate to the deceased, providing that should she pre-decease him, each of the girls would receive the sum of $15,000 and the two boys would receive the residue of his estate, which included the farm, livestock and chattels as tenants in common in equal shares.

Michael died on 1 December 1981. On the night that Michael died, he said to the plaintiff: ‘You know the farm’s going to be yours [and the defendant’s] one day?’ He had previously told both boys that they could rely on their Uncle Vin for assistance with farming matters saying: ‘If you ever need any help, go ask Vin. Vin will always be there if you need help running the farm’. There was an understanding that the boys would run the farm whilst the deceased was alive so that she had an income and, upon her death, the farm would pass to them. This was understood by all of the children in the family because of the fact that Michael had not inherited a farm from his parents, as had been promised to him, and Michael did not want this to happen to his boys.

At the reading of Michael’s will, it became apparent to the whole family that the representations he had made to the boys regarding the farm were reflected in his will.

On 20 May 1982, probate of the will dated 31 August 1979 was granted to the deceased, the defendant and the plaintiff as the named executors in the will. The farm was transferred to the deceased. The deceased and the plaintiff, who still lived at home, remained living on the farm.

On several occasions, the deceased reiterated the promise made by Michael to each of the boys, saying: ‘You know you boys are going to get the farm.’ Neither Michael nor the deceased wanted a repeat of Michael’s experience in his own family. The deceased promised the boys that this would not happen to them and they would both inherit the farm. The topic would come up in family conversations after someone had died or when someone transferred their farm to their sons. It was reiterated in family conversations over the years with all of the deceased’s children recalling these conversations, usually occurring when the family, including the plaintiff’s wife, were gathered around the dining table and the girls were visiting the farm. The common understanding was premised on the fact that the girls had moved to Melbourne to live and work, whereas the boys had remained on the farm.

The work on the farm after Michael’s death

After Michael’s death, both the plaintiff and the defendant continued to manage the farm for the deceased, as well as working at Mansfield Meat Supplies. Although the deceased owned the farm and the livestock, she was not involved in managing it. The boys managed the farm, and the deceased received an income from the farm business. Neither of the boys received a wage or any other benefit for the work that they did on the farm.

After the plaintiff moved off the farm, both he and the defendant would take turns going to the farm every other day to do the necessary farm duties. They did this every day after they had organised things at the butcher’s shop, such as boning the carcasses, making the sausages and getting the shop ready to service the customers. While the plaintiff still lived on the farm with the deceased, he usually went back to the farm in the afternoon while the defendant finished up at the shop. After he married in 1984, he continued going to the farm to do the necessary work.

The farm work was more intensive over the winter period as the livestock had to be fed. The two brothers did such things as the marking, drenching and the day-to-day maintenance on the farm. Other chores included lambing and calving, which involved checking on the stock twice a day.

The plaintiff and the defendant worked on the farm over the 23 year period, approximately two or three days each week, in addition to their full-time work at their butcher shop. On the days that either of them was up at the farm, they would work between three to six hours a day, depending on what work was being done. Some other farmers assisted them with jobs, such as fencing, and also taught them about the day-to-day maintenance on the farm. There were occasional weekends off but one of the boys would always be at the farm. In his evidence, the plaintiff stated:

You know it’s your duty to look after the farm. That’s where I was born and bred. That’s all I ever knew.

The failure of Mansfield Meat Supplies

Around the middle of the 1990s, Mansfield Meat Supplies ran into financial difficulty. This was said to be due to competition from the supermarkets and other butchery businesses in the town. The boys made the decision to sell the lane next to the butcher shop to raise funds and, on the defendant’s request of the deceased, also borrowed money from her. The money from the deceased was repaid but the business was still in financial difficulty. The plaintiff spoke to the deceased, asking her not to lend any more money to the business, as he was concerned that she might lose the farm. The finances of Mansfield Meat Supplies did not improve and, in the latter part of 1998, the boys decided to sell the freehold and the business.

In latter part of 1998 leading up to the sale, the plaintiff did some shearing to supplement his income. The defendant said he did not take wages for two years as the business struggled. In early 1999, they met with their accountant to discuss their finances, as it was apparent that the business was no longer viable. In February 1999, they closed the business as it could no longer be sold as a going concern.

On 16 March 1999, the freehold of the butcher shop was sold. After payment of the disbursements and the mortgage, the business still owed money to their creditors, including $7,000 owed to a local fuel company. The plaintiff explained that it was important to him to maintain his reputation in the town and any spare money he had was used to repay outstanding creditors of the business, including the fuel company.

The main asset of Mansfield Meat Supplies was the meat truck, with some other stock, plant and equipment. An undated document written by the defendant’s wife, Kathy, was produced which purported to divide the business assets to the defendant, with the defendant buying out the plaintiff’s share of the assets. The plaintiff believes the defendant sold the meat truck but the defendant never told him what happened to the sale proceeds. Kathy said the defendant took the meat truck in lieu of his wages not paid to him in the last two years of the business whereas the defendant said that during those two years, he was living off personal savings, his wife’s income and a parenting allowance from the government. Neither the defendant nor Kathy explained how the defendant could take the meat truck unilaterally when the business had outstanding debts to its creditors. There was little evidence as to what happened to the other stock, plant and equipment, other than they may have been sold off in a clearing sale or appropriated by the defendant. Some of the stock and plant that was not be sold remains on the farm.

After the business closed and butcher shop premises were sold, the boys still owned the freehold of the abattoir. They leased the abattoir premises to a company called Basz Nominees Pty Ltd (‘Basz Nominees’) at a rental of $800 per week. This rent was agreed to be applied towards the reduction of the outstanding debts of Mansfield Meat Supplies. The boys worked for Basz Nominees between March and June 1999 but the agreed rent was not paid. In July 2001, they sold the abattoir for $38,290.42.

After June 2001, the defendant said all the cattle owned by the B & G Cattle partnership were relocated to the farm. The defendant said some of the cattle were sold off to pay outstanding fees of the accountant and lawyers and other cattle were transferred to the deceased to pay off debts owed to her. The defendant sought to adduce evidence in respect of the transfer of the B & G Cattle to the deceased in the form of notations in his personal diary. He was unable to satisfy the Court when the notations were made in his diary and they were not tendered in evidence.

The plaintiff did not receive any payment from the defendant for his share of B & G Cattle. He followed up with stock agents, enquiring whether any of the B & G cattle had been sold by the defendant. He did not ask his mother about the cattle as she was not involved in running the farm on a day-to-day basis and was unlikely to be aware of stock movements on the farm.

After the lease with Basz Nominees ended in 1999, both boys were left unemployed. The plaintiff had a young daughter and he was the family’s only source of income. He needed an income to support his family and pay off their mortgage. He looked for work locally but was unable to find anything.

The defendant had been injured at the abattoir and, according to his evidence, was totally incapacitated for work. He and his family were living off Centrelink and compensation payments as well as his wife’s income.

Notwithstanding that he was totally incapacitated for work, when asked why he did not search for a job during this period, the defendant said:

I could have, I was fit and capable, there was no reason why I couldn’t have…I stayed and worked on the farm to help mum.

In 2001, the defendant said that he earned an income from his cattle that he said were bought independently of the B & G cattle. There was no evidence as to how he paid for these cattle.

The plaintiff’s conversation with the deceased in 1999 about working away from the farm

With the closure of the business and the end of the partnership between the plaintiff and the defendant in 1999 and their financial differences, the relationship between them broke down, as the plaintiff he felt he could no longer trust the defendant or work with him again. This was because the plaintiff did not know the whereabouts of the livestock and the meat truck owned by the business after it was wound up. As both boys had been managing the farm for their mother, the plaintiff spoke with his mother to obtain her permission to seek employment further afield. He needed to do this so he could support his family and pay the remaining debts of Mansfield Meat Supplies.

This conversation occurred around the kitchen table at the deceased’s home. The conversation was between the plaintiff, the defendant and the deceased. In response to the plaintiff telling his mother that he had no choice but to go away for employment, his mother said, ‘Do what you got to do. The farm will still be here when you get back. You know you boys are getting the farm.’

The defendant’s version of the conversation was that the plaintiff simply told his mother that he was going away and did not seek her permission. The defendant did not dispute what the deceased said to the plaintiff.

The deceased later told Lynette that the plaintiff was sent away to work as he was the younger of the two and was more likely to get work.

The plaintiff went shearing, doing contract work all over the country wherever he could get work, for example, in Tocumwal, Casterton and Broken Hill. When he was working at places far from home, such as Casterton and Broken Hill, he would come back to Mansfield every three to four weeks. When he was working closer to Mansfield, he came home on a weekly basis. The work was physical and demanding. It was not continuous work, dependent on the seasons and the particular farmer’s requirements. It meant that the plaintiff was away from his wife and young daughter and sometimes for lengthy periods. Sometimes, his wife and young daughter travelled to the plaintiff so they could be together.

Even though he was away shearing, the plaintiff called his mother once or twice every week to keep in touch. He called her because some of the stations that he worked on did not have reception and he knew that she would be at home when he called her. She also visited his home every Saturday after church when he was home at weekends. When he was at home, his mother visited him regularly during the week. The plaintiff, like his siblings, had a close relationship with his mother.

Defendant’s injury at the abattoir

The defendant said he suffered a back injury on 7 May 1999 when working at the abattoir for Basz Nominees. An employee at the abattoir, Mr Danny Brown (‘Mr Brown’), signed the defendant’s claim for workers’ compensation as a witness to the incident.

Also on 7 May 1999, in respect of the same injury, the defendant made another claim for compensation, also witnessed by Mr Brown. The second claim listed Mansfield Meat Supplies Pty Ltd as the employer. This claim was made to the insurer HIH but the defendant did not receive payments from this claim. In his evidence, the defendant said this claim form was completed in error, as it did not state the correct employer.

Between May 1999 and June 2001, the defendant received compensation payments for this injury. In order to receive the payments, he had to sign a declaration stating he had not engaged in any form of paid employment, self-employment or voluntary employment since the last continuing certificate of incapacity was issued. Mr Brown signed these monthly declarations.

On 18 January 2000, Defendant included a statement in support of his claim for WorkCover insurance. The statement included the following:

Since the time of my injury I have been resting at home. I have been trying to do some exercise in accordance with my doctor’s recommendations. This has included some walking and some swimming. I am continuing to experience a lot of pain in my back. Every morning I rub Deep Heat on my back. I have not worked since my injury. I feel like my back is still quite bad. Two of the practitioners who have treated me recommended that I do not return to work in the meat industry and find some lighter work.

The defendant gave evidence that he did do seasonal casual work in 2001, doing some shearing and said, ‘I chose to work the farm for Mum and then get other jobs when they became available casual’.

In 2001, the defendant also made an application to Centrelink for the disability support pension, which was accepted. He received payments over three years from May 2001 through to 2 April 2004.

The defendant’s wife, Kathy, said they were effectively separated under the one roof between 2001 and 2003. Because she barely saw the defendant during this period she could not comment on whether the defendant was actually disabled between these years.

On 23 July 2004, Centrelink wrote to the defendant stating that he had received $27,000 in total and requested that he pay back $15,000 of the money that he had received. The reason for this request was unclear but it established that, for some reason, the defendant received substantially more than he was entitled to receive.

In June 2005, the defendant issued proceedings against Basz Nominees and the Victorian WorkCover Authority in the County Court on the basis that he was totally incapacitated for work. In April 2006, the claim settled and he received $37,710.

Disagreement between the plaintiff and the defendant in 2001

In around 2001, the plaintiff, the defendant, Lynette and the deceased were in the kitchen at the farm. There was a discussion that ended in an argument and resulted in the plaintiff and the defendant not speaking to each other ever again.

The discussion began with the defendant asking the plaintiff if it were true that he did not want to do business with him anymore. The plaintiff replied in the affirmative because he felt that he could no longer trust him. The defendant then said that the deceased had lent $1,500 to the defendant’s wife, Judy, in 1995 as she was struggling with her young baby and could not pay the rent for her coffee shop. The plaintiff was completely taken aback and upset by this information. Judy had never told the defendant about this as the deceased had sworn her to secrecy. The plaintiff did not like owing money to anyone and paid the money back to the deceased within a couple of days of learning about it.

The discussion also included whether the defendant should be able to draw a wage for his work on the farm. The plaintiff vehemently opposed this as he thought that the defendant should get a job. Neither of them had drawn a wage from the farm while they had been working at Mansfield Meat Supplies. The plaintiff did not see why the defendant should be entitled to a wage for doing work that he saw as a duty to ensure their mother had an income given that the boys would one day inherit the farm.

The argument became physical with different versions given as to exactly what happened but it seems that the plaintiff lost his temper and punched the defendant.

On a number of occasions, the deceased implored the plaintiff to patch things up with the defendant but that never occurred.

The deceased’s September 2001 will

On 28 September 2001, the deceased made a will (‘the 2001 will’) that was similar in substance to the will that she had previously made in 1979 and in line with the common understanding within the family: the boys were to get the farm and the girls were to get the money. The 2001 will makes specific reference to the common understanding in that the deceased stated ‘…it being my wish that each son receive an equal share of the real estate I own.’

However, in the 2001 will, the farm was sub-divided between the two boys instead of passing to them as tenants in common in equal shares as the deceased had done under her previous will, reflecting the breakdown of the relationship between the plaintiff and the defendant. The specific gifts in the 2001 will were as follows:

(a) a legacy of $15,000 to each of her four daughters;

(b) a legacy of $1,000 to each of her grandchildren;

(c) a devise of the real estate described in Certificates of Title Volume 7063 Folio 441, Volume 7367 Folio 399 and a further fifty one and a half acres which is to be subdivided off Certificate of Title Volume 8152 Title 672 at the expense of the estate to the defendant;

(d) a devise of the real estate described in Certificate of Title Volume 8152 Folio 672 subject to the subdivision described in the gift above to the plaintiff; and

(e) any residue of the estate to the plaintiff and the defendant as tenants in common in equal shares.

The defendant’s management of the farm

The defendant said that after the plaintiff went shearing, he managed the farm on a daily basis but only went out to the farm three or four days per week and worked for two to six hours each day he was there. He would arrive at the farm at ten o’clock in the morning and his mother made him coffee. He then did farm duties, returning to have lunch with his mother. He went home at around four o’clock in the afternoon on the days that he was at the farm. The defendant said the work he undertook was not very physical, just driving around the paddocks checking on the cattle and distributing bales of hay with a hydraulic lifter. He then said he also said he sheared the sheep every year. He employed others to help in jobs such as hay carting, shearing, marking calves, dehorning steers, de-horning heifers, drenching animals, inoculating animals, putting bulls out, weaning claves and selling the stock. The defendant said that Mr Brown who had also worked at the abattoir also assisted with cleaning out the dog kennels and picking up wire and wood in the paddocks and was ‘mad on driving the four wheel motorbike all the time.’

When the plaintiff came back to Mansfield during the time he was contract shearing, he visited the deceased at the farm. He noticed things that needed to be done on the farm, and that the livestock were undernourished and in very poor condition. He also noticed a mix of livestock, not just the split between the cattle with the blue and yellow tags. The plaintiff brought this up with his mother who said the defendant was managing the farm and that she did not know what he was doing. As the plaintiff and the defendant had fallen out and did not speak to each other, it was difficult for the plaintiff to assist with any farm duties. His mother was also concerned that the plaintiff should spend his time at home with his family and she did not ask him to assist with the work on the farm.

Over this period, the defendant also told the deceased the plaintiff was doing well financially as he was making a lot of money from contract shearing. The deceased commented to the plaintiff about how much he was earning, even though he did not tell her about his income and she was unaware of how much of the time he was actually working when he was away.

The drought in Mansfield and the condition of the farm thereafter

In his evidence, the defendant spoke of the drought frequently, which he said was for the period between around 2000 through to 2008, and linked certain events over this period to the effect of the drought.

The defendant said that the nature of the farm work changed with the drought because there was no feed or water on the farm. This meant he had to take the cattle to other land or graze on the roadside near the farm, although it was unclear when he did this. He bought a caravan in 2006 and lived in it while he looked after the stock in 2006. During the drought and up until 1 July 2006, he was not receiving a wage from the deceased but said she would occasionally write out cheques for him if he sold some of her cattle.

Even though the drought conditions were very difficult, the defendant advised the deceased not to sell off her stock. He wanted to keep as many of the stock alive until the drought broke and try and keep them in the best condition. However, there were risks involved with keeping the cattle as their value had dropped significantly with the drought and there was significant expenditure required for feed and in agistment costs.

The deceased’s accountant

From 2004 onwards, the deceased’s accountant, Mr Mark Henry, would come to the farm every year to do the deceased’s tax returns and the books of account for the farming business. Mr Henry is related to the deceased by marriage, having married the deceased’s niece.

The deceased would provide Mr Henry with her bank statements, term deposit statements, share certificates, dividend statements, stock agent account sales and cheque books. The defendant always attended these meetings as he provided information about the natural increases and decreases for the livestock on the farm and any major purchases and farm expenses throughout the year, if required. However, he said he was otherwise uninvolved in the meeting. After Mr Henry had prepared the books of account and tax returns, he would send these documents to the deceased for signing.

The defendant alleges the deceased was disappointed with the plaintiff in 2006

Although he went contract shearing, the plaintiff continued running some sheep on leased property. He leased a small paddock called Callagher’s paddock next to the farm, running 15 ewes on it.

Sometime in the early part of 2006, the defendant wanted to run cattle on Callagher’s paddock, a small paddock not far from the farm. He asked the deceased to speak with the plaintiff about agisting cattle on it. However, the plaintiff told her the paddock was not available because he had his sheep on it. In his evidence, the plaintiff said Callagher’s paddock was not suitable for cattle at all as the feed on it, being kangaroo grass, was not suitable for cattle. The defendant said the plaintiff’s response apparently disappointed the plaintiff. Carmel gave evidence that her mother told her years later when she was in a nursing home that she had asked the plaintiff to put stock on Callagher’s paddock and that she was disappointed that he did not assist her.

The transfer of the farm and the making of the deceased’s will

In the first few months of 2006 and when the defendant was living in his caravan in 2006, he spoke to the deceased in her kitchen at around 5.30pm. He said that ‘out of the blue’, she told him she would transfer the farm to him. The defendant said as well as the incident over Callagher’s paddock being a significant factor in changing the deceased’s mind about the disposition of the farm in her will, his mother said: ‘You’re doing all the work. [The plaintiff] is never here and he’s not interested in the farm.’ He said the deceased made this decision on the basis that he was at the farm working all the time and the plaintiff was ‘not interested’ and never at the farm. The defendant did not say that the deceased had ever asked the plaintiff to assist on the farm during the drought.

The plaintiff said the deceased did not ever ask him to come back to assist on the farm during the drought. Instead, she told him to spend time with his family.

The deceased then asked the defendant how she should go about effecting the transfer. He told her she would need to see somebody qualified in the area, such as the Victorian Farmers’ Federation. The defendant then suggested that the deceased should tell the girls and the plaintiff about her decision but she asked him to keep quiet about it.

The defendant then told his wife, Kathy, what the deceased had said to him. Kathy asked him if the family had been informed and he responded in the negative. Kathy pressed the point but the defendant insisted that this would be against his mother’s wishes. He did not elaborate as to why the deceased did not want to tell the family, other than to say that it was her decision. Although Kathy and the deceased had not spoken for about ten years, the defendant did not feel that telling Kathy was a breach of the deceased’s wish to keep quiet about her decision because Kathy was his wife. In her evidence, Kathy said she did not think the transaction was odd, as the defendant had worked on the farm for the past 25 years. Kathy then told her father, brother, sister and two friends that the farm was to be transferred to the defendant. Around the middle of 2008, she also told her solicitor in Mansfield that the farm had been transferred to the defendant.

The deceased’s attendance at Centrelink

Two weeks after the deceased had told the defendant that she wanted to transfer the farm to him, the deceased asked him to drive her to Centrelink in Wangaratta as she had made an appointment with a Mr Richard Weston, who was a financial information service officer and rural counsellor. Mr Weston purportedly specialised in handing over farms in situations of drought and exceptional circumstances. Mr Weston was issued with a subpoena to give evidence, which was successfully resisted on his behalf by his employer, Centrelink, pursuant to s 207 of the Social Security (Administration) Act 1999 (Cth).

The defendant attended the Centrelink meeting with the deceased. He said the deceased told Mr Weston that she wanted to transfer the farm to the defendant and asked him for advice as to how to go about it. Mr Weston required information from the deceased about her financials and assets and the deceased showed him some of her bank statements and her personal income tax return.

Mr Weston asked the defendant whether he earned a wage working on the farm and he said that he did not. Mr Weston told the defendant that he would ‘be entitled to the farm on lost wages’. Four ‘Financial Information Service’ fact sheets from Centrelink that provide general information were produced in evidence. These information sheets were titled ‘Income Test – Single Pensioner’, Income Test – Pensioner Couple’, ‘Taxation and Senior Australians’, and ‘Transfer of farm for past contribution or services’.

On a general information sheet titled ‘Income Test – Single Pensioner’ with the back page titled ‘Asset Test – Single Pensioner’, Mr Weston highlighted some pension rates. The front page includes what the defendant said was Mr Weston’s handwriting with ‘fortnightly income’ listed and highlighted as ‘382.00’ and ‘fortnightly rate’ listed and highlighted as ‘403’. The back page includes highlighting on ‘assets homeowner’ as ‘225,000’ and ‘fortnightly rate’ as ‘315.00’.

The defendant said Mr Weston then advised the deceased to get some legal advice to transfer the farm. Mr Weston also gave her another document that listed details he required that included the titles to the land, the rates notice and the deceased’s current will and requested copies of these be provided to him. There was no evidence that these details were forwarded to Mr Weston.

The defendant also said that, as well as Mr Weston being at this meeting, another officer, Mr Andrew Gregory, was also present. However, later he said that it was only Mr Weston who was present and that Mr Gregory had asked his mother for further information at a later date. Mr Gregory’s name is included on a undated letter from Centrelink to the deceased headed ‘Request for further information’ requesting the following information:

Details of the transfer of farm to son including land titles and current will.
Life Insurance policies – surrender value of both policies.

Seemingly in response to the Centrelink request for information, the deceased received a letter from Colonial Life Insurance regarding her policy dated 11 August 2006. This letter stated that the policy started on 27 April 1975 and that its current surrender value was $25,400.77 as at that date. The letter has handwriting on it that states, ‘Mum Enquiry’. There was no evidence as to whose handwriting it was or when it was made on the letter.

The deceased’s first meeting with Ms Leonard

On 25 May 2006, the deceased met with a solicitor, Ms Debra Leonard, of BJT Legal in Benalla. Ms Leonard had been admitted to practice five months prior to this meeting after completing her practical legal training at Leo Cusson Institute. Ms Leonard’s supervisor and the principal at BJT Legal worked at the firm one day a week, usually on Fridays.

It is unclear how the deceased happened to make an appointment with Ms Leonard or how she travelled to her initial meeting with Ms Leonard. The defendant said that when he made his will on an earlier occasion, he had seen a solicitor who was located in the same building where BJT Legal was located.

Ms Leonard has only a vague recollection of her meeting with the deceased on 25 May 2006 saying:

I don’t specifically remember meeting with her…I remember that I did meet with her. I remember…this client in particular because I am friends with her grandson, Shane.
I do recall that I saw her to take instructions for her will. I didn’t actually remember that I saw her for a transfer of property until I saw this file again recently.

The file itself refers to the making of a will, although the inside cover of the file includes a reference to the transfer relating to the charges to the client in Ms Leonard’s handwriting. The deceased also gave instructions to Ms Leonard to draft a financial enduring power of attorney in favour of the defendant and a medical enduring power of attorney in favour of Carmel, who is a nurse.

Ms Leonard could not say with any certainty that the deceased was the only person in the room when she took instructions from her. She said, ‘I haven’t got the best memory.’ Her file notes made on the day of the meeting contain very little information, apart from the fact that there were instructions for a will, a transfer of the farm and two enduring powers of attorney.

Ms Leonard conceded that her notes lack detail and that there were significant issues with her file notes in that it is not recorded whether or not any legal advice was given. She agreed that it would be pertinent to give advice, such as the potential for a testators’ family maintenance claim. The files notes did not record the value of the deceased’s other assets or the reason why the deceased was giving her only significant asset to one of her six children. Ms Leonard also agreed that the file notes do not show whether she asked the deceased if she had made a previous will, whether she gave any advice as to any change of the deceased’s dispositions or whether she advised the deceased to speak with her family about her testamentary dispositions.

The only reference in the file to Ms Leonard taking instructions in relation to the transfer states:

Farm
Title transfer b4 ~~1 July~~
- SD exempt 30 June 06

In a letter dated the same day of the meeting, Ms Leonard enclosed a draft copy of the deceased’s will, a financial power of attorney and a medical power of attorney. Ms Leonard also requested further information for the transfer documents, including the defendant’s address, farm use, and information about the residential and non-residential premises on the property. She also asked whether the farm would be the defendant’s principle place of residence.

There is no further information on the file regarding how the transfer was to be effected, apart from a copy of the real property value statutory declaration required by the State Revenue Office, and the transfer itself. Both documents note that the farm was transferred with the consideration being listed as ‘natural love and affection’. The file does not contain any title searches for the farm property and the tax invoice on the file does not record a title search as a disbursement.

The deceased’s second meeting with Ms Leonard

On 5 June 2006, the deceased had a follow up appointment with Ms Leonard to sign her will, the financial power of attorney and the transfer documents. Ms Leonard did not make a file note on this occasion and cannot recall the meeting. She does not recall meeting the defendant but concedes that both the deceased and the defendant were in her office at the same time as she witnessed both of their signatures that day. Ms Leonard was effectively acting for both parties. She gave no evidence that she advised the defendant or the deceased to get independent legal advice.

The defendant said he sat outside in the reception area while the deceased spoke with Ms Leonard. He was then called into the meeting room and shown a document with details of the land titles for the farm. The defendant said that Ms Leonard then asked him to leave the meeting as the deceased said she was changing her will and he took the unsigned transfer documents with him.

After sometime, the defendant said that he was called back into the room where Ms Leonard went through the details on the transfer document, including asking for his address. Both the deceased and the defendant then signed the transfer documents. There is no evidence that the defendant sought to ensure that the deceased had received legal advice before the transfer documents were signed by her.

Ms Leonard explained there would be transfer fees involved and asked the defendant to pay these. The defendant said Ms Leonard also told him she had given legal advice to the deceased. The deceased signed the financial power of attorney in favour of the defendant, who said he signed it on the deceased’s instruction. The medical power of attorney in favour of Carmel was never signed.

The defendant did not mention anything to Ms Leonard about the improvidence of the transfer of the farm or the fact that the transfer was likely to cause a rift in an otherwise close-knit family. The defendant said he never questioned the transaction itself even though he was not aware of the deceased’s financial position or whether she would be able to exist without her major asset, being the farm.

After the documentation had been signed and when they were in the reception area, Ms Leonard introduced the deceased and the defendant to another solicitor, Mr David Joseph, who is now the defendant’s solicitor in this proceeding.

The defendant and the deceased then went for a cup of tea. On the way home, the defendant reiterated his view that the girls and the defendant were not going to be happy about the transfer and the deceased replied, ‘it’s my decision.’

On 8 June 2006, the defendant transferred the fee of $386.30 for the transfer of the farm to BJT Legal.

On 9 June 2006, Ms Leonard sent a letter to Ms Nadine McLean of BJT Legal in Melbourne enclosing the transfer documents for lodging at the Land Titles Office.

On 20 June 2006, Ms Leonard sent a letter to the deceased and the defendant advising them that the transfer had been effected. The registration of the transfer on the certificates of title to the farm were dated 30 June 2006.

The defendant said he did not tell his siblings of the transfer of the farm because:

I was under the, under the belief all the time that…[the plaintiff] and I would get half the farm and that the girls would get the money … way back as far as 1979 when…Dad…told me that he’d actually made a will.

He had already told his wife about the farm being given to him and, about 12 to 18 months after the transfer, he told his children about it. He did this because ‘Kathy and my three children are my family and I had – I wanted to tell them.’

He said he did not say anything to anyone else because he claimed he wanted to protect his mother’s privacy and his ‘hands were tied’ because she did not want to say anything to them.

After the transfer of the farm to the defendant, the deceased continued to live in the house on the farm. Nothing changed so far as the defendant’s management of the farm was concerned.

The deceased tells her accountant of the transfer of the farm to the defendant

At a meeting with Mr Henry in 2006, the defendant said to him that his mother had something to tell him. The deceased then said to Mr Henry, ‘I’ve transferred the farm to the defendant. Please don’t tell anyone.’ Mr Henry noted that it was a significant transaction from a financial security perspective but did not feel that he could inquire further as to the reason why the deceased had made the transfer. This was because he thought it was usually something that would be discussed with solicitors. He thought it may have been done so the deceased could apply for the pension, as is commonly done in farming families when there is an inter-generational transfer of land.

The deceased also told Mr Henry that the defendant was to take over the livestock, plant and equipment of the farm as of 1 July 2007. Mr Henry advised that, to avoid a tax liability for the deceased, a partnership agreement between the deceased and the defendant should be established to transfer the livestock and other assets. The partnership lasted three months. There was only one financial statement and income tax return for the partnership for the financial year ending 30 June 2008.

There is no written partnership agreement but Mr Henry applied for an ABN number on behalf of the deceased and the defendant to establish the partnership. Mr Henry said these sorts of partnerships are common where there is an inter-generational transfer of livestock. The assets of the partnership comprised the farm equipment and livestock comprising 376 head of cattle and 150 sheep, all previously owned by the deceased. For the purposes of the partnership agreement, the livestock were valued at $37,500. This was estimated at approximately one tenth of their market value. The defendant did not pay the deceased for any of the farm equipment or livestock.

The defendant’s WorkCover claim in 2006

Although the farm had been transferred to the defendant on 30 June 2006, from 1 July 2006, the defendant said the deceased paid him a wage of $850 per week for the work that he did on the farm pursuant to the partnership agreement between them, although that agreement did not come into effect until the following year.

On 15 July 2006, the defendant had an accident at the farm when a four-wheel motorbike flipped upside down on top of him.

On 5 October 2006, he made a WorkCover claim to CGU Insurance in respect of this incident. The injury was included in the farm’s Register of Injuries dated 18 July 2006. The deceased wrote out the claim form and signed it, describing herself as the owner of the farm. The defendant explained that she did this because she still owned the ‘business’ of the farm, being the livestock, even though he owned the property. Mr Brown witnessed the incident and he signed the WorkCover workers’ claim form dated 2 August 2006.

The deceased subsequently received a total of $66,844.50 as the defendant’s employer for the period from 2007 to 2009 and she paid this money to the defendant. There is no reference to the receipt of this money in the defendant’s tax returns.

On 3 May 2007, the defendant wrote a letter to Mr Paul Miles of CGU Insurance in support of his claim for the accident on 15 July 2006 stating he was not fit for light duties and had not been fit for light duties since the time of the accident. His evidence at trial was that he was running the farm on a day-to-day basis and working on the farm.

On 19 June 2007, the defendant wrote a further letter to CGU Insurance stating that he was still incapable of work and requesting that the insurance company pay for access to a heated pool at Benalla to aid in his recovery from the injury.

The defendant’s management of the farm after the transfer

In 2007, the partnership cattle were kept on the farm as well as on agistment due to the drought conditions. In the period from March to May of that year, the Department of Primary Industries (‘the DPI’) charged the defendant with 43 offences, most relating to animal cruelty, including dragging a dying cow behind a truck and failing to feed and medicate the stock. When asked why the stock were dying, the defendant said that it was because of the drought but conceded that the stock would die during a drought if they did not have sufficient feed or water.

The defendant pleaded guilty to ten of these charges, including aggravated cruelty to animals, failure to provide food and drink for an animal, knowingly failing to provide treatment for a sick animal and intimidating a DPI Officer with a rifle. This last incident involved the defendant pulling his rifle out of his utility as the DPI officers entered the property where the stock was agisted. Although he pleaded guilty to this latter charge, he said that he only took the rifle out to put down a cow and that the female DPI Officer was shocked to see the gun, which then led to this charge. He was fined $10,000 in respect of the ten charges and was also ordered to pay court costs of $1,200. In his evidence, the defendant said that the only reasons he pleaded guilty to the charges was because of the advice of his lawyers and not because he thought he had done anything wrong.

Although the rest of the family were not necessarily aware of these charges at the time, they noticed that the condition of the farm went downhill under the management of the defendant. When they returned to the farm every month or so, the family noticed that fences were down and the livestock was in very poor condition, with cattle bellowing as vehicles approached in expectation of feed. Carmel told the deceased she should sell the cattle as it was obvious that they were malnourished and without adequate feed. At this stage, no one in the family, save for the defendant, was aware that the farm had been transferred to him.

In 2007, the family organised a working bee with all the deceased’s children and grandchildren assisting in cleaning up and fixing the fencing at the farm. At this time, no one in the family was aware that the deceased no longer owned the farm; the defendant did not tell them of the transfer but accepted their help. The plaintiff produced photographs taken by him in June 2014 that showed the farm in significant disrepair: fencing on the ground, rubbish in the paddocks, as well as dead and neglected animals and livestock. He said that the condition of the farm was the exact opposite of this when he left to go shearing in 1998 or thereabouts and after that it deteriorated rapidly. He said he brought this up with the deceased and the defendant on many occasions when he returned to Mansfield, but to no avail.

Also in 2007, the defendant borrowed $100,000 under the Rural Finance scheme. He said he used this money to purchase a tractor, which he paid off at a rate of $4,000 each quarter, galvanised panels and gates, some bulls and agistment fees. He would not have borrowed this money if the farm, livestock and other assets had not been transferred to him.

The Rural Finance loan has been re-paid in part with $22,560 now owing. The deceased assisted him with these repayments in August 2007 when she withdrew $12,000 from her personal cheque account. Mr Henry made a notation on the account that this money was applied to the defendant’s Rural Finance loan. Mr Henry stated that this was a loan to the defendant but he did not know if it was ever paid back to the deceased.

After the transfer of the farm, livestock and other assets to the defendant, the deceased received the pension payments from Centrelink, as well as interest and dividends from her limited bank investments and listed securities.

The defendant produced his livestock accounts and individual tax returns for the period from 1 July 2000 to 30 June 2008. Excluding non-livestock assets, depreciation schedules, tax offsets, information regarding net profit and loss and other business income, such as wool sales, in all of those financial years, the defendant made a loss. The DPI found dead cattle in 2007 yet no deaths were recorded in the livestock trading account and income from cattle sales was not significant. Income from livestock in 2001 was approximately $6,000 rising to approximately $12,000 in 2007 and $46,000 in 2008, this latter year recording the transfer of the deceased’s stock to the defendant. In 2008, there were 475 cattle on the defendant’s books of account, 377 of which were listed as ‘purchases’ and ‘transfers’. The financial statement for the partnership agreement between the deceased and the defendant states that 376 cattle were transferred to the defendant in that year. Similarly, the defendant’s books of account record the 150 sheep, out of a total of 313 sheep, were transferred to him under the partnership agreement. The defendant said that the nucleus of his current herd comprises the livestock transferred to him by the deceased for no consideration. The defendant said he made improvements to the land, including new fences, new cattle yards and replacing a water tank.

The deceased’s mental condition

There is no evidence that Margaret lacked testamentary capacity. In a letter dated 10 July 2014, a doctor at the Mansfield Medical Clinic described Margaret’s medical condition in 2006 as follows:

I note in particular that there is no history in her file relating to dementia, stroke or mental illness and she was living independently at home at the time specified. In 2006 she was seen by doctors in this clinic on five occasions only. Two appointments for skin lesions on 19/1/2006 and 1/11/2006, one for a traumatic skin tear on 23/1/2006 (subsequently managed by our nursing staff over a few weeks) one visit for a flu vaccination on 5/4/2006, and one visit for routine prescriptions and review on 27/6/2006, at which time she was noted specifically to be well.
At no time in 2006 has any reference been made to any condition that would have resulted in an impaired mental capacity from a medical context. I can therefore only conclude that there is no medical evidence or poor health or altered state of mind related to her medical condition during 2006.

The deceased’s physical condition

Overall, the deceased was in very good health for an elderly lady and lived an independent life on the farm. In about 2000, she had a pacemaker fitted. She did not require assistance in her daily activities. In 2006, the deceased was still living independently and driving herself to church each week in Mansfield and to help with delivering ‘meals on wheels’.

Even though the deceased lived her life independently, her family noticed that as she aged she became less robust. Carmel said that her mother should not have been doing meals on wheels in her frail condition. She noticed a deterioration in her mother’s condition from around 2002 when she was aged of 80, with her mother slowing down a little and not doing as much housework.

As the deceased’s condition deteriorated, her children were concerned for her safety living on the farm by herself. Around 2006, Carmel researched nursing homes in Mansfield. Carmel also discussed with the deceased the idea of moving into town as well as the possibility of transferring the farm to the boys. Nothing came of this until after her mother had a fall in 2011. Lynette said had similar discussions with the deceased when the deceased was in her 60s and 70s. In the course of these discussions, the deceased reiterated the promise to Lynette that the boys would get the farm on her death.

The plaintiff said that, in 2006, after visiting the girls in Melbourne, the plaintiff had to drive his mother home at night and check that she was okay. In 2006, the deceased also asked the defendant to drive her to Wangaratta when she went to Centrelink and to Benalla when she went to see Ms Leonard.

In January 2011, when the deceased was 91, she had a fall and was severely injured. She was taken to Wangaratta Hospital, then transferred to the Royal Melbourne Hospital and put into palliative care. The doctors advised the children that she was no longer able to live independently. All of the siblings and the plaintiff’s wife, Judy, held a meeting at the hospital and agreed that a nursing home should be found for the deceased.

The defendant tells Carmel and Valerie of the transfer of the farm

As a result of this decision, in April 2011, Carmel, Valerie and the defendant went to see Mr Henry to ascertain their mother’s financial position. Before they went into the meeting, the defendant told Carmel and Valerie in the car park that the deceased had transferred the farm to him and that the plaintiff would not be happy when he found out. Carmel and Valerie told the defendant that was not how it was meant to be, was not what the deceased wanted and that the plaintiff would never speak to him again. The defendant told the girls not to tell the plaintiff. Carmel did not tell the plaintiff because she felt the deceased was too ill to discuss the issue at that time.

After the deceased had recovered somewhat, Carmel brought up the issue of the transfer with her on a number of occasions. Her mother’s only response was that she thought she was doing the right thing at the time. Carmel told her mother that she did not agree with what she had done as it was in breach of the common understanding. Carmel spoke with the defendant about the situation on a number of occasions as she thought the transaction was improvident and told him so but his only response was that it was ‘Mum’s decision’. None of the siblings had yet told the plaintiff about the transfer, as they wanted to speak with their mother about it first.

The deceased tells the plaintiff of the transfer of the farm

The plaintiff had a flock of a couple of hundred sheep that he had on leased land in the Mansfield area. While the deceased was still palliative care, the block of land that the plaintiff was leasing was put up for sale. He asked the deceased if he could move his sheep to the farm as an interim measure while he searched for another block of land to lease. It was then that he found out for the first time that the farm had been transferred to the defendant in 2006. This was because the deceased told him that he would have to ask the defendant as the farm belonged to him. The plaintiff told the deceased how disappointed he was and that he had run the farm for her for over 20 years without pay on the expectation that he and the defendant would get the farm. Her response was, ‘at the time I thought I was doing the right thing’. The plaintiff speculated when queried as to why the deceased had transferred the farm that it could have been so she could get the pension. The plaintiff’s wife, Judy, confirmed these conversations in her evidence.

When the deceased was in the Royal Women’s Hospital, the plaintiff again brought up the fact that he was not happy that he had laboured under an expectation and the deceased had betrayed him. The deceased told him that she would get Valerie to speak with the defendant. After Valerie had spoken with the defendant, his previously regular visits to the deceased in hospital became less frequent and, when he did visit, he always took one of his children with him because he knew that the deceased would not discuss such an issue in front of her grandchildren.

In May 2011, the deceased moved to a nursing home at Kirkbrae. The nursing home was close to where the girls lived in Melbourne. She remained at the nursing home until her death in March 2013. The plaintiff said that every time he visited the deceased at the nursing home, she would cry and none of the other siblings knew why. When they did find out, the girls were shocked. Lynette also spoke to her mother about the transfer as she was in disbelief at what her mother had done given the common understanding. Lynette recalled that her mother said she thought that it was the right thing to do at the time.

The girls took the deceased to see the defendant in Mansfield on a number of occasions to talk about the situation as she had told the girls that she wanted to fix what she felt was a mistake. However, the defendant did not make himself available and before the deceased could speak with him she caught pneumonia and was admitted to Maroondah Hospital. Lynette tried to discuss the situation with the defendant at the hospital as their mother was near death. He told her that he knew that their mother wanted to speak to him about the situation but he flatly refused to do anything about it. Margaret died approximately a week later on 25 March 2013.

The siblings met at the office of Mr Joseph and he informed them of the contents of the deceased’s will. Afterwards, all of the girls and the plaintiff met at Carmel’s house. Carmel and Lynette recall the plaintiff asked them if they knew of any reason as to why he was left out of the will. They all thought this was odd in light of the common understanding and the fact that the deceased had always had a good relationship with her children and did not have favourites.

Credibility of the witnesses

Much of the evidence in this proceeding concerned events occurring many years ago. There are obvious difficulties with recollections of a witness, as well as a tendency for a witness to tailor the evidence to suit his or her case. Where the witnesses rely on their recollections, any contemporaneous documents are of assistance in determining the facts as they usually provide more accurate information that the recollections of witnesses. Where there is a difference between the oral evidence and a contemporaneous document, I prefer the documentary evidence as being more reliable, particularly where it has been prepared contemporaneously and written by a person who has no interest in mis-stating the facts.

The principal witnesses were the plaintiff and the defendant. The plaintiff did not know about the transfers of the farm, livestock and chattels until 2011. The girls were told about the transfers shortly before the plaintiff. All of them expressed the view that the transfers were contrary to the common understanding and their evidence supported the plaintiff in this proceeding.

Overall, I found the plaintiff to be a credible and honest witness. The plaintiff was clearly uncomfortable with the fact that there were outstanding debts after the winding up of the business partnership with the defendant. I accept his evidence that from his earnings as a contract shearer over time he made certain those liabilities were paid. I also accept that when he found out about the deceased helping out his wife, Judy, by giving her $1,500 when she needed money to pay the rent on her shop, he repaid the amount to her as soon as he could. The plaintiff’s sense of responsibility and integrity was demonstrated by his answer when asked if he had promised to ‘look after’ his sisters if they supported him in this proceeding. The plaintiff responded:

I’ll be fighting this on my own back because it’s not fair to the girls that they miss out…if I get half the farm the girls – that was the girls’ money, it gets split four ways. I could have…said [to his solicitor] ‘right, Martin, go for it’ and lose all the girls’ money … What do they get out of the farm?. So [the defendant] gets something worth $2.3m plus all the stock, everything, and the girls would … get nothing. That’s a real nice set up that would be. So … I’ve paid my court costs and I’m still paying my court costs and that’s why I’m working the hours that I’m working because I want the girls to get the money.

In contrast, the defendant was not a credible witness. His evidence on the sequence of events that culminated in the transfer of the farm, livestock and chattels and the making of 2006 will was disordered, confused and largely unsubstantiated. He had a poor recollection of events surrounding the transfers and the discussions with his mother, Mr Weston from Centrelink and the solicitor, Ms Leonard, about these significant changes made in 2006 that were contrary to the common understanding. He agreed that the changes were contrary to the common understanding. His reasons for the change were self-serving and not credible in light of the firmly entrenched common understanding. He is the only person who has received a significant financial benefit from the change of ownership and he failed to consider the financial impact on the deceased or the plaintiff. He did not tell his siblings about these changes yet told his immediate family. He took part in a family organised working bee on the farm in 2007 with his siblings unaware of the changes in ownership of the farm. The defendant maintained that he did not say anything to anyone else because he wanted to protect her privacy so ‘his hands were tied’. He also maintained that on several occasions he asked his mother to tell the girls and the plaintiff about the changes. The defendant’s reasons for not telling his siblings about the changes were not credible.

The defendant was unable to provide satisfactory answers to the winding up of his business dealings with the plaintiff, including the whereabouts of assets of the business and the stock comprising the B & G Cattle partnership. He was unable to substantiate how he paid for his cattle said to be purchased by him in 2001.

The defendant’s history of claims related to his work injuries in 1999 and 2006 leave many unanswered questions as to his alleged incapacity to work. He gave inconsistent evidence asserting on oath that he was working at the farm three or four days a week for up to six hours a day from 1998 onwards yet his Workcover claim stated that he was totally incapacitated for work. He also obtained money from the deceased over the years and there is no evidence that suggests that he repaid these amounts. After the transfer of the farm, he obtained a loan of $100,000 from Rural Finance and then used the deceased’s money to repay part of that loan. Not only was the defendant prepared to be untruthful in order to obtain substantial financial benefits, he was comfortable in taking other financial benefits from the deceased as well as the farm, livestock and chattels. It is significant that the defendant did not tell anyone about the benefits that he received from the deceased.

The defendant also relied on a newspaper article published in the local newspaper in November 2013 regarding the quality of the lambs produced by him at that time to assert that he was a good farmer. The evidence at trial was that the defendant let the farm fall into disrepair and become rundown. At the time of the transfer and in 2007, the livestock on the farm were in poor condition, as attested to by the plaintiff and the girls and supported by the charges, mostly relating to animal cruelty, laid by the DPI in 2007 against the defendant and his subsequent convictions on ten serious charges.

In order for the plaintiff to establish his claim for unconscionability, he must prove:

(a) the deceased suffered from a special disability vis-à-vis the defendant at the time she transferred the farm to him in June 2006, at the time she changed the disposition of the farm, livestock and chattels in her 2006 will and at the time she transferred her livestock and chattels to the defendant in 2007;

(b) the special disability affected her judgment as to what constituted her best interests;

(c) the defendant was cognisant of her special disability; and

(d) the defendant took unfair advantage of her special disability in entering into the transactions.[31]

Was the deceased under a special disability vis-à-vis the defendant?

[31]Adapting the requirements expressed by Mason J in Commercial Bank of Australia v Amadio (1983) 151 CLR 447 to the facts in this proceeding.

At the time that the deceased transferred the farm to the defendant in June 2006, she was 84 years old, although she still lived a relatively independent life. However, for years prior to 2006, the deceased’s children had been concerned for their mother living on the farm by herself as they noticed her increasing frailty.

The deceased was an unsophisticated person who had lived on a farm for most of her life, she was elderly and frail, she was reliant on the defendant in the management of the farm and with her finances, she placed great trust in him, was close to him emotionally and saw him on an almost daily basis.

The deceased developed a dependence on the defendant, both emotionally, financially and in the management of the farm. The deceased relied on the defendant to attend the farm on a frequent, if not daily, basis to manage the farm, assist her with her finances and to check on her regularly. The defendant’s visits to the farm were a safety net for the deceased and her family. The deceased had never been involved or concerned with the management of the farm and she relied on the defendant’s advice concerning the farm, not knowing the actual conditions for the stock or how to manage them. In 2006, the drought was at its worst. Notwithstanding this, the defendant urged the deceased not to sell off any of her livestock and to ‘wait it out’. This resulted in the deceased’s income from the farm being minimal at that time.

The deceased was a person who required special assistance in terms of an explanation as to the nature of the transactions that she entered into with the defendant and her will. At the same time the deceased signed documents transferring the farm to the defendant for no financial consideration, she executed her will that left the farm, livestock and chattels to him. After she signed her will, she transferred the livestock and chattels to the defendant, with no consideration paid by the defendant.

There is no evidence that the deceased received legal advice regarding the improvidence of the transfer of the farm, the livestock and chattels or that, as a result, she would be deprived of her financial security. There is no evidence that her solicitor informed her that she could not leave the farm, livestock and chattels in her will if she no longer owned them.

I am satisfied that the deceased was under a special disability vis-à-vis the defendant at the time of the transfer of the farm, livestock and chattels to the defendant.

Did the special disability affect the deceased’s judgment as to what constituted her best interests?

The farm, livestock and chattels were her only significant valuable asset and they were the subject of the common understanding in the family. The transfer of the farm, the livestock and chattels to the defendant were improvident transactions: they rendered the deceased financially dependent on pension payments and the small income she earned from her investments and money in the bank, with no financial capacity to look after herself if her circumstances changed.

It is improbable that a person not subject to a special disability would transfer valuable property and assets for no consideration when there were real concerns as to how to fund that person’s future, especially when that person was elderly and would likely to be requiring, in the near future, increased medical care or special accommodation requiring the payment of a bond.

It is improbable that a person not subject to a special disability would transfer valuable property and assets subject to a longstanding common understanding when there was no change to his or her relationships within the family. The deceased maintained a good relationship with all of her children, notwithstanding the longstanding dispute between the defendant and the plaintiff.

It is improbable that a person not subject to a special disability would transfer valuable property and assets, subject to a longstanding common understanding, that would render her incapable of changing her freedom of testamentary disposition.

In my view, the deceased’s special disabilities affected her judgment as to what constituted her best interests.

Was the defendant aware of the deceased’s special disability or the facts that would raise the possibility that she suffered from a special disability?

While the deceased was not helpless or suffering from any disorder of the mind, old age coupled with her emotional dependence on the defendant are characteristics that would, in the mind of a reasonable person, have the effect of placing the deceased at a serious disadvantage vis-à-vis the defendant.

The defendant was well aware his mother was elderly and becoming increasingly frail. He was well aware that she relied on him as her eldest son and farm manager and that he was the only one of the deceased’s children who was able to visit her on an almost daily basis. Her reliance on him in an emotional sense is apparent and is analogous to the situation in Bridgewater v Leahy[32] whereby the gift giver was blinded to the improvidence of the transaction by virtue of his strong emotional dependence on or attachment to the recipient nephew, who managed the property on his behalf.
[32](1998) 194 CLR 457.

Even if the defendant was willingly blind to this state of affairs, he ought reasonably to have been aware that his mother had not received proper or independent legal advice regarding the transfer of the farm, livestock and chattels and the making of her 2006 will. As a business person, he had bought and sold the butcher shop and the abattoir. He had also purchased a residential property himself and his family. In each of those transactions, the defendant engaged lawyers to do the legal work and he would have received advice as to the terms of the contract, the timeframe for performance and any possible risks involved in the transaction.

The defendant well knew that the transactions for the transfer of the farm, livestock and chattels were unusual and went against the common understanding. Notwithstanding this, the defendant did not engage a lawyer for himself and, in fact, attended at the office of the deceased’s solicitor with his mother to sign the relevant documents. For a person who had been involved in past in buying and selling real estate and running a business for many years, the fact that only one inexperienced newly admitted solicitor, the same age as his son, was involved in effecting the transaction in a single day, without any time to consider the ramifications of the transactions, should have raised significant doubts as to whether the deceased had received proper and independent legal advice. Independent legal advice would have provided the deceased with the special assistance that she needed to make an informed decision as to what constituted her best interests.

In my view, the defendant knew that the deceased was under a special disability or knew of the facts that would raise in the mind of a reasonable person that she was under a special disability.

Did the defendant take unfair advantage of the deceased’s special disability in entering in to the transfer of the farm, livestock and chattels?

As the defendant knew that the deceased was under a special disability or knew of the facts that would raise in the mind of a reasonable person that she was under a special disability, he ought to have ensured that the transaction was at arms length. The transaction should have been entered into with the deceased and the defendant receiving separate legal advice and being represented by independent solicitors. The defendant’s evidence that he queried his mother regarding the transfer by asking her ‘are you sure you want to do this?’ is not credible and, in any event, such a simple query is manifestly not sufficient in the circumstances and especially against the background of the common understanding. The defendant did nothing to assist or ensure that his mother had proper and independent legal advice.

The defendant well knew that he had taken advantage of his mother as he kept the transfers of the farm, livestock and chattels a secret from the family for many years. His hand was forced in April 2011 when the deceased was about to move to a nursing home. In maintaining the secrecy, the defendant reinforced the conclusion that he had taken advantage of his mother and made sure that no one interfered with his substantial financial gain.

The importance of this is highlighted in light of the common understanding, which the defendant conceded existed from at least 1979. On the basis of the evidence given by the defendant and his wife, Kathy, it is clear that the defendant felt that he was entitled to the farm, in the same way that he felt he was entitled to the livestock and chattels as well as the assets from Mansfield Meat Supplies. The defendant said that Mr Weston at Centrelink told him that he was entitled to the farm in lieu of unpaid wages yet the defendant failed to tell Mr Weston that the plaintiff also worked on the farm for more than 20 years for no wages. Later, the defendant actively undermined the plaintiff by telling his mother how well the plaintiff was doing financially, insinuating that the plaintiff was not interested in and did not need the farm. The defendant maintained control over his mother’s financial transactions by managing the farm, attending meetings with her accountant, with Mr Weston and then with Ms Leonard.

The defendant took advantage of his mother’s special disabilities: a person acting in her interests would not have attended meetings with her accountant, with Mr Weston or with Ms Leonard nor would he have actively undermined the plaintiff or acted contra to the common understanding.

A reasonable person in the defendant’s position would have done several things to ensure that the deceased was not taken advantage of, including the following:

(a) speaking with his siblings, especially the plaintiff, and urging that they too speak with their mother about the transaction, especially in light of the long held common understanding;

(b) engaging independent lawyers and ensuring that his mother had independent and impartial legal advice; and

(c) refusing to sign the transfer unless and until the above had been satisfied.

In my view, the defendant took unfair advantage of the deceased’s special disability when she transferred the farm, livestock and chattels to him.

Conclusion on unconscionability

I am satisfied that the defendant’s conduct in seeking to retain the benefit of the transfer of the farm, livestock and chattels to himself is not consistent with equity or good conscience and the transactions should be set aside.

Undue influence

The plaintiff’s second claim in the alternative is that the transfer of the farm, livestock and chattels was procured by the undue influence of the defendant. The doctrine of undue influence has similarities with the doctrine of unconscionability. However, the underlying rationale of the two doctrines is fundamentally different. Whereas unconscionability is concerned with the conduct of the recipient in retaining a benefit gifted to him or her by a person under a special disability where it would not be in good conscience to retain such a benefit, the doctrine of undue influence focuses on the nature of the consent of the donor in conferring the benefit. In Johnson v Buttress,[33] the principles in relation to undue influence were stated by Dixon J as follows:

It applies whenever one party occupies or assumes towards another a position naturally involving an ascendancy or influence over that 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 interests 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 ... But, except in the well recognised 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 are not governed by the presumption but dependent on some inference of fact.[34]

[33](1936) 56 CLR 113.

[34]Ibid 134–135.

These principles are summarised by Kaye J in Christodoulou v Christodoulou as follows:

The basic principles relating to the concept of undue influence are uncontroversial. In equity, a transaction, whereby a donor transfers property to a donee (or recipient), is voidable, if it is shown to be the result of undue influence exercised by the recipient over the mind of the donor. There are two categories of cases of undue influence. The first category of cases arises where it has been positively proven that the transaction in question was produced by actual influence exercised by the recipient over the donor. … The second category of case is where there has been shown to be an antecedent relationship between the donor and the donee, which is such as to raise a presumption that the donee has relevant influence over the donor. In such a case, the court will set aside a voluntary gift, unless it is proven by the donee that the gift was a spontaneous act of the donor in exercise of an independent and informed will. In this category of case, the law has recognised particular relationships which automatically raise a presumption of influence, including the relationship of doctor and patient, solicitor and client, guardian and ward, and parent and child (where the gift is by the child to the parent). However, the classes of relationships, in which the presumption arises, are not fixed and inflexible. In essence, where there is found to be an antecedent relationship between the parties, which gives the recipient of the gift “authority or influence over the donor from the absence of which it is proper that he [or she] should be protected”, the law will presume that any gift by the donor to the donee was the result of undue influence exercised by the latter.[35]

[35]Christodoulou v Christodoulou [2009] VSC 583 (14 December 2009), [70] (emphasis added, citations omitted). Approved in Daunt v Daunt [2015] VSCA 58 (19 February 2015), 24 (Redlich, Santamaria, Kryou JJA).

His Honour then considered the circumstances in which the presumption of undue influence is rebuttable:

Where an issue of undue influence arises, the critical question is, ultimately, whether the decision of the donor was the result of the exercise by her of an independent judgment, free from any undue influence of the donee, and based on sufficient information so that the donor understands the nature and consequences of her act. In each case, that question involves an examination of all the relevant factors which bear on the nature of the relationship between the donor and donee, and in particular which relate to the effect of that relationship on the mind and will of the donor in the transaction in question.
Where a presumption of undue influence arises, one relevant circumstance is whether the intention, to make the gift, originated with the donor. However, by the same token, the fact that the proposal to make the gift originated with the donor would not preclude application of the principles of undue influence.
An important factor in determining whether the presumption of undue influence has been rebutted, is whether the donor, before making the gift, had independent legal advice.[36]

[36]Ibid 74–76.

The fact that the value of the gift of the farm, livestock and chattels was considerable is not disputed. In such circumstances, under this doctrine there is a presumption that the gift was procured by the undue influence of the defendant. Thus, the onus rests of the defendant to rebut this inference on the facts.

The factual situation in the present case is analogous, in many ways, to the situation in Bromley v Ryan:

…[the plaintiff] was old, lacking in education … mentally and physically weak, without proper advice, unable to properly protect [herself] and on unequal terms with the [defendant], all of which the [defendant] then well knew, and that the [defendant] took advantage of the [deceased’s] circumstances, that the same solicitor acted for both parties and did not give the [deceased] full and proper advice, that the [deceased] acted with undue haste and procured the [deceased’s] agreement to the sale at a great undervalue and upon terms highly favourable to himself and unfavourable to the [deceased]…[37]

[37]Bromley v Ryan (1956) 99 CLR 362, 413–414 (Kitto J).

This case does not fall within the first category of case espoused by Kaye J in Christodoulou v Christodoulou as it cannot be positively proven that the transfer of the farm, livestock and chattels to the defendant was the product of actual influence exercised by the defendant over the deceased.

It does, however, fall into the second category of case, namely, where an antecedent relationship between the deceased and the defendant exists, such as to raise a presumption that the defendant has relevant influence over the deceased. That influence was such that the defendant influenced her to transfer the farm, livestock and chattels to him for no consideration and to make a will in his favour in respect of the farm, livestock and chattels, which disposition was substantially from her previous will. In such circumstances, the onus is on the defendant as donee to rebut the presumption of undue influence by proving that the transfer of the farm, livestock and chattels to him was the result of a spontaneous act of the deceased in exercise of her independent and informed will.

In determining this, it is necessary to consider the nature of the relationship between the deceased and the defendant and whether the transfer of the farm livestock and chattels to the defendant was the product of the free will of the deceased.

What was the nature of the relationship between the deceased and the defendant?

The relationship must be one in which the recipient of the gift has ‘ascendency’ over the gift giver or donor. The circumstances of such a relationship must also give rise to the inference that, absence proof to the contrary, the gift was the product of undue influence by the recipient upon the donor. Where this inference or presumption arises, the effect of the ascendant relationship in light of all other circumstances must be examined to determine whether or not the donor exercised independent judgment and fully understood the nature and consequences of the relevant transaction.

It is evident that the deceased and the defendant had a close relationship and, inherent in that relationship, was a strong degree of trust on the part of the deceased. The deceased had a close relationship with all of her children; however, from 1999 onwards, the defendant was the only one of her children that she saw almost every day. While the deceased lived an independent life in that she drove herself into Mansfield, went to church and was involved in meals on wheels, the deceased relied on the defendant coming up to the farm regularly to check on her. She expected him most, if not, every morning and would end telephone calls with her other children when he arrived and make him a cup of coffee.

The deceased also relied on the defendant to manage her primary source of income, being the farm. He attended her meetings with her accountant and provided relevant information to him about her farming activities. It is apparent also that the defendant was aware of the deceased’s other financial dealings: he knew about the deceased’s loan to the plaintiff’s wife, Judy; he made notations on his mother’s financial statements; and, he attended other appointments related to her finances, such as the appointment with Mr Weston at Centrelink. It is clear that the deceased trusted the defendant with her finances, so much so that she also signed an enduring power of attorney in favour of defendant. I am satisfied that the defendant had influence over his mother’s financial affairs on or around the date of the transfer of the farm and the execution of her 2006 will.

Was the transfer of the farm, livestock and chattels to the defendant the product of the free will of the deceased?

Where a particular relationship exists, the presumption of undue influence is rebuttable where it can be shown that the donor exercised their free judgment and will in entering into the transaction. As noted by Kaye J in Christodoulou v Christodoulou, an important factor in rebutting the presumption of undue influence is that the donor obtained independent legal advice.

This did not happen in the case of the deceased. From both the few file notes and the viva voce evidence of Ms Leonard, no advice, let alone independent advice was given to the deceased regarding the improvidence of the transaction or the potential legal claims that may be made on her estate in relation to the significant change in the dispositions under her will. Ms Leonard failed to advise the deceased that she was effectively undermining her testamentary freedom in transferring the farm as, in doing so, she could no longer devise it in her will. Considering the provisions made in her two earlier wills in 1979 and 2001 that accord with and reflect the common understanding, such a dramatic change in 2006 is inconceivable. In particular, her 2001 will reflected the deceased’s understanding of the breakdown of the relationship between the plaintiff and the defendant yet her will remained in accordance with the common understanding. This is exemplified where her will provided: ‘It being my wish that each son receive an equal share of the real estate I own’. The dramatic change in 2006 was not only contrary to the common understanding and made without independent legal advice, it was also made in the context of no change in her relationship with any of her children.

Ms Leonard’s inexperience or lack of legal ability at the time did not assist the situation. She readily conceded that at that time she was unaware of the conflict in advising clients on both sides of a transaction or of giving impartial and independent advice to ensure that the transaction was entered into by the deceased with her fully informed consent, particularly where the farm was transferred for no consideration. There is no evidence that Ms Leonard provided any advice to the deceased about the improvidence of the transaction or enquired as to whether she had made any previous wills and whether any of her dispositions had changed. Even an inexperienced practitioner just fresh from completing the mandatory practical legal training, should consider it strange when a client gives instructions to devise a property to a person in their will at the same time as giving instructions to transfer that same property inter vivos to that same person. Such conflicting instructions indicate that the client does not understand the nature of the transaction and requires further explanation. There is no evidence that Ms Leonard did so nor is there is any evidence that Ms Leonard undertook title searches of the farm before preparing the necessary documents for the transfer.

Although Ms Leonard and the defendant were unable to recall whether the defendant was present at the deceased’s first meeting with Ms Leonard on 25 May 2006, it is probable that he did drove her to Benalla and did attend the meeting. At this stage of her life, the deceased only drove locally. The defendant drove the deceased to Wangaratta when she saw Mr Weston and to Benalla when she saw Ms Leonard for her second meeting on 5 June 2006. At this time, no-one else apart from Mr Weston, Ms Leonard and the defendant’s wife knew of the proposal to transfer the farm, livestock and chattels to the defendant. The defendant was certainly present at the second meeting between the deceased and Ms Leonard as Ms Leonard witnessed his signature on several documents and the defendant himself gave evidence that he was in the room when he and the deceased signed the transfer documents. Having himself made a will, the defendant would have been aware that a person cannot devise property they do not own and that any transfer of assets to him would negate the deceased’s ability to change her testamentary intentions should she wish to do so.

Ms Leonard’s file shows that she acted for the deceased and the defendant. Her evidence, both oral and from her file, establish that she failed to provide the deceased with independent advice that would allow her interests to be protected. By the transactions, she was deprived of her most significant asset and her ability to provide the financial security to fund any future medical or nursing home expenses, such as the bond, in her advancing years. Considering her age and her increasing frailty in 2006, the latter need would probably be sooner, rather than later.

I am satisfied that the deceased did not fully understand the nature of the transaction and she did not enter into the transaction as a free and independent exercise of her own will. The fact that a mere three weeks after the transfer of the farm was effected, the deceased described herself on the WorkCover claim for defendant’s accident on 16 July 2006 as a ‘farm owner’ supports the finding that she did not fully understand the nature of the transaction. The deceased also continued to live on the farm without any change to her lifestyle and continued to give money to defendant, including assisting him in paying his Rural Finance loan. These facts support the conclusion that the deceased was unaware she had transferred more than three quarters of her asset base to the defendant. Resultantly, the deceased was unable to exercise her freedom of testamentary disposition to change her testamentary intentions at any time before her death to accord with the common understanding.

In addition, when her daughters found out about the transfer to the defendant in 2011, the deceased asked them to arrange a meeting with the defendant so that she could ‘fix it’ and told her daughters on more than one occasion before she died that ‘I thought I was doing the right thing at the time’. In my view, this evidences a lack of understanding regarding both the nature of the transfer as well as the disposition of the farm, livestock and chattels under the will in favour of the defendant.

Conclusion on undue influence

In my view, the defendant did influence the deceased to transfer the farm, livestock and chattels to him for no consideration and did influence her to make a will in his favour in respect of the farm, livestock and chattels. I am satisfied that, as a result, the deceased was unable to exercise her testamentary freedom in respect of any dispositions of the farm, livestock and chattels thereafter and that this rendered her incapable, therefore, of carrying out the common understanding.

Conclusions, orders and costs

For the reasons I have given, I find in favour of the plaintiff’s claims on the basis of equitable estoppel, or, in the alternative that the transfer of the farm, livestock and chattels was unconscionable, or, that the deceased was subject to undue influence by the defendant in respect of the transfer of the farm, livestock and chattels.

At present the farm, livestock and chattels are in the name of the defendant. There should be a declaration that the defendant holds the farm, livestock and chattels on a constructive trust as to one of two equal undivided shares as tenants in common for the plaintiff beneficially. There should also be an order that the trust so declared vest and that the defendant do all such things and execute all such documents as are necessary to transfer to the plaintiff one of two equal undivided shares as tenant in common in the farm, livestock and chattels.

In view of these findings in favour of the plaintiff, it is unnecessary to consider the plaintiff’s other alternative claim under Part IV of the Administration and Probate Act 1958 in proceeding number S CI 2014 02185.

I will hear the parties as to the form of proposed orders and as to the costs of the proceeding.

Subject to anything further, I will order that the parties prepare an agreed form of order to be sent to my associate by 6 November 2015. The plaintiff is to file written submissions as to the costs of the proceeding by 13 November 2015, the defendants are to file written submissions as to the costs of the proceeding by 20 November 2015, and the further hearing of the proceeding be returnable in the Probate List on 4 December 2015 for hearing of any submissions. Should there be any disagreement as to the proposed form of order, that disagreement should also be addressed in the written submissions to be filed by each of the parties.

A further matter

After the trial concluded, the solicitor for the defendant forwarded an email to the Court, copying the solicitor for the plaintiff, stating:[38]

I refer to the above matter and to the recent decision of the Supreme Court of Queensland: Haggarty v Wood (No 2) [2015] QSC 244 (26 August 2015) [sic]
As a legal practitioner I believe that I am obliged to bring to the attention of the Court and of the other parties any matter that might reasonably have bearing upon the case. I consider the decision in the above cited case to be relevant to the present matter.

[38] Email sent 2 September 2015.

Haggarty v Wood (No 2)[39] concerned an application by the defendant for summary judgment or striking out a further amended statement of claim. The plaintiffs sought a declaration that the defendant holds company shares on constructive trust for their benefit to the extent of their contribution to the assets and value of the company, alternatively other relief, including equitable compensation. The plaintiffs alleged that the deceased acted unconscientiously or unconscionably in revoking his will, transferring 50 per cent of a company to the defendant (although the interest was actually held jointly thereby passing to the defendant by survivorship and not pursuant to the deceased’s will) and selling five lots of land (although the lots were owned by a company that was not alleged to have been a party to the alleged testamentary contract) in breach of the alleged testamentary contract. The executor of the estate of the deceased was not a party to the proceeding. In the result, the plaintiffs’ claim was dismissed on the basis that there were no facts alleged or proven suggesting unconscientious or unconscionable conduct by the defendant and the plaintiffs had not put forward facts from which they had a real prospect of success on such a case.
[39][2015] QSC 244 (26 August 2015).

Although unusual to communicate with the Court after the trial, the solicitor for the defendant did not request, as required by the relevant Solicitors’ Conduct Rules, that the Court relist the proceeding for further submissions as to why the decision was relevant to this proceeding.[40] Nevertheless, having considered the decision, I am satisfied that it is not relevant to the issues that arise in this proceeding.
[40]Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015, r 19.8 (as at 26 May 2015).

[2015] VSC 600

30 October 2015