Rydzewski v Rydzewski

[2024] NSWSC 802

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Rydzewski v Rydzewski [2024] NSWSC 802

Hearing dates:

30 October 2023–10 November 2023

Date of orders:

01 July 2024

Decision date:

01 July 2024

Jurisdiction:

Equity - Succession & Probate List - Probate

Before:

Richmond J

Decision:

See [324]

Catchwords:

CONTRACTS — parties — capacity — gift of real property

CONTRACTS — unjust contracts — Contracts Review Act 1980 (NSW) — unjust

EQUITY — unconscionable conduct — special disability or disadvantage — whether unconscientious advantage taken

EQUITY — trusts and trustees — constructive trusts — imperfect gifts

EQUITY — undue influence — relationships giving rise to presumption of undue influence

Legislation Cited:

Administrative Decisions Review Act 1997 (NSW)

Contracts Review Act 1980 (NSW)

Duties Act 1997 (NSW)

Evidence Act 1995 (NSW`)

Powers of Attorney Act 2003 (NSW)

Cases Cited:

Aboody v Ryan [2012] NSWCA 395

Banks v Goodfellow (1870) LR 5 QB 549

Blomley v Ryan (1956) 99 CLR 362

Boyse v Rossborough (1857) 10 ER 1192; (1857) 6 HL Cas 2

Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34

Brown v Barber [2020] WASC 84

Collins by her next friend Poletti v May [2000] WASC 29

Commercial Bank of Australia v Amadio (1983) 151 CLR 447; [1983] HCA 14

Crouch v Hooper (1852) 16 Beav 182; 51 ER 747

DVB v NSW Trustee and Guardian [2021] NSWCATAD 105

Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd (1999) 161 ALR 599; [1999] HCA 15

Et-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24

Gibbons v Wright (1954) 91 CLR 423; [1954] HCA 17

Hanna v Raoul [2018] NSWCA 201

In the matter of Kit Digital Australia Pty Ltd (in liq) [2014] NSWSC 1547

Ip v Chiang [2021] NSWSC 822

Johnson v Buttress (1936) 56 CLR 113

Johnson v Smith [2010] NSWSC 306

Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392; [2013] HCA 25

Louth v Diprose [1992] HCA 61; (1992) 175 CLR 621

Mentink v Olsen [2020] NSWCA 182

Nitopi v Nitopi [2022] NSWCA 162

Schwanke v Alexakis; Camilleri v Alexakis [2024] NSWCA 118

Scott v Scott [2012] NSWSC 1541

Smilevska v Smilevska [2015] NSWC 1794 at [28]

Stubbings v Jams No 2 Pty Ltd [2022] HCA 6; (2022) 276 CLR 1

Symons v Williams (1875) 1 VLR (E) 199

Szozda v Szozda [2010] NSWSC 804

Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49

Tomanovic Multitown Pty Limited v Interlux Projects Pty Limited [2021] NSWSC 190

Turner v O’Bryan-Turner [2021] NSWSC 5

Turner v Windever [2003] NSWSC 1147

Union Fidelity Trustee Co of Australia Ltd v Gibson [1971] VR 573

Watson v Foxman (1995) 49 NSWLR 315

Winefield v Clarke [2008] NSWSC 882

Texts Cited:

Sir Frederick Jordan, Chapters on Equity in New South Wales (6th ed, 1947)

Category:

Principal judgment

Parties:

Stanislaus Rydzewski (Cross-claimant)
Janina Rydzewski (Second Cross-defendant)
Krystina Rydzewski (Third Cross-defendant)
Daniel McKinnon as the administrator of the Estate of Maria Rydzewski (Fifth Cross-defendant)

Representation:

Counsel:
Dr H Bennett (Cross-claimant)
Mr M Daniels (Second and Third Cross-defendants)
Solicitors:
Browne Linkenbagh Legal Services (Cross-claimant)
Laurence & Laurence Commercial Lawyers (Second and Third Cross-defendants)

File Number(s):

2021/100787

Publication restriction:

Nil

Table of Contents

Introduction

Background

Chronology of relevant events

Lay Evidence

Mr Ireland

Jenny

Krystina

Kevin

Stan

Susan Curran

Marie Rydzewski

Tina Olter

Sonia Snopkowski

Krystine Bichta

Ms Geras

Joanne Rydzewski

Roman Rydzewski

Dr Bassa

Jason Zahra

Janina Zahra

Medical evidence

Maria’s medical history

Expert evidence

Issues

Assessment of the evidence of lay witnesses

Maria’s capacity to enter into the Transfers

Principles

Cross-claimant’s submissions

Cross-defendants’ submissions

Consideration

Unconscionable Conduct Issue

Principles

Cross-claimant’s submissions

Cross-defendants’ submissions

Consideration

Undue Influence Issue

Principles

Cross-claimant’s submissions

Cross-defendants’ submissions

Consideration

Unjust Contract Issue

Principles

Cross-claimant’s submissions

Cross-defendants’ submissions

Consideration

Conclusion

JUDGMENT

Introduction

1. These proceedings were commenced by a statement of claim seeking a grant of probate over the Estate of Maria Rydzewski (Maria or the deceased) by her son Kevin Rydzewski (Kevin). That proceeding has been largely resolved by the appointment of an independent administrator of Maria’s estate. This judgment concerns a cross-claim brought by one of the beneficiaries of Maria’s estate, her son Stanislaus Rydzewski (Stan). In this judgment I will refer to members of the Rydzewski family by their given names without intending any overfamiliarity or disrespect.

2. The cross-claim seeks to set aside the following transfers of property (Transfers) made by Maria on 25 October 2017 when she was 92 years of age, to Janina Rydzewski (Jenny) and Krystina Rydzewski (Krystina), the wife and daughter of Kevin respectively:

1. a transfer from Maria to Jenny of 9 Bunda Place, Glenmore Park given the folio ID 6432/843352 (Bunda Place);

2. a transfer from Maria to Jenny of 77 Aberdeen Circuit, Glenmore Park given the folio identifier 7770/1006043) (Aberdeen Circuit)

3. a transfer from Maria to Krystina of 12 Brown Street, Penrith given the folio identifier 46/2167 (Brown Street)

(in this judgment the New South Wales properties will be called the Properties).

3. Stan seeks to set aside the Transfers on the basis that:

1. Maria lacked the capacity to effect the Transfers and Krystina and Jenny knew or ought to have known this (the mental incapacity issue);

2. The Transfers were the result of unconscionable conduct on the part of Jenny and Krystina (the unconscionable conduct issue);

3. The Transfers were the product of undue influence exercised by Jenny and Krystina (the undue influence issue); or

4. the Transfers were unjust, as that term is understood in the Contracts Review Act 1980 (NSW) (the unjust contract issue).

4. Jenny and Krystina, the second and third cross-defendants, are the only active cross-defendants. Mr Daniel McKinnon in his capacity as the administrator of Maria’s estate was referred to as the fifth cross-defendant and has filed a submitting appearance.

5. I have found:

1. there is insufficient evidence to support a finding that Maria lacked capacity at the time of entering into the Transfers.

2. the Transfers were the product of both unconscionable conduct and undue influence on the part of Jenny and Krystina.

6. These reasons commence with a background of uncontested facts, before addressing the lay and expert evidence in the proceedings, and then turning to each of the issues identified in [3] above.

7. There were a significant number of documents provided to the Court at the hearing, with the Court Book comprising over 5300 pages. I have read and considered the evidence that I have been taken to by the parties at the hearing and in their submissions. The evidence in these proceedings, which is partially summarised below, was coloured by the unfortunate background of significant family disputes from the 1980s onwards. To the extent possible, I have included the accounts of events relevant to the issues in contention in the proceedings.

8. Much of the affidavit evidence in the proceedings concerned a history of conduct that informed the relationships between the parties. A full accounting of these familial disputes is neither appropriate nor of assistance in coming to a decision on the claims raised by the cross-claimant. It is sufficient to note that there were in effect two competing groups of the family. On the one side was Stan, his sister Wieslawa Snopkowski (Barbara), and her husband Andrew Snopkowski (Andrew) (with Barbara having been diagnosed with dementia in 2008). On the other was Kevin and his family, including Jenny (his wife) and Krystina (his daughter).

Background

9. Maria was born on 2 August 1925. She was married to Mr Michal Rydzewski and emigrated to Australia from Poland. Maria was illiterate and spoke only Polish. Maria had a brother in Poland from whom she occasionally received letters, and when she received these letters (written in Polish) they would be read out to her and she would dictate her reply. Maria and Michal had four children:

1. Kevin, born in 1947;

2. Barbara born in 1948;

3. Danuta Rydzewski (Danuta), born in 1957; and

4. Stan, born in 1959.

10. Michal died in 2008, and thereafter Maria lived in Rooty Hill with Danuta. Barbara was diagnosed with dementia in 2008.

11. Danuta died in July 2016. Danuta owned four properties at the time of her death, one in Western Australia, and the three properties in New South Wales which are the subject of the Transfers.

12. Danuta died intestate, and Maria inherited the Properties, while the property in Western Australia was distributed between Maria and her other children pursuant to the laws of intestacy in that state.

13. Maria had lived with Danuta as her carer until early May 2016. At this point Maria was aged 91 and suffered significant health issues, which are described below. Following this, she initially lived intermittently between Stan and Kevin’s homes until the end of August 2016, when she resided with Kevin (and Jenny and Krystina) for a period of 18 months until 28 February 2018. On 28 February 2018, Maria was admitted to St John of God Hospital in Hawkesbury (Hawkesbury Hospital). When she was discharged from hospital, she attended a rehabilitation facility in Minchinbury Community Hospital. On 16 April 2018, Maria was discharged from that hospital and went to live with Stan and his family, who cared for her until her death on 5 April 2021.

Chronology of relevant events

14. On around 8 May 2016, Kevin and Jenny removed Maria from the Rooty Hill property where she had been living with Danuta and in her care, and Kevin and Stan from that time until the end of August 2016, shared the caring responsibility for Maria, with Maria alternating between each of their homes and living there for several weeks at a time.

15. On 16 May 2016, Maria attended Dr Bassa’s surgery and his notes record that he was told that Danuta had been caring for Maria and managing her anti-coagulants, but Danuta ‘was abusing her and now she has moved in with her family’. At Maria’s next consultation with Dr Bassa on 26 May 20216, his notes record that Maria had been subjected to bullying while living with Danuta for the last 10 years and ‘has been subject to intimidation and physical attacks like pinching and shouting’ and ‘was afraid of her daughter’. Dr Bassa’s evidence in cross-examination was that this was relayed to him by Kevin in Maria’s presence and at this time (May 2016) Maria was emotionally frail and threatened (T517-518).

16. On 25 May 2016, Maria executed three documents:

1. an enduring power of attorney instrument that appointed Kevin and Stan as her attorneys jointly and severally. That was witnessed by a solicitor, who also issued a certificate consistent with s 19 of the Powers of Attorney Act 2003 (NSW) (the May 2016 EPOA);

2. a will, which appointed Kevin and Stan as the joint executors and gifted the estate in equal shares to her four children (as Danuta at this point was still alive) (the May 2016 Will); and

3. a document appointing Kevin and Stan as her enduring guardians. A solicitor attested as to Maria’s understanding of the enduring guardianship instrument, and Kevin and Stan both gave a certificate of witness (the May 2016 EG).

17. Those documents were prepared by Elizabeth Paine (Ms Paine), of the firm Paine Ross & Co. Maria attended the offices of Paine Ross & Co to execute those documents on 25 May 2016, with Stan and Kevin. Ms Paine recorded in a file note made on the following day what occurred at the meeting, as follows:

I met with Mrs Rydzewski on Monday, 23 May and Wednesday, 25 May to discuss and do Wills, Powers of Attorney and Enduring Guardian and a Revocation of existing Power of Attorney.

The Rydzewski family were referred to me by Frank Spiteri.

Mrs Rydzewski does have limited English, her language is Polish. I also enquired whether she could read Polish and her literacy is limited so having a Polish written translation of the documents was not going to assist.

Mrs Rydzewski attended at my office with her two sons, Stan and Kevin. The reason for the creation of the documents and revocation of an assumed previous Power of Attorney to Denuta that Denuta whom Mrs Rydzewski was living with is suffering from mental health issues and is unable to manage Mrs Rydzewski’s affairs or look after Mr Rydzewski. Mrs Rydzewski is currently living between Stan and Kevin’s houses.

Mrs Rydzewski’s sons explained that she wanted to split her Estate four ways equally and we then discussed holding Denuta and Barbara’s share in trust due to the issues they are having.

I was able to explain in simple words to Mrs Rydzewski that she wished to split her Estate evenly between her four children and she appeared to understand that.

We also discussed and Stan translated to her that her daughters shares would be held in trust by them so that they could look after the daughters given their issues.

I explained to the sons that in theory because the girls are adults if they call on those funds they can have them, the sons understood that.

I prepared a simple Will where Stan and Kevin are appointed Executors and the Estate was split four ways. I was satisfied that Mrs Rydzewski understood the effect of the Will and she then signed the Will in my presence and in the other witness presence.

With the Power of Attorney and Guardianship, I had Stan translate the meaning of these documents and also the Revocation of Denuta’s appointment.

After that explanation Mrs Rydzewski appeared to understand what she was doing and she then signed the documents.

I formed the view that with the background knowledge I had about the situation and with her sons translating for her I was satisfied that she understood the documents that she was signing as translated by her sons and understood the effect of what she was doing.

18. In late July, Danuta’s body was discovered at Maria’s Rooty Hill house. On 4 August 2016, the Coroner released the body after an autopsy. She had been suffering from significant mental health issues, and her family believe that she committed suicide, although an open coroner’s finding was returned.

19. On 4 August 2016, Kevin and Jenny attended a meeting with Ms Paine. Krystina also recalled being at the meeting. This meeting was not included in the affidavit evidence of Kevin, Jenny or Krystina and was first dealt with in their cross-examination. Ms Paine’s handwritten file note of the meeting records:

1. Probate Caveat

Danuta Barbara Rydzewski 28/7/2026

● Original death certificate to Kevin

2. Liz to consider whether can put a caveat on for Maria under Power of Attorney

● register power of attorney?

20. Jenny and Krystina both said in cross-examination that the reason for the meeting was that Kevin was concerned that Stan might act unilaterally under the May 2016 EPOA. They each said that the second item related to Kevin seeking advice as to whether a caveat could be put on the title to Maria’s home at Rooty Hill to prevent Stan from selling the property (T380.44 and T422.7). They each agreed that at that time they and Kevin thought that Maria was vulnerable and open to being manipulated or taken advantage of by someone she trusted, in this case Stan (T382, 422).

21. On 8 August 2016, Maria then executed a fresh enduring power of attorney, in which Stan was appointed as her sole attorney, and signed a revocation of power of attorney in relation to the May 2016 EPOA. This was witnessed by a different solicitor who also issued a certificate in accordance with s 19 of the Powers of Attorney Act. Similarly, Maria appointed Stan as her enduring guardian. These instruments had the effect of removing Kevin as her attorney and enduring guardian.

22. On 11 August 2016, Danuta’s funeral and wake took place. Maria did not attend the funeral but did attend the wake. She was living with Stan at that time, and his evidence was that in the morning he woke her at 7am to get her ready to be collected at 9:15am to attend the funeral service and she refused because she said she had sore ribs due to a fall and did not sleep well. Stan attended the funeral, leaving his wife Marie at home to look after Maria. His evidence was that after the funeral he rang Marie to see how Maria was and he was told that she was still asleep and that he rang Marie again when he was at the wake and was told that Maria was now awake. Marie then brought Maria to the wake. I accept this evidence that Maria told him she had a fall, was sore and did not want to go to the funeral. Maria had suffered falls in the past and there is no cogent reason why Stan would have prevented her from attending the funeral if she had wanted to go.

23. Further, if Maria did not have a fall, she had a complicated relationship with Danuta, including bullying which is recorded in Dr Bassa’s notes in the presence of Maria and Kevin (see above). It is quite possible that she did not want to attend the funeral because of her conflicting emotions about Danuta.

24. Stan’s evidence is corroborated by his wife, Marie, and the daughter in law of Kevin, Joanne, who recalls an announcement to this effect at the wake (see [184] below). This significance of the reason for Maria’s non-attendance at the funeral is that Kevin, Jenny and Krystina gave evidence that she subsequently expressed puzzlement to Kevin and other members of his family as to why she was not taken to the funeral, and blamed Stan for this. If Maria did indeed say this it was not corrected by Kevin or other members of his family and became a sore point in their relationship with Stan.

25. On around 31 August 2016, Maria left Stan’s care and was taken by Kevin to his home where she was cared for by Kevin and Jenny until February 2018. There is a conflict in the evidence of Kevin, Jenny and Stan regarding the circumstances in which this occurred, but ultimately I consider that it is not necessary to resolve it, except to note that at this point the relationship between Kevin and Stan broke down and they rarely spoke in the intervening period until the serious decline in Maria’s health in February 2018.

26. On 22 September 2016, Maria executed a new will (the September 2016 Will). This will named Kevin as her executor, and gifted her estate equally between each of her living children. This will was witnessed by a solicitor, Mr David Ireland (Mr Ireland) and Ms Naomi Lamont. On the same day, Maria executed another enduring power of attorney instrument appointing Kevin as her sole attorney. Mr Ireland also issued a certificate pursuant to s 19 of the Powers of Attorney Act. Maria also executed a deed of revocation in relation to the 8 August 2016 appointment of Stan as her sole attorney, but not the May 2016 EG. The net effect of this is that Maria had appointed both Stan and Kevin as her attorneys in May 2016, then appointed Stan solely in August 2016, and then Kevin solely in September 2016. Maria attended the offices of Paine Ross & Co for the execution of these documents, and met with Mr Ireland. Maria was accompanied by Kevin and Jenny, and Jenny translated from English to Polish for Maria.

27. On 19 June 2017, the Properties were registered in Maria’s name pursuant to a transmission application.

28. On 7 July 2017, Maria attended Dr Bassa’s surgery and his notes record that she was ‘slow’ and had ‘poor compliance with incontinence’. Dr Bassa said in cross-examination that the reference to ‘slow’ was his observation that her movements were slower than previously. Maria’s incontinence was a topic which had been raised at two earlier consultations in February 2017 and related to Kevin and Jenny reporting to Dr Bassa that Maria was confused in relation to where the toilet was and consequently urinating in inappropriate places and then hiding this fact. As a consequence of this, Dr Bassa raised with Kevin and Jenny whether she should be moved into a nursing home, but they said they would manage Maria at home. Professor Schwartz accepted in cross-examination that this was one of the aspects of Dr Bassa’s evidence in cross-examination that lead him to change his opinion regarding Maria’s cognitive impairment at this time in the direction of being more moderately impaired, than mildly impaired and Professor Watson saw it as confirming his view of moderate impairment (T643).

20. On around 18 July 2017, Kevin, Jenny and Maria visited Maria’s Rooty Hill property and Kevin did some work pruning trees. He and Jenny give evidence of a conversation which Kevin had with Maria in which she expressed a desire to give Danuta’s properties to Kevin. He says in his affidavit that the conversation was as follows:

Maria:   Why are you working so hard? Where is Stan? Why isn’t he helping you?

Kevin:   I don’t know. When we went to his place previously, he said he wasn’t going to help and that he had done enough.

Maria:   I have had enough of him. He won’t help with the houses. He did not take me to the funeral. I am going to give everything to you.

Kevin:   You can’t do that. It has to be divided equally. If you want to do something different, that is up to you, but you cannot give it all to me.

Maria:   I want to give you extra.

Kevin:   I cannot take it.

Maria:   He is not getting Danuta’s properties. If you won’t take them, I will give them to Jenny and Krystina. They look after me. They treat me like a queen. They make me happy.

Kevin:   What about Wieslawa?

Maria:   She has a husband to look after her. He got his parents’ money. She does not need anything extra from me.

Kevin:   Let’s discuss it later, not now.

30. Kevin’s evidence is that Maria raised the matter again a number of times and the idea that she would transfer the Properties to Jenny and Krystina came from Maria and not from him. He was cross-examined on this evidence: see [131] below.

31. On around 11 August 2017, Kevin gave to Andrew a copy of a letter from Mr Ireland to Kevin dated 5 July 2017 enclosing an affidavit to be signed by Maria, and consent forms to be signed by Andrew (as attorney for Barbara) and Stan, all of which related to the administration of Danuta’s estate. Andrew (who died on 11 September 2022) showed this letter to Stan. Andrew and Stan discussed the letter and then instructed a solicitor, Mr Darryl Browne (Mr Browne) to advise them in relation to the documents. Mr Browne wrote to Mr Ireland on 22 August 2017 seeking information about the administration of the estate. Mr Ireland responded by letter dated 24 August 2017 refusing to supply the documents sought and stating: ‘Our client instructs us that she is most disappointed that your clients felt the need to seek legal representation or advice, since this matter is absolutely no concern of theirs’.

32. On 29 August 2017, Mr Browne rang Mr Ireland, and Mr Ireland’s file note records that Mr Browne said his clients, Andrew and Stan, wanted to talk with Maria about the matter. Mr Ireland then spoke to Jenny on 1 September 2017: see [57] below. Ultimately, a meeting took place with Maria on 4 October 2017 at Kevin’s home, referred to below.

33. On 14 September 2017, Maria again attended the offices of Paine Ross & Co, and discussed with Mr Ireland a transfer of the Properties to Jenny and Krystina.

34. On 15 September 2017, Maria attended Dr Bassa’s surgery and his notes record that her cognition was ‘good’. He was asked by Kevin or Jenny to prepare a medical certificate for Maria which he did: see [77] below. He was cross-examined at length on these documents. I do not place any weight on Dr Bassa’s assessment of Maria’s cognitive capacity for the reasons given at [208] below.

35. On 4 October 2017, Andrew, Susan (Andrew’s daughter) and Rebecca (Stan’s daughter), visited Maria at Kevin’s house, following letters from Mr Browne the solicitor retained by Andrew and Stan. Kevin was present at this meeting, but Jenny was not. The matters discussed at the meeting included the administration of Danuta’s estate.

36. On 25 October 2017, Maria executed transfers for each of the Properties to Jenny and Krystina (the Transfers). The Aberdeen Circuit and Bunda Place Properties were transferred to Jenny, and the Brown Street Property was transferred to Krystina. The Transfers of the Properties were expressed to be made for nominal consideration of $1 on each Transfer. Mr Ireland witnessed the signatures as the ‘transferee’s solicitor’, and arranged for the payment of stamp duty. The only other asset of significant value held by Maria was her home in Rooty Hill.

37. On 16 November 2017, the Transfers were registered.

38. On the same day, Mr Browne sent a letter to Mr Ireland following up on the meeting which had occurred on 4 October 2017. The letter states that Mr Browne understood that at the meeting on 4 October 2017 Maria had said in relation to Danuta’s estate that she didn’t see a solicitor about it, that ‘Kevin and Jenny do that’, and did not know what had happened with Danuta’s houses, and was particularly vague about the estate and her financial position. The letter then continues:

In my letter I asked for information about Danuta’s estate. That was not idle curiosity by my clients. They had provided me with information about the estate that may or may not have been relevant to your client, depending on the information known to her. However, they indicated that much of their information would probably not be known to Maria Rydzewski such as:

●   Danuta had referred to making a will

●   Danuta had mentioned an overseas asset

●   at her death Danuta had assets like shares, jewels, an unresolved compensation claim and a funeral fund

●   Danuta had been a member of a superannuation fund.

It was in this context that the information was sought by my letter of 22 August 2017.

Litigation

During our discussion on 31 August 2017 you said that my clients were not able to commence litigation. You recall that I was somewhat stunned by that comment as it had not been raised by my clients and I hadn’t turned my mind to it. The forerunner to our conversation was the Consent form being delivered to Andrew Snopokowski, my letter requesting information and your response. My telephone conversation had been designed to avoid an impasse which could further divide the family and produce litigation. However, in hindsight, it may have been preferable to foreshadow the litigation available to my clients. There is obviously a range of available legal recourse including preliminary discovery, application for revocation of the grant, application to remove the administrator and possibly family provision proceedings. This is not intended to be an exhaustive list.

Renewed request

It is apparent that the suggestion that my clients’ questions concerning the estate should be directed to Maria was well meaning, but futile. They could not be answered by Maria. I therefore repeat the request for the material listed 1 to 3 in my letter of 22 August 2017.

Instructions

I also wish to mention that it is important that instructions concerning my request be provided directly by Maria. It is a “red flag” for elder abuse if instructions are taken through an intermediary. Similarly, if your communications with your client are sent through intermediaries. Moreover, my clients express concern about Maria’s capacity to act as administrator. An administrator has a public function conferred by the court. It is not merely a private role. Accordingly, there is an additional responsibility on legal practitioners, as officers of the court, to ensure a person is capable of performing the function.

39. This letter supports the conclusion, which I accept, that prior to 17 November 2017, Stan and Andrew were not aware that the Transfers had been signed. The letter also confirms that Stan’s concern about Maria’s mental capacity existed at the time the Transfers were executed, and did so independently of knowledge of the Transfers.

40. On 28 February 2018, Maria was admitted to Hawkesbury Hospital with pneumonia. That developed into sepsis, and Maria was close to death. Maria recovered and was eventually transferred from Hawkesbury Hospital to Minchinbury Rehabilitation Hospital. On 26 March 2018, Maria was reviewed by a neuropsychologist, who diagnosed her with a moderate to severe neurodegenerative disease, likely Alzheimer’s disease.

41. On 24 April 2018, following competing applications by Stan and Kevin, the New South Wales Civil and Administrative Tribunal (NCAT) determined that Maria did not have capacity to manage her affairs, and appointed the NSW Trustee and Guardian (Trustee) as her financial manager, with the Public Guardian appointed as her guardian (2018 NCAT Proceedings). After the Trustee’s appointment, Stan (via his solicitor) raised the issue of the Transfers and asked the Trustee to consider bringing a claim to unwind them. In the letter petitioning the Trustee, Stan’s solicitor raised the issues the subject of the present claim.

42. Ms Maree Rice, an employee of the Trustee, had carriage of Maria’s matter. She had a telephone conversation with Maria’s treating general practitioner.

43. The Trustee then conducted investigations to assess whether action should be taken to set aside the Transfers. On 11 January 2019, the Trustee determined that no further action should be taken, with that decision communicated to Stan on 15 January 2019. An internal review of that decision on 6 March 2019 determined that this approach should be affirmed.

44. On 9 April 2019, Stan, and Barbara’s husband Andrew (Barbara having lived in care since 2016 with dementia) commenced proceedings in NCAT to review this decision pursuant to s 53 of the Administrative Decisions Review Act 1997 (NSW).

45. A hearing on that application occurred on 7 to 9 September 2020 before Principal Member Britton (NCAT Review Proceedings), who delivered judgment on 30 March 2021: DVB v NSW Trustee and Guardian [2021] NSWCATAD 105 (NCAT Review Judgment). Principal Member Britton upheld the review application, finding that:

[206] I conclude that it is arguable that each of the proposed set-aside actions would succeed. However, in my view, the prospects of the disputed transfer being set aside on the basis of unconscionable conduct and in an action brought under the Contracts Review Act are stronger, and each is likely to succeed. I acknowledge that if the proposed actions were to be commenced, it is possible, if not probable, that additional material would become available, which may strengthen or weaken the prospects of having the disputed transfer set aside.

[207] The question then arises, given the attendant risks of litigation, whether it is in Maria’s best interests to commence one or more of the proposed actions, or at least those actions I have concluded are likely to succeed.

[208] If the only likely outcome of the disputed transfer being set aside would be that Stan and Wieslawa would inherit a greater share of Maria’s estate, I would be inclined to the view that the attendant risks of litigation would not be justified. However, setting aside the disputed transfer would strengthen Maria’s overall financial position and financial independence and, importantly, significantly expand the options available to her for her future medical treatment, care and support. While Maria is of an advanced age it is possible that she may live on for a number of years. Her ability to survive the constellation of conditions which led to her hospitalisation in February 2018 suggests that, despite her many problems, her health is resilient.

[209] For these reasons, I have decided that the correct and preferable decision is to set aside the Trustee’s decision, and in substitution for that decision to decide to commence action in the NSW Supreme Court to have the disputed transfer set aside on the basis of unconscionable conduct and in an action brought under the Contracts Review Act. In reaching this conclusion I have had regard not only to the statutory instructions that Maria’s welfare and interests be given paramount consideration and that she be protected from exploitation, but also the importance of preserving family relationships: s 39 of the Trustee Act. With respect to the latter, in my view, given the evident antipathy within the family, commencing legal action to set aside the disputed transfer is unlikely to materially impact on those relationships.

46. On 5 April 2021 Maria died. As a consequence, the Trustee did not commence proceedings in this Court to set aside the Transfers in line with the NCAT Review Judgment.

47. On 20 April 2021, Stan filed a caveat over Maria’s estate in response to Kevin’s notice of intended application for probate of the May 2016 Will.

Lay Evidence

Mr Ireland

48. Mr Ireland gave evidence by affidavit and was cross-examined on the first and second day of the hearing. He was the solicitor who prepared the Transfers, and was an experienced solicitor by 2017. Mr Ireland provided affidavit evidence pursuant to interlocutory orders made by Hallen J. He was not called as a witness for any party and was cross-examined by Dr Bennett and Mr Daniels.

49. On 22 September 2016, Mr Ireland met with Maria when preparing the September 2016 Will. There were no file notes of this meeting. Jenny translated for Maria at this meeting, and Mr Ireland did not speak Polish. At this meeting, Mr Ireland did not observe any ‘red flags’ in relation to Maria’s mental capacity.

50. In cross-examination by Dr Bennett, Mr Ireland stated that at this meeting he perceived that Maria (T42.46–42.49):

seemed uncomfortable. Like she didn’t want to be alone. She didn’t want to be without Kevin and Jenny with her.

51. Mr Ireland asked to see Maria alone, as was his usual practice with clients, but did not speak to her without Jenny and Kevin present. Moreover, Mr Ireland accepted that he did not directly assess Maria’s mental state as he was always relying on Jenny or Kevin’s translation. Mr Ireland did not arrange for a formal capacity assessment of Maria before she executed the documents at this meeting.

52. In October 2016, Mr Ireland again met with Maria (with Kevin and Jenny) in relation to Danuta’s estate. He gave evidence that he initially considered Kevin to be his client, though he later changed his view in light of the laws of intestacy. A file note was made of this meeting. Mr Ireland issued a costs agreement showing Kevin as the client and did not issue a new costs agreement to show Maria as his client.

53. From October 2016, Mr Ireland acted on the administration of Danuta’s estate. As part of this process Mr Ireland sent emails to Kevin and Jenny in order to obtain information from Maria (T51–52.24).

54. In August 2017 valuations were obtained of the Properties, though Mr Ireland could not give evidence as to why those valuations were required at that point, as stamp duty would not be payable on the transfer from Danuta to Maria. The evidence of Kevin is that he arranged the valuations himself.

55. On 22 August 2017, Mr Browne, the solicitor for Stan and Andrew, sent a letter to Mr Ireland regarding the administration of Danuta’s estate, seeking information about it (as noted above). Mr Ireland recalled providing that letter to Kevin and Jenny to translate for Maria (T57–58). On 22 August 2017, Mr Ireland made a file note of a telephone conversation with Kevin, Jenny, and Maria. In that file note he recorded the notation ‘Mrs R, prefer to give minimal information’. Mr Ireland did not have an independent recollection of this conversation, but gave evidence that Maria was generally against the provision of information, and ‘didn’t appreciate people outside the family obtaining information’. However, of course, Andrew and Stan were part of the family.

56. On 29 August 2017, Mr Ireland had a telephone conversation with the Mr Browne, in which he recorded in a file note ‘Darryl Browne wants his clients to talk with Mum alone to discuss’. The matter to be discussed was the administration of Danuta’s estate.

57. On 1 September 2017, Mr Ireland made a file note of a telephone conversation with Jenny. That file note records:

→ door is open to visit mum

→ she’ll sit with mum b/c way Stan is she feels intimidated/threatened. Not speaking or influencing.

Jenny is her carer.

OK if Kevin not there.

58. Mr Ireland gave evidence that these were Jenny’s words.

59. When cross-examination on this file note occurred, the following exchange took place (T61.3–T61.46):

Q. Not there. Sorry. So, again, Jenny is the person you spoke to on the phone, and these are the Jenny's words that you've written down there?

A. Yes, that’s right.

Q. Was it a bit of a red flag for you that Jenny did not want Stan to see Maria without Jenny present?

A. Well, I thought that she was saying that Maria felt that. Intimidated and threatened.

Q. But you never got that directly from Maria, did you?

A. No. Not in that - yes, not in that conversation, no.

HIS HONOUR

Q. Just to be clear, Mr Ireland, did you ever--

A. No. Not in here.

Q. --hear Maria say to you via the translation of anyone else that she felt intimidated or threatened by her son, Stan?

A. No, I don't believe she ever said that, no. To me.

Q. To be clear, she didn’t say it to you?

A. She didn’t say it to me. Sorry, yes.

Q. You got it second-hand?

A. Got it second-hand, yes.

Q. So, just on this red flag point, I didn't quite understand your response to that. You were asked, was it a flag that Jenny was telling you that her mother‑in‑law saw Stan as someone who intimidated or threatened her, or would be threatening if she saw him alone? Did that not cause you to - red flag to you?

A. I'm not quite sure about what the - the question means in terms of red flag. Are we - are we talking about red flag in a legal issue sense or in a general--

Q. That’s not a term you’re used to, is it, in your practice as a solicitor?

A. Oh, it is. It is. Yes. And - and to me, it means - it specifically means was there any indicator that in - in terms of what I'm doing, legally, I need to be cautious and take extra care. Extra steps.

Q. Using it in that way, was there anything in this phone call that caused you to think that should be doing something different to the way that you were doing it, so far as Maria was concerned?

A. No. No.

60. On 14 September 2017, Mr Ireland had a meeting with Kevin, Jenny and Maria. Jenny translated for Maria. Mr Ireland made a file note of this conversation. Mr Ireland gave evidence that Maria (via Jenny) told him that she wished to transfer two of the Properties. Mr Ireland’s file note initially recorded that Barbara would also receive a property (Bunda Place), although her name was scratched out. Mr Ireland, in cross-examination, stated that by the end of the meeting he understood there only to be two transfers (of the Aberdeen Property to Jenny and the Brown St Property to Krystina). He later understood that two of the properties were to be transferred to Jenny, at a second meeting (on 25 October 2017, the day of the Transfers), and annotated his earlier file note to include Jenny’s name above the crossed-out name of Barbara.

61. Mr Ireland’s file note also records the following:

Potentially get an interpreter and sign a statement in Polish.

1. docs to sign

2. statement. → to be converted to Polish + signed by Mum, witnessed by interpreter.

→ certificate from geriatrician? Or if interpreter says what she says + says it’s clear she has capacity then OK.

…

→ dr ltr of advice

→ get acknowledgement of advice + instructions

→ not under dutess + obtained legal advice

→ will translated…?

→ send her the translated will, advice + ask her to confirm

62. Mr Ireland stated that these were effectively notes to himself as to what to follow up (T67.20).

63. When asked about the latter part of that file note (‘not under duress’), Mr Ireland stated:

Yes. I was worried that there could be [a perception that Maria had made the Transfers under duress], because of the fact that Kevin and Jenny had accompanied her to my office.

…

At this meeting, I guess I thought to myself:

“Well, we're going to have a formal meeting, we're going to have a translator or an interpreter there, so that will, I guess, deal a bit more with the issues about it, and I can try and get her in a room alone with the interpreter.”

Which unfortunately didn't happen.

64. In cross-examination by Dr Bennett, Mr Ireland stated that he had a recollection of this meeting (T68.6). He was challenged on this issue by reference to his evidence in the NCAT Review Proceedings. The transcript of those proceedings, admitted as evidence in these proceedings subject to a limitation under s 136 of the Evidence Act 1995 (NSW), showed that Mr Ireland had given the following responses when cross-examined by Dr Bennett:

Q: And do you have any – I mean again I don’t expect you to have any independent recall – but in terms of what you’ve got written down here is 1, 2, 3 – do you have any independent recall of the fact that the transfer of three properties was discussed?

A: No, I don’t. But it looks very clear that I’ve written 1 house Bunda.

…

Q: Right. And part of that might be because you just can’t recall it and can’t assist us beyond what’s written on this page?

A: Yes, I can’t recall the discussion about those three properties at that 14^th of September meeting. All I can recall for sure, is that when I put the documents together to be translated into Polish, I was only thinking about one house for Jenny, and one house for Krystina, and nobody else, and no other house.

65. After being taken to this passage of transcript, Mr Ireland said:

Well, okay. I can say that I can independently recall that there was a discussion about transferring real estate. I can agree that it’s not clear that it was three properties discussed or two. Yep.

66. Mr Ireland gave evidence in his affidavit that Maria, via Jenny, had said words to the effect:

Kevin, Jenny and Krystina have always been good to me and looked after me, and do everything for me, so they deserved these. Stan is too bossy and tries to control everything. He has never done much for me. He doesn’t deserve anything of Danuta’s. Wieslawa has a husband to look after her and he has not helped me.

67. Mr Ireland agreed that he did not make a file note of that statement at the time, and agreed that it would have been important for him to do so (T69.35–69.47). Mr Ireland was then directly challenged on this evidence (T69.49–70.32):

Q. Mr Ireland, you have no actual memory of the precise number of properties that Maria was wanting to transfer, and I’m going to suggest to you that you do not have a precise memory of what it is that Maria said on the day, in relation to any reasons that she might have given.

A. Well, my recollection is that she thought Jenny and Kristina had helped her and looked after her, and Stan and - Wislawa’s not in a position to - but Stan - Stan didn’t.

Q. Those conversations, and I’ll come to them, that you’ve file-noted, in relation to what happened on 25 October--

A. Yes.

Q. In relation to your file note on 14 September, you certainly recorded the issue of what properties and the transfers, but you’ve made no record of any reasons. That’s because, isn’t it, there were no reasons given on that day?

A. I would have thought that we would have talked about them. Would have talked about some reasons from them. It would be unusual to sort of, just, not enquire at all.

Q. But if you did, it was an extremely important piece of information to have recorded. Isn’t it the reasons why she might be wanting to make those property transfers?

A. Yes, it is.

HIS HONOUR

Q. Mr Ireland, is it possible that you’re not recalling the discussion, but rather thinking it’s likely that there would have been the discussion, but without any positive recollection of it?

A. Yes. That’s possible, your Honour. Yeah.

Q. And maybe are you conflating, possibly, this meeting with a later meeting that you have recorded?

A. That’s possible. That’s possible.

68. I do not accept Mr Ireland’s evidence at [66] in light of the fact that no negative observations regarding Stan are recorded in any of his file notes, and his evidence in the previous paragraph.

69. Mr Ireland did not recall whether there was any discussion regarding the benefits of disposing of the properties by testamentary gift as opposed to an inter vivos transfer. One clear benefit is that a transfer of the Properties under a new will rather than by inter vivos transfer would have saved the stamp duty which was paid on the Transfers (totalling $75,180), which Maria paid on the Transfers (as an additional gift as Jenny and Krystina were liable for the duty). This duty would not have been payable had the transfers been made by will: Duties Act 1997 (NSW), s 63.

70. Mr Ireland did not confirm what Maria’s future needs would be, and did not ask Maria about her future needs. In his affidavit, Mr Ireland stated that he understood that:

[Maria] had considerable financial resources, more than she needed to live out her remaining years in comfort, and, in terms of her health and future care, she was being well cared for by Kevin, Jenny and Krystina I therefore did not ask the deceased whether it might be financially imprudent for her to transfer the NSW properties.

71. Mr Ireland accepted that his evidence on this issue was not a direct recollection and was based on the totality of his dealings with Maria, Kevin and Jenny.

72. After the 14 September 2017 meeting, Mr Ireland:

1. drafted a ‘letter of understanding’ of his instructions;

2. organised for a translator, Ms Hania Geras (Ms Geras) to attend a subsequent meeting with Maria to translate;

3. prepared the transfer forms; and

4. arranged a meeting with Maria, Jenny, and Kevin at Paine Ross & Co’s offices on 25 October 2017 (through Jenny).

73. The letter of understanding, dated 21 September 2017 recorded Maria’s instructions as:

1   you wish to give the property at 77 Aberdeen Circuit, Glenmore Park to [Jenny] and the property at 12 Brown Street, Penrith to [Krystina]; and

2   you will pay the stamp duty, legal costs, registration fees and associated costs of the transactions

74. The letter of understanding also stated:

We note that we have advised you that:

1   if you die within 3 years of the transfer of the properties; and

2   if any family provision claim is made on your estate – for example, a claim by Stan or Wieslawa (through her husband Andrew); and

3   if any such claim is successful; and

4   if there are insufficient funds in your estate to pay any such claim,

then a Court may find that the value of the properties being transferred are part of your “notional estate”, meaning the value of these properties could be notionally “clawed back” into your estate to increase the share available to satisfy those claims. If that happened, these two property gifts would effectively be treated as if they had been an “early distribution” of part of your estate.

75. Mr Ireland did not have a recollection of discussing either the stamp duty and costs issue raised in [73] above or the family provision issue raised in the previous paragraph (T86).

76. On 25 October 2017, Mr Ireland had a meeting with Maria, Kevin, Jenny and the translator, Ms Geras. In his affidavit evidence, Mr Ireland stated that Krystina was present at this meeting. However, in cross-examination he accepted that his memory was unreliable on that issue when informed that Krystina’s evidence was that she was not present.

77. Mr Ireland had a medical certificate from Dr Bassa, Maria’s treating general practitioner, dated 15 September 2017, which stated:

MEDICAL CERTIFICATE

THIS IS TO CERTIFY THAT

Mrs Maria Rydzewski has been assessed for her capacity. She lives with her son Kevin and his wife Janina in Kurrajong.

I review her monthly for the last 12 mths.

She is 92 yr old who is on warfarin therapy for AF.

She is mobile with a stooped posture.

She is able to make decisions regarding her health and financial affairs.

78. Mr Ireland gave evidence that he viewed this certificate, despite coming from a general practitioner and not a geriatrician, as supportive of his view that Maria had capacity. He stated that he had formed this opinion on the basis of:

My interactions with Maria, in the meeting, in previous meetings, and my - my colleagues’ interactions with her, and her family’s interactions with her, when we spoke to her, and when I asked her questions, and she would respond through interpreter or through her family.

79. Mr Ireland agreed in cross-examination that Maria was not a particularly loquacious person and he could not recall her ever asking him questions about the advice he gave (T89). At this meeting on 25 October 2017, Mr Ireland asked that Maria be left alone in the room with himself and Ms Geras. Maria refused this invitation and insisted that Kevin and Jenny remain in the room.

80. In his handwritten file note of the meeting on 25 October 2017 with Maria, Ms Geras, Jenny and Kevin, Mr Ireland recorded:

[Ms Geras] read out the letter of acknowledgment in Polish so Mrs Maria Rydzewski could hear & understand and ask any questions.

●   Stamp duty & costs payable by Maria

●   Mrs R (Maria) said only person helping her is Jenny & daughter & Kevin that’s why she wants to give them property.

●   Maria said she wants to

○   give 9 Bunda Place to Jenny

○   give 77 Aberdeen Circuit to Jenny

○   give 12 Brown St to Krystina

81. It may be noted that this file note does not record a negative statement about Stan. Mr Ireland agreed in cross-examination that he would have expected himself to have recorded something negative being said about Stan in justification of the Transfers if it had indeed been said.

82. Mr Ireland later created a typed file note of the meeting on 25 October 2017 which was as follows:

Meeting with Maria Rydzewski – 12.00pm on 25 October 2017

1. In attendance at this conference was myself, Maria Rydzewski, the interpreter and translator Hania Geras, Kevin Rydzewski and Jenny Rydzewski.

2. I asked Ms Geras to translate my statements into Polish for Maria’s benefit, and to translate Maria’s statements in Polish into English for my benefit.

3. I asked Maria whether she would be comfortable in conducting the conference without Kevin and Jenny present, but she indicated that she would prefer that they be present. Accordingly, the conference proceeded with them present.

4. I explained the purpose of the meeting was to confirm Maria’s previous instructions to us regarding her giving away the 3 New South Wales properties she inherited on intestacy from her daughter Danuta. Although Maria does speak some English, her English is somewhat limited, so in our view it was prudent to have a Polish interpreter available at the meeting, so as to ensure that there were no misunderstandings as regards her instructions to deal with the real estate, and to ensure that Maria fully understands our advice to her in regards to the proposed real estate dealings.

5. I had arranged in advance of the meeting for Ms Geras to translate 3 documents from English to Polish, being:

a. A letter from Paine Ross to Maria dated 25 October 2017 stating my understanding of her previous instructions to me and setting out our advice to Maria in relation to the proposed property gifts;

b. A document entitled “Acknowledgement of Advice and Instructions to Solicitor”; and

c. A copy of Maria’s will dated 22 September 2016.

6. At the meeting Ms Geras read out the letter and the Acknowledgement in Polish so Maria could hear in Polish what the documents said and so she would have an opportunity to ask any questions she had about the documents.

7. After the documents were read out, I asked whether she understood the documents and whether she had any questions about the documents. She indicated that she did understand the documents and she did not have any questions.

8. Jenny queried who would pay the stamp duty and legal costs, I explained that Maria’s previous instructions to us, as reflected in our letter dated 25 October 2017, were that Maria would pay the stamp duty, legal costs, registration fees and associated costs of the transactions. Maria confirmed this was her intention.

83. Again, it may be noted that this does not record any negative comments by Maria about Stan.

84. In cross-examination Mr Ireland stated that he thought he had created this file note ‘months’ after the meeting, because he was ‘conscious that the original file note was deficient’ (T92.19). Mr Ireland accepted that the handwritten file note was a more reliable, whilst incomplete, record of what occurred (T93). The difference is important, because it is clear that contrary to the typed file note, translated documents were not available at the 25 October 2017 meeting (T94). The inclusion of this detail in para 5 is likely a product of Mr Ireland later looking at the file, which included translated documents, and including a reference to them in his record.

85. Mr Ireland accepted in cross-examination that a translated version of the documents was not available at the time that the Transfers were executed (T99.48). It appears that these documents were subsequently produced in December 2017, and were included as evidence in these proceedings.

86. Mr Ireland signed as the transferee’s solicitor on the Transfer forms.

87. In none of Mr Ireland’s file notes is there any mention of negative views expressed by Maria (or anyone else) about Stan. What the file notes record at their highest is that Maria said that the only persons helping her were Kevin, Jenny and Krystina. He also gave the evidence recorded at [59] above that he could not recall Maria ever saying to him that she felt intimidated or threatened by Stan.

Jenny

88. Jenny is the second cross-defendant and the transferee of two of the Properties. Jenny was Maria’s daughter-in-law. In cross-examination, Jenny was questioned on inconsistencies between her recollection of conversations in her affidavits in these proceedings and her evidence in the 2018 NCAT proceedings and the NCAT Review proceedings.

89. Jenny recalled Maria repeatedly asking about Danuta’s death, but attributed it to her inability to understand Danuta’s motivation for taking her own life and not to forgetting about her death.

90. Jenny recalled a meeting at Paine & Ross on 4 August 2016 between Kevin, Jenny and a solicitor called Elizabeth Paine. Kevin was informed that Stan could make decisions alone under the terms of the power of attorney (T343.10). On Jenny’s recollection, this meeting was arranged because Kevin was concerned that Stan could sell Maria’s property in Rooty Hill (T381.11). That concern was prompted after Kevin told Jenny that Stan had taken items from Danuta’s house after she passed away.

91. Jenny was a party to the phone call between Stan and Krystina on 11 August 2016, where she heard Stan say that Maria could not attend the funeral as “she [Maria] had a fall” (T350). She gave evidence that her observations of Maria at the wake were inconsistent with her having had a fall that day (T350–351).

92. Jenny’s evidence was that Maria had significant misgivings towards Stan as a result of his failure to bring Maria to Danuta’s funeral (T371.07). Jenny herself had a poor view of Stan, informed by Maria’s failure to attend Danuta’s funeral, demonstrated by this response in cross-examination (T371.16):

Q. But you, yourself, felt that Stan had been underhand, didn't you?

A. Well, I didn't - I believed him that - that - when he said that she had a fall and - and hurt her back, I believed him, because why wouldn't I? but when Marie brought her to the wake, and Mum showed no evidence of a fall, or hurting herself, or in her - the way she walked or anything, she looked normal, and she denied, at that - at that wake, that she had a fall, and, you know, when people were coming up to her, giving her the condolences, you could see the expression on her face.

She - when she came in, she didn't realise she was at a wake, because she didn't go to the funeral. She knew that arrangements were made for a funeral - for Danuta's funeral, but I didn't tell her what day of the funeral, so I assumed that Stan would tell her the day of the funeral, but when Mum come in, she saw all these people, but when - when they started to give her condolences, well, her demeanour changed.

93. Jenny accepted in cross-examination that Maria was vulnerable, particularly in stressful conditions (T382.44) and that the reason that she met with a solicitor on 4 August 2016 (referred to at [19]) was that both she and Kevin felt that Stan may take advantage of Maria and get her to agree to sell her Rooty Hill property (T383.1).

94. On 30 August 2016, there was another meeting with Elizabeth Paine. Jenny accepted that both she and Kevin knew by that point that the May 2016 EPOA in favour of Kevin had been revoked (T383.50). At this meeting, discussions were had relating to a potential application to NCAT (T384). This was the day before Maria was removed from Stan’s care.

95. Jenny gave evidence that on 31 August 2016, the day that Maria ceased living with Stan and began living with her and Kevin, there was a significant falling out and Stan was yelling ‘in a rage’. Her understanding was that Stan was to collect Maria after one month, but he simply ceased contact and that was the reason that Maria stayed for the 18 months with Kevin and Jenny. She also gave evidence that Maria only wished to see Stan with Jenny present (T398.45).

96. Jenny gave evidence that she took Maria for an appointment with Maria’s general practitioner, Dr Bassa, on 20 September 2016. She did not recall asking for a referral to a specialist to ascertain Maria’s mental capacity, despite Dr Bassa drafting a request on that day.

97. Jenny initially gave evidence that she did not have animosity towards Stan at any point. However, she later accepted in cross-examination after being shown her evidence in the NCAT Review Proceedings in 2020 that she had been ‘livid and angry’ with Stan and had strong animosity to him (T375–378).

98. Jenny stated that the first day that she heard Maria express significant disappointment in Stan was on 18 July 2017. On that day Kevin was attending to maintenance work on Maria’s property at Rooty Hill, and Maria stated ‘Stan should be here helping you. Where is he?’ (T355.10). Jenny recorded this in a chronology that she had prepared in relation to the 2018 NCAT proceedings.

99. In that same conversation, Jenny recalled Maria stating that Stan had ‘done nothing for her’ (T356). Jenny did not accept in cross-examination that Maria may have had memory problems that caused her to forget things that Stan had done for her, or that she had not always felt this way.

100. This conversation was also recorded in Jenny’s affidavit evidence in this proceeding. There was a discrepancy between the two versions, and in the later version additional words are attributed to Maria to the effect that Stan had abandoned her and that she did not wish for him to receive anything in her will (T388.35). In particular the words ‘he abandoned me when he knew Danuta was sick’ were attributed to Maria. I consider this evidence to be unreliable. Had these words been said, it would be expected that they would appear in the timeline prepared for the NCAT proceedings, given that it was created at a much closer point in time to the conversation, and the significance of it (had it truly been said).

101. On 14 September 2017, Jenny, Kevin, and Maria met with Mr Ireland (recorded above at [60]). Jenny stated that at the meeting it was clear that all three of the Properties were to be transferred, with two to her and one to Krystina. Contrary to Mr Ireland’s file note, there was no discussion of a transfer of any of the Properties to Barbara. Her explanation for the words ‘all rental goes to Mum’ appearing in the file note was that the intention was to use the rent from the Properties to fix Maria’s Rooty Hill property.

102. On 15 September 2017, a day after a meeting with Mr Ireland, Kevin, Jenny and Maria attended an appointment with Dr Bassa. At that appointment a certificate of capacity was issued by Dr Bassa. Jenny could not recall any certificate being issued or requested.

103. Jenny viewed herself as Maria’s carer when she lived with her (T365.40). When attending doctors appointments, Jenny would translate for her in language that Maria could understand (ie in Polish and in simpler terms) (T366.11).

104. At the meeting on 25 October 2017, Jenny thought that Ms Geras was reading from documents that were already in Polish due to her fluency in reading the documents (T366.40). Jenny stated that she left the room during the meeting with the translator at the request of Mr Ireland and when she came back in the Transfers had been signed by Maria (T368.38). This was not in her affidavit evidence (T396).

93. Jenny accepted in cross-examination that Maria was able to be misled or manipulated by people that she trusted (T370.25).

Krystina

106. Krystina is the third cross-defendant and the transferee of one of the properties. She is the daughter of Kevin and Jenny.

107. Krystina is the principal author, along with her sisters Janina and Wanda, of the timeline prepared in the 2018 NCAT proceedings (beginning at CB 3363). Other members of the family, including Jenny contributed to its creation by telling Krystina about events, and she would then type them and insert them into the document (T405).

108. Krystina had direct contact with Maria whilst she was in Danuta’s care prior to 2016, and was familiar with her medical conditions (T407). One of the key elements of her medical care were weekly INR blood tests, which informed Maria’s dosages of Warfarin (an anti-coagulant). When Danuta failed to properly monitor Maria’s INR test results, this was a key factor in the decision to remove Maria from her care (T407.10). Maria had been on Warfarin for 15 years (T407.35). Krystina recorded that Danuta had told her that Maria needed ‘constant care’ from around 2010 (T408.15).

109. Krystina’s view was that this ‘constant care’ mostly related to Maria’s reliance on others for transport, but otherwise she generally ‘tended to herself’ (T408.33). Maria was very active until 2014, at which point her health began to deteriorate. Krystina was aware that Maria had a fall in 2014, and had a CT scan on her brain, but was not informed by Danuta as to the results (T409.20).

110. Krystina gave evidence that in the 18 months that Maria was living with her, Jenny, and Kevin from September 2016, she ate five to six meals a day that were prepared for her, and her food was cut up for her (T411.35). Maria could dress herself, but required assistance with some items of clothing (411.50). Maria was also occasionally incontinent (T412.20).

111. Krystina attended the meeting with Elizabeth Paine on 4 August 2016 (T420.25). Her account of the events leading up to that meeting is consistent with the accounts of Jenny (recorded above at [90]) and Kevin (recorded below at [122]–[123]) (T420–421). Her source for that information was Kevin (T421.30).

112. Krystina accepted in cross-examination that Maria was reliant on other people and could be manipulated by somebody who she trusted (T422.38), such as by going along with something that somebody else wanted, even if it was contrary to her own interests (T422.44). In relation to Maria’s vulnerability, Krystina gave the following evidence (T436.43):

You’ve got to understand, Maria can only go on what she’s been told by people she trusts. If that trust is broken because somebody’s lied to her, well, she’s going to change her mind very quickly…

113. Krystina did not believe Stan that Maria had a fall on the morning of Danuta’s funeral, and gave evidence that Maria had said that she did not (T424.45).

114. Following Danuta’s death, Krystina gave evidence in cross-examination that whilst Maria asked about the circumstances of her daughter’s death, she did not forget its occurrence (T417).

115. From approximately December 2016, Krystina, Jenny, and Kevin performed work on the two Glenmore Park properties that would ultimately be transferred (T426). Krystina did not know who was paying for the maintenance of those properties (T427–428).

116. Krystina was taken in cross-examination to her evidence in the NCAT Review Proceedings in 2020, where Krystina had said ‘we were all livid about the treatment of Maria… we are livid with Stan…’ (T431.25).

117. Krystina gave evidence that she had a conversation with her mother after the meeting with Mr Ireland on 25 October 2017, though could not give more specific timing, that all the rent generated from the Properties should be used to maintain Maria’s Rooty Hill property (T438).

118. Krystina opened an account for the payment of rent from the Brown Street Property on 27 February 2018, the day before Maria was hospitalised. Krystina gave evidence that this was a coincidence (T440–441).

Kevin

119. Kevin gave evidence that he and Jenny had to make the decision to remove Maria from Danuta’s care in 2016 (T450.30).

120. In a statement made in relation to the 2018 NCAT proceedings, Kevin said in relation to Maria’s memory that with ‘on the spot questioning she can forget things but given time to think about events she remembers’.

121. Until the end of August 2016, Kevin accompanied Maria and Stan to appointments with Dr Bassa.

122. Kevin gave evidence that he arranged to meet with Elizabeth Paine on 4 August 2016 due to difficulties arising between him and Stan following Danuta’s death in relation to her estate (T456.5). Kevin’s view was that Maria had wanted Stan and him to work together, but that Stan had begun to act unilaterally, and he was concerned that this conduct would continue.

123. At the meeting on 4 August 2016 with Elizabeth Paine, Ms Paine had recorded in her file note the possibility of obtaining a probate caveat in relation to Danuta’s estate (CB 1530). Kevin did not recall discussing this matter, or if Krystina was present, but accepted that Jenny was in attendance (T457.30).

124. Kevin recalled getting a call from Stan in the fortnight following Danuta’s funeral, as referred to in Stan’s testimony below at [152]. Stan put Maria on the phone, and she told him that she wished to stay with Stan (T471.30). Kevin was of the opinion that Maria would go along with the person that she was with at the time (T472.19), and was concerned about Stan influencing her.

125. Kevin did not recall having a meeting with Ms Paine on 30 August 2016, but accepted that it may have happened based on references to such a meeting in correspondence from Paine & Ross Co on 2 September 2016 (CB 1531; T460). In that correspondence, reference was made to Kevin approaching Stan about Maria’s living arrangements, but he accepted that he did not do so (T461.01).

126. Kevin pinpointed the falling out between himself and Stan to an issue that arose following Danuta’s death, when Stan had removed belongings from the house without his consent (T474.35). He was angry with Stan after this.

127. Kevin’s view was that when Maria left Stan’s home at the end of August 2016, that was supposed to only be for a month, but Stan simply went incommunicado and refrained from contacting either him or Maria (T475.15).

128. During the 18-month period that Maria lived with Kevin’s family, he recalled working on Danuta’s properties (T475.20). Kevin was angry with Stan ‘to a degree’ for not assisting in these efforts (T475.49).

129. Kevin did not have a good recall of the meeting with Mr Ireland in September 2016, or the appointment with Dr Bassa on 20 September 2016. He did not recall a referral from Dr Bassa for an assessment of Maria’s capacity by a specialist.

130. Kevin gave evidence in his affidavit recalling a conversation with Maria on 18 July 2017, set out at [29] above.

131. Kevin said in cross-examination that when he said that Maria’s property ‘ has to be divided equally’ he was thinking of her will at this point (T483.35). However, despite Kevin giving evidence that he recalled meeting with Mr Ireland in September 2016 in relation to a power of attorney, he did not recall Maria executing the September 2016 Will (T484.35–.50).

132. Kevin gave evidence that he had arranged for the valuations of the Properties in August 2017, which no other witness had recalled. He said he did so at Maria’s request (T485.44). Kevin stated that following the conversation on 18 July 2017, Maria had been ‘badgering’ him to transfer everything to him (T485.45), and he had said that tax would have to be paid on any transfer. Maria then proposed transferring the properties to Krystina and Jenny, at which point the conversation turned to obtaining a valuer for the purposes of tax (T486.01–.04). Kevin then stated that at the end of the day on which this conversation occurred, Maria stated ‘well, go ahead with it’ (T486.05). Kevin then arranged a meeting with the valuer and at that meeting he asked if the valuer could ‘make the stamp duty to Maria’ (T486.10). These conversations were not included in Kevin’s affidavit, and he stated that he had forgotten about it, and did not view it as something important to include (T486.20).

133. In cross-examination Kevin recalled attending the 14 September 2017 meeting with Mr Ireland, Maria and Jenny. Kevin accepted that Mr Ireland had asked for a doctor’s certificate, and that he had arranged for Maria to meet with Dr Bassa to obtain one (T489.40). The extent of his recollection of the meeting with Dr Bassa, was that he had asked for a certificate with the following instructions (T490.15)

Well, if she remembers things or, you know, what - what - you know, things like that, you know. Look, I've even forgotten what I actually said but it was to do with her memory and all that sort of stuff, you know

134. Kevin did not have a good recall, and stated that his memory was not good (T490.20).

135. Kevin was at the meeting on 25 October 2017. In his affidavit evidence, Kevin stated that Maria had signed documents after they were read to her. In cross-examination, he stated that he knew the documents were read to Maria because he had left the room as the documents were started to be read to her (T493.35). However, this conflicts with Mr Ireland’s evidence that Kevin was present throughout the meeting, and his affidavit evidence.

Stan

136. Stan was required for cross-examination from the start of the third day of the trial.

137. In his affidavit evidence, Stan gave evidence that Maria was a person that heavily relied upon other people to conduct everyday business, as a consequence of her lack of understanding of English. This had been the case for the majority of his life (CB 49).

138. Stan attested that Danuta had always lived with their parents and had always lived in the family home.

139. Stan gave evidence that he had been involved in the maintenance and purchase of the Properties from the time of their acquisition by Danuta (T168.15).

140. Stan stated that he had a strained relationship with Kevin, stating that Kevin had bullied him throughout his childhood. In approximately 1983–85, a significant argument occurred in relation to a loan with Kevin and Jenny on one side, and Stan and the rest of the Rydzewski family on the other.

141. The parties agree that in May 2016, Maria ceased living with Danuta and began living between Stan and Kevin’s houses. In cross-examination, Stan stated that Kevin had made the decision (in conjunction with Jenny) to move Maria out of Danuta’s care in 2016 out of concerns for her welfare and had ‘dictated’ to him that Maria was to live intermittently between the two of them. He disputed that Danuta’s care was inadequate. He recalled that Kevin had told him that Maria had complained that Danuta was not taking her to the doctors, but attributed that to Maria’s declining memory. Stan stated that in 2014, 2015 and 2016, Maria’s memory was declining so much that he would have to announce who he was so that she recognised him (T172).

142. On 8 August 2016, Stan and Maria attended a meeting at the offices of a solicitor to arrange for the preparation and execution of the documents referred to at [21] above. Stan’s explanation for arranging this was that in about August 2016, Maria had asked to live with him on a long-term basis (T190.38). She would not provide a reason for this desire. Stan told Maria that it would be prudent to change the power of attorney and enduring guardianship to appoint Stan alone, to the exclusion of Kevin, to avoid disputes in the family (T191.30). Stan’s recollection was that this conversation and the organisation of an appointment with the solicitor occurred prior to the discovery of Danuta’s body (T189.40).

143. Stan arranged for a family friend, Krystine Bichta (Ms Bichta), to act as a translator during the meeting with the solicitor. Stan viewed her as appropriate because she spoke Polish and Maria had met her previously, noting Maria’s aversion to strangers. Maria instructed the solicitor, through Ms Bichta, without Stan present in the room. Stan explained that his view was that changing both the power of attorney and enduring guardianship appointments was required because there were difficulties in arranging Maria’s care with Kevin when Maria was in Stan’s care. Stan’s understanding of the arrangements was that he and Kevin had to agree on Maria’s care.

144. In the days prior to the meeting, Stan had Maria practise her signature.

145. Danuta’s funeral and wake occurred on 11 August 2016. For the cross-defendants this was a significant event in the relationship between Maria and Stan. Maria was living with Stan at this date.

146. Kevin and Jenny had arranged for a car to arrive to take Maria to the funeral at 9.15am. In his affidavit evidence, Stan stated that he woke Maria up at 7.00am that morning. Stan stated that Maria refused to go, claiming that her ribs hurt. In cross-examination, Stan accepted that Maria was acting ‘unreasonably’. He further gave evidence that Maria did not seem to be aware that it was Danuta’s funeral that morning, and ‘brushed it off’ when he told her (T175.18). Stan did not believe that Maria could have ‘responded reasonably’ to the situation that early in the morning (T176.48).

147. Stan stated in cross-examination that he had raised concerns about the timing of the funeral with Jenny during the planning of the ceremony (T176.3–.13). This was because in her later years, Maria often got confused when awoken early in the morning, and had become a late riser.

148. Stan stated that Maria refused to attend the funeral, claiming that she wanted to go to bed, and he then informed Krystina and Jenny of this fact and attended the funeral alone.

149. Stan sent Krystina the following text message (CB 1064):

Krystina

CANCEL the car for us, Moms woke up with a sore rib cage area and is in too much pain to get dressed etc.

told me not to force her to get ready!!!

I’ll see how she will settle, but not worth wasting time for car as it’s going to be sent away without mom!!

Stan

150. Maria did not attend the funeral for Danuta. Stan’s wife, Marie Rydzewski (Marie) remained at home with Maria, and brought her to the wake later in the day. The funeral was earlier that day. In Stan’s account, Maria’s attendance at the wake was referable to her desire to be with him, and that on his recollection she did not seem to recognise that a funeral had occurred earlier in the day.

151. In the weeks following the wake and funeral, Stan attested that Maria would ask where Danuta was, and he would have to remind her of Danuta’s passing away.

152. In mid- to late-August 2016 Stan phoned Kevin and put Maria on the line (T202.15), where she said, in Polish, “Kevin, I don’t want to go to your place” (T203.4).

153. On 31 August 2016, Maria visited Kevin and Jenny, who took her to see Danuta’s grave. They returned to Stan’s house, where Jenny stated that Maria was going to go home with them. Stan recalled that she looked pale and frightened, and when asked by Maria about the telephone conversation recorded at [152] above, she stated that she did not remember and shrugged her shoulders. Stan gave some evidence that Kevin was pressuring his mother to stay with him (T203). In his affidavit, Stan recalled that Kevin and Jenny would bring up Maria’s non-attendance at Danuta’s funeral, which would upset Maria.

154. From that day until February 2018, Maria lived with Kevin and Jenny. Stan did not see Maria until she was admitted to hospital with a significant illness. He did not attempt to exercise his powers under the May 2016 EG, and explained this by his lack of understanding of the powers available under that instrument, and his desire not to create a family dispute.

155. Stan says that he attempted to call and text Kevin in relation to Maria but was not answered. In cross-examination he gave evidence that he attempted to visit Maria at Kevin’s house on one or two occasions in early 2017, but did not see Maria as no one answered the door (T208–209). This evidence was not in his affidavit. In his affidavit, he explained that he did not visit Maria because he felt anxious and intimidated by Kevin.

156. Stan stated that he considered that if he visited Maria at the home of Kevin and Jenny, he would be open to bullying and abuse (T214). Whilst Kevin had told Stan that he could visit Maria at their home, Stan perceived this as a form of control over his relationship with Maria.

157. After Maria was admitted to hospital in February 2018, Stan saw Maria for the first time since September 2016. Upon discharge, Stan exercised his powers under the May 2016 EG and decided that Maria should thereafter live with him. Stan gave evidence that this occurred after Maria informed him that she would like to live with him when she was in Hawkesbury Hospital (T232.29). When Maria lived with Stan in 2018, Kevin and Jenny would visit with Maria two days a week.

Susan Curran

158. Ms Susan Curran (Susan) is the daughter of Barbara and Andrew. She is therefore the niece of Kevin and Stan, and Maria’s granddaughter. Susan is a social worker and has experience with caring for people with dementia both with her mother and her mother-in-law. Susan speaks Polish. Susan recalled that there had been previous familial disputes between her mother and father and Kevin’s immediate family.

159. From 2010 to 2016, Susan would interact with Maria when dropping her mother off for visits. Susan stated that in 2016, Danuta asked her to stop bringing Barbara for visits due to Maria’s mental decline (T240.35; CB 591). At times, Maria appeared not to recognise her.

160. Susan saw Maria more often when she was living with Stan in 2016. She recalled that Maria had memory lapses whilst living there.

161. Susan attended the meeting on 4 October 2017 that had been arranged by Stan’s solicitor.

162. Susan was present throughout the meeting. Her evidence was that Maria did not initially recognise her, Andrew or Rebecca; that Maria expressed pleasure when told that she was invited to Rebecca’s engagement party and that Stan (her father) would be there and said words to the effect ‘Yes? He will? I would like to see him.’

163. Susan’s recollection is that Kevin said that if Stan wanted to see Maria he should have visited her at Kevin’s home and said that ‘If he wants to see Mum, he needs to come here and that’s it’.

164. The matter was left on the basis that Kevin would not attend and that if Jenny wanted to take Maria to the engagement party then she would do so. Susan’s evidence referred to in this and the preceding two paragraphs was corroborated by Rebecca (who was not cross-examined).

165. Susan also recalled that Andrew showed Maria a copy of Mr Ireland’s letter of 5 July 2017 and asked her questions about Danuta’s estate, and that Maria said she did not know about the letter and could not remember anything about Danuta’s estate, including that she would receive all Danuta’s properties. This is corroborated by Andrew’s affidavit (which is admissible hearsay evidence pursuant to s 63 of the Evidence Act 1995, with Andrew having passed away on 11 September 2022). At the time of this discussion, Kevin and Rebecca were outside in the garden.

166. Ms Curran gave evidence that when Maria went to live with Stan after her hospitalisation in February 2018, she was ‘much the same’ as she was in October 2017 (T255).

Marie Rydzewski

167. Marie is Stan’s wife, and lived with Maria during 2016, and then again after Maria’s hospitalisation in 2018. Marie could not speak Polish with Maria, and managed with limited English.

168. Marie testified that she had a conversation with Danuta in 2014, in which Danuta informed her that Maria had been diagnosed with dementia.

169. Marie gave evidence that Maria forgot that Danuta had died, and repeatedly asked what had happened to her when she was told of her funeral arrangements. Marie also testified when, in her presence, Jenny spoke to Maria about Danuta it appeared as though Maria did not know who she was (T264–265).

…

[161]   Equitable intervention to deprive a party of the benefit of its bargain on the basis that it was procured by unfair exploitation of the weakness of the other party requires proof of a predatory state of mind. Heedlessness of, or indifference to, the best interests of the other party is not sufficient for this purpose. The principle is not engaged by mere inadvertence, or even indifference, to the circumstances of the other party to an arm’s length commercial transaction. Inadvertence, or indifference, falls short of the victimisation or exploitation with which the principle is concerned.

278. In Thorne v Kennedy [2017] HCA 49; (2017) 263 CLR 85 the High Court (Kiefel CJ, Bell, Gageler, Keane and Edelman JJ) said at [38] (footnotes omitted):

The other party must also unconscientiously take advantage of that special disadvantage. This has been variously described as requiring “victimisation”, “unconscientious conduct”, or “exploitation”. Before there can be a finding of unconscientious taking of advantage, it is also generally necessary that the other party knew or ought to have known of the existence and effect of the special disadvantage.

279. The reference in Kakavas at [161] to the need for a finding of the presence of a ‘predatory state of mind’ is to be regarded as a reference to the need for an unconscientious exploitation of the innocent party’s special disadvantage with knowledge of it. As Ward P said in Nitopi v Nitopi at [181]:

As to the complaint that it was necessary for there to be a finding that the appellant had a predatory state of mind (relying on the statement in Kakavas to the effect that the principle of unconscionable dealing requires this), I would read this as simply another way of saying that there needs to be unconscientious exploitation with the requisite knowledge. If that is established, then it can be said that there was a “predatory” state of mind in that there was a deliberate or intentional taking of advantage of the known special disadvantage or disability. That is consistent with the recognition that passive acceptance or retention of moneys may in some circumstances be sufficient to amount to unconscionable dealing.

280. Consistently with these observations, it is not necessary to show that the stronger party has acted dishonestly: Johnson v Smith [2010] NSWSC 306 at [5] and [10]; Hanna v Raoul at [99].

281. It has been recognised in a number of cases that where it is established that the weaker party was under a special disadvantage of the relevant kind, the stronger party had knowledge of that special disadvantage and that the transaction is improvident, the evidentiary onus shifts to the stronger party to show that the transaction was fair, just and reasonable: Blomley v Ryan (1956) 99 CLR 362 at 386, 399 per McTiernan J and 428-9 per Kitto J; Turner v Windever [2003] NSWSC 1147 at [105]–[106] (and, on appeal, [2005] NSWCA 73 at [99]); Nitopi at [37]–[39] per Bell CJ and [147] per Ward P. An improvident transaction includes a sale at a substantial undervalue or a gift. The shifting of the evidentiary onus in this way is also referred to in the statements of the relevant principles in the passages set out at [272] and [273] above. In circumstances where there is a special disadvantage which is known to the stronger party and the transaction is improvident that will make it prima facie unconscionable for the stronger party to procure, accept or retain the benefit of the weaker party’s assent to the transaction.

282. Where the evidentiary onus shifts to the stronger party, one of the ways in which the stronger party can show that the transaction was fair, just and reasonable is by showing that the weaker party received adequate independent advice: Aboody v Ryan [2012] NSWCA 395 at [67]; Hanna v Raoul [2018] NSWCA 201 at [110]-[119].

283. In Stubbings v Jams 2 Pty Ltd, Kiefel CJ, Keane and Gleeson JJ made the following observations regarding the approach to be taken in a case involving an unconscionable conduct claim at [39] (footnotes omitted):

In Commercial Bank of Australia Ltd v Amadio, this Court held that unconscionability involves: a relationship that places one party at a “special disadvantage” vis-à-vis the other; knowledge of that special disadvantage by the stronger party; and unconscientious exploitation by the stronger party of the weaker party’s disadvantage. But these considerations should not be understood as if they were to be addressed separately as if they were separate elements of a cause of action in tort. As Dixon CJ, McTiernan and Kitto JJ said in Jenyns v Public Curator (Qld), in a passage approved by this Court in Kakavas and Thorne v Kennedy, the application of the equitable principles relating to unconscionable conduct:

calls for a precise examination of the particular facts, a scrutiny of the exact relations established between the parties and a consideration of the mental capacities, processes and idiosyncrasies of the [vulnerable party]. Such cases do not depend upon legal categories susceptible of clear definition and giving rise to definite issues of fact readily formulated which, when found, automatically determine the validity of the disposition. Indeed no better illustration could be found of Lord Stowell’s generalisation concerning the administration of equity: ‘A court of law works its way to short issues, and confines its views to them. A court of equity takes a more comprehensive view, and looks to every connected circumstance that ought to influence its determination upon the real justice of the case’.

284. Whilst there are similarities between the equitable principles underlying relief against unconscionable bargains and undue influence, those doctrines remain distinct and the success or failure of one does not affect the other. The essential difference between them was explained by Mason J in Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 151:

In the latter the will of the innocent party is not independent and voluntary because it is overborne. In the former the will of the innocent party, even if independent and voluntary, is the result of the disadvantageous position in which he is placed and of the other party unconscientiously taking advantage of that position.

See also Deane J at 474.

Cross-claimant’s submissions

285. The cross-claimant submitted that Maria suffered a special disability because:

1. her proficiency in English was extremely limited, with Polish being her first, and to a large extent sole, language;

2. her literacy in Polish was also low;

3. she had a limited education;

4. she had physical disabilities;

5. she suffered from mental deficiencies and disabilities;

6. she was unsophisticated and inexperienced in legal affairs and business affairs and had largely relied upon others for these issues;

7. Maria was entirely reliant on her carers.

286. That issue is not disputed by the cross-defendants (T739.47).

287. Further, all the evidence, including that of Kevin, Jenny, and Krystina, supports a finding that Maria was someone who placed very significant trust in the people around her. In many ways, her access to the world was effectively gatekept by those translating for her. There could be no reasonable degree of equality between Maria on the one hand and Krystina and Jenny on the other. Even prior to the impugned transfers, their rescue of Maria from Danuta’s care in March 2016 is indicative of that fact. The medical evidence, regardless as to whether it supports a finding as to incapacity, supports a finding that Maria had cognitive deficits at the time of the Transfers that placed her at a special disadvantage vis-à-vis Krystina and Jenny.

288. Krystina and Jenny, as people who lived with Maria and provided her care, must have known about this special disability. They were undoubtedly aware that Maria was almost entirely reliant upon them to function in everyday life. Jenny in particular was across Maria’s medical conditions, and both Jenny and Krystina were well aware of Maria’s distrust of others, and reliance on the people that she lived with for complex matters.

289. Krystina and Jenny’s acceptance and retention of a benefit conferred by Maria in the circumstances was unconscionable. There is no basis on which the Transfers, of valuable property valued at approximately $2 million, transferred for $1 each and with Maria also bearing the burden of paying stamp duty was ‘fair, just and reasonable’: Commercial Bank of Australia v Amadio (1983) 151 CLR 447 at 474 per Deane J; [1983] HCA 14.

290. Whilst the provision of legal advice may be relevant to the conscionability of a transaction, in this circumstance Mr Ireland’s engagement was not truly independent and does not absolve Krystina and Jenny of responsibility. The cross-claimant points to the position in Stubbings v Jams 2 Pty Ltd [2022] HCA 6, where a borrower had obtained a certificate of independent financial and legal advice, but nevertheless it was found that the lender had acted unconscionably (at [93]). In particular, the following passage was pointed to:

Neither certificate stated that Mr Stubbings had turned his attention to or had had his attention drawn to the improvidence of the transaction and the inevitable and disastrous consequences for him.

291. Here, Mr Ireland was acting for both sides of the transaction, and did not effectively ascertain Maria’s independent view of the Transfers free from Kevin, Jenny, and Krystina.

Cross-defendants’ submissions

292. The cross-defendants submit that there is an explicable reason for the Transfers that is unrelated to the relative imbalance in relationship between Maria on the one hand and Jenny and Krystina on the other. That is that Jenny and Krystina were natural candidates for a receipt of the gift of the Properties.

293. At the time of the Transfers Stan had essentially had no contact with Maria for well over a year. Maria believed that Stan had caused her not to attend Danuta’s funeral. Maria had a much closer relationship to the members of Kevin’s family, as she had been living with them, and at that time it appeared she would continue to do so indefinitely. Maria did not completely abandon Stan, she left him in her will, her intention was to remove Stan as the beneficiary of the unexpected and unfortunate windfall she had received as a result of Danuta’s death and intestacy. That windfall was one that she believed would be appropriately distributed to the people that were (a) caring for her, and (b) taking care of the properties that she owned (including her Rooty Hill property).

294. Rather than Maria’s will being overborne by those caring for her, the inference that can be drawn from the evidence in the proceedings is simply that Maria was surrounded, for the 18 months she was in Kevin and Jenny’s care to February 2018, with people who were caring for her.

Consideration

295. It is clear that Maria suffered a special disadvantage at the time the Transfers were executed and indeed in the entire period from July 2017 to the execution of the Transfers on 25 October 2017. I understand this to be conceded by the cross-defendants (T739.47).

296. The special disadvantage existed because Maria was 92 years of age and suffering from serious ill health: see [227] above; she was unsteady on her feet and prone to falls; she was suffering from progressive vascular brain disease, which the medical experts agreed impaired her cognitive function (either moderately or more moderately than mild); she was dependant on her carers and incapable of managing her own personal and financial affairs; her proficiency in English was basic, with Polish being her first language; she had a low level of education and her literacy in Polish was also low; and she placed trust in her carers who at all relevant times were Kevin, Jenny and Krystina. Due to the combination of these matters, Maria was capable of being manipulated by those she trusted, which both Jenny and Krystina accepted in cross-examination.

297. The special disadvantage referred to in the previous paragraph seriously affected Maria’s ability to make a judgment as to her own best interests.

298. In my opinion, Jenny and Krystina knew that Maria was under a special disadvantage of this kind. They were aware of all matters referred to in [296] and it is implicit from their acceptance that Maria was capable of being manipulated by those she trusted, that they knew she had a special disadvantage which affected her ability to make a judgment as to her own best interests.

299. The Transfers were clearly improvident transactions. They were gifts of property having a total value of $1,970,000. While the Transfers state that nominal consideration of $1 was payable, there is no evidence that it was paid and that would not in any event detract from the character of the Transfers as gifts. In addition, Maria paid the stamp duty on the Transfers (totalling $75,180), notwithstanding that it was the liability of each transferee to pay the stamp duty on the Transfers. That was also a very significant benefit which was improvident from Maria’s point of view.

300. In these circumstances, the evidentiary onus shifts to Jenny and Krystina to establish that the Transfers were fair, just and reasonable. Critical to the discharge of that evidentiary onus is whether Maria was given independent advice. The only advice she was given was by Mr Ireland at the meeting on 25 October 2017. This was not independent because Mr Ireland was acting for Kevin, Jenny, Krystina and Maria. It was manifestly inadequate because: he had no independent recollection of discussing with Maria the pros and cons of leaving the Properties by her will rather than making inter vivos transfers; he could not recall discussing the advantages of transferring or not transferring the Properties; he made no file note of her financial position suggesting that he did not consider that to be an important issue; he had no discussion with Maria and gave her no advice about the effect of the gifts on her pension; his file notes do not record any reason being given for why such large gifts would be made and thereby disturb the testamentary intention contained in Maria’s September 2016 Will, which Mr Ireland drafted. Of particular significance is that Maria was not given any advice that the Transfers exposed her to stamp duty of $75,180 which would not have been payable if the gifts had been made by her will.

301. Accordingly, in my view, Jenny and Krystina have not discharged their evidentiary onus. I do not accept that the gifts under the Transfers are fair, just or reasonable, or to be explained simply as recognition of Maria’s gratitude for the care which Kevin, Jenny and Krystina were providing to her, given the quantum of the gifts, and the lack of an adequate explanation being provided to Maria of the alternatives to making the gifts, both as to quantum and method (ie. by will rather than inter vivos transfers).

302. Based on a consideration of all the evidence, in my opinion Kevin, Jenny and Krystina unconscionably took advantage of the special disadvantage under which Maria was operating to bring about the Transfers. Accordingly, the Transfers were unconscionable transactions and should be set aside.

Undue Influence Issue

Principles

303. Under the doctrine of undue influence a court of equity will set aside an improvident or substantial transaction that was unconscientiously procured as a consequence of the relationship between the parties to that transaction. It is insufficient that there is mere inequality in bargaining power, rather the relationship must be such that the relationship is one which gives rise ‘to such influence over the mind of the other that the act of the other is not a “free act”’: Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49 at [31]. As outlined in the recent decision of the Court of Appeal in Schwanke v Alexakis; Camilleri v Alexakis [2024] NSWCA 118, presumptions as to undue influence arise in inter vivos transactions, but not for testamentary gifts. The parties are aligned that this was an inter vivos transaction, but the cross-defendants contend that Maria’s testamentary intentions are relevant to her motivations to make the Transfers.

304. There are relationships which by themselves give rise to a presumption of undue influence. That is not the case here, and instead the cross-claimant relies on the principle that the presumption ‘can also be raised by proof that the history of the particular relationship involved one party occupying a similar position of ascendency or influence, and the other a corresponding position of dependency or trust’: Thorne v Kennedy at [34] citing Johnson v Buttress (1936) 56 CLR 113 at 134–35 per Dixon J

305. The High Court in Thorne v Kennedy at [34] stated that common experience gives rise to a presumption (citations omitted):

that a transaction was not the exercise of a person’s free will if (i) the person is proved to be in a particular relationship, and (ii) the transaction is one, commonly involving a “substantial benefit” to another, which cannot be explained by “ordinary motives”, or “is not readily explicable by the relationship of the parties”.

306. In relation to the latter condition it must be proved that the transaction was ‘so improvident or the gift is so substantial as not to be reasonably accounted for on the ground of friendship, relationship, charity or other ordinary motives on which ordinary persons act’: Brown v Barber [2020] WASC 84 at [316] quoting Sir Frederick Jordan, Chapters on Equity in New South Wales (6^th ed, 1947). It is not the relationship alone that gives rise to the presumption, it is the specific transaction within the context of a relationship of ascendancy that gives rise to the presumption of undue influence.

307. As Emmett AJA set out in Tomanovic Multitown Pty Limited v Interlux Projects Pty Limited [2021] NSWSC 190 at [89] (footnotes omitted):

Undue influence can exist from very different sources. For example, excessive pressure may give rise to undue influence. However, since pressure is but one of the sources for the inference that one person may exert undue influence over another, it is not necessary that pressure that contributes to a conclusion of undue influence be characterised as illegitimate or improper. A person can be subjected to undue influence where the effect of factors such as pressure is that the person has no free will. Where a party is not a free agent and is not equal to protecting himself or herself, the Court will protect him or her. Undue influence can arise from the deliberate contrivance of another, which includes pressure, giving rise to such influence over the mind of the other that the act is not a free act. The question whether a person’s act is free requires consideration of the extent to which the person was constrained in assessing alternatives and deciding between them. Thus, pressure can deprive a person of free choice where it causes the person to subordinate his or her will to that of another party. Questions of degree are involved but, at the very least, the judgment of the party seeking relief must be shown to be “markedly sub-standard” as a result of the effect upon that person’s mind of the will of another. There are various ways in which undue influence can be established. There may be a presumption that a transaction was not the exercise of a person’s free will if the person is proved to be in a particular relationship and the transaction is one involving a substantial benefit to another that cannot be explained by ordinary motives or is not readily explicable by the relationship of the parties.

308. In making this assessment the Court may have regard to considerations such as those identified by Gillard J in Union Fidelity Trustee Co of Australia Ltd v Gibson [1971] VR 573 at [10(a)]:

The standard of intelligence and education, and the character and personality of the donor, are relevant matters. Age, state of health, blood relationship, experience, or lack of it, in business affairs of the donor, length of friendship or acquaintanceship between the donor and donee and the intricacy of their business affairs may be factors to influence a donor to depend upon the donee. Equally, the relative strength of character and personality of the donee, the period and closeness of the relationship and the opportunity afforded the donee to influence the donor in his business affairs are correlative considerations to the foregoing: see Clark v Malpas (1862) 4 De G F and J 401; 45 ER 1238.

309. Once the presumption is raised it may be disproved by the other party proving, in the case of a transfer of property, that the weaker party knew what he or she was doing, when the transfer was made, in the sense that he or she understood its effect and significance to himself or herself, and also that the transfer was the result of his or her own free will: Johnson v Buttress at 123; and Thorne v Kennedy at [34].

Cross-claimant’s submissions

310. The cross-claimant submits that Krystina and Jenny had a ‘special relationship’ with Maria and the transaction was such a significant gift that a presumption of undue influence arises, and this presumption has not been rebutted by the cross-defendants.

311. Counsel for the cross-claimant took the Court to [43] of Barrett J’s decision in Winefield v Clarke [2008] NSWSC 882:

The circumstances in the period April to June 2004 were such that the plaintiff’s incapacity in these respects, combined with the gratitude that she bore towards the defendant for having brought her home from Queensland and restored her to her home environment, consolidated both dependence and trust on the plaintiff’s part and ascendancy and influence on the part of the defendant. This situation was a natural one in the circumstances. An old lady with failing mental powers and in deteriorating health was cared for diligently and with affection by her daughter. The defendant is to be commended for the way in which she looked after her mother. But the fact that the defendant acted towards her mother as she did out of respect and affection does not change the legal conclusion that the defendant stood in a position of undue influence towards the plaintiff.

312. For the cross-claimant, that analysis bears a striking similarity to the position that Maria was in during the period that she lived with Kevin, Jenny, and Krystina. Maria was entirely dependent on Krystina and Jenny.

313. The gift was substantial in that it was a very large gift of property together valued at over $2 million. Despite the relationship between Maria and the cross-defendants, a gift of that size (especially when considered as part of Maria’s total assets) cannot be explained as part of the ordinary course of her affections. That is for three reasons:

1. on Kevin’s own evidence, Maria’s desire to transfer the Property was to exclude Stan from the benefit of the Properties in her estate;

2. she did so by adopting Krystina and Jenny’s view of Stan, namely that he was a poor son who did not assist his family;

3. Maria’s cognitive deficits were likely such that she could not have fully appreciated the impact of her decision to transfer the Properties to Krystina and Jenny. It is one thing to confer a benefit on people who are helping you, it is another to do so at the detriment of someone you intend to benefit through the gift of your estate.

Cross-defendants’ submissions

314. The cross-defendants submit that they were a natural object for the provision of the gift in all the circumstances of Maria’s life. Central to this submission is the characterisation of the Properties. These were not properties that Maria could readily have accepted as being ‘hers’ in a moral sense, they were windfall gains from the unexpected death of her daughter. Maria had never maintained the Properties, and in fact it was Kevin and his family that had kept the Properties in working order. Maria’s gift is consistent with her gratitude for Krystina and Jenny taking care of her. It is natural that a person in the situation that Maria is in, being cared for by one unit of her wider family, would confer extra benefits upon them. That she chose to do this whilst she was alive, rather than by her will, makes no real difference.

315. There is no evidence that Maria’s cognitive deficit was such that she was unable to appreciate the basic proposition that by giving something she owned away that she was therefore unable to pass it on to another person.

Consideration

316. In view of my conclusion on the unconscionable transaction issue, this issue does not arise. However, for essentially the same reasons, I consider that the cross-claimant has established his case of undue influence on the part of Jenny and Krystina. In my opinion the evidence establishes that throughout 2017 when Maria was living with Kevin, Jenny and Krystina, she placed trust and confidence in each of them as members of her family and her carers, which placed Kevin, Jenny and Krystina in a position of being able to exert influence over Maria. Maria’s special disadvantage referred to at [296] above gave Kevin, Jenny and Krystina a moral or practical superiority in their relationship with Maria. For the reasons already given, the transfers were improvident, conferring a very substantial benefit on Jenny and Krystina which cannot be explained by the relationship of the parties, and consequently the presumption that they resulted from undue influence arises. In my view, Jenny and Krystina have not discharged their evidentiary onus of establishing that Maria knew what she was doing, and that the transaction was the result of her free will.

Unjust Contract Issue

Principles

317. Section 7 of the Contracts Review Act 1980 (NSW) provides:

(1)  Where the Court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the following—

(a)  it may decide to refuse to enforce any or all of the provisions of the contract,

(b)  it may make an order declaring the contract void, in whole or in part,

(c)  it may make an order varying, in whole or in part, any provision of the contract,

(d)  it may, in relation to a land instrument, make an order for or with respect to requiring the execution of an instrument that—

(i)  varies, or has the effect of varying, the provisions of the land instrument, or

(ii)  terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the land instrument.

(2)  Where the Court makes an order under subsection (1) (b) or (c), the declaration or variation shall have effect as from the time when the contract was made or (as to the whole or any part or parts of the contract) from some other time or times as specified in the order.

(3) The operation of this section is subject to the provisions of section 19.

318. Section 9 sets out the relevant matters to consider:

(1)  In determining whether a contract or a provision of a contract is unjust in the circumstances relating to the contract at the time it was made, the Court shall have regard to the public interest and to all the circumstances of the case, including such consequences or results as those arising in the event of—

(a)  compliance with any or all of the provisions of the contract, or

(b)  non-compliance with, or contravention of, any or all of the provisions of the contract.

(2)  Without in any way affecting the generality of subsection (1), the matters to which the Court shall have regard shall, to the extent that they are relevant to the circumstances, include the following—

(a)  whether or not there was any material inequality in bargaining power between the parties to the contract,

(b)  whether or not prior to or at the time the contract was made its provisions were the subject of negotiation,

(c)  whether or not it was reasonably practicable for the party seeking relief under this Act to negotiate for the alteration of or to reject any of the provisions of the contract,

(d)  whether or not any provisions of the contract impose conditions which are unreasonably difficult to comply with or not reasonably necessary for the protection of the legitimate interests of any party to the contract,

(e)  whether or not—

(i)  any party to the contract (other than a corporation) was not reasonably able to protect his or her interests, or

(ii)  any person who represented any of the parties to the contract was not reasonably able to protect the interests of any party whom he or she represented,

because of his or her age or the state of his or her physical or mental capacity,

(f)  the relative economic circumstances, educational background and literacy of—

(i)  the parties to the contract (other than a corporation), and

(ii)  any person who represented any of the parties to the contract,

(g)  where the contract is wholly or partly in writing, the physical form of the contract, and the intelligibility of the language in which it is expressed,

(h)  whether or not and when independent legal or other expert advice was obtained by the party seeking relief under this Act,

(i)  the extent (if any) to which the provisions of the contract and their legal and practical effect were accurately explained by any person to the party seeking relief under this Act, and whether or not that party understood the provisions and their effect,

(j)  whether any undue influence, unfair pressure or unfair tactics were exerted on or used against the party seeking relief under this Act—

(i)  by any other party to the contract,

(ii)  by any person acting or appearing or purporting to act for or on behalf of any other party to the contract, or

(iii)  by any person to the knowledge (at the time the contract was made) of any other party to the contract or of any person acting or appearing or purporting to act for or on behalf of any other party to the contract,

(k)  the conduct of the parties to the proceedings in relation to similar contracts or courses of dealing to which any of them has been a party, and

(l)  the commercial or other setting, purpose and effect of the contract.

(3)  For the purposes of subsection (2), a person shall be deemed to have represented a party to a contract if the person represented the party, or assisted the party to a significant degree, in negotiations prior to or at the time the contract was made.

(4)  In determining whether a contract or a provision of a contract is unjust, the Court shall not have regard to any injustice arising from circumstances that were not reasonably foreseeable at the time the contract was made.

(5)  In determining whether it is just to grant relief in respect of a contract or a provision of a contract that is found to be unjust, the Court may have regard to the conduct of the parties to the proceedings in relation to the performance of the contract since it was made.

319. The Court of Appeal has outlined the operation of the provisions in Hanna v Raoul [2018] NSWCA 201. As noted at [136] of that decision, a finding that a contract was ‘unjust’ can be established for the same reasons as establishing an entitlement to equitable relief due to the bargain being unconscionable or the operation of the doctrine of undue influence.

Cross-claimant’s submissions

320. The cross-claimant relies on the same evidence and submissions made in relation to the unconscionable conduct issue. The cross-claimant submits that in the circumstances the Transfers were unjust (within the meaning of s 9 of the Contracts Review Act) because (with reference to the relevant categories of evidence under s 9(2)):

1. Maria suffered a material inequality of bargaining power owing both to her mental deficits and her dependency on Jenny and Krystina (s 9(2)(a)).

2. the Transfers were not the subject of negotiation (s 9(2)(b)), being a gift given by Maria, in circumstances where she also assumed the responsibility to bear the stamp duty liability without further discussion.

3. Maria was not reasonably able to protect her interests due to her mental and physical incapacities. Moreover, Mr Ireland was not reasonably able to protect her interests on the same basis, and given that he was also acting for Jenny and Krystina (s 9(2)(e)). Moreover, his advice was not truly independent given the circumstances in which he was acting (s 9(2)(h)).

4. Maria had very significant limitations in her educational background and literacy (ss 9(2)(f) and 9(2)(g)).

5. the provisions of the Transfers and their legal and practical effects was not accurately explained to Maria (s 9(2)(i)).

6. the cross-defendants exerted undue influence over Maria for the reasons given above (s 9(2)(j)).

7. the contract effectively undermined Maria’s intended testamentary arrangements.

Cross-defendants’ submissions

321. The cross-defendants largely repeat their submissions in relation to the unconscionable conduct issue and the undue influence issue. The Transfers have a logical relationship to the closer relationship that Maria had with Jenny and Krystina than the cross-claimant (or any other member of the extended Rydzewski family). The acceptance of the gift was not unconscientious in light of this reality. At the time of the Transfers, Maria had not seen Stan for a significant time. There is no direct evidence of inappropriate pressure or undue influence being exercised by Jenny and Krystina.

322. The cross-claimant overemphasises the extent of Maria’s cognitive deficiencies, with the cross-defendants relying on the same submissions as in relation to the mental capacity issue. The evidence led on the cross-defendants’ behalf indicates that Maria had the ability to comprehend the nature of the Transfers, and the consequences of her gifting the Properties to Jenny and Krystina. Importantly, this was not a case where the cross-defendants were alleged to have procured the Transfers, rather it was their retention of the benefits. If the Court accepts that Maria intended to gift the Properties, fully understanding the nature of that gift, and the cross-defendants neither exerted undue influence nor unconscientiously retained that gift, then it must follow that the Transfers were not unjust contracts liable to be voided pursuant to s 7 of the Contracts Review Act.

Consideration

323. In light of my conclusion on the unconscionable conduct and undue influence issues, this issue does not arise.

Conclusion

324. It follows that the appropriate orders should be that each of the Transfers be set aside and that the Properties be transferred into the name of the independent administrator in his capacity as the executor of Maria’s estate. The cross-defendants ought to pay the costs of the cross-claimant on the ordinary basis.

325. I will give the parties seven days to bring in short minutes of order to reflect these reasons, and also to ascertain the view of the independent administrator as to final orders. Any application for an alternative costs order should be brought within this same period.

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Amendments

02 July 2024 - Corrections to [13], [17], [22], [28], [29], [39], [46], [87], [165], [166], [316].

Decision last updated: 02 July 2024