JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: SHEPHARD -v- GALEA and BYRNE as Executors and Trustees of the Estate of the late Joseph Galea [2019] WASC 164
CORAM: KENNETH MARTIN J
HEARD: 11-14 FEBRUARY 2019
DELIVERED : 17 MAY 2019
FILE NO/S: CIV 1459 of 2017
BETWEEN: GEORGINA SHEPHARD
Plaintiff
AND
TUANIE PAUL GALEA and CARMEN BYRNE as Executors and Trustees of the Estate of the late Joseph Galea
First Defendants
TUANIE PAUL GALEA as Beneficiary of the Estate of the late Joseph Galea
Second Defendant
CARMEN BYRNE as Beneficiary of the Estate of the late Joseph Galea
Third Defendant
Catchwords:
Family dispute - Derivative action - One-third equal residuary bequest made to daughter by testator's last will along with two other children - Other children made executors - House and land as the substantial asset of the estate is gifted to the other children during life of testator - Daughter left with value of one-third interest in testator's negligible value estate - Challenge against testator's inter vivos disposition to other children and joint executors - Alleged undue influence or unconscionable conduct against deceased and his estate
Legislation:
Evidence Act 1906 (WA)
Family Provision Act 1972 (WA)
Result:
Plaintiff's action dismissed
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr C V Eastwood & Mr T M Clavey |
| First Defendants | : | Ms C H Thompson |
| Second Defendant | : | Ms C H Thompson |
| Third Defendant | : | Ms C H Thompson |
Solicitors:
| Plaintiff | : | Eastwood Law |
| First Defendants | : | Nielsen & Co |
| Second Defendant | : | Nielsen & Co |
| Third Defendant | : | Nielsen & Co |
Case(s) referred to in decision(s):
Hilliard v Eiffe (1874) LR 7 HL 39
Johnson v Buttress (1936) 56 CLR 113
Kakavas v Crown Melbourne Ltd [2013] HCA 25; (2013) 250 CLR 392
Ramage v Waclaw (1988) 12 NSWLR 84
Sharpe v San Paulo Railway Co (1873) LR 8 Ch App 597
Stainton v Carron Co (1854) 18 Beav 146; 52 ER 58
Thorne v Kennedy [2017] HCA 49; (2017) 350 ALR 1
Travis v Milne; Milne v Milne (1851) 9 Hare 141; 68 ER 449
Woodley v Woodley [2018] WASC 333
Yeatman v Yeatman (1877) 7 Ch D 210
TABLE OF CONTENTS
Introduction
The Galea family history and relationship to the litigation
Trial evidence before the court
The plaintiff's evidence
The defendants' evidence
My detailed findings of uncontroversial facts
The early years
Life at 86 Second Avenue, Bassendean
Josuarda's illness in 2007
The 2008 incident between Joseph and Mario
Events following Josuarda's death
The 2011 $11,000 cash incident
An August 2011 incident and VRO against Mario
Joseph's final will
2012 - 2013
Sale of the Moat Street property
Joseph's declining health
Contested evidence
Mario's evidence
Janet Scott Leon's evidence
Melvyn Levitan's evidence
The evidence of Dr Anthony Sciberras
Sylvia Ashcroft's evidence
Georgina's derivative action against Carmen and Tony
Georgina's standing to bring the action
Legal principles
Georgina's submissions
The irrational economics of the present action by Georgina
The claims against Tony and Carmen
Undue influence
Legal principles
Present case
Residential proximity
Unconscionable conduct
The pleadings
Legal principles
Present case
Moat Street property sale
The Galea family and its witnesses - disposition of evidence and witnesses
Plaintiff's evidence
Georgina
David Shephard
Jason Shephard
Mario
Uncle Angelo
Defence's evidence
Carmen and her daughters
Sylvia Ashcroft
Father Leong and Margaret Horrocks
Dr Sciberras
Melvyn Levitan
Some conclusions
The late pleas in the RSSC under pars 26A, 33A, 33B and 33C
The Moat Street property proceeds and the cache of cash
The cash leakages
Joseph and a cash reserve?
Conclusion
KENNETH MARTIN J:
Introduction
To an outsider, the 82 years of the enigmatic life of the late Joseph Galea, exposed at this trial, presents as the almost perfect film script. Unfortunately, however, for Joseph's surviving four adult children his legacy to them is only a wasteland horizon of tragic and ongoing family discord.
The parties to this proceeding are three of the four children of Joseph and Josuarda Galea. Joseph Galea died in 2015 about four years after his wife Josuarda had passed. Throughout the trial all the parties were referred to by their first names. With no disrespect intended, I will do the same.
The plaintiff (Georgina Shephard) brings this action against her younger siblings (Tuanie Paul Galea and Carmen Byrne). She pursues them in their capacities as executors and trustees of their late father's estate (as first defendants), but also personally, as the beneficiaries of Joseph's estate (as second and third defendant respectively). Tuanie is mostly referred to as Tony, and again with no disrespect intended, I will so refer to him.
In essence, Georgina's derivative action against Tony and Carmen is advanced under two heads. First, she contends that, during a period from about 2011 concerning their mother's death, her father was subjected to undue influence that reached a level of his free will being overborne by the actions of Tony and Carmen. Further to that, Georgina argues that Joseph's estate was depleted before his death of its significant assets (being his house and land which had been the family home in Bassendean and also of large sums of cash). This is said to arise by reason of the unconscionable conduct of Tony and Carmen perpetuated against their father in his last years.
Before exploring these claims any further, I will first turn to examine the relationship between the parties and some family background behind the dispute.
The Galea family history and relationship to the litigation
Joseph Galea became the patriarch of his family. Born in Malta in September 1932, Joseph married Josuarda Dimech when he was only 18 years of age. They would spend the next 60 years of their lives together until Josuarda's death in 2011.
In 1952 whilst still in Malta, the couple welcomed their first child, a son, Mario. Mario is not a party to the current action, as I discuss later.
In 1954, the family migrated to Western Australia to settle in what was then outer Perth, settling in Bassendean.
In 1955, their daughter Georgina was born. She was followed by Carmen in 1956 and finally, by Tony, in 1964.
I will now outline some of the evidence put before the court at this trial.
Trial evidence before the court
The evidence adduced in this trial from parties and witnesses proceeded by the parties providing the court with various affidavits. For the most part the affidavits were accepted into evidence with only minor excisions on upheld admissibility objections. Most affidavit deponents were required for cross‑examination, but with a few exceptions which I will explain.
In addition to the affidavit materials provided from witnesses who provided their evidence for the trial there was, beyond that, a substantial amount of documentary evidence comprised in a trial bundle, spanning across four lever arch volumes, eventually accepted as exhibits 1.1 through 1.69. The parties' respective chronologies were largely agreed once exchanged and were ultimately tendered as exhibits 2.1 and 2.2 during the trial.
The plaintiff's evidence
As her evidence-in-chief, Georgina provided the court with her long affidavit sworn 31 October 2018, accepted as exhibit 3. Minor amendments were made to this affidavit during her examination‑in‑chief (ts 76 ‑ 78). Next, Georgina was comprehensively cross‑examined by counsel for the defendant (ts 79 ‑ 121), then re‑examined by her counsel (ts 121 ‑ 128).
Supporting Georgina's claims, her husband David Shephard and son Jason Shephard provided affidavit evidence. David's affidavit sworn 31 October 2018 was accepted as exhibit 5. Jason's affidavit sworn 30 October 2018 was accepted as exhibit 7. Both were required for cross‑examination.
Mario was called as a witness to support Georgina's claims. His affidavit sworn 7 November 2018 was accepted in evidence as exhibit 6.1, save for pars 426 to 428 (inclusive) which were excised.
Georgina's last witness was her aged uncle, Angelo Dimech (or Uncle Angelo, as he was known in the family and as I will refer to him). Uncle Angelo is the younger brother of the late Josuarda. Uncle Angelo's affidavit sworn 30 October 2018 was accepted as exhibit 4. Albeit Uncle Angelo was required for a brief cross‑examination, his evidence was largely background and essentially inconsequential.
The defendants' evidence
Carmen and Tony both swore multiple affidavits as their evidence‑in‑chief.
Carmen's first affidavit sworn 23 June 2017 became exhibit 9.1 (Carmen's 2017 affidavit). Her second affidavit sworn 3 September 2018 was recorded as exhibit 9.2 (Carmen's 2018 affidavit).
Tony's first affidavit sworn 23 June 2017 became exhibit 11.1 (Tony's 2017 affidavit). His second, sworn 3 September 2018, became exhibit 11.2 (Tony's 2018 affidavit).
Carmen and Tony were then cross‑examined at some length over the course of one and a half days by counsel (Mr Clavey) for the plaintiff.
Various other members of Carmen's immediate family also then gave their evidence at the trial at the behest of the defendants. They included Carmen's two daughters, Mrs Holly Renee Harsanyi (formerly Byrne) who swore two affidavits on 20 June 2017 (exhibit 8.1) and 7 February 2019 (exhibit 8.2) and Ms Carly Jay Byrne sworn 28 January 2019 (but with an objection to par 25 upheld) (see exhibit 12). Both Holly and Carly were briefly cross‑examined.
Other witnesses called on behalf of the defence, included Ms Sylvia Georgina Ashcroft (Joseph and Josuarda's niece). She swore her affidavit on 28 January 2019 (exhibit 13) and also provided some important further verbal evidence at the trial. Also giving evidence were Father Aloysius Leong who swore his affidavit on 24 June 2017 (exhibit 15) and Ms Margaret Horrocks who swore an affidavit on 27 August 2018 (exhibit 16). These three witnesses were only lightly cross‑examined.
Affidavits from three other witnesses who did not attend court to give evidence were accepted into evidence for the defence.
Of these further witnesses, the first was Ms Janet Scott Leon a licensed settlement agent. Her affidavit was sworn 14 July 2017 and was accepted with par 7 excised as exhibit 14.
Second was the affidavit of Dr Anthony Sciberras. Dr Sciberras had been Joseph's general practitioner for almost 25 years prior to Joseph's death. It was agreed that Dr Sciberras would not be required for cross‑examination. His affidavit sworn 26 August 2018 was ultimately received as exhibit 17.
The final affidavit accepted without cross-examination was from a retired legal practitioner, Mr Melvyn Levitan, sworn 15 June 2017 (exhibit 18). I will address Mr Levitan's evidence at great length discretely, later in these reasons.
In the next section of the reasons I will record more largely uncontroversial findings of fact. These are assembled from facts either admitted by the parties in their respective exchanged chronologies or agreed to, within the parties' pleadings or otherwise, as uncontroversial evidence.
My detailed findings of uncontroversial facts
The early years
Joseph was born in the British colony of Malta on 13 September 1932.
On 10 November 1950 Joseph, aged 18, married Josuarda Dimech. Details of Joseph's education and early life on Malta are rather sketchy. However, it appears he obtained a secondary education and then further qualifications as a skilled cabinet maker in this period according to what Tony says his father had related to him (Tony's 2017 affidavit).
On 22 May 1952, Mario was born.
On 12 July 1954, Joseph, Josuarda and Mario migrated to Australia from Malta, arriving in Perth in August 1954. By then there were other relatives from the Galea and Dimech families already well settled in Western Australia. Joseph's newly arrived family of three received immediate support through their relatives and from a vibrant expatriate local West Australian Maltese community. Always a hard worker, Joseph was able to ply his cabinet makers skills to immediately secure limited work to support his family.
Roughly three or four months after arrival Joseph purchased from his brother, Paul Galea, a block of vacant land at 86 Second Avenue, Bassendean (86 Second Avenue).
Across 1955 to 1957, Joseph laboured industriously, erecting by sweat and toil a residence on his land for the family. As he had told his children, that work began with a basic shed, then a laundry. It progressed brick by homemade brick, room by room, as Joseph used all his spare time and skills to finish the family home.
Some time in 1958, Joseph obtained a mortgage from the Bank of New South Wales, secured against the title of 86 Second Avenue. The land title record shows that the mortgage was discharged 10 years later, on 10 September 1968.
During 1956, Joseph, now 24, began working full-time at Vickers Hadwa WA at Midland, a short distance from the emerging Bassendean family home. Joseph remained employed with Vickers Hadwa for over 20 years.
On 27 August 1955, Georgina was born. Some 16 months later, Carmen arrived on 10 December 1956. Tony was born on 20 December 1964. The family was now complete.
The four Galea children were educated at various local schools, including at the local Bassendean Catholic School, St Michael's, and at Hampton Senior High School. Together the family took root and prospered, enjoying a basic but happy life in a new country during the Menzies era.
Life at 86 Second Avenue, Bassendean
The following facts are primarily taken from Georgina's uncontested recollections related in her affidavit.
From the Bassendean home, Joseph would ride his bicycle to work each day during the 20 years he was employed at Vickers Hadwa. He would often ride home to have lunch, faithfully prepared for him by Josuarda. Josuarda was less proficient in English than Joseph. She devoted herself exclusively to his needs and those of the four young children.
Joseph owned a motor scooter on which he would convey all the members of the family to church every Sunday morning, as Georgina recollects. She also recalls the family did not possess a car until about 1962. Money was always scarce at this time.
But Joseph was a saver by nature. He encouraged Georgina particularly to put her money away for a 'rainy day', instead of spending it on hedonistic pleasures such as the lollies she sometimes splurged upon.
In the early 1970s, Georgina left school aged 15 to obtain her first job working for Tom The Cheap Grocer at a store near Bayswater - with a take-home pay of about $21 a week, paid in cash.
Georgina recalls Mario had got married (to Karen) when he was about 18 or 19. Shortly after that, Mario purchased a house at 17 Second Avenue, Bassendean, just down the street from the Galea family home.
Georgina met David Shephard in 1973. After a courtship of some 18 months they married in 1974. Georgina was 19 and David was 20. At that time, David had also been employed at Vickers Hadwa, as a welder. Georgina and David lived with Joseph and Josuarda for the first six months of the marriage at 86 Second Avenue. Shortly after, Georgina and David had saved a deposit sufficient for them to purchase their first house in Scaddan Street, Bassendean, only 10 minutes away from the family home.
Georgina also recalls her father's frequently expressed disdain against Banks. When it came to money matters Joseph preferred to, and usually operated by, using cash.
In 1977, now aged 45, Joseph left Vickers Hadwa to take up work with Qantas at the Perth airport as a baggage handler. He remained in that employment for another 13 years, until February 1991, when after suffering a work related back injury, he retired at the age of 58. Whilst at Qantas Joseph never said 'No' to an overtime shift. He still worked very long hours.
In late December 1984 or 1986 (the parties' chronologies differ as to the year) a property at lot 134 Grandis Road, Rolling Green, Gidgegannup was purchased for an estimated amount of $10,000. Notwithstanding that the land was purchased in the name of Josuarda, the purchase funds were all provided by Joseph. Subsequently, that investment land was sold.
In 1983 Joseph funded the purchase of 43 Allnutt Street, Mandurah, for $24,500 (the Allnutt Street property). The property was purchased by Joseph, but under the names of Mario, Georgina and Carmen (but not Tony, who was then only 19). The Galeas enjoyed Mandurah together as a family holiday destination. There had been regular family holidays, particularly involving camping before Allnutt Street property was acquired.
The Allnutt Street property at Mandurah was sold in December 1988, for a sale consideration of $58,000 - a handsome profit in a period of ownership of just over five years.
The sale proceeds from the Allnutt Street property look to have been used to immediately purchase a replacement Mandurah holiday property for the use of the family. This was 22 Moat Street, Mandurah (the Moat Street property). The Moat Street property was acquired this time by Joseph in the names of all four children (Mario, Georgina, Carmen and Tony) and as tenants in common in equal shares. The 1988 purchase price was $78,000.
The Moat Street property was then held by the Galea family members for over 26 years until it was sold in March 2014. During this period, it was routinely used primarily by Joseph and Josuarda but also by arrangement by all members of the family for holiday purposes. Because Mario, and eventually Tony, came to reside in Mandurah, they, in particular, were more proximate to the Moat Street property. Tony kept a set of keys. Joseph and Josuarda were frequent weekend and holiday visitors to the Moat Street property over this period.
Although Joseph, after the sale of Allnutt Street, provided all funds used to purchase the Moat Street property, I have no doubt that there is a clear presumption of advancement towards an underlying beneficial ownership by his four children for the property. That also suited Joseph's purposes to receive the aged pension. He owned 86 Second Avenue and more property in his name could jeopardize his pension when he retired from Qantas. Joseph was no fool when it came to money matters.
On 28 February 1991, Joseph had retired from Qantas aged 58 years. At this time he had suffered some level of back injury which caused him a degree of discomfort. That contributed to his decision to cease work altogether. However, he still remained active in his shed and garden at 86 Second Avenue and also regularly travelled by car to Mandurah for holidays at the Moat Street property.
Joseph then became entitled to receive an aged pension. This was regularly paid into his Westpac bank account (account ending 718) (the Westpac account). But it always remained as the practice of Joseph to personally attend at his local Westpac branch at Bassendean and draw out as cash most of the pension payment from the Westpac account to meet his and Josuarda's essential living expenses. As related, Joseph was not a man of expensive tastes. He and Josuarda always lived relatively frugal lives. But Joseph particularly liked the feel of cash and he did not waste his money.
Joseph was not a social man. He enjoyed his family but did not go out often. He was careful with money, basic in his tastes and enjoyed simpler things in life. He always presented as a quiet, but firmly authoritarian paternal figure in the family. Joseph did not like to be contradicted. Moreover, if he perceived that he had been wronged by someone he would tend to dwell over the slight. In other words, Joseph would be known to hold a grudge, for a long time if he thought he had been wronged. Joseph might forgive, but he did not forget.
Josuarda's illness in 2007
In August or September 2007 Josuarda had a fall. She broke her hip, but was then also diagnosed with the onset of Alzheimer's disease. Following Joseph's retirement in February 1991 until this time, Joseph and Josuarda appear to have led quiet, comfortable and mostly uneventful family lives together. They had aged and prospered together in their new country. The couple enjoyed their home at 86 Second Avenue, the Moat Street property and mostly warm relationships with their children and steadily arriving further grandchildren.
Joseph, as is accepted by the defendants, had a close relationship with Georgina until about 2011 and also with Mario, until about 2008: see par 6 of the second further amended substituted defence (SFASD).
However, relationships began to unravel and deteriorate within the family after the injury and illness sustained by Josuarda in 2007.
Josuarda was initially admitted to the Swan District Hospital after her fall. Following her discharge from hospital, she was then admitted to a Belmont nursing home where she remained for some period, largely due to the onset of her mental health problems. Nevertheless, Joseph was always insistent that Josuarda be cared for at home at 86 Second Avenue. Josuarda eventually did leave the Belmont nursing home to live at home. There are conflicting dates regarding when Josuarda returned home - both between the parties and within a party's pleaded case (see par 20 of the re‑amended substituted statement of claim (RSSC) and pars 2.2.4 and 8 the SFASD). Regardless, the precise time is immaterial. It can be safely said that Josuarda spent time at home being cared for primarily by Joseph (then in his late 70s), prior to her passing in April 2011.
So, for a period of approximately two years, between April 2009 and April 2011, the unwell Josuarda was cared for at home with Joseph as her primary carer. This was a difficult time for Joseph. Josuarda had always been the homemaker. But Joseph coped and family members helped as they could in this time.
Four months or so before Josuarda's death (December 2010 to January 2011), Joseph had attended at the premises of a solicitor, Mr Melvyn Levitan to make a will.
On 25 January 2011 Joseph executed what was his penultimate will prepared by Mr Levitan. In that will Joseph named his youngest children, Carmen and Tony, his executors. He left all his estate to the ailing Josuarda and, in the event that he outlived her, left his estate to be shared equally between his four children. Regrettably, from a family harmony perspective, that sensible position came to be altered under Joseph's final will.
The 2008 incident between Joseph and Mario
Joseph and Mario's relationship began to deteriorate around 2008.
An incident occurred in the period whilst Josuarda was in hospital, prior to her entering the Belmont nursing home. This was in or around 2008. The incident concerning Mario, his wife, Karen and Joseph, was over a trivial issue of a supposedly lost comb of Josuarda's. Strong words were exchanged and there was some minor pushing as between Mario and his father.
I pinpoint that 2008 'lost comb' incident as being the commencement of a deterioration in the relationship as between Mario and his father, which to that point had been relatively warm. At that time, Mario and Karen resided in Mandurah and were raising a family of their own.
The 2008 incident between Mario and his father changed the relationship - at least from Joseph's perspective. He had been disrespected by his elder son. The incident would have carryover implications with a later incident that occurred after a very early morning telephone call from Joseph to Mario in August 2011. I will relate to that incident chronologically later in the reasons.
Events following Josuarda's death
Josuarda died on 22 April 2011. Her funeral was held a week later, on 29 April 2011.
Joseph, then 78 years of age and a widower after over 60 years of marriage, was still living at 86 Second Avenue. He was now alone. His four children were now all married and living elsewhere.
Of the four children, Carmen lived the most proximately to her father at Anzac Terrace in Bassendean, only a few minutes away by car. Georgina and David resided further away from Joseph at Gnangara, about half an hour's drive away to the north. Mario and Tony both resided in Mandurah along with their respective growing families, Mandurah being about 90 minutes from Bassendean by car, depending on traffic.
The 2011 $11,000 cash incident
Georgina relates that after her mother's passing an incident occurred with her father. She says that in June 2011 (14 June 2011, to be precise, pars 544 ‑ 560) she drove from her home in Gnangara to 86 Second Avenue, to see her father to give him some money. That was after a Sunday phone call on 9 June 2011 when her father (very surprisingly to her as she related it) had demanded money he said she owed him and said that he wanted it immediately and repaid in cash.
Georgina says that she then told her father that she had repaid him that money 'ages ago' (as, indeed, she relates in her affidavit pars 522 ‑ 542). But her father, she said, was definite and insistent in the telephone call which she says distressed her.
To put this telephone demand for money incident in some better context, Georgina related that, in around 1989 (see par 199 and following of her affidavit), she had received an $11,000 cash loan in notes from her father. The loan funds were used to meet a tax bill and pay for some Christmas expenses. Georgina then relates repaying an instalment of $5,000 to her father in cash and then further amounts of cash she gave to her father. She says that by the end of 1992 her $11,000 loan was fully repaid. This was at or about the time that Georgina and David had moved from their Scaddan Street, Bassendean residence to a new home in Gnangara (par 215).
According to Georgina's version of events, the $11,000 debt now being demanded of her by her father over the telephone in 2011 had been fully repaid almost some 19 years prior.
Notwithstanding all that, Georgina relates that, after discussing the matter with David, David went to see Joseph that Sunday (pars 537 ‑ 538) to discuss the demand that had upset his wife.
But, David returned from seeing Joseph to relate that Joseph was very upset with Georgina over this issue and was insistent. David said $11,000 should be paid to Joseph (in effect, just to keep the peace), even though it would be a case of that the debt being repaid twice, as David and Georgina saw the matter.
A few days thereafter, on 14 June 2011, Georgina says that she had raised $11,000 in cash. Albeit still upset, she drove to 86 Second Avenue with the $11,000 cash in a bag for her father ‑ along with a Maltese cooking book she had borrowed and was returning.
As Georgina related this key incident at pars 554 ‑ 565 of her affidavit, it unfolded as follows:
I knocked on the door and Dad opened the door.
Dad said, 'Georgina, what are you doing here?'
I said, 'Dad, I am here to give you the money you asked for and this, your book.'
He said to me in an accusing tone, 'Is this how it's going to be?'
I said, 'This is what you wanted, Dad.'
I teared up and said, 'I will see you later, Dad.'
Dad closed the door.
After this I tried ringing him.
He never answered the phone.
I probably tried three or four times.
At this time Dave was working in Belmont near Dad's house.
Dave told me he tried visiting Dad on his way home of an evening. Dad would not answer.
I found this version of events unduly sterile and surprisingly brief ‑ given the voluminous other details given regarding far less important issues in Georgina's affidavit. Hence, during the course of Georgina's oral evidence I sought to elicit whether she had intended to but had not said in her affidavit that at that time she actually gave her father the $11,000 in cash when she had spoken to him at the door of his house at 86 Second Avenue (ts 120 ‑ 121). She indicated she had. But I found this aspect of her evidence to be curious and ultimately, unreliable.
An August 2011 incident and VRO against Mario
As foreshadowed, there was a further incident in August 2011 between Joseph and Mario. This arose from an early morning telephone call at 4.53 am made by Joseph to Mario, on 25 August 2011.
Mario appears to have related the content of this fractious telephone call to Georgina. She relates it as hearsay under her affidavit: see pars 573 ‑ 581. I prefer Mario's direct evidence as to what happened, which I find reliable.
I note Mario was initially mistaken about the time and date of the telephone call. In his affidavit, Mario relates that the phone call occurred on 23 August 2011 at around 4 am (par 339). I find that was certainly made by Joseph at 4.53 am, as the tendered telephone records at trial reliably disclosed (see exhibit 1.49, pages 524 and 527). The records show the call occurred on 25 August 2011. Mario readily accepted he could have been mistaken about the time and date (ts 196 - 197). But I find this error was immaterial to the overall reliability of Mario's evidence about what was said between him and his father this time.
As related by Mario, during this early morning call Joseph, who is accepted to be an early riser, verbally accused Karen (Mario's wife) of stealing Josuarda's jewellery and of taking $21,000 of Joseph's cash that was (Joseph said) hidden in the living room of 86 Second Avenue. By his evidence Mario recounts that, having been woken by the early call, he strongly queried his father over why he would accuse Karen of stealing and told him she would never do that and that neither he nor she would or could have taken any of his father's money (ts 189 ‑ 190). Strong and earthy rebuttal language was used by Mario to his father in this unexpected early morning telephone call ‑ which had basically seen Joseph accuse Mario's wife, out of the blue, of being a thief. Mario responded strongly in very blunt terms to his father and the telephone call ended with the men on bad terms. Later, it seems, Joseph communicated the heated conversation to Tony.
There followed, on 30 August 2011, the grant of a violence restraining order (VRO) issued out of the Mandurah Magistrates Court for Joseph against Mario. The VRO was then served on Mario by the Police ('the 2011 VRO'). Tony had obviously assisted Joseph in obtaining the ex parte 2011 VRO against Mario. The terms of the 2011 VRO put heavy proximity restrictions against Mario as regards future contact with his father. The 2011 VRO application also recounted and raised as supporting evidence the 2008 'lost comb' incident, I have previously noted.
At all events, Mario did not contest this 2011 VRO and it remained in place.
Joseph's final will
On 2 September 2011, Joseph attended again upon his lawyer, Mr Levitan, to provide instructions for a new will. Now of course Josuarda had passed some five months earlier. Unlike the terms in Joseph's penultimate will, Mario was now to be explicitly excluded. The August 2011 telephone call and subsequent VRO events had recently occurred Advice was also obtained at this time from Mr Levitan concerning a possible disposition of 86 Second Avenue during Joseph's lifetime to Carmen and Tony.
Next, on 5 September 2011, Joseph attended for a consultation with Dr Sciberras, his general medical practitioner, to obtain evidence about his mental capacity. After running the standard tests for a dementia diagnosis, Dr Sciberras prepared a letter confirming he was then satisfied that Joseph did not suffer from cognitive impairment: see affidavit of Dr Sciberras, Annexure AVS1.
On 13 September 2011, Tony telephoned Mr Levitan advising him on his father's behalf that a transfer of 86 Second Avenue to Carmen and to himself by Joseph, was not being proceeded with at that stage.
According to the trial evidence of Carmen and Tony, at this time they had told their father that he needed to take time to think about what Joseph had then been proposing to them as a proposed inter vivos (during Joseph's life) transfer of the 86 Second Avenue property to them. Both Carmen and Tony say that. I am cautious about that evidence since it is not independently corroborated and is somewhat self‑serving. But, in the end, I accept it.
On 19 September 2011, Dr Sciberras elaborated concerning Joseph's mental capacity (affidavit of Dr Sciberras, Annexure AVS2), saying this:
He is capable both cognitively and emotionally in deciding his own will. He is fully capable of signing an enduring power of attorney.
On 20 September 2011, Joseph executed what was his final will and testament prepared by Mr Levitan (Joseph's final will). He again nominated as his executors Tony and Carmen (as he had done in his penultimate will). Joseph's residuary beneficiaries were now nominated to be Georgina, Carmen and Tony, in equal shares. Mario's exclusion as a residuary beneficiary was made clear in two explicit clauses of Joseph's final will
The clauses in Joseph's final will concerning Mario read in rather cold and cruel terms as follows:
4.I have not included my son MARIO GEORGE GALEA in this my Will as he assaulted me approximately eighteen (18) months ago and recently in August 2011 when he refused to return my late wife's jewellery and our money which his wife Karen had stolen from us, Mario threatened to kill me and as a result I took out a Violence Restraining Order Number MH332/11 against him at the Mandurah Magistrates Court to protect myself.
5.I have loaned my son MARIO GEORGE GALEA Forty Thousand Dollars ($40,000.00) which we agreed he would repay to me. He has only paid Five Thousand Dollars ($5,000.00) in or about April 2009 and I require that he repays the sum of Thirty Five thousand Dollars ($35,000.00) to my Estate as his behaviour did not justify me in releasing him from the debt.
I should point out here that, notwithstanding what Joseph wrote, there is no evidence to support the allegations of theft against Mario or his wife Karen. I deal with Mario's evidence discretely later in the reasons.
2012 - 2013
In February 2012, Joseph transferred the title for his 86 Second Avenue, Bassendean property to Carmen and Tony. No money changed hands. The transfer was expressed by Joseph to be for 'natural love and affection'. However, Joseph expressly retained a life interest in the property for himself. The disposition was a gift of his property at Bassendean from Joseph to Carmen and Tony, subject to Joseph's retained life interest. Later, Joseph even reimbursed Carmen for stamp duty she had initially outlaid upon that transfer conveyance for it to proceed to registration.
On 24 February 2012, registration of the transfer of 86 Second Avenue to Tony and Carmen was perfected. The recorded stamp duty on the transfer would indicate the then assessment of the value of the land being transferred to Tony and Carmen had a dutiable value of $515,000 (see exhibit 1.21, page 63).
Mr Levitan had also commenced a general procedure claim out of the Perth Magistrates Court, number 3231 of 2012, on behalf of Joseph against Mario, on 23 February 2012. The claim filed sought repayment of a loan in the amount of $35,000. Mr Levitan had sent a letter of demand to Mario on Joseph's behalf on 16 November 2011 to that effect (see exhibit 1.45, page 874). Mario disputed the claim and declined this demand. Then he resisted the action – denying any debt to his father.
On 17 July 2012, the Perth Magistrates Court action by Joseph against Mario was discontinued on Joseph's behalf by Mr Levitan.
By contrast to the tumult of the prior two years, 2013 appears to have been relatively peaceful in the Galea family.
On 5 January 2013, Joseph had visited his new granddaughter Rachael, Tony's daughter, born the previous day at the Peel Hospital in Mandurah.
On 27 June 2013, Dr Sciberras had unconditionally certified Joseph as (still) fit to drive. During the middle of that year, in approximately June‑July, Joseph was taken to visit at the Maltese Association by Carmen, a place he had visited more frequently in the years before Josuarda became unwell.
Around September 2013, arrangements were made by Tony with Telstra on behalf of Joseph for Joseph's home telephone number to be changed. As related by Tony, this was after Joseph had complained to him about receiving harassing or nuisance phone calls (not, I infer, from the family). So much may be accepted. But the consequence of the change appears to have been that neither Carmen nor Tony, who knew of Joseph's changed phone number arrangements, thought it necessary or appropriate to pass on their father's new landline telephone number to their older siblings, Mario and Georgina. That I find very curious. The consequence was that Georgina could not reach her father over a now disconnected former telephone landline number. Georgina does not say that she took any physical steps to visit the family home at 86 Second Avenue or to try and ascertain her father's new telephone number, or to ask Tony or Carmen about it. Sadly, the 2011 $11,000 cash incident with her father as related, seems to have led to an almost complete cessation of contact as between them.
In November 2013, Joseph obtained some legal advice from Brook Legal. At this time, he signed a second enduring power of attorney given to Carmen and to Tony.
Sale of the Moat Street property
In 2014, the four Galea siblings had eventually agreed that the Moat Street property held in their names should be sold. In the end, it was sold for $300,000. A settlement was effected on 17 March 2014.
Concerning the proceeds of the sale of the Moat Street property, the four siblings as the joint owners were each legally then entitled to a quarter share of the net proceeds of sale, being $73,652.52 each. I turn to discuss further the proceeds of this sale later in these reasons. For now, however, it is sufficient to see that Mario relinquished all his quarter share of the proceeds to his father. Out of her share of some $73,652.52, Georgina relinquished $25,000 - on the basis it be received by her father and on the basis she understood then that her other siblings would also relinquish $25,000 to him.
On a basis of all of Mario's full share plus $25,000 each from Carmen, Tony and Georgina, an amount of $148,635.52 was eventually paid into Joseph's ANZ bank account (the ANZ account). That I find came about with the knowledge and consent of all siblings at the time.
However, shortly after that, on 25 March 2014, Carmen and Tony each received from Joseph's bank account amounts of $25,000 each. Carmen received a bank cheque drawn on Joseph's ANZ account in the amount of $25,000 (see exhibit 10). Tony received a transfer of that amount made directly into his bank account.
Neither Joseph, nor Carmen or Tony told Mario or Georgina about these $25,000 payments from Joseph at this time or at all.
Eventually, residual funds in Joseph's ANZ account were transferred over to his Westpac account, some $98,000 or thereabouts. Of course a lump sum of cash in that amount posed a problem then of possibly impacting negatively against Joseph's pension. From Joseph's Westpac account they were largely withdrawn by Joseph in cash amounts after March 2014 over a period between June 2014 and July 2015.
Joseph's declining health
Towards the end of 2014, Joseph was referred by Dr Sciberras to Dr Ferguson, a medical oncologist at Royal Perth Hospital.
On 2 December 2014, Dr Ferguson provided a medical report on Joseph's condition (see exhibit 1.44, pages 745 ‑ 746). The report diagnosed Joseph with metastatic prostate cancer and superficial bladder cancer.
Over the following months, Joseph attended various appointments with specialists regarding his diagnosis. It would appear that Carmen accompanied him to most if not all of these appointments.
Joseph remained both active and ambulatory spending time in his beloved shed and garden at 86 Second Avenue. He shopped, cleaned and cooked for himself every day after Josuarda passed in 2011.
On 26 May 2015, Dr Sciberras once again unconditionally certified Joseph as fit to drive (see exhibit 1.44 pages 736 ‑ 737).
However, on 6 August 2015, Dr Sciberras noted a 'deterioration cognition, inable [sic] to do clock drawing; depressed and will need ACAT Assessment'. By his unchallenged affidavit at par 18, Dr Sciberras explains the clock drawing exercise (where the patient is to place the numbers in the correct spaces of a clock) as a test used to assess early cognitive failure.
On 9 August 2015, (as he did most days after Josuarda passed in 2011) Joseph drove himself to early morning Mass held at Good Shepherd Catholic Church in Lockridge. This would be for the last time. Later Joseph drove to Carmen's house in Bassendean for dinner. During the day he visited friends Felix and Rita Calleja at Regis Aged Care in Embleton in the company of Carmen.
On 10 August, Joseph again attended Dr Sciberras who now noted that Joseph 'had worsened' (exhibit 1.44, page 672).
Joseph was duly admitted to Sir Charles Gairdner Hospital on 11 August 2015. He was transferred to the Swan District Hospital on 2 September 2015.
Joseph's condition deteriorated on 8 September 2015. Surprisingly, that was when Tony had, for the first time, called Georgina and Mario to advise them their father was unwell and in hospital.
On 10 September 2015, Joseph died.
Joseph's funeral was held on 16 September 2015 at Good Shepherd Catholic Church.
On 13 September 2016, probate on Joseph's final will as made in 2011 was granted with Tony and Carmen as his executors.
On 21 March 2017, this action was commenced by Georgina by a writ of summons.
Contested evidence
I now turn to address some of the more contested evidenced in the action.
Mario's evidence
As foreshadowed earlier, Mario provided his evidence‑in‑chief under affidavit. He was rather briefly cross-examined. On the whole I assessed Mario to be a reliable and financially dispassionate witness in this trial.
I accept Mario's evidence that, at the time he purchased a new home for himself and his wife in Falcon (Mandurah), his father had offered to lend him $35,000 in cash without interest. Mario had accepted the cash loan from his father in around April 1993. But I also accept Mario's evidence that he had repaid this cash loan to his father in full over the course of the next three years (see Mario's affidavit, pars 188 - 199).
As regards the 2008 'lost comb' incident, I accept Mario's evidence concerning the incident with his father over the trivial loss at the time of Josuarda's comb (see Mario's affidavit, pars 240 - 252). As Mario related at par 276 of his affidavit:
This incident changed things between Dad and I.
That position, I think, is firmly established as regards a deteriorating relationship between Mario and his father from that point onward.
Next, I turn to the August 2011 telephone call incident and the VRO. Other than the fact that the phone call from his father on 25 August 2011 was closer to being made at 5.00 am than 4.00 am and that Mario may have initially been mistaken as to the date of the call, I fully accept Mario's version of what occurred as between himself and his father as related by Mario at pars 339 - 352 of his affidavit.
An early morning phone call of this kind from his father accusing Mario's wife of stealing Josuarda's jewellery and accusing Mario of stealing Joseph's cash (par 346) would surely have been a somewhat unexpected and unnerving wake-up call to Mario that day. I accept that Mario responded rather unsurprisingly in strong terms to his father, suggesting that he would not be responsible for what happened if his father 'came over' (see par 351). Whilst this was a strong and imperfect reaction, in the circumstances, I assess it as provoked and explicable. As I said earlier, there is no evidence at all in this trial to support anything along the lines of Joseph's highly pejorative accusations of theft made out of the blue over the telephone that morning concerning Mario's wife Karen and against Mario himself.
I also accept that Mario, after he cooled down later, soon came to regret his words with his father. Whilst this was also a relatively minor incident within a family as between father and son, it appears to have been the 'straw' that 'broke the camel's back' in terms of the relationship. The incident is directly proximate to clauses within Joseph's final will, made about a month later, which expressly excluded Mario from any share in Joseph's estate.
I also accept Mario's evidence to the effect that he did not contest the 2011 ex parte VRO obtained by his father. I accept that Mario did not want to exacerbate the unfortunate situation after he had been served by the Police with the ex parte VRO that Tony had assisted his father in getting from the Mandurah Magistrates Court.
But Mario's evidence does not assist me towards Georgina's arguments seeking to prove that a large reserve of cash was kept Joseph at 86 Second Avenue in the period at or shortly prior to his death in 2015, which issue I will address later in the reasons. Events concerning Mario's repaid loan of $35,000 are simply too distant to draw any reliable conclusions concerning the alleged existence of a cache of cash possessed by Joseph at 86 Second Avenue some 20 years later.
At pars 409 ‑ 412 of his affidavit, Mario makes reference to the issue of a little black book kept by Joseph over time saying:
Dad had spoken to me about this little black book on many occasions.
Dad said words to the effect that 'I have a book that keeps a record of who I lend money to and record as they pay it back'.
I never saw the book.
Dad did not keep the book a secret. It was openly spoken about.
I accept that evidence. But again, it does not of itself assist in proving the existence of that book in 2015 when Joseph passed away. Anything could have happened to it over time.
Janet Scott Leon's evidence
Ms Leon swore affidavit tendered by the defendants (exhibit 14). She was not required for cross-examination.
Ms Leon worked for Strand Settlements in 2012. Strand Settlements assisted Joseph with the transfer of 86 Second Avenue to Carmen and Tony at that time.
Ms Leon described, in her affidavit, a statutory declaration dated 1 February 2012 which Joseph signed at the time when he transferred away 86 Second Avenue. Ms Leon related that she had taken Joseph's statutory declaration, found as CB 10 to Carmen's 2017 affidavit. Joseph's statutory declaration at this time read:
STATUTORY DECLARATION
I, Joesph [sic] Galea formerly of 33 Seventh Avenue Bassendean and now of 86 Second Avenue Bassendean WA, Retired
Sincerely declare as follows ‑
1.I am the sole registered proprietor of the land described as Lot 5 on Plan 1785 Volume 1129 Folio 734.
2.I am the sole remaining parent of Tuanie Paul Galea of [redacted] Lakes Road Parklands WA and Carmen Byrne [redacted] Anzac Terrace Bassendean WA (my two youngest children) and it is my decision to transfer the property into their names as Tenants in Common in Equal Shares for Natural Love and Affection. No money will be changing hands.
3.I am of sound mind and attach documents from my doctor stating the same.
4.This agreement has been made conditional upon myself, Joseph Galea, remaining in occupation of the property described as Lot 5 on Plan 1785 Volume 1129 Folio 734 rent free for all of the days of my life or until I decide to relinquish the tenancy of the said property.
Ms Leon's evidence generally addresses the high standards of care taken by her at the time to ensure a person in the position of Joseph was, in transferring a property, acting with both capacity and acting free from external influence such as family pressure. I accept this unchallenged evidence, albeit general in nature, as regards her practices. It suggests that in transferring 86 Second Avenue to Carmen and Tony in February 2012, Joseph was then acting both competently and freely of his own volition.
Melvyn Levitan's evidence
Mr Levitan was not available to participate by cross-examination in the trial.
Broadly speaking, affidavit evidence adduced for the defendants, was to the effect that Mr Levitan, since swearing his affidavit, had fully retired from legal practice and had relocated to live with one or other of his children in Israel.
[Sentence redacted from published reasons]. For that reason, I redact in the formally published reasons the preceding sentence concerning Mr Levitan's health condition. That sentence remains, however, in the formal record of reasons and as provided to the parties in the reasons kept as the court's official record.
Over objection by the plaintiff, I admitted into evidence the statements from within Mr Levitan's affidavit pursuant to s 79C of the Evidence Act 1906 (WA). Their weight is of course another matter, given the absence of any opportunity to cross-examine Mr Levitan.
Not only was Mr Levitan's affidavit ultimately received, also received were four documentary client files of Mr Levitan which were marked for identification. The files included a copy of Joseph's penultimate will made in January 2011, prior to the passing of Josuarda. There was a separate file in relation to Joseph's final will of September 2011. A further file covered the proceedings as commenced by Joseph claiming money against Mario out of the Perth Magistrates Court. There had been a pre‑trial conference in the Perth Magistrates Court. Ultimately, the file record shows the civil proceedings against Mario were discontinued.
Mr Levitan's affidavit became exhibit 18. Set out below are pars 4, 5, 7, 8, 10 - 15 from that affidavit:
4.Annexed and marked ML2 is a true copy of a further memorandum in my handwriting dated 2 September 2011, timed between 10.30 am and 11 am, and that conference was with Joseph Galea alone. I advised Joseph Galea about the transfer of his property in Bassendean to his two children Tony Galea and Carmen Byrne, for the reasons stated therein. There is a further note on the same memorandum that Tony Galea telephoned me on 13 September 2011 and indicated to me that the transfer was not being proceeded with at that stage.
5.I have known Joseph Galea for more than 6 years, and he first instructed me on 8 December 2010.
…
7.Annexed hereto and marked ML4 is a true copy of the Will of the late Joseph Galea dated 20 September 2011, as probated on 13 September 2016. Prior to finalising that Will, I received a copy of a report authored by Dr Anthony Sciberras dated 5 September 2011 relating to the capacity of Joseph Galea to make a Will. A true copy of that report is annexed hereto and marked ML5.
8.Joseph Galea paid the bill of $334.40 being the bill for the superseded Will and Enduring Power of Attorney and which bill was addressed to Mr Joseph Galea and dated 25 January 2011. A true copy of the bill with receipt is annexed and marked ML6. At that time I also provided independent legal advice to Joseph Galea relating to those documents.
…
10.At all material times, I was instructed by Joseph Galea, and not by his children. At all material times, neither of Tony Galea nor Carmen Byrne influenced me at any time in relation to my advice to my client Joseph Galea.
11.At no time did I hear any conversations, nor see anything, that would draw me to the conclusion that Tony Galea and/or Carmen Byrne were influencing their father in any way. I recall that Joseph Galea had very clear instructions to me as to why he wanted his two children Tony Galea and Carmen Byrne to receive the Bassendean property by way of gift, and I refer to my memo annexed hereto and marked ML2.
12.During the time that I knew Joseph Galea, I did not consider him to be physically enfeebled - in fact I considered him to be a very robust man in his late 70s: he interacted with me as a normal client would.
13.I did not detect any memory loss in Joseph Galea during my conversations with him, which conversations were lucid, and easily understood by both of us. I considered him to be fluent in English, even though his first language was Maltese. I did not consider at any time that he had any difficulty comprehending my advice to him, and I had no reason to question that he was finding it difficult to comprehend the English language, written and oral.
14.As to his emotional state, I am of the view that he was missing his late wife very much, and was grieving his loss, but I did not consider him to be emotionally fragile at any time.
15.My files indicate that Joseph Galea issued proceedings against his son Mario in the Perth Magistrates Court on 23 February 2012 under Case number 3231/12 for $35,000 being the balance of $40,000 loaned by him to Mario. He again demonstrated his independence in terms of his thinking, given that he had stated to me that Mario's wife had taken jewellery from him without his consent that had belonged to Joseph Galea's wife.
Cautious as I am about accepting evidence in circumstances where Mr Levitan was not available for cross-examination, I accept this sworn evidence from a legal practitioner, now retired, as reliable.
Annexure ML2 to Mr Levitan's affidavit is his file note concerning his conference with Joseph on 2 September 2011. Even at that time, in reference to the 86 Second Avenue property, Mr Levitan's contemporaneous longhand note reads revealingly as to Joseph's future intentions as regards the Bassendean property:
Joe wants to give a gift to Tony & Carmen.
Advised Joe will pay the Stamp Duty and he does not want it to be in his Estate.
His daughter Georgina did not help Joe & his wife & ignored them. It was left to Tony & Carmen to help them & look after them.
Stamp duty = 12,000
Landgate fee 180
Mr Levitan's subsequent handwritten file note of 5 September 2011 records a telephone conversation with Tony. On 13 September 2011, Mr Levitan's longhand records read (referencing, I would assess, another conversation with Tony concerning a possible transfer of 86 Second Avenue by Joseph): 'not being proceeded with at this stage'.
Ultimately, Mr Levitan's evidence and records provide both reliable and independent insights towards Joseph's mindset in 2011 when making various decisions relevant to the subject matter of this litigation.
The evidence of Dr Anthony Sciberras
As Dr Sciberras was also not required for cross‑examination by the plaintiff at the trial, his evidence stands uncontradicted.
This I assess was most powerful evidence from someone else with a Maltese speaking and cultural expatriate background who knew Joseph professionally from 1977 as his general practitioner. Dr Sciberras' letter of 19 September 2011, appended as AVS2 to his affidavit, elaborates further on his confidence in Joseph's mental capacity, making particular reference to Joseph's ability to know his own will and to enter a power of attorney. As part of this handwritten document, Dr Sciberras then wrote concerning Joseph:
He is capable both cognitively and emotionally in deciding his own will. He is fully capable of signing an enduring power of attorney.
Sylvia Ashcroft's evidence
Sylvia Ashcroft was called by the defendants. She related that she and her 'Uncle Joe' remained close, even after her aunt (Josuarda) had died. She related that Joseph attended her father's funeral and his wake in September 2014. Ms Ashcroft's late father was Paul Borg, who had been married to Helen Borg (nee Dimech), Josuarda's sister.
Ms Ashcroft recalls visits to her 'Uncle Joe' at Bassendean in the period after the passing of her aunt. On one occasion she had expressed her admiration to him of the beautiful state of his garden and his work concerning his lawn, flowers and even the state of his shed - which she said he loved. She also relates in fond terms (understandably) their mutual watching of the highlights of a West Coast Eagles game with her uncle at this time and how they talked together about the football team at the time.
Ms Ashcroft also spoke about 'really good' conversations she had with her uncle when they saw each other and that she was (par 29 of her affidavit):
... confident that he wasn't suffering memory loss or confusion because he would ask about people by name and he recalled previous conversations.
Relevantly, she also said this at par 35:
Joe talked about Georgina and Mario and told me he was heartbroken over what had happened. He blamed Karen (Mario's wife) and was adamant that she had stolen jewellery that belonged to Aunty Josuarda. He told me that Georgina and Dave owed him money, and that they said they had paid it back but he was sure they hadn't. He said that if they had paid it back there would be proof. He also told me he was sad that they didn't call or visit him.
As part of the substance of her further evidence at trial, Ms Ashcroft recalled a conversation she had with Joseph at least a year after Josuarda's death. There was no objection to this further evidence being received (ts 474). Counsel for the defendants had the following interaction with Ms Ashcroft:
Mrs Ashcroft, did you ever have a conversation with Joe Galea about the transfer of his house at 86 Second Avenue, Bassendean?---Yes.
Can you tell his Honour about that conversation? Can you tell his Honour where it was?---Yes. It was at Good Shepherd Church in the columbarium where my parents have got a plaque there, and his - my aunty has a plaque - his wife - there.
… ---And I would see him there sometimes after 8 o'clock mass on a Sunday. And after we've seen - I've seen my parents and he has seen his wife, then we would have a talk. He would ask me how I was, how my family was. This particular day he said to me - I said to him, 'How are you?' and he said, 'Not that great', he said, 'But I'm really sad', he said, 'but I've made a decision', and I went, 'Oh', and he said, 'I've decided that I'm going to change my house'. And I asked, 'What do you mean?' He goes, 'I'm putting my house - I'm changing it. I'm transferring it over to Carmon [sic] and Tony. I've already seen a lawyer'. He said, 'It's what I want to do.' He said, 'Because without them, I don't know what I would do'. And he said to me, 'Carmen has told me that she doesn't want me to do it because she doesn't want to upset anybody'. He said, 'But it's my decision, and that's what I want to do, and I feel better about it.' And then we went on to talk about a lot of other different things, but that's what he said to me.
And how long before he died did you have that conversation with him?‑‑‑Well over - - -
Roughly. Roughly?---Well over 12 months.
This evidence, which I fully accept as reliable, tells strongly against all suggestions that Joseph's decision to transfer 86 Second Avenue during his lifetime to Carmen and Tony was anything other than his own decision freely and rationally made and without any undue influence from Carmen or Tony.
Having now dealt with the evidence in this matter, I return to discuss Georgina's legal claims.
Georgina's derivative action against Carmen and Tony
Georgina's action does not pursue a personal cause of action of her own against her two younger siblings. Rather, it is in the nature of a derivative action ‑ which Georgina seeks to run, essentially on behalf of Joseph's estate as against them.
As mentioned, the named executors of Joseph's estate by his final will are Carmen and Tony.
The derivative action Georgina seeks to advance, on behalf of Joseph's estate, argues first, that in the period after Josuarda's death, ie, after April 2011, her father was subjected to undue influence which reached a level of Joseph's free will being overborne by reason of the conduct of Carmen and Tony. Second, Georgina argues Joseph's estate lost as assets both 86 Second Avenue and large amounts (unspecified as to amount) of Joseph's cash - all by reason of the alleged unconscionable conduct perpetrated by Carmen and Tony as against their father.
A further and alternative amended claim emerging late at trial was advanced by the RSSC. This is the late claim that 86 Second Avenue is to be assessed as held by Carmen and Tony on trust for Joseph's estate. This late claim is said to have occurred under circumstances I will later explain.
Georgina's action is unusual, in that the executors of Joseph's estate, Carmen and Tony, have not brought litigation for Joseph's estate to pursue the causes of action Georgina now seeks to run for it. That would essentially see Carmen and Tony bringing the action against themselves. They would have a conflict of interest in doing so. However, both Carmen and Tony strongly repudiate any suggestions of undue influence or of misconduct on their parts as regards their father, his assets and his estate.
So it is then that Georgina effectively seeks to establish a legal threshold of showing exceptional circumstances in order to advance this derivative type claim against her two younger siblings. The irony of Georgina's claim is that her standing to bring a derivative action as plaintiff is grounded on her holding a one-third equal share residual beneficiary interest under the terms of her late father's valid final will of September 2011. Ordinarily, a self‑sufficient adult child has no reasonable basis to expect that anything at all would be left to them by their parents' estates. Subject to statute law, a person with capacity can leave, or give away their own property to whoever they choose as they choose.
Consequently, by her advancing of these present claims Georgina implicitly seems to accept that her father held full and free capacity to make the valid residuary disposition to her in September 2011, as he did by his final will. Her standing arises from that residual interest to her under his will.
The essence of Georgina's derivative action argument is that, after September 2011 up to the period just prior to his death in September 2015, Joseph was improperly prevailed upon by Carmen and Tony, pressuring Joseph over that period to essentially divest himself of his most valuable property and assets. The lifetime divestiture of 86 Second Avenue by Joseph has led to a situation whereby at the time of Joseph's death, the worth of his estate was only minimal, essentially he left financial assets of around $15,000. Consequently, the worth of Georgina's one‑third residuary interest in Joseph's estate works out at essentially, one‑third of 'not very much'. Her one third residuary interest would have been worth substantially more, but for the pre‑death divestments of assets to Carmen and Tony, which her derivative action now seeks to claw back for Joseph's estate.
This court is, of course, well familiar on an almost daily basis with situations under which disappointed surviving family members bring actions under the Family Provision Act1972 (WA) to challenge dispositions under a deceased relative's will, as being essentially inadequate for their maintenance, care or advancement in life: see, for instance, the Court of Appeal's decision in Lemon vMead [2017] WASCA 215. This is not one of those actions.
So also is this court routinely presented with testamentary situations under which there is a challenge made against a will's validity - by reason of the questioned testamentary capacity of a testator or testatrix at the time they make their will in order to upset the validity of their dispositions by their will: see, for example, West v Smith [2018] WASC 12. This again is not one of those cases challenging the validity of a will.
Here, the situation is unique. It is one where a named beneficiary of an estate (who as things stand, may receive only 'peanuts'), seeks to recapture assets and property for the estate ‑ which assets were given away during the life of the testator.
The unique legal challenge of Georgina is made on a basis of alleged undue influence against Joseph during his life and also, that those assets and property disbursed are now held on a trust for the estate.
If the assets and property can be recaptured, not only would that make the potential worth of Georgina's one‑third residuary share under Joseph's final will more valuable, it would, of course, necessarily also do the same for Carmen and Tony's one‑third residuary shares.
Derivative actions of this kind were once rare but are being increasingly encountered by courts these days. In order to pursue such an action, it is necessary that a plaintiff such as Georgina establish that 'exceptional' or 'special' circumstances exist. That is the first legal threshold question to be addressed.
Georgina's standing to bring the action
First, I address whether Georgina has a sufficient standing to bring such a derivative action which is directly put in issue in this trial by the defendants' pleading.
Legal principles
The standing of Georgina to pursue these proceedings is heavily contested.
The basis upon which Georgina asserts her standing, is to first invoke legal principles discussed by Powell J in Ramage v Waclaw (1988) 12 NSWLR 84.
In Ramage, after an extensive discussion of old chancery practice texts, including Smith's Chancery Practice (1857) and Daniell's Chancery Practice (5th ed, 1871) at pages 90 ‑ 91, Powell J canvassed a selection of the leading case authorities in the area, including observations by Sir W M James LJ in Sharpe v San Paulo Railway Co (1873) LR 8 Ch App 597.
Ultimately, Powell J endorsed and applied the observations as then found in Jacob's Law of Trusts in Australia (4th ed, 1977) at page 531 (cited by his Honour at page 91). The cited passage from Jacob's stated that it needed to be established before a beneficiary could sue in their own name, that relief was sought only in the equitable jurisdiction of the court and, further, only where circumstances were 'exceptional'. The cited passage then read:
If [the circumstances] are not exceptional, or if the proposed action is to be commenced in the common law jurisdiction, the beneficiary's remedy is to sue the trustee for the execution of the trust and then to apply for the appointment of a receiver and for leave to sue in the name of the trustee or of the receiver.
At page 91 of Ramage Powell J had observed by reference to his earlier citation of the chancery practice authorities that:
Although it would appear that, in the early stages, the only circumstances which might be regarded as 'exceptional', or 'special', were collusion between the trustee and the debtor, or insolvency of the trustee, a consideration of the authorities will, I believe, demonstrate that 'exceptional', or 'special', circumstances are not now to be regarded as limited to such categories of case. (my emphasis)
Powell J duly discussed a number of further case authorities, including Consett v Bell (1842) 1 Y & CCC 569; Travis v Milne;Milne v Milne (1851) 9 Hare 141; 68 ER 449; Stainton v Carron Co (1854) 18 Beav 146; 52 ER 58; and Yeatman v Yeatman (1877) 7 Ch D 210. His Honour also referred to a decision of the Vice-Chancellor of Ireland, Hilliard v Eiffe (1874) LR 7 HL 39 at 44(n), where, in reference to a permitted exception to sue under 'vaguely termed "special circumstances"', the unnamed Vice-Chancellor had said:
The last exception seems to comprehend, and to be confined to, cases in which, from the nature of the assets or the position of the personal representative, it would be either impossible, or, at least, seriously inconvenient, for the representatives to take proceedings. In the present case, I am of opinion that, after what has occurred, there would be very great difficulty in the way of the executor with respect to, at least, that portion of the bill which seeks repayment of the moneys already paid, and that his conduct, though not amounting to an actual refusal, affords evidence of an unwillingness to embark in so serious a litigation, sufficiently to justify the Plaintiff in filing his bill against him and the other Defendants.
Powell J duly proceeded to identify, by reference to the underlying circumstances of that litigation, 13 discrete factors which he identified as contributing to his end conclusion there that special circumstances were indeed shown in the case before him.
Georgina's submissions
Given the standing of Georgina to bring the present action is strongly challenged, specific closing submissions on this discrete issue were provided under her written closing submissions of 14 February 2019. These submissions were aimed at sustaining Georgina's primary contention that special or exceptional circumstances are demonstrated presently by her towards her action.
Reliance was placed by Georgina's submissions upon some more recent observations by Tottle J in Woodley v Woodley [2018] WASC 333, where his Honour had discussed the legal criteria of special or exceptional circumstances, albeit upon facts underlying that decision ultimately concluding that that challenging beneficiary lacked a sufficient standing in all the circumstances.
Obviously, as regards the standing threshold, each case is different and needs to be evaluated by reference to its own particular circumstances. Here, a number of Georgina's contended special or exceptional circumstances present as being in heavy factual dispute from the defendants. From her written closing submissions, the assembled facts relied upon by Georgina to meet her standing threshold of showing exceptional or specific circumstances, are these:
9.The facts material to the issue of standing at the time the claim was brought include:
9.1as at 2012, the property at 86 Second Avenue comprised the Deceased's major asset; [ü]
9.2the proceeds from the sale of 22 Moat Street, received in March 2013, represented a significant cash asset of the Deceased's estate; [ü]
9.3at the time of the transactions the Deceased was advanced in age being almost 80 by the time Second Avenue was sold; [ü]
9.4at the time of the transactions the Deceased's health was not good, he was grieving the loss of his wife who had been chronically ill for some time and he had substantially withdrawn from family and become emotionally and physically dependant [sic] upon the second and third defendants;
9.5the transfer of both the Deceased's interest in 86 Second Avenue and the proceeds of sale of 22 Moat Street were procured by the second and third defendants by undue influence;
9.6there appeared to be a lack of independent legal advice concerning these transactions;
9.7the bulk of the costs and disbursements associated with the transfer of 86 Second Avenue was paid by the third defendant; [ü]
9.8the fact of the transfer of 86 Second Avenue was withheld from the plaintiff and her brother Mario; [ü]
9.9a prima facie case of undue influence, or the transfers being a fraud in equity;
9.10the plaintiff is a residuary beneficiary under the Deceased's will; [ü]
9.11the Executors declined to apply for probate or renounce their entitlement to obtain a grant of probate and declined to commence proceedings;
9.12unless the plaintiff is permitted to bring these proceedings, assets which would markedly increase the size of the Deceased's estate might be lost to the estate; [ü]
9.13the plaintiff seeks to recover property on behalf of the estate; [ü]
9.14one [sic two] of the persons from whom the plaintiff seeks to recover property on behalf of the estate is the second and third defendants in their personal capacities; [ü]
9.15all affected persons have been joined in the proceedings as parties; [ü] and
9.16the plaintiff is [amenable] to cost orders and bound to conduct the derivative suit at her own risk as to costs. [ü]
Facts 9.1, 9.2, 9.3, 9.7 (save that Carmen was later reimbursed by Joseph for the stamp duty she initially paid out), 9.8 (although 'not disclosed to Mario' would properly describe the position more neutrally), 9.10, 9.12, 9.13, 9.14 (corrected), 9.15 and 9.16 may all be accepted as being established at this trial. I have indicated to that end by the tick (√) seen at the end of each sub‑paragraph.
Particularly controversial as regards contested material trial facts are items 9.4, 9.5, 9.6, 9.9 and 9.11 (probate of the 2011 final will of Joseph was in fact obtained by Tony and Carmen). I elaborate on these observations in due course.
I pause at this point, however, to observe on the scale of and low ostensible economic worth of the present litigation.
The irrational economics of the present action by Georgina
The economic policy consideration of the cost of four days' contested litigation in the Supreme Court of Western Australia and the extensive legal preparation costs incurred across the two years beforehand leading to the trial, including extensive discovery and subpoenas issued to banks, telecommunications corporations, hospitals, legal practitioners and the like, all seem to have been dismissed as considerations concerning this action.
The significant asset the subject of the litigation is the house and land that was the Galea family home at 86 Second Avenue and which Joseph owned legally and beneficially from 1954 until February 2012. The value of the property in 2012 when assessed by the stamp duty value was only $515,000. There is no more precise financial evidence before me concerning the value of 86 Second Avenue. But if that figure is some indication of its value in 2019, then Georgina's potential one-third interest would only be in the order of approximately, say, $172,000 ($515,000 ÷ 3 = $171,666.66).
As regards a missing cash hoard of Joseph, being some of the withdrawn cash sale proceeds given to him from the settlement of the Moat Street property, in March 2014, the funds entering Joseph's ANZ account at the time were in the order of $148,000, or thereabouts. Of those proceeds $50,000 ($25,000 x 2) was received by Tony and Carmen respectively, before a residue of some $98,000 was transferred to Joseph's Westpac account. A one-third interest in $98,000, assuming that the cash had not been otherwise disposed of and had been kept by him to form part of a cash hoard for Joseph's estate, would amount to around $32,666 or $49,500 - if the calculation is done on one third of the $148,000 proceeds before deduction of the $50,000 received by Carmen and Tony.
Hence, Georgina's enhanced one-third residuary contingent interest in 86 Second Avenue and in some residual cash of Joseph, if notionally restored as assets to the estate, would indicate this litigation is only run over $172,000 plus $49,500 reaching $221,000 (approximately) by Georgina.
In my experience four trial days of intense litigation in the Supreme Court plus the costs of preparation over two years in the lead-up to a four-day trial would almost always work out at well in excess of that amount. In the end, there is likely here to be another fight over legal costs, irrespective of whoever succeeds and with the quantum of that second battle exceeding the worth of the very subject matter of the litigation. That eventuality, of course, is a commercial nonsense.
Those observations are not to deprecate what are no doubt seriously felt underlying family grievances afflicting the surviving members of the Galea family, all of whom profess to have loved their father and their mother very much.
But the harsh commercial reality of litigation is that disgruntled adult children litigating over assets of their deceased parents is a well recognised source of disharmony and family breakdown. Courts are necessarily familiar with, and do already resolve far too many cases arising between family members over claims challenging dispositions under a will pursuant to the Family Provision Act, or will challenges made against testamentary capacity.
Consequently, an expanding future horizon of even more litigation by disgruntled adult children over assets that were disposed of by their parents during the parents' lifetime needs to be closely monitored as a most unwelcome trend. More family litigation is a bad thing for society and for community harmony more generally. It brings discord and fragmentation that destroys families. In my view, the law is in need of some serious and urgent legislative reform here. In my view, it should be necessary, at least, for would be plaintiffs such as Georgina to first obtain permission of the court as a matter of merit before being able to proceed with a derivative action of the present kind.
A pragmatic difficulty well illustrated by the present circumstances is that essentially a full-blown four day trial needed to be run to its end in order to evaluate the merits or demerits of Georgina's base factual standing arguments, of which a lot are factually at issue. If her fact‑based arguments were ultimately sustained, then clearly, these executors would be seen as defending their own personal interests, and not the interests of the estate by not bringing the proceedings. Hence, the proper recourse on such assumed facts would be to allow Georgina to litigate for the estate. On the other hand, the key factual allegations on which Georgina renders these challenges against her younger siblings are serious charges. They are thoroughly disputed factually by Tony and Carmen. They need to be proved factually by Georgina at this trial.
In a context of weighing an application for leave to bring such a derivative action, if a reform is to be made, the overall economics of the mooted exercise must surely not be lost sight of, as regrettably they look to have been here.
I can finally proceed to evaluate the merit with the claims made against Tony and Carmen.
The claims against Tony and Carmen
Georgina initially bases her standing to bring the present action predicated upon her position as an equal one-third residuary beneficiary (along with Carmen and Tony) under Joseph's final will of September 2011.
It is next necessary to briefly examine legal principles concerning causes of action for undue influence and for unconscionable conduct.
In an equitable action grounded upon alleged undue influence, the legal spotlight is upon the person whose will is said to have been adversely affected such that it was effectively overborne - ie, hence the focus here is upon Joseph.
By contrast, for an equitable action predicated upon alleged unconscionable conduct, the legal spotlight is directed at the conduct of the stronger party or parties manifesting within the particular relationship under examination, where the stronger parties seek to enforce or retain a benefit of, or the results of, their dealing with a person suffering under a 'special disability'. In that sphere, it is necessary to focus upon the alleged conduct of Carmen and Tony as regards their late father - since within that particular relationship they are to be assessed as the potentially stronger parties. Moreover, it is necessary to establish that Joseph was under a 'relevant' special disability. The question asked is whether Joseph had capacity to make an independent judgment and, if so, then whether he was able to make a judgment to protect his own interests.
Undue influence
Legal principles
Fortunately, the law in this area was recently the subject of extensive consideration by the High Court of Australia in Thorne v Kennedy [2017] HCA 49; (2017) 350 ALR 1. That case concerned, in effect, the validity of a prenuptial agreement entered into as between a wealthy property developer (Mr Kennedy) and an East European woman some 30 years his junior (Ms Thorne). Ms Thorne owned no assets of financial value herself. She had relocated to Australia to marry her much older fiancé. Clearly, the present underlying facts here are entirely different to those in Thorne v Kennedy. But key principles concerning undue influence and unconscionable conduct were helpfully reconsidered and restated by the plurality justices Kiefel CJ, Bell, Gageler, Keane, & Edelman JJ.
Concerning undue influence, their Honours said this at [30] ‑ [32]:
In Allcard, Lindley LJ said that 'no Court has ever attempted to define undue influence'. One reason for the difficulty of defining undue influence is that the label 'undue influence' has been used to mean different things. It has been used to include abuse of confidence, misrepresentation, and the pressure which amounts to common law duress. Each of those concepts is better seen as distinct. Nevertheless, the boundaries, particularly between undue influence and duress, are blurred. One reason why there is no clear distinction is that undue influence can arise from widely different sources, one of which is excessive pressure. Importantly, however, since pressure is only one of the many sources for the influence that one person can have over another, it is not necessary that the pressure which contributes to a conclusion of undue influence be characterised as illegitimate or improper.
In 1836, … Story said that a person can be subjected to undue influence where the effect of factors such as pressure is that the person 'has no free will, but stands in vinculis [in chains]'. He explained that 'the constant rule in Equity is, that, where a party is not a free agent, and is not equal to protecting himself, the Court will protect him'. In 1866, this approach was applied in equity by the House of Lords, recognising undue influence in a case of pressure that deprived the plaintiff of 'free agency'. In 1868, in probate, Sir James Wilde also described undue influence as arising where a person is not a 'free agent'. In Johnson v Buttress, Dixon J described how undue influence could arise from the 'deliberate contrivance' of another (which naturally includes pressure) giving rise to such influence over the mind of the other that the act of the other is not a 'free act'. And, in Bank of New South Wales v Rogers, McTiernan J characterised the absence of undue influence as a 'free and well-understood act' and Williams J referred to 'the free exercise of the respondent's will'.
The question whether a person's act is 'free' requires consideration of the extent to which the person was constrained in assessing alternatives and deciding between them. Pressure can deprive a person of free choice in this sense where it causes the person substantially to subordinate his or her will to that of the other party. It is not necessary for a conclusion that a person's free will has been substantially subordinated to find that the party seeking relief was reduced entirely to an automaton or that the person became a 'mere channel through which the will of the defendant operated'. Questions of degree are involved. But, at the very least, the judgmental capacity of the party seeking relief must be 'markedly sub-standard' as a result of the effect upon the person's mind of the will of another.
Having seen what Mr Levitan would likely say at 8 June 2018, then even louder tolling bells should have surely indicated the critical need for some independent supporting countervailing platform of admissible evidence to sustain the twin causes of action. Yet there was nothing. Properly assessed across a three‑week period after 8 June 2018, the twin causes of action should surely have been evaluated by the plaintiff and her solicitors as, at best, highly vulnerable to an embarrassing future failure at a trial.
The plaintiff's five factors opposing indemnity costs
I return to the five factor summation as provided by the plaintiff under par 40 of her written costs submissions (referred to earlier at [70] of these reasons).
The first factor contended is that the offer was at a relatively early stage of the proceedings. I reject that contention. The plaintiff's action had been running for 15 months and there were then more than enough 'cards on the table' at 8 June 2018 from the defendants after the exchange of the defendants' summary judgment affidavits. The Master dismissed the application, but on the basis that the summary judgment threshold under the Rules of the Supreme Court 1971 (WA) O 16 required the plaintiff's case to be factually unarguable. In the circumstances, it was impossible for the Master to reach an assessment without in effect making final factual findings.
I reject the contention that the plaintiff did not then hold sufficient information about the defendants' case on which to decide whether or not to reject the 8 June 2018 Calderbank offer. But the real problem was her case and the evidence she did not hold then, or ever.
The second factor contended is that the 8 June 2018 Calderbank offer contained an 'unfair' term that was broader than needed. This contention is directed towards an allied condition that the plaintiff surrender as part of an overall settlement any rights to make a Family Provision Act claim against the estate. Given her age and her independently self‑supporting circumstances, the prospects of any successful Family Provision Act claim by the plaintiff against, at best, a relatively modest estate (to which she was named as an equal one-third residuary beneficiary), was not an unreasonable condition. To the contrary, it was a sensible requirement directed at finally ending more costly ongoing family litigation all round and stopping future legal costs haemorrhaging in a wholly uneconomic family squabble.
The third factor contended is that the quantitative (ie $50,000) amount of the compromise sum offered, was relatively low. Remembering that hindsight is not to be used, that submission by the plaintiff needs to be measured first against the scale of a plaintiff's best case assessment of her June 2018 of financial prospects, if successful at a trial. I discuss this in the primary reasons at [187], arriving at an estimate of $221,000. Assessed in that context, the plaintiff's economic claim, even if wholly successful at a future trial was economically modest to pursue at best.
I observe that $50,000 probably would not have covered the plaintiff's own legal costs at 8 June 2018 (if she carried that exposure). But even so, properly advised during the last three weeks of June 2018 and then assessed realistically against a background of a case then grounded on belief, rather than an admissible evidence, the accompanying terms to the parties' mutual costs walk-away proposal, the offer of $50,000 was then of objective value and attraction (in effect, the parties bearing their own incurred legal costs). The plaintiff might at least have backed down then, with a degree of partial vindication. That did not happen.
The fourth factor contended is the plaintiff's argument that this was a heavily factual case depending upon the ultimate factual findings of the trial judgment. That submission does not, in my view, engage against what was coherently put to the plaintiff on 8 June 2018 - as regards the substantive demerits at trial of her undue influence and unconscionable conduct causes of action, viewed at that time. At that time, the plaintiff after 15 months essentially had nothing of an evidentiary persuasive nature other than what appeared to be beliefs held on her side by members of her direct family. That position needed to be coolly and unemotively weighed against looming trial evidence from Mr Levitan as to the late Mr Galea's unimpaired cognitive capacity around the time he made his last will and after. Evidence from the settlement agent, Ms Leon, who transferred the Bassendean family home to the second and third defendants on the deceased's instructions, concerning her practices and the independence prerequisites that she required from someone seeking to transfer property in circumstances of the late Mr Galea, was also likely to be problematic for the plaintiff. None of that supported the plaintiff's twin causes of action.
Hypothetically, for instance, if the plaintiff's solicitors had obtained a statement from Dr Sciberras, as the late Mr Galea's long‑standing general practitioner, to gain at least some foothold of evidentiary support for their contentions as regards the late Mr Galea's cognitive impairment, emotional fragility, or some level of special vulnerability, then that might have been said to be a countervailing factor for the plaintiff to put against the present application.
But the plaintiff never held any evidence of that nature. Indeed, the medical evidence at the trial about the late Mr Galea from Dr Sciberras was overwhelmingly to the contrary and uncontested.
It is one thing for a plaintiff to hold a respectively arguable case predicated upon evidence that proves later to be discredited at a trial. It is quite another to not hold any independent supporting evidence and run a four‑day trial in the Supreme Court on belief or hope.
On my assessment, there was no point at which this plaintiff possessed some body of potentially persuasive independent evidence to support her twin causes of action. As I assess matters, this case should not have been started ‑ especially given the pre-requisite standing requirement of showing special or, exceptional circumstances for a derivative action. That requirement was 'bootstrapped', as I earlier explained.
The fifth factor contended against indemnity costs is that the issue over the plaintiff's standing to advance her derivative claim had not at the time of the offer been raised. Whilst that might be the case, it is not, at the end, determinative as regards the plaintiff's negative outcome at the trial. Establishing standing was always this plaintiff's responsibility, and no one else's. The plaintiff bootstrapped her derivative action position to a point at trial whereby her standing was grounded essentially on her self‑supporting assumption that she would necessarily make good factual contentions of serious misconduct against her siblings. That happened in circumstances where this plaintiff never held an independently admissible evidentiary platform of facts to reasonably support what she was using to contend for special or exceptional circumstances permitting the derivative action.
Conclusion
In all the circumstances, I am persuaded that the plaintiff's failure to accept the 8 June 2018 Calderbank offer as it was put then by the defendants was unreasonable conduct on the part of the plaintiff and her legal advisers (which is attributable to her) at that time.
In the circumstances, the orders sought by the defendants for indemnity costs after 8 June 2018 should follow. Consequently there will issue at the publication of these reasons costs orders in terms that:
The plaintiff is to pay:
(a)the defendants' costs of the action to 7 June 2018 to be taxed, if not agreed, and
(b)for the period from 8 June 2018, all of the defendants' costs except insofar as they are of an unreasonable amount or have been unreasonably incurred, so that subject to those exceptions the defendants are completely indemnified for their costs for this period.
SCHEDULE 1 (EWN2)
8 June 2018
...
Without prejudice save as to costs
Dear Sir,
RE: SHEPHARD v GALEA & ORS
Supreme Court CIV 1459 of 2017As you are aware, the matter has been provisionally listed for trial for three days commencing on 11 February 2019. Our respective clients are no doubt preparing the matter for trial and will be incurring significant legal fees in doing so. We note the first substantial milestone in that regard is the filing of affidavits by 27 July 2018, followed by the construction of the trial bundle by 5 October 2018. Your client's obligation to enter the matter for trial, and in doing so pay the hearing fees of approximately $4,500, also falls on 27 July 2018.
Undue influence claim
1.In the course of these proceedings you have asserted on several occasions that your client's undue influence claim regarding the transfer of the Bassendean Property is assisted by your client having the advantage of a legal presumption. We understand what you refer to is a presumption that the transfer was procured by reason of undue influence, arising by virtue of the relationship between the deceased Mr Galea as transferor and his children, the second and third defendants, as transferees. We understand that your client's case is to be put on the basis that the second and third defendants bear the onus of proving, on the balance of probabilities, that the transfer is not affected by undue influence.
2.As you are no doubt aware, we disagree with your analysis on this point and maintain that your client bears the onus of proving the there was actual undue influence which affected the transfer.
3.Enclosed is a copy of an article by Fiona Burns, Under Influence Inter Vivos and the Elderly, 26 Melb UL Rev 499 which canvasses the law in this area. We also point you to the more recently published O'Neill and Peisah Capacity and the In particular, the issues as to onus in an undue influence claim are discussed in chapter 3 and Ms Burns' article is extensively quoted. You will note that both these texts make it clear that the presumption of undue influence only operates, relevantly, when the transferor is the child and the transferee is the parent, the opposite to the relationship between the relevant parties to this transfer.
4.In light of these materials, we urge you to reconsider your view that your client has the benefit of a presumption.
5.Furthermore, none of the evidence we have seen, including nothing in the documents returned under the various subpoenas your client has issued, causes us to regard your client as likely to discharge her onus of proof. There is simply no basis at all in the evidence to suggest that there was actual undue influence.
6.It appears that the highest your client's evidence reaches is that in 2013 Tony Galea made enquiries with Telstra as to having a silent telephone number and that the deceased had an ANZ cheque account for which Tony Galea was a signatory. In respect to the former, you will note that the records also indicate that Tony was told he could not change his father's telephone number; the only person who could do so was his father and in fact the change was effected by Telstra contacting the deceased who was the account holder. As to the ANZ signatory, having the right to sign cheques is of no moment if the right was never utilised. We note that the ANZ subpoena did not return any cheques or other records which indicate Tony Galea ever operated the account.
Unconscionable conduct
7.The claim of unconscionability suffers from the same defects as the undue influence claim. Your client must prove that her father was vulnerable, in the legal sense, to a stronger party. Whilst the onus will shift to the defendants if your client is able to show that Mr Galea was vulnerable, there is no evidence at all that supports the assertion that he was vulnerable, so your client's case will fail at that hurdle.
8.The fact that your client had no contact with her father during the last 4 years of his life does not mean he was vulnerable, it means that she has no personal evidence on which she can rely to establish vulnerability. She is not assisted by the evidence of her brother Mario or her husband and son, the sum total of which is that none of those witnesses had any contact during the relevant period so can say nothing as to vulnerability. Assertions in a statement of claim do nothing to improve the paucity of the evidence your client has to rely on.
9.Furthermore, even if the court were to take the view that there is a scintilla of evidence of vulnerability, the fact that Mr Galea consulted Mr Levitan regarding the transaction as well as Ms Leon's evidence, the medical evidence at the time of the transaction and Mr Brook's file notes clearly demonstrates that Mr Galea entered into the transaction with full understanding, cognitive ability and consent.
10.Consequently, it is our view that your client simply cannot succeed in meeting the threshold necessary to reverse the onus, and even if she can, the independent evidence clearly establishes no unconscionability.
$200,000 cash alleged to be in the house
11.Your client pleads that the deceased had $200,000 as at August 2011, in a locked drawer at his home in Bassendean. As we understand your client's evidence, she has not been to her father's home since June 2011 and had apparently not entered the house since some date prior to that. She gives no evidence at all which could be the foundation for the plea in paragraph 25 of the statement of claim. None of the remaining evidence filed on your client's behalf, assuming it is admissible, provides a foundation for the plea.
12.Furthermore, if we assume that your client is ultimately able to prove that in August 2011 the deceased had $200,000 in cash in a locked drawer in his home, the proof of that does not advance your client's case to the point that the first defendants are liable to account for those funds; to do that you will need to prove that he had the funds at the time of his death in September 2015, over 4 years later.
13.You have seen the affidavits of the defendants in which both say they conducted a thorough search of the house and could not locate any sum of that nature, consequently there is no evidence that any significant sum of money existed in the house at the time of his death. There can be no accounting for funds which did not exist.
14.As your client should be well aware, Mr Galea was entitled during his life to spend his money as he chose. During his lifetime the deceased owed no obligation to account to your client, our clients or any other person for what he did with his money. In short, the defendants do not know and cannot account for their father's spending during his lifetime and nor are they obliged to account for him.
15.This part of your client's claim is bound to fail.
Moat Street
16.The claim for an account of the proceeds of sale of the Moat Street property in March 2014 must also fail. In summary:
(a)your client has sought an account of the proceeds, which she is not entitled to, but in any event, the proceeds of the sale have been fully accounted for in the affidavits filed by the defendants in these proceedings;
(b)the deceased was entitled to gift part of the proceeds he received from his children to our clients, or anyone else he chose, during his lifetime and was not liable to account to your client or any other person for that;
(c)the executors are not liable to account for an inter vivos gift of the deceased; and
(d)there is no pleaded basis for your client or the estate having any interest in the proceeds of the sale as they did not form part of the estate, having been part received by the deceased over 18 months prior to the deceased's death.
Offer
17.In light of these matters we are instructed to repeat the offer made in our letter of 16 February 2018, being:
(a)The sum of $50,000 be paid out of the estate (and/or from the second and third defendants' funds) to the plaintiff in settlement of all claims by your client against ours, and against the estate, to be paid within 7 days of settlement.
(b)All of the parties bear their own costs in relation to the various claims and any other litigation arising out of or in relation to the administration of the estate and all extant cost orders be discharged.
(c)All parties release and discharge each other and the executors of the estate from all or any claims that the parties made or may make in relation to or arising out of the death of their late father and the administration of his estate: that is, a mutual discharge and release.
(d)For the avoidance of doubt, your client expressly acknowledges that this settlement is in settlement of any potential claim your client might have had under the Family Provision Act, noting of course that the time for bringing any claim under that Act expired on 12 March 2017, probate having been issued on 13 September 2016.
(e)The parties sign all necessary consent orders and a deed to give effect to the settlement, which we will draw.
18.Please respond to this offer by 12 noon on Friday 29 June 2018.
19.This offer is made in accordance with the principles in Calderbank v Calderbank and our clients will produce this offer of settlement in the event that this litigation continues to trial and the claim by the plaintiff is unsuccessful, in which event our clients will seek an indemnity cost order against her.
Yours faithfully,
NIELSEN & CO.
SCHEDULE 2 (EWN1)
16 February 2018
...
Without prejudice save as to costs
Dear Sir,
RE:SHEPHARD v GALEA & ORS
Supreme Court CIV 1459 of 2017The present situation in respect to this matter is:
1.This matter has been the subject of a fully argued summary judgment application and two attempts at mediation.
2.In the course of the summary judgment application our clients filed numerous affidavits setting out the evidence on which they rely to demonstrate that their deceased father was not reliant on them in the manner you have pleaded, had not located any substantial amount of cash in the house at Second Avenue, Bassendean, and in which the proceeds from the sale of Moat Street during their father's lifetime were accounted for.
3.Your client filed various affidavits in the summary judgment application all of which demonstrated that she and her immediate family had no contact with her father for a number of years being the period in which you allege the deceased's will was overborne. It appears therefore your client had no actual evidence to support her case and will instead have to rely on inferences and cross-examination.
4.You will also have received the defence filed by our clients which pleads the matters which we relied on in the summary judgment application and the evidence filed to support that. Nothing in that defence should have come as a surprise to you or your client.
5.Our clients are now preparing to get the matter up for trial and will be incurring substantial legal fees in doing so.
6.As you are aware we have requested that the matter be entered into the CMC List as we seek to have it closely managed to a trial, hopefully in the second half of 2018.
In light of these matters we are instructed to make the following offer:
(a)The sum of $50,000 be paid out of the estate to the plaintiff in settlement of all claims by your client against ours, and against the estate, to be paid within 7 days of settlement.
(b)All of the parties bear their own costs in relation to the various claims and any other litigation arising out of or in relation to the administration of the estate and all extant cost orders be discharged.
(c)All parties release and discharge each other and the executors of the estate from all of the claims that the parties made or may make in relation to or arising out of the death of their late father and the administration of his estate: that is, a mutual discharge and release.
(d)For the avoidance of doubt, your client expressly acknowledges that this settlement is in settlement of any potential claim your client might have had under the Family Provision Act.
(e)The parties sign all necessary consent orders and a deed to give effect to the settlement.
Please respond to this offer by 12 noon on Friday 2 March 2018.
This offer is made in accordance with the principles in Calderbank v Calderbank and our clients will produce this offer of settlement in the event that this litigation continues to trial and the claim by the plaintiff is unsuccessful, in which event our clients will seek an indemnity cost order against her.
Yours faithfully,
NIELSEN & CO.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
JT
Research Associate to the Honourable Justice Martin
12 AUGUST 2019
- AGLC
- Shephard v Galea and Byrne as Executors and Trustees of the Estate of the late Joseph Galea [2019] WASC 164
- Case
- [2019] WASC 164
- Decision Date
CaseChat Overview and Summary
The central legal issues revolved around whether the daughter could successfully argue that the inter vivos transfer of the family home and land was obtained through undue influence or unconscionable conduct. The court was required to determine if the daughter had a valid claim to an equitable interest in the family home and land, given that she was left with only a one-third equal residuary bequest in an estate with negligible value after the inter vivos disposition.
In reaching its decision, the court examined the nature of the relationship between the deceased and the other beneficiaries, as well as the circumstances surrounding the inter vivos transfer. The court found that there was no evidence of undue influence or unconscionable conduct by the deceased or the executors. The court held that the transfer of the family home and land to the other children was a valid inter vivos disposition, and the daughter's claim for a derivative action against the estate was dismissed. The court determined that the daughter's claim to an equitable interest in the family home and land was without merit.
As a result of the court's decision, the daughter's challenge to the inter vivos disposition was unsuccessful. The court upheld the validity of the transfer of the family home and land to the other children, and no equitable interest was recognised for the daughter. The court dismissed the daughter's claim and made no orders in her favour.
Orders
Orders of the court
Full text does not contain this section.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
Full text does not contain this section.