Shephard v Tuanie Paul Galea as executor and trustee of the estate of the late Joseph Galea
[2020] WASCA 152
•11 SEPTEMBER 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: SHEPHARD -v- TUANIE PAUL GALEA as executor and trustee of the estate of THE LATE JOSEPH GALEA [2020] WASCA 152
CORAM: QUINLAN CJ
MURPHY JA
MITCHELL JA
HEARD: 12 AUGUST 2020
DELIVERED : 11 SEPTEMBER 2020
FILE NO/S: CACV 68 of 2019
BETWEEN: GEORGINA SHEPHARD
Appellant
AND
TUANIE PAUL GALEA as executor and trustee of the estate of THE LATE JOSEPH GALEA
CARMEN BYRNE as executor and trustee of the estate of THE LATE JOSEPH GALEA
First Respondents
TUANIE PAUL GALEA beneficiary of the estate OF THE LATE JOSEPH GALEA
Second Respondent
CARMEN BYRNE beneficiary of the estate OF THE LATE JOSEPH GALEA
Third Respondent
FILE NO/S: CACV 101 of 2019
BETWEEN: GEORGINA SHEPHARD
Appellant
AND
TUANIE PAUL GALEA as executor and trustee of the estate of THE LATE JOSEPH GALEA
CARMEN BYRNE as executor and trustee of the estate of THE LATE JOSEPH GALEA
First Respondents
TUANIE PAUL GALEA beneficiary of the estate OF THE LATE JOSEPH GALEA
Second Respondent
CARMEN BYRNE beneficiary of the estate OF THE LATE JOSEPH GALEA
Third Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: KENNETH MARTIN J
Citation: [2019] WASC 164
File Number : CIV 1459 of 2017
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: KENNETH MARTIN J
Citation: [2019] WASC 164 (S)
File Number : CIV 1459 of 2017
Catchwords:
Equity - Undue influence - Inter vivos gift of property from parent to two adult children - Parent's estate left with few assets as a result - Derivative action claimed on behalf of estate by an adult child who did not share in the inter vivos gift - Whether judge erred in not finding a relationship of presumed undue influence
Practice and procedure - Costs - Calderbank offer - Whether judge erred in finding that plaintiff unreasonably rejected a Calderbank offer
Legislation:
Nil
Result:
Appeals dismissed
Category: B
Representation:
CACV 68 of 2019
Counsel:
| Appellant | : | M D Cuerden SC |
| First Respondents | : | C H Thompson |
| Second Respondent | : | C H Thompson |
| Third Respondent | : | C H Thompson |
Solicitors:
| Appellant | : | Eastwood Law |
| First Respondents | : | Nielsen & Co |
| Second Respondent | : | Nielsen & Co |
| Third Respondent | : | Nielsen & Co |
CACV 101 of 2019
Counsel:
| Appellant | : | MD Cuerden SC |
| First Respondents | : | CH Thompson |
| Second Respondent | : | CH Thompson |
| Third Respondent | : | CH Thompson |
Solicitors:
| Appellant | : | Eastwood Law |
| First Respondents | : | Nielsen & Co |
| Second Respondent | : | Nielsen & Co |
| Third Respondent | : | Nielsen & Co |
Case(s) referred to in decision(s):
Allcard v Skinner (1887) 36 Ch D 145
Bank of New South Wales v Rogers (1941) 65 CLR 42
Bester v Perpetual Trustee Co Ltd [1970] 3 NSWR 30
Callaghan v Callaghan (1995) 64 SASR 396
Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353
Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447
Craig‑Bridges v NSW Trustee Guardian [2017] NSWCA 197
Dowsett v Reid [1912] HCA 75; (1912) 15 CLR 695
Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1
Goldsworthy v Brickell [1987] Ch 378
House v The King [1936] HCA 40; (1936) 55 CLR 499
Huguenin v Baseley (1807) 14 Ves 273; (1807) 33 ER 526
In re Coomber; Coomber v Coomber [1911] 1 Ch 723
Jenyns v Public Curator (Qld) [1954] HCA 2; (1954) 90 CLR 113
Johnson v Buttress (1936) 56 CLR 113
Joyce v Anderson [2020] WASCA 48
Kakavas v Crown Melbourne Ltd [2013] HCA 25; (2013) 250 CLR 392
Kerr v West Australian Trustee Executor Agency Co Ltd (1937) 39 WALR 34
Lee v Lee [2019] HCA 28; (2019) 266 CLR 129
Mercanti v Mercanti [2016] WASCA 206; (2016) 50 WAR 495
Mills v Mills [1938] HCA 4; (1938) 60 CLR 150
Nelson v Nelson (1994) 33 NSWLR 740
Permanent Mortgages Pty Ltd v Vandenbergh [2010] WASC 10; (2010) 41 WAR 353
Quek v Beggs (1990) 5 BPR [97405]
Shephard v Galea and Byrne as Executors and Trustees of the Estate of the late Joseph Galea [2019] WASC 164
Shephard v Galea and Byrne as Executors and Trustees of the Estate of the late Joseph Galea [2019] WASC 164 (S)
Smart v Power [2019] WASCA 106
Spong v Spong [1914] HCA 52; (1914) 18 CLR 544
Stivactas v Michaletos (No 2) (1993) NSW ConvR 55‑683
Strzelecki Holdings Pty Ltd v Jorgensen [2019] WASCA 96
Symons v Williams (1875) 1 VLR (E) 199
Thorne v Kennedy [2017] HCA 49; (2017) 350 ALR 1
Union Fidelity Trustee Co of Australia Ltd v Gibson [1971] VR 573
Whereat v Duff [1972] 2 NSWLR 147
Yerkey v Jones (1939) 63 CLR 649
Table of contents
Introduction
Background
1954 - 1977
1980s
Retirement 1991
2007 - Josuarda's illness
2008 - the 'comb' incident with Mario
Late 2010/early 2011 - Joseph's penultimate will
The siblings' relationships with their parents and Josuarda's death
The incident involving Georgina in June 2011
The incident with Mario in August 2011
Joseph's arrangements in September 2011
2012 - transfer of the Bassendean property
2012 - proceedings in Magistrates Court against Mario
Mr Levitan's evidence in relation to Joseph's instructions in 2011/2012
Ms Ashcroft's conversations with Joseph
2013
The sale of the Moat Street property in early 2014
Late 2014
2015
Georgina's claim in the primary proceedings
The derivative action
Undue influence
Unconscionable conduct
The judge's findings on undue influence and unconscionable conduct
Undue influence
Unconscionable conduct
Conclusions
Grounds of appeal and Georgina's submissions
Grounds
Georgina's submissions
Ground 1
Ground 2
Ground 3
The submissions of Carmen and Tony
Ground 1
Ground 2
Ground 3
Legal principles
Undue influence
Approach to appellate intervention
Disposition - undue influence
Ground 1
The appeal against the costs decision
Georgina's grounds of appeal and submissions
The submissions of Carmen and Tony
Georgina's statement of claim at the time of the Calderbank offers
Evidentiary materials as at 8 June 2018
The Calderbank offers
The judge's findings
Disposition
Conclusion
JUDGMENT OF THE COURT:
Introduction
The appellant appeals against a decision of Kenneth Martin J in Shephard v Galea and Byrne as Executors and Trustees of the Estate of the late Joseph Galea[1] (primary decision) and his Honour's costs decision in that matter.[2]
[1] Shephard v Galea and Byrne as Executors and Trustees of the Estate of the late Joseph Galea [2019] WASC 164.
[2] Shephard v Galea and Byrne as Executors and Trustees of the Estate of the late Joseph Galea [2019] WASC 164 (S) (costs decision).
The primary proceedings concerned a family dispute. The judge referred in his reasons to the parties by their first names and, with no disrespect intended, these reasons will do the same.
By the primary proceedings, the appellant (Georgina) brought a derivative action against the respondents (Carmen and Tony). Georgina, Carmen and Tony are the children, together with another sibling, Mario, of the late Joseph Galea. Joseph transferred his property in Bassendean to Carmen and Tony before his death, leaving little in the estate. Georgina alleged (amongst other things) that the transfer was the result of undue influence and unconscionable conduct by Carmen and Tony, and sought relief, on behalf of the estate, against Carmen and Tony. Carmen and Tony were and are the executors of the estate. For the reasons which follow, the appeal against the primary decision and the appeal against the costs decision should be dismissed.
Background[3]
[3] The background is taken from the findings of fact made by the primary judge and uncontested evidence.
Joseph was the 'patriarch' of the family. He was born in Malta in 1932.[4] He married his wife, Josuarda, in 1950.[5] In 1952, their first child, Mario, was born.[6]
1954 - 1977
[4] Primary decision [28].
[5] Primary decision [29].
[6] Primary decision [30].
In 1954, the family emigrated to Western Australia and settled in Bassendean.[7] Georgina was born in 1955. Carmen was born in 1956, and Tony was born in 1964.[8]
[7] Primary decision [31].
[8] Primary decision [36].
On arriving in Australia, Joseph and Josuarda settled into a vibrant expatriate local Maltese community.[9]
[9] Primary decision [31].
Shortly after their arrival, Joseph purchased, with his brother, Paul, a vacant block of land in Second Avenue, Bassendean (Bassendean property).[10] Between 1955 - 1957, Joseph built a family residence on the Bassendean property.[11] In 1958, he obtained a mortgage from the Bank of New South Wales, secured against the Bassendean property, and the mortgage was discharged 10 years later, in September 1968.[12] In the meantime, Joseph commenced work with Vickers Hadwa WA in Midland, and remained in employment there for over 20 years.[13] Together the family took root and prospered, enjoying a basic but happy life in their new country.[14]
[10] Primary decision [32].
[11] Primary decision [33].
[12] Primary decision [34].
[13] Primary decision [35].
[14] Primary decision [37].
Josuarda was less proficient in English than Joseph, and devoted herself exclusively to the needs of the family.[15]
[15] Primary decision [39].
Joseph was a 'saver by nature'. He encouraged Georgina to put away her money for a 'rainy day'.[16]
[16] Primary decision [41].
Further, Joseph expressed disdain against banks, and, when it came to money matters, preferred to operate by, and usually operated by, using cash.[17]
[17] Primary decision [45].
In 1977, Joseph left Vickers Hadwa WA to work as a baggage handler in Qantas, where he remained until February 1991. He retired at the age of 58. He never said 'no' to an overtime shift and worked very long hours.[18]
1980s
[18] Primary decision [46].
In the mid‑1980s, Joseph purchased some land as an investment in Gidgegannup in the name of Josuarda. Subsequently, that land was sold.[19]
[19] Primary decision [47].
In 1983, Joseph also funded the purchase of a holiday home in Mandurah (the Allnutt Street property), where the Galeas enjoyed family holidays. The property was sold in December 1988 for $58,000, having been purchased for $24,000.[20]
[20] Primary decision [48] - [49].
The sale proceeds of the Allnutt Street property were used to purchase another Mandurah holiday property, referred to as the Moat Street property. Joseph purchased the property and put it in the names of his four children, Mario, Georgina, Carmen and Tony, as tenants in common in equal shares. The property was purchased in 1988 for $78,000.[21]
[21] Primary decision [50].
The Moat Street property was used routinely by members of the family, primarily by Joseph and Josuarda, but also by arrangement by all members of the family for holiday purposes. Mario and eventually Tony both later resided in Mandurah and were 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.[22]
[22] Primary decision [51].
Although Joseph provided the funds for the purchase of the Moat Street property, it suited Joseph's purposes to put it in the names of his children in order to receive the aged pension. He owned the Bassendean property, and more property in his name could have jeopardised his position when he retired from Qantas. Joseph 'was no fool when it came to money matters'.[23]
Retirement 1991
[23] Primary decision [52].
In February 1991, Joseph retired from Qantas. However, he still remained active, particularly in his 'shed' and in his garden at the Bassendean property. He also travelled regularly by car to Mandurah for holidays at the Moat Street property.[24]
[24] Primary decision [53].
Joseph became entitled to receive an aged pension, which was paid regularly into his Westpac bank account. However, it always remained his practice to attend personally at the local Westpac branch to draw out as cash most of the pension payment to meet his and Josuarda's essential living expenses. He was not a man of expensive taste, and he and Josuarda lived relatively frugal lives. However Joseph particularly liked the feel of cash, and he did not waste his money.[25]
[25] Primary decision [54].
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 was a quiet but firmly authoritarian parental figure in the family, and did not like being contradicted. Further, if he was slighted he would tend to dwell on it. He might 'forgive but he did not forget'.[26]
2007 - Josuarda's illness
[26] Primary decision [55].
In 2007, Josuarda had a fall. She broke her hip and was also diagnosed with the onset of Alzheimer's disease. Josuarda was admitted, initially, to Swan District Hospital and then to a Belmont nursing home. However, Joseph was insistent that she be cared for at home, and she returned to the Bassendean property where Joseph cared for her prior to her passing away in April 2011.[27] During this time, Joseph coped and 'family members helped as they could'.[28]
[27] Primary decision [59].
[28] Primary decision [60].
Sometime after Josuarda's illness, certain family relationships began to unravel and deteriorate, particularly those involving Mario and Georgina.[29]
2008 - the 'comb' incident with Mario
[29] Primary decision [58].
In 2008, there was an incident between Joseph and Mario whilst Josuarda was in hospital. It concerned a supposedly lost comb of Josuarda's. Strong words were exchanged between Joseph and Mario, and there was some minor pushing as between Mario and Joseph. The incident changed the relationship, at least from Joseph's perspective. He had been 'disrespected' by his eldest son.[30] The 'comb' incident firmly established a deteriorating relationship between Mario and Joseph from that time onwards.[31]
Late 2010/early 2011 - Joseph's penultimate will
[30] Primary decision [63] - [66].
[31] Primary decision [125].
On 8 December 2010, Joseph attended the premises of his solicitor, Mr Levitan, to make a will.[32] Mr Levitan's file note records that Josuarda, Carmen and Tony also attended the meeting. Mr Levitan's file note also records instructions as to (1) Joseph's assets - his joint interest in the Bassendean property, money in the bank and a car,[33] (2) the executors - Tony and Carmen, and (3) the devise - everything to Josuarda and, in the event that she predeceased him, everything to the children equally (save that Tony was going to get the carpentry tools, in any event). The file note also refers to an enduring power of attorney given to Tony and Carmen. It also records an address for emails as Carmen's email address.[34] There was no evidence that Joseph had an email address, and it appeared common ground that he did not own a computer.
[32] Primary decision [61], [142].
[33] There is no reference to the Moat Street property.
[34] Mr Levitan's file note, GB 448. See also ts 323 - 325 (Carmen XXN), ts 405 (Tony XXN).
On 13 December 2010, Mr Levitan emailed a draft version of the will to Carmen for her consideration.[35]
[35] Mr Levitan's email, GB 449. See also ts 324 (Carmen XXN).
On 25 January 2011, Joseph executed the will prepared by Mr Levitan. This was to be his penultimate will. He named his youngest children, Carmen and Tony, as his executors, and left his estate to Josuarda, and, in the event that he outlived her, directed that his estate be shared equally between his four children.[36] On the same date, Joseph gave Carmen and Tony an enduring power of attorney.[37]
[36] Primary decision [61] - [62], [269].
[37] Primary decision [219].
Joseph also gave Tony authority to deal on his ANZ account,[38] and Joseph had been assisted by Tony and Carmen in dealing with his legal and financial affairs, such as in dealing with his pension entitlements via Centrelink.[39]
The siblings' relationships with their parents and Josuarda's death
[38] Primary decision [219].
[39] Primary decision [219]. See ts 451 (Tony XXN).
Carmen saw her parents more often than her siblings, and was able to assist more on a daily basis and with meals and general support.[40]
[40] Primary decision [210].
Carmen and, to a lesser extent, Tony were more attentive to seeing and assisting the needs of their ageing parents.[41]
[41] Primary decision [211].
Joseph became closer to Tony and Carmen from 2011 and onwards.[42]
[42] Primary decision [219].
Josuarda died on 22 April 2011.[43] After Josuarda's death, Joseph regularly attended early morning Mass at a local church.[44]
[43] Primary decision [67].
[44] Primary decision [114].
At the time of Josuarda's death in 2011, Carmen was the most proximate to her father in Bassendean, living only a few minutes away by car. Georgina and her husband, David, resided in Gnangara. Mario and Tony both resided in Mandurah, along with their respective growing families.[45]
[45] Primary decision [69].
Joseph grew closer to Carmen and Tony, than to Georgina, after Josuarda's death. Carmen's residential proximity had much to do with that.[46] Also, Joseph and Tony effectively saw each other on a weekly basis.[47]
[46] Primary decision [206].
[47] Primary decision [209].
Georgina had a close relationship with Joseph until about 2011.[48] However, there was a particular incident involving Georgina in June 2011 'which seems to have led to an almost complete cessation of contact' as between Georgina and Joseph.[49]
The incident involving Georgina in June 2011
[48] Primary decision [57].
[49] Primary decision [100]. Georgina's evidence in cross‑examination was to the effect that although she made some attempts to telephone her father at least between 1 August 2011 and 30 March 2012, she did not visit or speak to her father again until a few days before he died: ts 101, 104 - 106.
There was an incident between Georgina and Joseph in June 2011. Georgina's evidence was to the effect that her father had demanded her to repay a debt of $11,000, which she considered had been fully repaid some 19 years earlier. Her husband, David, went to see Joseph one Sunday to discuss the demand. David returned from seeing Joseph, and told Georgina that Joseph was very upset and was insistent that the money should be repaid. David said $11,000 should be paid to Joseph in effect to keep the peace, even though the debt would have then been repaid twice, as David and Georgina saw the matter.[50]
[50] Primary decision [70] - [75].
On Georgina's evidence, a few days later on 14 June 2011, she had raised $11,000 in cash and drove to the Bassendean property to see her father. The judge said:[51]
[51] Primary decision [77] - [78]; see also primary decision [245], [248].
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 [the Bassendean property] ... She indicated she had. But I found this aspect of her evidence to be curious and ultimately, unreliable.
The incident with Mario in August 2011
There was a further incident involving Mario in August 2011, when Joseph telephoned Mario in the early hours of the morning of 25 August 2011.[52] Joseph, in effect, accused Mario's wife of stealing certain jewellery owned by Josuarda, and of taking $21,000 of Joseph's cash that Joseph said had been hidden in the living room in the Bassendean property. Mario responded in very blunt terms to his father, and the telephone call ended up with the men being on bad terms. Joseph recounted the telephone conversation to Tony.[53]
[52] Joseph called Mario at 4.53 am and the call lasted for around 24 minutes: primary decision [79], [81], [126].
[53] Primary decision [82].
Moreover, on 30 August 2011, Joseph took out a violence restraining order against Mario. Tony had assisted Joseph in taking out the restraining order. It put heavy restrictions on Mario's future contact with his father. Mario did not contest the restraining order and it remained in place.[54]
Joseph's arrangements in September 2011
[54] Primary decision [79] - [84].
On 2 September 2011, Joseph attended his solicitor, Mr Levitan, to provide instructions for a new will.[55] Tony was present at this meeting between 9.50 am and 10.30 am.[56] At this point in time, Josuarda had passed away some five months earlier, and the August 2011 telephone call with Mario and the subsequent violence restraining order events had recently occurred.[57] Under this new will, Joseph's intention was to explicitly exclude Mario.[58]
[55] Primary decision [85].
[56] Affidavit of Melvyn Levitan affirmed 15 June 2017, par 3; GB 107 - 108; see also Mr Levitan's file note, GB 468.
[57] Primary decision [85].
[58] Primary decision [85].
On the same date, between 10.30 am and 11.00 am, Joseph obtained advice from Mr Levitan concerning a possible disposition of the Bassendean property during Joseph's lifetime to Carmen and Tony. That conference was with Joseph alone.[59] Mr Levitan's file note of 2 September 2011 read:[60]
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
[59] Affidavit of Melvyn Levitan affirmed 15 June 2017, par 4; GB 108; see also Mr Levitan's file note, GB 447.
[60] Primary decision [144].
At this time, Joseph was telling Mr Levitan, in person, that he was seriously considering transferring the Bassendean property to Tony and Carmen during his lifetime.[61]
[61] Primary decision [213].
On 5 September 2011, Joseph attended his general practitioner, Dr Sciberras, to obtain evidence about his mental capacity. Dr Sciberras prepared a letter confirming that he was satisfied that Joseph did not suffer from cognitive impairment.[62] On the same date, Mr Levitan records having a telephone conversation with Tony.[63]
[62] Primary decision [86]. See GB 103.
[63] Primary decision [145]. See GB 447.
On 13 September 2011, Tony telephoned Mr Levitan. He advised, on Joseph's behalf, that a transfer of the Bassendean property to Carmen and himself was not being proceeded with at that stage.[64] At this point, Carmen and Tony had told their father that he needed to take time to think about the proposed transfer of the Bassendean property to them.[65] Joseph appears 'to have taken a brief step back' from transferring the property.[66]
[64] Primary decision [87], [145]. See GB 447.
[65] Primary decision [88].
[66] Primary decision [213].
On 19 September 2011, Dr Sciberras elaborated on Joseph's mental capacity and reported that he was cognitively and emotionally capable to decide his own will, and fully capable of signing an enduring power of attorney.[67]
[67] Primary decision [89]; GB 104 - 105.
On 20 September 2011, Joseph executed his last will and testament. He again nominated Tony and Carmen as his executors. The residuary beneficiaries were Georgina, Carmen and Tony, in equal shares. Mario was explicitly excluded.[68] The will was witnessed by Mr Levitan and a Mr Cohen.[69] The clauses dealing with the exclusion of Mario read as follows:[70]
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.
2012 - transfer of the Bassendean property
[68] Primary decision [90].
[69] Affidavit of Melvyn Levitan affirmed 15 June 2017, par 6; GB 108.
[70] Primary decision [91].
Strand Conveyancing Services (Strand Conveyancing) assisted Joseph with the transfer of the Bassendean property to Carmen and Tony.[71] The Strand Conveyancing file was opened on 27 January 2012, and the 'file details' document indicated that it acted for the buyer.[72]
[71] Primary decision [134]; affidavit of Janet Scott Leon sworn 14 July 2017, par 2; GB 89.
[72] GB 124.
However, on 30 January 2012, a letter was sent by Ms Lowe of Strand Conveyancing, addressed to Joseph, Tony and Carmen. Amongst other things, the letter stated:[73]
Dear Sirs & Ms Byrne
RE: PURCHASE OF [THE BASSENDEAN PROPERTY]
We acknowledge and thank you for appointing us as your Settlement Agents in regard to the above transaction and we enclose the following:-
1.An Appointment to Act Form - to comply with Licensing controls.
…
In light of the circumstances, we do ask that you seek your own independent legal advice to ensure that this is the best way to transfer the property or if there is another way that may be more appropriate and advise this office as to the outcome.
[73] GB 176.
On 1 February 2012, Joseph, Carmen and Tony executed a Strand Conveyancing 'Appointment of Settlement Agent'. The section of the appointment document which contained the words '(3) you may not act for any other party to the transaction. **(You must delete either option 2 or 3)' was crossed out.[74]
[74] GB 137 - 139.
Also, on 1 February 2012, Joseph signed an instrument transferring the title of the Bassendean property to Carmen and Tony.[75] No money changed hands. The transfer was expressed by Joseph to be for 'natural love and affection'.
[75] Primary decision [93], [135]. See GB 116 - 118.
Ms Leon of Strand Conveyancing had taken Joseph's statutory declaration in relation to the transfer of the Bassendean property. The statutory declaration read.[76]
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 [Bassendean property].
2.I am the sole remaining parent of [Tony] and [Carmen] (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.[77]
4.This agreement has been made conditional upon myself, Joseph Galea, remaining in occupation of the [Bassendean] property … rent free for all of the days of my life or until I decide to relinquish the tenancy of the said property.
[76] Primary decision [135]. See GB 159. There was also a handwritten document expressed in similar terms to the statutory declaration, which stated that 'we agree that this transfer is made conditional that I Joseph Galea will reside at the [Bassendean property] rent free for all the days of my life or when I so wish to relinquish the tenancy': GB 188.
[77] The documents attached were Dr Sciberras' documents of 5 September 2011 and 19 September 2011.
On 24 February 2012, the transfer was registered, and the stamp duty assessment indicated that the Bassendean property had a dutiable value of $515,000. Joseph later reimbursed Carmen for the stamp duty that she had outlaid initially upon the transfer.[78]
[78] Primary decision [94]. See GB 119.
Ms Leon's evidence, accepted by the judge, indicated that Joseph was then acting both competently and freely of his own volition.[79]
[79] Primary decision [136]. See GB 88 - 91.
The judge also found that Joseph expressly retained a life interest in the property.[80] After the transfer, Joseph lived at the Bassendean property rent free until about five weeks before his death (in September 2015), when his health 'deteriorated dramatically'.[81]
[80] Primary decision [93].
[81] Primary decision [274].
The judge concluded that Joseph wished the Bassendean property not to be shared with Georgina under the terms of his last will, and that '[h]arsh or potentially unwise as that might be viewed externally, that was Joseph's wish'.[82] Further, the judge concluded that Joseph's decision to transfer the property was taken in full cognisance of its negative financial consequences on Georgina. His Honour found that Joseph fully appreciated that the property would not form part of his estate if he transferred it away during his life, and he knew that the property was the significant asset of his estate and appreciated the negative financial ramifications for his estate of such a transfer made in his lifetime.[83]
2012 - proceedings in Magistrates Court against Mario
[82] Primary decision [276]; see also primary decision [213].
[83] Primary decision [205].
Also in February 2012, Joseph commenced proceedings in the Perth Magistrates Court against Mario to recover an alleged debt of $35,000.[84]
[84] Primary decision [95].
Mr Levitan's file records a number of telephone conversations with Tony, relating to the debt recovery, in file notes dated between 8 November 2011 and 19 July 2012, including advising Mr Levitan that his father authorised Mr Levitan to send the letter of demand to Mario.[85] Tony also went with his father to a pre-trial conference.[86]
[85] See GB 514 - 515, 517, 525 - 526, 531, 536, 540, 542, 545, 550.
[86] ts 438 - 440 (Tony XXN). See GB 515, 517, 545.
The proceedings were discontinued later in July 2012.[87]
Mr Levitan's evidence in relation to Joseph's instructions in 2011/2012
[87] Primary decision [96].
Mr Levitan's evidence, accepted by the judge, in relation to these events included:[88]
[88] Primary decision [142].
4.[On] 2 September 2011, timed between 10.30am and 11am [there was a] conference … 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 [in Mr Levitan's memorandum of 2 September 2011]. 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.… Prior to finalising [the] Will [of September 2011], 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 …
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. … 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 …
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 ... 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.
Ms Ashcroft's conversations with Joseph
Ms Ashcroft, the child of Josuarda's sister and niece of Joseph, remained close with Joseph after Josuarda died. She visited 'Uncle Joe' at the Bassendean property and had 'really good conversations' with Joseph. She was 'confident' that he was not suffering from memory loss or confusion because he would ask about people by name and recalled previous conversations.[89] Relevantly, her evidence included:[90]
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.
[89] Primary decision [149] - [151].
[90] Primary decision [152].
Ms Ashcroft also had a conversation with Joseph about the transfer of the Bassendean property to Tony and Carmen. It occurred at the church where her parents and Josuarda had a 'plaque'. Her conversation with Joseph was to the following effect:[91]
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.
[91] Primary decision [153].
The judge accepted the conversation recounted by Ms Ashcroft and regarded it as telling strongly against any suggestion that the transfer to Carmen and Tony was anything other than Joseph's own decision freely and rationally made, and without any undue influence from Carmen or Tony.[92]
2013
[92] Primary decision [154].
On 5 January 2013, Joseph visited his new granddaughter, born to Tony the previous day.[93]
[93] Primary decision [98].
On 27 June 2013, Dr Sciberras unconditionally certified Joseph as (still) fit to drive. In June/July 2013, Joseph was taken by Carmen to visit the Maltese Association, a place he had visited more frequently in the years before Josuarda became unwell.[94]
[94] Primary decision [99].
On 16 September 2013, Tony made arrangements with Telstra, on behalf of Joseph, for Joseph's telephone number to be changed.[95] As related by Tony, this was after Joseph had complained to Tony about receiving harassing or nuisance calls - not from the family. Both Carmen and Tony knew of the arrangements, but did not inform the other siblings, Mario and Georgina. The judge said that this was 'very curious'. The consequence for Georgina was that she could not reach her father over a now disconnected former telephone landline.[96]
[95] Primary decision [100].
[96] Primary decision [100].
Georgina, however, did not say that she took any steps to visit the family home at Bassendean, or to try and ascertain her father's new telephone number, or to ask Tony or Carmen about it. As noted earlier, the 2011 incident concerning $11,000 cash 'seems to have led to an almost complete cessation of contact' as between Joseph and Georgina.[97]
[97] Primary decision [100].
In November 2013, Joseph obtained some legal advice from another firm of solicitors, and executed a second enduring power of attorney given to Carmen and Tony.[98]
The sale of the Moat Street property in early 2014
[98] Primary decision [101]. Although the solicitor's file note appears to have errors in it, the errors appear to reflect on the author of the file note, rather than Joseph: GB 585.
In 2014, the four Galea siblings agreed that the Moat Street property held in their names should be sold. It was sold for $300,000, with settlement being effected on 17 March 2014.[99]
[99] Primary decision [102].
Each of the siblings was entitled to a quarter share of the net proceeds of sale, being $73,652 each. All of the siblings agreed that they would relinquish $25,000 of their share to Joseph. However, Mario relinquished the whole of his share. On this basis, the siblings transferred a total of $148,635 (being $25,000 each from Carmen, Tony and Georgina, and Mario's full share of $73,652) into Joseph's ANZ bank account (ANZ account).[100] Joseph had no knowledge of these payments until the money arrived in his bank account.[101]
[100] Primary decision [103] - [104].
[101] Primary decision [231].
Shortly after that, on 25 March 2014, Carmen and Tony each received $25,000 from Joseph's 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).[102]
[102] Primary decision [106].
Eventually, residual funds totalling approximately $98,000 in Joseph's ANZ account were transferred to his Westpac account. This lump sum posed a potential negative impact for his pension. Joseph withdrew the amount by cash amounts over the period June 2014 to July 2015.[103]
Late 2014
[103] Primary decision [107].
By the end of 2014, Joseph had been referred to an oncologist for metastatic prostate cancer and superficial bladder cancer. He attended various appointments over the following months, and Carmen accompanied him to most if not all of those appointments.[104]
[104] Primary decision [108] - [110].
Despite this, Joseph remained active and ambulatory, spending time in his 'beloved shed and garden' at the Bassendean property. He continued to shop, clean and cook for himself.[105]
2015
[105] Primary decision [111].
On 26 May 2015, Dr Sciberras once again unconditionally certified Joseph as fit to drive.[106]
[106] Primary decision [112].
However, on 6 August 2015, Dr Sciberras noted a deterioration in Joseph's condition along with the existence of depression.[107]
[107] Primary decision [113].
On 9 August 2015, Joseph drove himself to early morning Mass in Lockridge, and then over to Carmen's house in Bassendean for dinner. He also visited friends at an aged care facility in Embleton in the company of Carmen.[108]
[108] Primary decision [114].
On 10 August 2015, Joseph again attended Dr Sciberras who noted that Joseph had 'worsened'. He was admitted to Sir Charles Gairdner Hospital on 11 August 2015 and transferred to Swan District Hospital on 2 September 2015.[109]
[109] Primary decision [115] - [116].
On 8 September 2015, Joseph's condition deteriorated, and Tony, for the first time, called Georgina and Mario to advise that their father was unwell and in hospital.[110]
[110] Primary decision [117].
On 10 September 2015, Joseph died. The funeral was held at his local Catholic church.[111]
[111] Primary decision [118] - [119].
Georgina's claim in the primary proceedings
The derivative action
The judge said:[112]
The lifetime divestiture of [the Bassendean property] 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.
Undue influence
[112] Primary decision [163].
Georgina pleaded both presumptive undue influence and actual undue influence. As to the former, presumptive undue influence, Georgina pleaded:[113]
[113] Re-amended substituted statement of claim, pars 27 - 32; BB 109 - 113. See also 'Plaintiff's Outline of Submissions', pars 39 - 41; BB 143 - 144.
1.At the time of the transfer of the Bassendean property:
(a)Joseph was still grieving the loss of Josuarda, was close to 80 years of age and was chronically ill, including with prostate and bladder cancer, diabetes, hypertension, chronic incontinence, chronic back pain, dizziness, chronic tinnitus in the right ear, was losing weight, was physically weak, suffered from mild memory loss and suffered from worry and anxiety; and
(b)he 'had substantially withdrawn from the family' other than Tony and Carmen.[114]
2.By reason of those matters, Joseph 'had become emotionally dependent upon Carmen and Tony'.[115]
3.Since the death of Josuarda, Joseph had become dependent upon Carmen and Tony generally, in that Carmen and Tony assisted Joseph with his meals, drove him to places, made and attended medical and solicitor's appointments, instructed solicitors on his behalf, dealt with his Telstra account, dealt with and managed his Centrelink entitlements and paid his legal bills.[116]
4.Prior to the transfer of the Bassendean property, and after Josuarda's death, Joseph had appointed Tony and Carmen as attorneys under an enduring power of attorney dated 25 January 2011, had appointed Tony and Carmen as executors of his will, had given Tony authority to deal with his ANZ bank account and his Centrelink entitlements, had given Tony authority to conduct his legal and financial affairs, and had authorised Carmen to receive his confidential legal documents by email from his solicitor.[117]
5.In the premises referred to in points 1 ‑ 4 above, Carmen and Tony were 'in an antecedent relationship with [Joseph] in which [Joseph] reposed trust and confidence in Carmen and Tony and had become emotionally dependent upon them', and Carmen and Tony were 'in a position to exercise dominion over [Joseph]' and, accordingly, Joseph 'was not in a position to exercise his own free will' in relation to the transfer of the Bassendean property and the transfer was 'therefore not a product of a free and independent mind, and the transfer was so improvident or substantial as to not be reasonably accounted for on the ground of the relationship between Joseph and Carmen and Tony or by other ordinary motives on which ordinary persons act'.[118]
[114] Re-amended substituted statement of claim, par 27; BB 109 - 110.
[115] Re-amended substituted statement of claim, par 28; BB 110.
[116] Re-amended substituted statement of claim, par 29; BB 111.
[117] Re-amended substituted statement of claim, par 30; BB 111 - 112.
[118] Re-amended substituted statement of claim, par 32; BB 112 - 113 (emphasis added).
Georgina also relied on actual undue influence by Carmen and Tony in procuring the transfer of the Bassendean property.[119]
Unconscionable conduct
[119] Re-amended substituted statement of claim, par 31; BB 112; Plaintiff's Outline of Submissions, par 55; BB 148.
Georgina also alleged that the transfer of the Bassendean property was effected at a time when Joseph was at a special disadvantage, and that Carmen and Tony were aware of Joseph's vulnerability and took unfair and unconscientious advantage of the opportunity created by the transfer and, in doing so, acted unconscionably.[120] The plea of 'special disadvantage' relied on the same matters pleaded by Georgina as supporting a finding of a relationship of presumed undue influence.[121]
[120] Re-amended substituted statement of claim, pars 34 - 35; BB 114.
[121] Re-amended substituted statement of claim, par 34; BB 114.
The judge's findings on undue influence and unconscionable conduct
Undue influence
In relation to undue influence, the judge referred to 'forensic considerations as regards proof in an undue influence case and … presumptions'[122] and, in that context, referred to the observations of the High Court in Thorne v Kennedy:[123]
There are different ways to prove the existence of undue influence. One method of proof is by direct evidence of the circumstances of the particular transaction … Another way in which undue influence can be proved is by presumption … A presumption, in the sense used here, arises where common experience is that the existence of one fact means that another fact also exists. Common experience gives rise to a presumption that a transaction was not the exercise of a person's free will if (i) the person is proved to be in a particular relationship, and (ii) the transaction is one, commonly involving a 'substantial benefit' to another, which cannot be explained by 'ordinary motives', or 'is not readily explicable by the relationship of the parties' … Outside recognised categories, the presumption can also be raised by proof that the history of the particular relationship involved one party occupying a similar position of ascendency or influence, and the other a corresponding position of dependency or trust. In either case, the presumption is rebuttable by the other party proving that the particular transaction or transfer, in its particular circumstances, was nevertheless the result of the weaker party’s free will. (emphasis added)
[122] Primary decision [202].
[123] Thorne v Kennedy [2017] HCA 49; (2017) 263 CLR 85 [34].
His Honour also referred to the High Court's decision in Johnson v Buttress.[124] Latham CJ, Dixon, Evatt and McTiernan JJ explained the decision in Buttress on the basis that there existed an antecedent relationship of influence (Starke J found actual undue influence on the facts). The judge contrasted the circumstances in the present case with those in Buttress, and said:[125]
[124] Johnson v Buttress [1936] HCA 41; (1936) 56 CLR 113.
[125] Primary decision [203] - [205].
Towards present circumstances, in strong contrast to the position of Mr Buttress in Johnson v Buttress …, Joseph here, as regards his disposition of [the Bassendean property] to Carmen and Tony in February 2012:
(a)was then only about seven months short of reaching his 80th birthday;
(b)had executed his final will and testament on 20 September 2011, some five months earlier;
(c)had been a widower for approximately 10 months since the passing of Josuarda on 22 April 2011;
(d)had rightly or wrongly, become estranged from Mario, following the 2011 incident and subsequent 2011 VRO which Mario did not challenge;
(e)was by no means illiterate, unintelligent, or without any business acumen, in contrast to the respondent in Johnson v Buttress;
(f)had been retired from full-time employment for almost 20 years, was debt free and was financially secure being in receipt of the aged pension and with no dependants;
(g)had expressly retained for himself a rent free life interest in the [Bassendean] property to let him effectively reside there until his death as part of his transfer dealing with Carmen and Tony;
(h)had satisfied the acting settlement agent used by him in relation to the 2012 transfer of [the Bassendean property] (in circumstances where he was transferring the property to his children for only 'natural love and affection') that he was acting freely without influence and had a proper understanding of the consequences of his transfer; and
(i)had fully appreciated the consequences of what he had done in 2012 by transferring [the Bassendean property] sufficient to recount and reaffirm all this coherently and independently to his niece, Ms Ashcroft.
In all these circumstances, I find no basis from the trial evidence to conclude that the February 2012 transfer of [the Bassendean property], was anything other than a fully informed and deliberate decision of Joseph made at that time. I reject suggestions that Joseph's free will was somehow overborne in this transaction by Carmen and Tony, or that Joseph was somehow subjected to improper, undue or illegitimate pressure. Any legal presumption relied upon to suggest that conclusion is rebutted by the trial evidence assessed as a whole.
Moreover, I conclude that it was a transfer decision by Joseph made in full cognisance of its negative financial consequences as regards Georgina, under the latest workings of Joseph's final will at his death. Joseph, I find, fully appreciated that [the Bassendean property] would not form any part of his estate if transferred away during his life. Joseph knew [the Bassendean property] was the significant asset of his estate and further appreciated the negative financial ramification for his estate of such a transfer made in his lifetime. This would be that the one-third residuary beneficiary interest left to Georgina (and Tony and Carmen) would effectively be rendered, if not wholly worthless, financially paltry compared to the worth of the one-third share which would have been received if the [Bassendean property] did form part of his estate. There is no doubt on all the evidence that Joseph did appreciate that negative outcome vis-a-vis Georgina. I further find that Joseph not only intended it, but that he was content with it. (emphasis added)
In relation to the particular matters pleaded by Georgina in relation to presumptive undue influence (see [79] above), the judge said:[126]
[126] Primary decision [215] - [221].
As regards undue influence, the relevant plea appears to culminate at pars 32 - 33. The effect of the plea at this section would seek to paint Joseph (from April 2011) onwards as a physically sick, frail old man suffering from many health ailments and who was vulnerable at the hands of Carmen and Tony as regards his financial decisions.
I must reject that attempted characterisation of Joseph as being erroneously overblown. True it is that Joseph was approaching 80 years of age and had been suffering from prostate cancer for some years. However, that condition was controlled by medication. Joseph also suffered from a bad back since he retired from Qantas and something was sought to be made of that in the plea.
However, I conclude that Joseph was still a physically active man. He still enjoyed gardening and his shed. Joseph still looked after himself, cooked, cleaned and shopped for himself. He conducted rational conversations with visiting family, friends and acquaintances met, particularly at the daily morning Mass he attended. After Joshuarda's [sic] death Joseph became even more religious. He would attend Mass on a daily basis, driving himself by car from Bassendean to the Good Shepherd Catholic Church in Lockridge for the early morning service.
The trial evidence as a whole does not suggest to me a physically frail or compromised old man. To the contrary, I assess Joseph as a mobile, active and more than capable 80 year-old. True, Joseph was greatly saddened and distressed by the loss of his wife in 2011 - but he was not broken by his grief. He still coped well enough with the exigencies of being a widower after 60 years of marriage and with the advancing ravages of time. Joseph's housekeeping and cooking skills may not have been up to Josuarda's exacting standards, but Joseph still coped satisfactorily enough as he always had.
Within this same sphere of the pleading it is also contended Joseph was 'emotionally dependent' upon Carmen and Tony (par 28). The term 'emotionally dependent' as used here, is an unclear and unhelpful phrase. The phase tends to obscure, rather than to elucidate when used in the present context. Certainly, Joseph became closer to Tony and Carmen from 2011 and onwards. I accept he fully trusted them both. He appointed them as his executors and had given them an enduring power of attorney in January 2011. Joseph had given Tony his authority to deal on his ANZ account ... Joseph had been assisted by Tony and Carmen in dealing with his legal and financial affairs, such as in dealing with his pension entitlements via Centrelink. Joseph had also been assisted by Carmen and Tony in his travelling to meet Mr Levitan and to go about all the steps to draw up and obtain his final will in September 2011. For that assistance Joseph was grateful to them. But none of that, on my assessment, amounts to more than a 'hill of beans', as regards the proof of their undue influence over Joseph.
Added to that is Georgina's attempt to portray Joseph as an emotionally devastated old man in the wake of the loss of his beloved wife of over 60 years. There is no doubt that Joseph had loved his wife Josuarda deeply. He was understandably distressed at the time of her passing in April 2011 and for a period after that. Such deep grief and sense of loss is perfectly understandable in those circumstances. But the elided suggestion that his loss of Josuarda rendered Joseph so emotionally fragile as to be suffering from a 'special vulnerability', or a 'disadvantage', by my assessment, significantly exaggerates Joseph's position. It simply goes too far.
On all the evidence, Joseph had faced and dealt with his grief and he had stoically carried on. Joseph was not a wilting lily. True, he was grateful for the support of his children and grandchildren when they visited, particularly Carmen and Tony. But on my assessment Joseph always remained capable and competent as regarding the conduct of his financial affairs and his relationships. (emphasis added)
Unconscionable conduct
In relation to unconscionable conduct, the judge referred to the observations of the High Court in Thorne and in Kakavas v Crown Melbourne Ltd.[127] His Honour found that, first, there was no relevant special disadvantage ever applicable to Joseph and, secondly, Joseph's action in disposing of the Bassendean property was not a product of any relevant unconscionable conduct directed towards Joseph by Carmen or by Tony.[128]
Conclusions
[127] Kakavas v Crown Melbourne Ltd [2013] HCA 25; (2013) 250 CLR 392.
[128] Primary decision [226].
The judge concluded the section of his reasons dealing with the evidence and witnesses in the following terms:[129]
I conclude this section of the reasons repeating an observation I have previously rendered. It is demonstrably clear from all the trial evidence that Carmen and Tony grew much closer to their father in the period after Josuarda's passing from April 2011. The fact that Joseph reposed trust and confidence in Carmen and Tony and was affectionate towards them, enjoyed their company and gratefully accepted their assistance from time to time with daily various tasks, may all be accepted. However, on my assessment, all that is not enough to show proof of undue influence or unconscionable conduct as alleged. I need to be satisfied, in accordance with legal principles already discussed, that there was an exertion by Carmen and Tony of some influence over Joseph in terms of overriding or compromising Joseph's decision making, that benefited them both. Alternatively, I am looking for a level of unconscionable conduct by Carmen and Tony directed towards their father - were he assessed to be in a position of special vulnerability (which I would reject) - to make good the unconscionable conduct cause of action Georgina advances on a derivative basis, if she has standing as a one-third residuary beneficiary.
In the end I reject all the undue influence and unconscionable conduct allegations as regards Joseph's 2012 transfer of [the Bassendean property]. I am left satisfied that Joseph wanted, after retaining a rent-free life interest for himself in the family house he had built with his hands and sweat, to see Carmen and Tony enjoy the benefit of receiving that property, shared only as between them. Correlatively, Joseph deliberately and freely implemented steps in his lifetime, so that [the Bassendean property] would not form an asset of his estate that might otherwise be shared on a one-third residuary basis with Georgina. Whatever the reasons underlying his decisions, this was Joseph's decision concerning what he did with his own property. Subject to law, he could do with it as he pleased, as he did.
[129] Primary decision [271] - [272].
Grounds of appeal and Georgina's submissions
Grounds
Georgina's substituted grounds of appeal comprise three grounds:
1.The judge erred in fact and in law in failing to find that the antecedent relationship between Tony and Carmen (or either of them) and Joseph was such as to give rise to a presumption of undue influence with respect to the transfer of the Bassendean property.
2.The judge erred in fact and in law in finding that such presumption had been rebutted, and in failing to find that Tony and Carmen had failed to rebut the presumption of undue influence with respect to the transfer of the Bassendean property.
3.The judge erred in fact and in law in failing to give Georgina leave to pursue a derivative action against Carmen and Tony.
Georgina's submissions
By way of overview, Georgina contended, in effect, that the judge treated the case as a claim based on actual undue influence, and did not address or make findings on the presumptive undue influence case alleged by Georgina. That case was to the effect that there was a pre‑existing relationship between Tony and Carmen on the one hand, and Joseph on the other, which was of a nature which gave rise to a presumption of undue influence.[130]
[130] Appellant's written submissions, pars 1 - 5.
Georgina also contended that the judge did not find that there was not a relationship of undue influence, but merely concluded that any presumption had been rebutted.[131] Georgina contended that, in not having considered the case of presumptive undue influence, the judge wrongly placed the onus on Georgina to prove the existence of actual undue influence.[132]
[131] Appellant's written submissions, par 8.
[132] Appellant's written submissions, par 7.
Georgina also said that she did not challenge any credibility‑based findings of fact. Rather, the appeal was confined to the proper conclusions which flowed from the judge's findings, the incontrovertible facts and the uncontested testimony.[133]
Ground 1
[133] Appellant's written submissions, par 11.
Georgina accepted that the relationship of Joseph on the one hand, and Carmen and/or Tony on the other, did not fall within the recognised categories attracting the presumption. Nevertheless, Georgina contended that a relationship of presumptive undue influence was established, having regard to the following matters:[134]
[134] Appellant's written submissions, pars 15 - 47.
1.The transfer of the Bassendean property could not be explained by ordinary motives and was not readily explicable by the relationship of the parties, in that:
(a)the gift to Carmen and Tony was a substantial amount, both in absolute terms and relative to Joseph's overall assets - it was not only his residence but his only substantial asset;[135]
[135] Primary decision [205].
(b)the gift was inexplicable in circumstances where Joseph had not long earlier made his final will gifting his estate to Tony, Carmen and Georgina in equal shares,[136] and where the result of the transfer was effectively to make the estate worthless;[137] and
[136] Primary decision [90].
[137] Primary decision [205].
(c)the transfer was improvident in that Joseph, whilst believing that he retained a life interest in the property, did not - he put its ownership beyond recall and left himself dependent on the goodwill and benevolence of Tony and Carmen. The judge described the transfer as 'harsh or unwise'.[138]
[138] Reference was made to primary decision [213], [276].
2.The finding that Joseph was not under a special disadvantage did not answer the question of whether there was undue influence.[139]
[139] Primary decision [226].
3.At the time of the transfer, Joseph was 79 years of age, he had only recently, 10 months earlier, lost his wife of over 60 years, and, after her death, he lived alone.[140]
[140] Primary decision [68].
4.The evidence of Tony and Carmen was to the effect that Joseph was very hard of hearing and relied on them to communicate with others on his behalf.[141]
[141] ts 435 - 436, 441, 451.
5.Joseph was not a social man and, apart from his church attendance, had limited contact other than with the members of his family.
6.By August 2011, Joseph had become isolated from both Mario and Georgina, and, from that time onwards, his only contact was with Carmen and Tony, at least on matters of a financial nature.[142]
[142] Primary decision [83] - [84], [100]. See also primary decision [63] - [66], [79] - [81], [85].
7.Tony assisted his father in relation to the restraining order which led to a complete breakdown in his relationship with Mario.[143]
[143] Primary decision [83].
8.Tony and Carmen failed to inform Georgina and Mario, from September 2013, that Tony, with Carmen's knowledge, had arranged a new telephone number for their father,[144] and they had failed to inform Georgina or Mario of their father's ill health until about two days before his death, notwithstanding that he had been seriously ill and hospitalised.[145] Although these matters occurred after the transfer of the Bassendean property in February 2012, they are indicative of their attitude prior to that time.
[144] Primary decision [100].
[145] Primary decision [108] - [117].
9.The judge found that Joseph 'fully trusted' Tony and Carmen.[146]
[146] Primary decision [219].
10.Joseph had appointed Tony and Carmen as the executors of his will and had given them an enduring power of attorney in January 2011. He had also given Tony his authority to deal with his ANZ bank account. Both Carmen and Tony assisted their father in dealing with legal and financial affairs, such as his pension entitlements via Centrelink, his travelling to meet his solicitor, Mr Levitan, and to go about all the steps to draw up and maintain his final will in September 2011.[147]
[147] Primary decision [219].
11.The involvement of Carmen and Tony extended to Joseph's legal and testamentary affairs, in that:
(a)Tony and Carmen attended with their father and Mr Levitan in December 2010 to discuss the preparation of their father's penultimate will executed on 25 January 2011;[148]
[148] ts 323 - 325, 405.
(b)Mr Levitan emailed Carmen a draft version of his penultimate will for her consideration and instructions;[149]
[149] ts 323 - 325, 404 - 406; exhibit 1.45.
(c)Tony was present with his father when he met Mr Levitan on 2 September 2011 and gave him instructions to make what became Joseph's final will, which specifically excluded Mario;[150]
[150] Affidavit of Melvyn Levitan affirmed 15 June 2017, par 3; GB 107 - 108. See also GB 468.
(d)the meeting between Tony, Joseph and Mr Levitan on 2 September 2011 to discuss Joseph's will was only three days after Tony had assisted his father to obtain a violence restraining order against Mario;
(e)immediately following that meeting, Joseph met with Mr Levitan alone and told him that he wished to transfer the Bassendean property to Carmen and Tony;[151]
(f)Mr Levitan spoke with Tony three days later, on 5 September 2011, about the subject of the then proposed transfer,[152] and on 13 September 2011 Tony told Mr Levitan that it was not being proceeded with at that stage.[153]
(g)Tony was involved in a number of telephone conversations with Mr Levitan on his father's behalf, and agreed that he assisted his father in 2012 in instructing Mr Levitan with respect to the recovery of an alleged debt from Mario - including instructions to Mr Levitan on his father's behalf to send a letter of demand, instructing Mr Levitan on 1 February 2012 to sue Mario for the alleged debt and attending a pre‑trial conference on his father's behalf;[154] and
(h)Tony collected his father's mail.[155]
12.The evidence of Ms Ashcroft, accepted by the judge, was to the effect that Joseph said that he wished to transfer the Bassendean property to Carmen and Tony 'because without them, I don't know what I would do'.[156]
13.Joseph, having decided not to proceed with the transfer around 13 September 2011, nevertheless changed his mind, and Carmen and Tony did not explain why he did. The judge found that Joseph's reasons remained 'something of a mystery'.[157]
14.Whatever Joseph's reasons, it was Tony (not Joseph) who contacted the settlement agent with respect to the transfer. This contact occurred on or about 27 January 2012, only three days before the transfer documents were signed on 1 February 2012, and (Georgina contended) the settlement agent's documents record that they were retained by Carmen and Tony, not by Joseph.[158]
15.The settlement agent's records include a note of instructions, by necessary implication from Tony, which said 'trying to protect father's stakes have a problem with another sibling' - evidently (according to Georgina) a reference to Mario.[159] This was only four months after Joseph had made his final will on 20 September 2011, leaving everything to the other three children, but not Mario.
16.Both Carmen and Tony accompanied Joseph to the settlement agent on 1 February 2012 to sign the documents to effect the transfer to themselves, although they were not in the same room when Joseph signed his statutory declaration.
[151] Affidavit of Melvyn Levitan affirmed 15 June 2017, par 4; GB 108. See also GB 447.
[152] Primary decision [145].
[153] Primary decision [87].
[154] ts 434 - 440; exhibit 1.45.
[155] Affidavit of Georgina Veronica Shephard sworn 31 October 2018, pars 641 - 642; GB 33.
[156] Primary decision [153].
[157] Primary decision [206].
[158] Exhibit 1.39; GB 124, 135 - 136, 137 - 139; ts 440 - 444.
[159] GB 193 (Mario's cross-examination on this is at ts 441 - 444).
Georgina submitted:[160]
Having regard to the whole of these circumstances, the proper conclusion is that [Joseph] placed a level of dependency upon [Carmen and Tony] which went well beyond ordinary familial trust and confidence. [Carmen and Tony] (or at least one of them) stood in a special relationship of influence over their father, with the capacity to influence him in his decision to transfer his residential property to them. The transfer was not readily explicable by reference to the ordinary incidents of their relationship. Accordingly the circumstances were such as to place upon [Carmen and Tony] the onus of rebutting the presumption of undue influence.
Ground 2
[160] Appellant's written submissions, par 47.
Georgina contended that Tony and Carmen did not rebut the presumption of undue influence. She contended that, in order to rebut the presumption, Tony and Carmen were required to establish that Joseph (1) knew and understood what he was doing in the sense that he 'thoroughly comprehended the transaction', and (2) was acting independently of the influence of Carmen and Tony.[161]
[161] Appellant's written submissions, pars 48 - 56.
Georgina contended that neither of these facts had been established by Tony and Carmen.[162]
[162] Appellant's written submissions, pars 59 - 85.
As to the first matter, Georgina contended that Carmen and Tony did not prove that Joseph knew and understood what he was doing, having regard to the following matters:[163]
[163] Appellant's written submissions, pars 59 - 71.
1.Although Joseph signed a statutory declaration indicating that he had retained a life interest in the Bassendean property, that was not the case - the transfer was unconditional. At best, he may have had a caveatable equitable interest but, even so, there was no caveat lodged to protect any such equitable interest.
2.The evidence of Tony and Carmen was that they did not discuss the potential risks and implications of the transfer.
3.Mr Levitan had acted for Carmen in a family law matter and in preparing Carmen's will. Carmen did not adduce evidence of the full details of the professional relationship between her and Mr Levitan, and 'therefore there was no evidence from which the judge could conclude that Mr Levitan was fully independent of Carmen'.
4.Although Mr Levitan's evidence was to the effect that he 'advised' Joseph about the then proposed transfer of the Bassendean property, there was no evidence as to the detail or content of any such advice, and the judge could not be satisfied that Mr Levitan did give 'advice' about the transfer.
5.In any event, there was no evidence of any advice about the disadvantages or implications of the transfer from Joseph's perspective, and no evidence about any advice as to the incongruity of transferring the Bassendean property in a context where he had recently made a will providing for his estate to be shared between Tony, Carmen and Georgina, and when the effect of the transfer was to deplete his estate.
6.Further, Mr Levitan had no involvement in the proposed transfer after 13 September 2011.
7.Ms Leon's evidence did not assist Carmen and Tony because:
(a)she was retained by Carmen and Tony (and not by Joseph);
(b)she was not qualified to give any advice to Joseph about the propriety, disadvantages or implications of the transfer; and
(c)although she assisted Joseph in preparing and signing a statutory declaration concerning a life interest, she allowed the transfer to be registered without any reference to a life interest, or even lodging a caveat to protect any equitable interest.
8.In these circumstances, it may be accepted that (1) Joseph was mentally competent to transfer the property, and (2) knew what he was doing in the sense that he knew that he was transferring legal title to the property. However, 'it was not open to the judge to conclude that he understood the implications of the transfer'.
Georgina also contended that Carmen and Tony had not proved that Joseph acted independently of their influence, in that:[164]
[164] Appellant's written submissions, pars 72 - 85.
1.The judge made no finding as to Joseph's reasons for transferring the Bassendean property to Tony and Carmen. Further, the possible explanation recorded in Mr Levitan's file note (love and affection) was contrary to the judge's findings of fact, in that:
(a)the judge found that 'family members' (which may be taken to include Georgina) helped Joseph care for Josuarda at home insofar 'as they could';[165] and
[165] Primary decision [160].
(b)it was only after Josuarda's death that Joseph grew closer to Carmen and Tony.
2.Carmen and Tony adduced no evidence as to why Joseph changed his mind after 13 September 2011.
3.The judge found that 'why' Joseph transferred the Bassendean property after expressly naming Georgina as a beneficiary under his last will 'must remain something of a mystery', and that 'whatever the underlying reasons' for Joseph's decision, it was ultimately his decision.[166]
4.Tony instructed a settlement agent to provide no information to Mario, and neither Tony nor Carmen informed Georgina of the transfer. Georgina's knowledge of it occurred only after Joseph's death. The fact that a transfer is kept secret from other members of the family tends to suggest that it was the result of undue influence.[167]
5.Whilst Tony and Carmen told Joseph that he needed to take time to consider his proposal to transfer the Bassendean property to them, this simply reinforces the fact that he was discussing the transfer with them.
6.In any event, evidence of that nature is of limited significance given that the doctrine of undue influence is not concerned solely, or even primarily, with gifts which the donee has actively encouraged the donor to make.
7.Further, it could not be said that Tony and Carmen were passive recipients of the gift, in that they engaged the settlement agent and attended with Joseph on the execution of the transfer.
8.There was no evidence that Tony (as opposed to Carmen) tried to discourage Joseph from making the transfer.
9.Ms Ashcroft's evidence 'went nowhere' in answering the questions which the judge should have addressed but failed to consider - whether Joseph knew what he was doing and how the intention to transfer had been produced.
Ground 3
[166] Primary decision [206], [275].
[167] Reference was made to Stivactas v Michaletos (No 2) (1993) NSW ConvR 55‑683, 59, 903.
Georgina contended, in effect, that if grounds 1 and 2 are upheld, the proper conclusion is that Georgina be granted leave to pursue the derivative action. Georgina, in oral submissions, also referred, in support of this proposition, to Whereat v Duff.[168]
[168] Whereat v Duff [1972] 2 NSWLR 147, 181 (Asprey JA), 182 (Holmes JA).
The submissions of Carmen and Tony
Ground 1
Carmen and Tony contended, in effect, that:
1.The common characteristic of presumptive relationships of undue influence is that the first‑named in such a relationship will advise and afford guidance to the other in and for the purpose of such relationship, solely in the interest and for the benefit of the other.[169]
[169] Respondent's written submissions, par 6, referring to Union Fidelity Trustee Co of Australia Ltd v Gibson [1971] VR 573, 577.
2.Further, in none of the cases where a presumption of undue influence arises is it natural to expect one party to give property to the other, so that the character of the relationship itself is never enough to explain the transaction and to account for it without suspicion of confidence abused.[170]
3.Here, it was entirely natural, and indeed expressly recognised by the law through the presumption of advancement, that a father would give property to a child, even an adult child.[171]
4.For the relationship in this case to be a type where a presumption arises, it was incumbent upon Georgina to show that the relationship between Carmen and Tony and Joseph was one which naturally involved ascendancy or influence on the part of Carmen or Tony, or dependence and trust on the part of Joseph. That is, Georgina had to prove that the nature of the relationship involved a degree of reliance, dependence or trust which created ascendancy on their part over his free will.[172]
5.The judge addressed the pleaded case of presumed undue influence at primary decision [215] ‑ [221].[173]
6.The judge rejected Georgina's factual premise as to the nature of the relationship involving ascendancy or influence on the part of Carmen and/or Tony, or dependence and trust on the part of Joseph. Having rejected the underlying factual premise, the question of whether a presumption was rebutted did not arise.[174]
7.Contrary to Georgina's contentions, Joseph did retain a life interest in the Bassendean property, being an ability to reside at the property for his lifetime without the payment of any rent.[175]
8.The judge did not make a finding that the transfer of the Bassendean property was harsh or unwise. Rather, his observations were to the effect that cutting Georgina out of the estate by gifting the property to Carmen and Tony might seem, to third parties, as harsh or unwise. There was no finding that the transfer was harsh or unwise in respect of Joseph's own interest, and it is his own interest that must be considered in an undue influence case.[176]
9.What the appellant seeks to do is to re‑run the case at trial, and argue, in effect, that the judge's findings were against the weight of the evidence, without squarely raising that proposition and without complying with the relevant practice direction.[177]
Ground 2
[170] Respondent's written submissions, par 6, referring to Yerkey v Jones (1939) 63 CLR 649, 675.
[171] Respondent's written submissions, par 7, referring to Kerr v West Australian Trustee Executor Agency Co Ltd (1937) 39 WALR 34; Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353.
[172] Respondent's written submissions, par 12.
[173] Respondent's written submissions, par 17.
[174] Respondent's written submissions, par 20.
[175] Respondent's written submissions, par 23, referring to exhibit 1.39.
[176] Respondent's written submissions, par 24.
[177] Respondent's written submissions, par 25.
Carmen and Tony contended that the question of rebutting the presumption does not arise in circumstances where the judge did not find that the presumption arose. They also contended that, in any event, the judge had 'plenty of evidence' to rely on to be satisfied, as he was, that the transfer was the exercise of Joseph's own free will. That evidence comprised Mr Levitan's affidavit, his entire file, Ms Leon's affidavit (who was not cross‑examined), the affidavit of Dr Sciberras and his medical files (Dr Sciberras not having been cross‑examined), the oral evidence of Ms Ashcroft, the affidavit of Ms Harsany, and the file notes of Joseph's other solicitor, Mr Brook.[178]
Ground 3
[178] Respondent's written submissions, pars 27 - 28.
Carmen and Tony contended that, ultimately, if, contrary to the judge's conclusions, this court accepted that the special or extraordinary circumstances relied upon by Georgina are made out, then this court may conclude that she had standing to bring the claim.[179]
[179] Respondent's written submissions, par 32.
Legal principles
Undue influence
An overview of the relevant principles was provided in Permanent Mortgages Pty Ltd v Vandenbergh:[180]
[180] Permanent Mortgages Pty Ltd v Vandenbergh [2010] WASC 10; (2010) 41 WAR 353 [166] ‑ [173], [175] ‑ [176]; approved in Mercanti v Mercanti [2016] WASCA 206; (2016) 50 WAR 495 [381].
The basis of the equitable jurisdiction to set aside an alienation of property on the grounds of undue influence is the prevention of the unconscientious use of any special capacity in or opportunity for the disponee to affect the disponor's will or freedom of judgment in reference to the transaction: Johnson v Buttress (1936) 56 CLR 113, 134.
The jurisdiction to set aside a transaction procured by undue influence is exercised on two bases. The first is where undue influence is proved as a fact. The second is where undue influence is presumed by reason of the antecedent relationship between the parties, and the presumption has not been rebutted: Johnson v Buttress (119); Union Fidelity Trustee Co of Australia Ltd v Gibson [1971] VR 573, 575. The former is 'actual' undue influence and the latter is 'presumed' undue influence: Powell v Powell [2002] WASC 105 [120] ‑ [121].
Actual undue influence requires proof that the transaction was the outcome of such an actual influence over the mind of the disponor that it cannot be considered to be the free act of the disponor: Johnson v Buttress (134). The source of power to practise such influence or domination over the disponor may not arise from an antecedent relationship, but may arise in the particular situation, or by the deliberate contrivance of the disponee: Johnson v Buttress (134).
Presumed undue influence arises in two ways. One is where there exists a class of relationship historically recognised by the law as raising a presumption of undue influence. The recognised classes include parent and child, guardian and ward, solicitor and client, doctor and patient, religious adviser and adherent ...
Dispositions from the latter to the former fall within the presumption.
The other is where, outside of those recognised categories, the plaintiff positively proves that there in fact existed an antecedent relationship between the parties, the nature of which was that the defendant was in a position to exercise dominion, power, or ascendancy over the plaintiff: Meagher, Heydon & Leeming, Equity: Doctrines & Remedies [15‑105].
The recognised categories of relationship are marked by the characteristic that it is not natural to expect that 'one party would give property to the other. That is to say, the character of the relation itself is never enough to explain the transaction and to account for it without suspicion of confidence abused': Yerkey v Jones (1939) 63 CLR 649, 675.
Parents' dispositions to children can be explicable as being the consequence of parental love and affection without any suspicion of confidence abused. Accordingly, the parent/child relationship, insofar as it concerns dispositions from parent to child, is not a presumed relationship of influence. See Powell v Powell [130]; Wilby v St George Bank [2001] SASC 388; (2001) 80 SASR 404 [95]; Urane v Whipper [2001] NSWSC 796 [22]; Tessmann v Costello [1987] 1 Qd R 283, 293; ASB Bank Ltd v Harlick [1996] 1 NZLR 655, 660 ‑ 662.
…
Where a special relationship outside of the traditional categories is set up it is 'necessary to see the extent and nature of the confidence reposed and whether it involved any ascendancy over the will of the person supposedly dependent on the confidence': Jenyns v Public Curator (Qld) (1953) 90 CLR 113, 133.
The doctrine of undue influence looks to the quality of the consent, or assent, of the weaker party: Commercial Bank of Australia v Amadio (474); Bridgewater v Leahy [1998] HCA 66; (1998) 194 CLR 457, 478.
The judge's findings
[318] F Burns, Undue Influence Inter Vivos and the Elderly, 2002, 26 Melbourne University Law Review 499, 506 ‑ 507, 517 ‑ 519.
The judge, amongst other things, said:[319]
[319] Costs decision [73] - [74], [77] - [83].
For present circumstances, I am of the view that this action, unlike the 'case of substance' assessed by the trial judge in Lo Presti v Ford [No 2], was never a case of arguable merit. Here, it cannot be reasonably suggested in my view that, properly advised, this plaintiff at 8 June 2018 might legitimately have thought that she held a reasonably arguable or respectable cause of action - predicated upon the twin undue influence or unconscionable conduct causes of action …
In the primary reasons, I collected all [Georgina's] trial evidence, which, apart from documents, essentially came from herself, her husband, her son, her brother Mario plus from her uncle Angelo (see primary reasons [13] - [16]). But none of that came close to being enough. There had been real substance in the 8 June 2018 Calderbank offer criticisms by the defendants to the effect that none of these persons appear to have been in regular contact with [Joseph] (after the passing of his wife ‑ their mother) ‑ for the purposes of providing some substantively direct trial evidence bearing on making good those twin causes of action against the defendants.
…
Here, the twin causes of action directed against the defendants, in my view, were allegations of serious misconduct. The defendants were also of course the named executors under [Joseph's] will which had been admitted to probate.
Where then, was the factual (not necessarily strong, overwhelming or conclusive, but respectably persuasive, potentially) evidence held in the hands of [Georgina's] lawyers which could provide some proper basis to sustain serious misconduct allegations of undue influence and unconscionable conduct? Nothing is evident other than internal family squabbling and suspicions. No submission is put to me now by [Georgina] that her case had once looked a lot better for her back in June 2018 ‑ but then later had deteriorated before trial, due to a loss of a key witness or something like that. Her case on what I saw at the trial was always deficient. Properly advised, this action should not have been convened until such a platform of evidence was held.
The 8 June 2018 Calderbank offer pointed out at length the forensic difficulties manifesting for a then future trial - as regards proving undue influence and the absence of any presumption favouring [Georgina]: see pars 4, 5 and 6. As regards unconscionable conduct, the absence of any evidence persuasively pointing to [Joseph's] relevant special vulnerability, was rendered explicit: see pars 7, 8 and 9. All this was seemingly ignored as [Georgina] pressed on to a trial valley, resonating with Tennyson's verse for the Light Brigade's charge.
At par 9 of the 8 June 2018 Calderbank offer, express attention was directed towards the evidence of [Joseph's] legal representative - who prepared his penultimate and final wills, Mr Melvyn Levitan, concerning how that evidence would demonstrate [Joseph's] full understanding, cognitive ability and consent. How could that likely evidence therefore be ignored or downplayed?
Faced with all that the adverse looming trial evidence from [Tony and Carmen], including evidence from Mr Levitan, loud warning bells should then have been tolling for [Georgina].
Yet the tenor of [Georgina's] position under her present costs submissions is that subsequent to the 8 June 2018 Calderbank offer, more evidence emerged from [Tony and Carmen] which rendered [Georgina's] (assumed) arguable undue influence and unconscionable conduct cases to become vulnerable to be lost at trial. That submission, however, wholly displaces and ignores the fundamental starting responsibility of a plaintiff and their legal advisers to gather together at least some respectable body of evidence to support a trial position concerning serious allegations of undue influence and unconscionable conduct in order to plead that at all in the first place - before starting a litigious war to follow.
In the present circumstances, a proper level of trial preparation for [Georgina] at a time 15 months after issuing the writ would at least have envisaged trying to get a statement of evidence from the longstanding general medical practitioner of [Joseph] (Dr Sciberras) upon [Joseph's] cognitive capacity. Dr Sciberras' affidavit evidence (at trial he was not required for cross‑examination on his affidavit) was, of course, totally inconsistent with [Georgina's] advocated case theory of [Joseph] as an emotionally fragile and incapable old man, that was effectively 'putty' in the hands of his manipulative younger children. No medical evidence supported that theory. (emphasis added)
The judge continued:[320]
The fourth factor contended [by Georgina was] 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 [Georgina] 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, [Georgina] 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 [Joseph'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 [Joseph], was also likely to be problematic for [Georgina]. None of that supported [Georgina's] twin causes of action.
Hypothetically, for instance, if [Georgina's] solicitors had obtained a statement from Dr Sciberras, as [Joseph's] long standing general practitioner, to gain at least some foothold of evidentiary support for their contentions as regards [Joseph's] cognitive impairment, emotional fragility, or some level of special vulnerability, then that might have been said to be a countervailing factor for [Georgina] to put against the present application.
But [Georgina] never held any evidence of that nature. Indeed, the medical evidence at the trial about [Joseph] 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. (emphasis added)
Disposition
[320] Costs decision [92] - [96].
The question of error is to be determined in accordance with the principles in House v The King.[321] The effect of the grounds is to allege (1) express error, and (2) inferred error in the sense that the conclusion that the rejection of the Calderbank offer of 8 June 2018 was unreasonable was one which was 'unreasonable or plainly unjust … [and] that a substantial wrong has in fact occurred'.[322]
[321] House v The King [1936] HCA 40; (1936) 55 CLR 499, 504 - 505.
[322] House (505).
As to the first ground, express error is alleged in two respects:
1.The judge acted upon a wrong principle in that he considered that because the relationship between Joseph on the one hand and Carmen and/or Tony on the other was not one of the established categories of presumptive undue influence, Georgina necessarily had to establish the existence of actual undue influence.
2.The judge mistook the facts, in that he failed to appreciate that Georgina's case was premised on the existence of an antecedent relationship of influence, notwithstanding that the relationship was not within an established category.
Whether the judge made the express errors imputed in the first ground depends, in substance, upon a proper construction of the judge's reasons in the costs decision.
His Honour's reference[323] to the 8 June 2018 letter pointing out 'forensic difficulties manifesting for a then future trial - as regards proving undue influence in the absence of any presumption' is, arguably, capable of being read as the judge making the error of assuming that because the relationship between Joseph and Tony and/or Carmen did not fall within the recognised categories of presumptive influence, Georgina necessarily had to establish actual undue influence.
[323] Costs decision [79].
On the other hand, it is also arguable that his Honour's reference in that regard, read in the light of pars 2 and 3 of the letter of 8 June 2018, and the reference in the letter to 'relevantly' in the last sentence of par 3 of the letter, is to be understood as accepting that absent viable grounds for an inference of a relationship of presumptive influence, Georgina had to establish actual undue influence. On balance, the latter construction of his Honour's reasons is to be preferred.
At the outset, it should be observed that the inference of error ought, prima facie, not be too readily drawn, given that the judge (as explained in [128] ‑ [129] above) had dealt with the claim for presumptive undue influence in the primary decision, and it could not easily be inferred that his Honour was unaware of, or had forgotten that in the costs decision. That is particularly so where the judge's remarks, referred to in [180] above, were immediately preceded by a paragraph including the statement that, 'Her case on what I saw at the trial was always deficient'.[324]
[324] Costs decision [78].
Further, his Honour had been involved in case‑managing the litigation and may be taken to have been familiar with its procedural history. As counsel for Tony and Carmen in effect submitted, as at 8 June 2018, Georgina's pleading of an antecedent relationship of influence lacked the clarity with which it emerged in the later pleading. The 2017 statement of claim did not, in terms, refer to an 'antecedent relationship' (unlike the statement of claim at trial), and did not clearly distinguish between claims for presumed undue influence and actual undue influence.[325] The 2017 statement of claim pleaded (amongst other things):
1.that Joseph lacked independent legal advice - a plea that may contribute to an inference of actual undue influence,[326] and, moreover, is commonly made by defendants in rebuttal of a pleaded claim of presumed undue influence;[327]
2.reliance on the fact that Tony and Carmen were the 'lawful' children of Joseph as contributing to a relationship of trust and influence for the purposes of undue influence;
3.that Joseph lacked familiarity with English; and
4.that after Josuarda died, Joseph was unable to live at home without assistance.
[325] Compare the plea at trial referred to in [79.5] above.
[326] Johnson (126).
[327] See [106] above; Meagher, Gummow & Lehane's Equity: Doctrines and Remedies (5th ed) [15.135].
By the time of trial, Georgina had withdrawn from the statement of claim the allegations referred to in points 1 ‑ 4 above.
The 2017 statement of claim did not plead (1) the fact of the power of attorney given to Carmen and Tony, (2) the allegation that Tony was authorised to conduct Joseph's legal affairs, and (3) the assertion that Joseph had authorised Carmen to receive his confidential legal documents by email from his solicitors.[328]
[328] Compare the plea referred to in [79.4] above.
In the costs decision the judge found, in effect, that as at 8 June 2018, the affidavit evidence filed by Georgina indicated that the witnesses had little or no personal knowledge of the alleged social, physical or financial dependence of Joseph, particularly given their limited contact with Joseph after Josuarda's death.[329] On the other hand, Georgina, by that stage, had been served with evidence filed by Tony and Carmen to the effect that Joseph was not socially isolated (which included evidence from Father Leong), as well as evidence from Mr Levitan, Ms Leon, and the medical reports dated 5 and 19 September 2011 of Dr Sciberras (attached to the statutory declaration). The judge found that Dr Sciberras' evidence (the kernel of which was contained in his documents dated 5 and 19 September 2011) was 'totally inconsistent with [Georgina's] … case theory of [Joseph] as an emotionally fragile and incapable old man, that was effectively "putty" in the hands of his manipulative younger children'.[330] Moreover in this context, the judge noted that it was not as though Georgina's case unexpectedly took a turn for the worse because she lost a material witness between 8 June 2018 and the trial.[331]
[329] Costs decision [73] - [74], [78], [92].
[330] Costs decision [83].
[331] Costs decision [78].
The better view of the costs decision, read as a whole, is that the findings referred to in the preceding paragraph addressed Georgina's claim for undue influence, both presumed and actual. These findings in turn form part of the context in which the judge's reference, outlined in [180] above, is to be understood.
In light of the matters in [181] ‑ [187] above, we are not persuaded that his Honour made the first express error imputed to him, when the costs decision is read as a whole.
Nor would we infer that the judge mistook the facts, insofar as it is alleged that his Honour 'failed to appreciate' that Georgina's case was 'premised' on the existence of an antecedent relationship of influence, notwithstanding that the relationship was not within an established category.
As at 8 June 2018, Georgina's pleaded case was not 'premised' on a claim for presumed undue influence. Although it may be accepted that the 2017 statement of claim included (albeit without the clarity of the later pleading) allegations referable to such a case, in substance, the 2017 statement of claim treated the claim for undue influence generically. The other pleaded claims involved unconscionable conduct and the alleged failure to account. The judge's observation that the materials sought to be relied on by Georgina were 'always deficient', may be read as applying to the generic claim of undue influence, whether allegedly arising from a relationship of presumptive influence or from the exercise of actual undue influence.
Ground 1 has not been established.
In relation to ground 2, we see no error in the judge's assessment[332] of the first, second, third, fifth and sixth factors outlined as ordinarily relevant in Ford Motor Company of Australia Ltd v Lo Presti.[333] As to the fourth Lo Presti factor (the offeree's prospects of success assessed as at the date of the offer), the burden of the 2017 statement of claim was that Joseph was old, limited in his capacity to write and understand English, suffering from mild memory loss, physically enfeebled, socially isolated, and, against that background, 'dependent' upon Tony and Carmen to meet his physical needs, and 'entirely dependent' upon them to meet both his financial needs and his emotional needs. As the judge in effect found, as at 8 June 2018, Georgina's affidavit evidence was lacking in cogency in that regard. Further, Georgina's pleaded claim that a relationship of presumptive undue influence was contributed to by the fact that Tony and Carmen were the children of Joseph could not reasonably have been regarded as meritorious, at least without otherwise establishing the burden of her pleaded case, and given that the parent/child relationship does not fall within the recognised categories of influence. Nor could the fact that Tony and Carmen were Joseph's executors reasonably be seen, absent establishing the other pleaded factors relied upon by Georgina, as contributing to a conclusion of presumed or actual undue influence or unconscionable conduct. That is particularly so given that, on Georgina's evidence, the appointment of Tony and Carmen as executors arose at a time when Georgina had a good relationship with her father.
[332] Costs decision [47] ‑ [56], [63] ‑ [64].
[333] Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1 [19].
Also, as noted earlier, the allegations referred to in [185] above (on which Georgina placed considerable emphasis in the appeal against the primary decision) had not been pleaded in the 2017 statement of claim, and there is no evidence that amendments to that effect were in contemplation as at 8 June 2018. Even assuming those matters were to be taken into account in assessing the unreasonableness or otherwise of Georgina's rejection of the Calderbank offer, the first allegation (the fact of the power of attorney) had limited significance absent Georgina otherwise establishing the burden of her pleaded case. The second allegation (that Tony had been authorised to conduct Joseph's legal affairs) is an overstatement of the effect of the evidence derived from Mr Levitan's file, as is the third allegation (that Joseph had authorised Carmen to receive his confidential legal documents by email from his solicitors).
Further, assuming that the matters referred to in [185] above, together with the matters referred to in [150] above, might be pressed in argument as establishing that in all the circumstances as at 8 June 2018 it was not unreasonable for Georgina to reject the Calderbank offer, the ultimate question remains, for present purposes, whether the judge's conclusion is unreasonable or plainly unjust. As Mitchell JA observed in Joyce v Anderson:[334]
Even where the appeal concerns the inferences to be drawn from established primary facts, it remains necessary for the appellant to demonstrate error. As Beaumont and Lee JJ observed in Minister for Immigration, Local Government and Ethnic Affairs v Hamsher:
'... The court must be satisfied that the judgment of the trial judge is erroneous and it may be so satisfied if it reaches the conclusion that the trial judge failed to draw inferences that should have been drawn from the facts established by the evidence. The court is unlikely to be satisfied if all that is shown is that the trial judge made a choice between competing inferences, being a choice the court may not have been inclined to make but not a choice the trial judge should not have made. Where the majority judgment in Warren v Coombes (at 552 - 553) states that an appellate court must not shrink from giving effect to its own conclusion, it is speaking of a conclusion that the decision of the trial judge is wrong and that it should be corrected.'
That observation has been adopted by this and other intermediate appellate courts.
[334] Joyce v Anderson [2020] WASCA 48 [107].
The judge in the primary decision described Georgina's characterisation of her father's condition and circumstances at the date of the transfer as 'overblown'.[335] Although this was said with reference to the position at trial, this characterisation appears equally accurate when considering the nature of Georgina's case, actual or prospective as at 8 June 2018, in the context of the question of the unreasonableness or otherwise of Georgina's response to the Calderbank offer as at 8 June 2018. Overall, we are not persuaded that error has been established in the requisite sense as alleged in ground 2.
[335] Primary decision [216].
There is no point in giving an extension of time to appeal against the costs decision as there is no merit in the appeal. The appeal against the costs decision should be dismissed.
Conclusion
Both appeals should be dismissed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DM
Associate to the Honourable Justice Murphy11 SEPTEMBER 2020
9
16
1