Sylvia Betty Birch By Her Litigation Guardian Geoffrey Michael Birch and Douglas Birch

[2020] HCATrans 112

[2020] HCATrans 112

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B14 of 2020

B e t w e e n -

SYLVIA BETTY BIRCH BY HER LITIGATION GUARDIAN GEOFFREY MICHAEL BIRCH

Applicant

and

DOUGLAS BIRCH

Respondent

Application for special leave to appeal

NETTLE J
GORDON J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 14 AUGUST 2020, AT 10.30 AM

Copyright in the High Court of Australia

MR A.J. GREINKE:   If it please the Court, I appear with my learned friend, MR S.F. LAMB, for the applicant.  (instructed by Shine Lawyers)

MS R.M. TRESTON, QC:   May it please the Court, I appear with my learned friend, MR G.J. BARR, for the respondent.  (instructed by Payne Butler Lang Solicitors)

NETTLE J:   Mr Greinke.

MR GREINKE:   Your Honours, the proposed appeal raises important questions about the fundamental principles of the equitable doctrines of undue influence and mutual wills.  It is important, because it is of critical importance for those in particular who are engaging in succession planning, particularly those in farming communities, and the roles of solicitors and financial advisors in relation to those transactions. 

In respect of the special leave questions, we submit that the reasons of the Court of Appeal diverge from decisions of this Court, decisions of the New South Wales Court of Appeal, and English authorities that are appropriate for this Court, ultimately, to consider and decide.

If we could come to the first special leave issue, which is in relation to the burden of proof, your Honours will see the relevant part of the reasoning of the Court of Appeal in the application book at page 59, and in the reasons of the Court of Appeal at paragraph 76.  This is the finding that, because my client:

was of full capacity at the time of the transfer –

the Court of Appeal started with the proposition that:

the degree of his influence –

which was to be presumed:

could not have been high.

We submit that that is a lifting of the burden, previously represented as a heavy burden in previous decisions of this Court, including in Watkins v Coombes, and it is not a matter that was in accordance with the general principle, that is that a demonstration of emancipation from the presumed influence does not follow from the fact of capacity.

If anything, the Court of Appeal suggested that the degree of burden on a person to displace the presumption was a light one in cases where there was capacity and it implies that a plaintiff would need to bring a further case to suggest that there was some mental defect or other difficulty to enjoy the heavy burden required by the cases about displacement. 

Your Honours, the case of Watkins v Coombes is not one about mental impairment.  There was no question that Mrs Reynolds in that case was anything other than a person of capacity.  Even more so, in the case of Powell v Powell, in that case a young person - and that was a case dealing with again principles of what needs to be demonstrated for emancipation - your Honours, in that case the relevant test, if your Honours have that decision which is in the list of authorities in the special leave application - Powell v Powell [1900] 1 Ch 243, your Honours will see the relevant discussion by Justice Farwell beginning at the end of 125 going over to 126, but at 125 the test that is being looked at is one of emancipation, that is:

if the latter impeaches the gift within a reasonable time, unless the donee can prove the donor had independent advice, or that the fiduciary relation had ceased for so long that the donor was under no control or influence whatever.  The donee must shew (and the onus is on him) that the donor either was emancipated, or was placed, by the possession of independent advice, in a position equivalent to emancipation.

In this case the approach taken by the Court of Appeal was wrong in two respects.  One, it departed from what the description of the heavy burden had been in Watkins v Coombes and, secondly, focused on a test which was not based on emancipation.  The approach is really more apt, in my submission, to a case of unconscionable conduct which, while it is a related equitable doctrine, there are significant differences in approach as illustrated by these cases as to what the requirements are and particularly to displace the doctrine.

Your Honours, the other element from that in terms of the textual analysis from Johnson v Buttress itself - there is a quotation which is in application book 69 from Johnson v Buttress, which is in the written outline for special leave and it is at page 120 of the report, paragraph 41 of our submissions.  Your Honours, I pay attention to the words in there where it refers to:

in the case of an illiterate or weak-minded person it will be more difficult for the donee to discharge the prescribed onus of proof than in other cases.  The burden will be still heavier upon the donee where the donor has given him all or practically all of his property.

In my submission, the words “more” and “still”, qualifying the words “difficult” and “heavier”, there reinforce the view made out in our written outline that the heavy burden in Watkins v Coombes is not lifted by demonstration of capacity.  It is, however, obviously more difficult and still heavier, in particular, a case as illustrated by Johnson v Buttress.  Johnson v Buttress does not stand for the position that if a person has capacity to enter into legal transactions that the undue influence ought to be seen as a fairly light burden easily displaced.

Your Honours, in relation to the second special leave question, this is about the relation of love and affection and coming back to the reasoning of the Court of Appeal, the reasoning for this sits at paragraph [77] on page 59 of the application book and it follows from the quotation there from Yerkey v Jones.  It refers to this proposition, which your Honours will find just after line 30:

The relationship of mother and son does not displace, as a matter of law, the presumption imposed by s 87.  But it can be relevant, and in some cases critical, to a question of whether the presumption is rebutted in a particular case.  In the present case, that relationship is of central importance.

We say that that is a wrong statement of principle and in fact, in these circumstances the opposite approach ought to have been adopted which is that the close, loving and trusting relationship between mother and son here ought to have been as a serious, if not decisive factor, to reinforce the presumed undue influence, particularly in the context we note in our written outline where this is a statutory implied presumption in cases of grants of powers of attorney which one would expect to be given to closely trusted family members to whom that type of very love and affection ought to be directed. 

The other difficulty in relation to the doctrine is, again, it does not go to question, which we submit should be overriding question - is one focused on the emancipation of the individual person and, in relation to a party who has a close family relationship where there are questions of love and affection and trust, gratitude, and so forth, which was relied upon by the Court of Appeal, are highly present, it confronts and makes, in our submission, more difficult to disentangle these various influences from an independent mind freed from that type of influence.

So, for example, I refer to what Justice Dixon says in Johnson v Buttress.  This is at page 135 of the Commonwealth Law Reports.  There, he refers particularly to the burden - finding upon a person who needs to displace the presumption and refers to:

the relations between him and the donor are so close as to make it difficult to disentangle the inducements which led to the transaction.

It is the very type of case that we have here, your Honours.  It does not…..to displace the presumption that they have a close, trusting and loving relationship.  If anything, in my submission, it ought to have been seen by the primary judge and the Court of Appeal as a matter that was reinforcing that presumption.  We point, in our written submissions, to that approach having been taken in the New South Wales Court of Appeal in Stivactas, referring to the nature of the relationship between the parties in that case.  We have that in our written outline, at page 70 of the application book ‑ ‑ ‑

NETTLE J:   Accepting for argument’s sake that the criticisms that you make in the two respects you have identified, is it really a question of principle or just error in the application of well‑established principle about which you complain?

MR GREINKE:   Well, in this case, there was a difference in approach in terms of the principle, we say, because of the manner in which the Court of Appeal stated these propositions at the very high level of generality that they did and, in particular, I have taken your Honours to [76] and [77] of the Court of Appeal’s reasons.  In relation to other parts of the appeal, again, we have fairly straightforward apparent statements of principle.  Another one is paragraph [84] on page 60 of the application book which refers to the adequacy or proposed adequacy of the legal advice, that is:

Mr Laurentiussen did not misstate the legal options which were open to Betty, or the possible legal consequences of them.

Again, that conflicts with a range of authorities about what the proper role of a solicitor is.  The impression one receives from the Court of Appeal’s reasoning is that it is sufficient for a solicitor to discharge the requirements to advise a party who may be subject to influence to not mistake the legal options and make sure she understands the legal consequences which is different from what the courts have found in Powell v Powell and Stivactas in particular as to the types of matters that ought to have been for their attention.  For their own protection and, as Justice Brereton said in the Ritz v Perpetual Trustee Case, there is a reality check against the donor’s intentions. 

GORDON J:   Perhaps, Mr Greinke, because in relation to that paragraph [84] you have taken us to, is not the position that that is an application or purported application of the factors set out in paragraph [62]?  This is raising the question Justice Nettle just put to you.  The principles are set out.  Is it more a misapplication of the principles to the facts of this case?

MR GREINKE:   Well, there is a reference in [62] to what the principles ought to be, but I do agree that when it comes to the application of those, at [84], there seems to be a departure from that both in terms of the content that is required at [84] and, more broadly, a resiling from those principles to the extent that there was – it is suggested by the Court of Appeal in [83], and also going over to [85] and [86], that, really, there did not need to be any advice at all because in this case Betty had already made up her mind before seeing the solicitor for reasons that were somehow not to do with legal reasons or financial reasons but for other reasons about gratitude for his contributions, development of the operation of the property and so on.

So there are matters which ought properly to have been critiqued by Powell and Stivactas and Justice Waddell’s statements quoted at [62].  But then the Court of Appeal does not accept those matters applied to the circumstances here, particularly at [83] and [84].  So I accept that there is a misapplication of the principles but, in my submission, it goes further because they are stating principles about what was done correctly by Mr Laurentiussen, which is not correct and does not meet with those particular standards.

GORDON J:   Thank you.

MR GREINKE:   In relation to that question of advice, again, one of the matters of importance is that, as you would have noted in our written submissions, even the primary judge was quite concerned whether there was any financial advice given to Mrs Birch about what would be her financial circumstances in the event that there was some falling out with her son, on whom she was dependent for her future financial support.  Ultimately there was no advice of a financial kind given by anybody, yet the primary judge and the Court of Appeal dismissed that as a relevant consideration, apparently on the basis that, again, the evidence was that she had already made up her mind to do it.

In relation to the relationship to the parties – and this is the one that really overlaps with the previous point – the primary judge had found that, even if proper advice had been given, because of her relationship with her son and her concern for his welfare and her desire to make sure that he obtained the one-third interest in the land, that she would have not acted on that advice. 

Again, that is a factor which we submit ought to have been treated, not in the way it was by the primary judge or the Court of Appeal as a significant factor rebutting the presumption, but in this case a significant factor reinforcing and decisively reinforcing the presumption.  It comes back to what Justice Farwell says in Powell v Powell, to which I have taken your Honours earlier, and that is it is not sufficient to give advice to a donor unless the donor acts on the advice, otherwise the same influence that produced the desire to make the settlement – in his words, and this is at page 126 – the same influence that produced the desire to make the settlement would produce disregard to the advice to refrain from executing it and so defeat the rule, would strongly influence the greater need for protection.

Again, given the difficulty to disentangle the close family relationship between Mrs Birch and her son, who was being financially supported, who was very close to her in an emotional sense and a trusted person to whom she had given her enduring power of attorney, these are matters where it is insufficient, in my submission, for the matter to have been dealt with as a matter displacing rather than reinforcing the presumption.

Finally, if I can just comment on the final point, which is about mutual wills, and this goes fairly to the heart of the question of improvidence.  We say that there was a wrong approach taken by the Court of Appeal that says the existence of the mutual wills disabled Mrs Birch from any dealing with the property of Fairyland and your Honours will find that in the Court of Appeal reasons at [81] - this is at page 60 of the application book:

She was obliged not to do anything which would affect the full value of that interest in Fairyland passing to Doug under her will.  A reverse mortgage of that interest, if it could have been procured, would have breached that obligation . . . she was not free to sell or otherwise dispose of that interest.

This is contrary to the decision of this Court in Birmingham v Renfrew, which describes, not in the manner that the Court of Appeal did in this case, as effectively a bare trust in favour of Doug from the point at which her husband died, but one which she is allowed to, without making gifts or other dispositions to defeat the will intentions, to live in terms of her own capacities.  Your Honours will find that in Birmingham v Renfrew, I think we have quoted part of it in our reasons, but it is also at page 689 of the report.  His Honour Justice Dixon there refers to:

No doubt gifts and settlements, inter vivos, if calculated to defeat the intention of the compact, could not be made by the survivor and his right of disposition, inter vivos, is, therefore, not unqualified.  But, substantially, the purpose of the arrangement will often be to allow full enjoyment for the survivor’s own benefit and advantage upon condition that at his death the residue shall pass as arranged.

So that the starting point is not one that creates a bare trust, but it is a matter for the court to enforce within the discretions of equity and within the principle of what he describes as a floating obligation descending upon the death, that is, the finding of the Court of Appeal takes a much different approach which is that a mutual will will create, in effect, a bare trust of the land, if there is land involved, at the death of one person, to the expense that the other, in this case Mrs Birch, cannot touch the property, even to look after her own health and welfare as she grows into her old age if that is the only asset she has to draw upon. 

So those are very important questions, legally, for the Court to deal with, and accordingly, we submit it is an appropriate case for special leave in this case.  If it please the Court.

NETTLE J:   Ms Treston.

MS TRESTON:   Thank you, your Honours.  There are primarily four reasons why the special leave application ought not be granted.  We set them out briefly and then develop them.  Firstly, the grounds of special leave at paragraphs 17, 18 and 19 as to the burden of proof demonstrate that this is exquisitely a facts case, not appropriate for a grant of special leave.  Secondly, no special leave question arises out of the adequacy of legal advice because expressly the Court of Appeal did not decide the case on that issue.

Thirdly, there was no misstatement of principle in relation to the mutual will and improvidence question that infected the improvidence consideration, because the right to deal with the property during her lifetime was not an unqualified one consistently with the statements in Birmingham v Renfrew and, fourthly, on that mutual will question, even if the applicant succeeded on every other aspect of the appeal, or any one of them, the applicant now concedes the mutual will and seeks only a particular form of order.  There is no question of principle as to the form of order for a mutual will, the resolution of which is of such public importance that it would justify the grant of special leave.

Can we start with the heavy burden question, special leave questions 17, 18 and 19.  The criticised paragraph of the judgment, paragraph [76] at application book page 59, the court was following this Court’s reasoning in Johnson v Buttress, that the facts which must be proved in every case are not always the same because influence varies both in nature and in degree.  In that way, the nature of the issues – such as influence and disadvantage – necessarily affects the process by which reasonable satisfaction is attained.

So, while it can be accepted that the burden is a heavy one, a gloss must not be placed on the burden, particularly by attempting to describe it as having been lifted because the Court of Appeal used no such language, even by implication.

In the context of the statutory presumption of undue influence found in the Powers of Attorney Act (Qld), the Court of Appeal was doing no more than identifying that in the context of “presumptive”, as opposed to “factually proved undue influence” the burden may not be as heavy in some cases as in others. Justice Dixon recognised that at page 134 of Johnson, which is the extracted passage by Justice McMurdo at [75].

Chief Justice Latham echoed the same sort of approach in Johnson v Buttress at page 122 where ‑ we summarise – he said, for example, if the evidence showed that the deceased was highly excitable, very stupid and mentally unstable then those sorts of findings are sufficient to increase to some extent the weight of the burden of proof which rests on the defendant.

Here, at [76], Justice McMurdo identified the opposite but equally conventional approach, here having started from the premise that undue influence is presumed but not proved.  In the discharge of the burden, he took into account a range of factors as had been found by primary judge and were unchallenged in the Court of Appeal.  The donor was of full capacity.  She and her husband had intended since at least 2004 for the respondent to receive the particular share of the particular farm.

She and her husband had made wills in 2004 and again in 2008, gifting to him on each occasion that property and on each occasion had written a letter to their children explaining what they had done and why, showing their state of mind and their intentions.  One such letter is at page 8, set out by the primary judge at paragraph [11].  Your Honours application book will see, written in the terms in 2008, that:

You will be reading this when we are both no longer here –

setting out what they had done with their property “Fairyland” and why.

NETTLE J:   Is it not correct, as submitted by the opposition, that by doing what this lady did before death, as it were, she made herself wholly dependent upon the largesse of her son by dispossessing herself of any guaranteed source of income?

MS TRESTON:   No, respectfully, your Honour, it is not because she had other ways that she could have achieved income or capital indeed.  For example, she owned a property at Eidsvold, which was the house where she lived.  This property, as your Honours would remember, was a farm that she did not live on and had not lived on for many years.  She also had a life interest, a one-third share of the same farm that she had inherited from her husband.

So whether she sought to make an arrangement to, for example, relinquish that right, as she could easily have done, surrendered her life interest, allowing the termination of the interest, the sale of that interest to her son, which would have resulted in capital of, Justice McMurdo says, “a million dollars, the assumed value of the property,” if she had done that, for example, she would then have been entitled, under his will to the absolute benefit of that.

So she had other options available to her but, importantly, it was always her intention and her husband’s intention and had been for many years that he receive their individual one‑thirds that he could hold with his own one‑third so as to keep that property in the family and continue to run the farm, as is common on rural properties. 

Justice McMurdo also took into account that she, in fact, had had independent legal advice - the nature of the advice is criticised and we will come back to that - but the solicitor had given evidence which was accepted by the primary judge that she understood that she had options being that she could…..the property into a joint tenancy.  She could give the property now or she could keep it as it was.  She had an underlying reason for making the gift because evidence was given, accepted by the primary judge at application book 16, paragraph [45] that:

“she had some concerns about other family members” ‑

who she thought might be upset about the gift of a third having been left to the respondent.  The Court of Appeal and the primary judge took into account the fact that shortly after the transaction she had separately told both her brother‑in‑law and her daughter what she had done and why, demonstrating her appreciation of the transaction in the way identified by then President Kirby in Stivactas. 

Indeed, 16 months after the transfer was made, the evidence of what she understood she had done was clearly contained in a letter set out by the Court of Appeal at application book 47, paragraph [34], if we could take your Honours to that.  So this is, as I say, 16 months after the transaction she went and saw another solicitor, not the solicitor who effected the transfer but someone completely independent.  We take your Honours to it, she says that - and the evidence was that she had written this out substantially in her own handwriting and the solicitors had facilitated the typing and sending of it.  So she was acting on the advice of a solicitor, records that her father:

wished to keep “Fairyland” in the family with Douglas –

that is the respondent:

having to borrow a large amount ‑

of money.  She had made a promise that she would do everything that the father wanted to ensure that that would happen.  Importantly, at the top of page 48, she says she signed her share over to him so he would be able to buy out the father’s share.  She goes on at the paragraph that commences:

I owned a one‑third share which I could give away and I did this so we could keep “Fairyland” in the family as that was your father’s wish.  Regardless of the time, it was always our intention to give a one third share to Douglas so that he would only have to purchase the remaining one‑third share.

Those words, “Regardless of the time”, show that she understood that the gift was always intended to be a complete gift of one‑third and the timing of the gift did not matter, merely that the gift was being effect to.  She was found at first instance factually not to have regretted her actions until after the intervention of the litigation guardian and his siblings about 18 months after the transfer - that is at application book page 61, paragraph [87]. 

So Justice McMurdo at [76] was identifying correctly that the respondent had an obligation to discharge the burden but in the particular facts of this case a donor of full capacity who had an unchallenged and long‑held intention to give this very piece of property to this son was choosing merely to accelerate that benefit and the discharge of the burden, therefore, was not as heavy as when the facts themselves established that the bargain with the influencer was not itself consistent with equity and good conscience in the way described in Amadio, merely because in Queensland, it is a legislative presumption.  

The legislation does no more than still impose a burden of reasonable satisfaction having regard to the nature of the issues.  The same is an answer, in our submission, to especially question 18 – which seeks to ask a hypothetical – that is, does the relationship of love and affection displace or reinforce the presumption.  It is hypothetical because Justice McMurdo at [77], line 34, accepted that the mother/son relationship did not displace the presumption.  What his Honour did was explore a process of reasonable satisfaction.  He took into account all of the other evidence as to why a woman of full capacity might seek to accelerate a benefit of a gift to her son.

So, the approach his Honour took – the Court of Appeal took – is not inconsistent with the New South Wales Court of Appeal in Stivactas.  In any case, that case did not recast the principle in Johnson’s Case to the effect that a close and loving relationship should reinforce the presumption.  It did not depart from the test in Johnson that the ascendant party needed to prove that he took no advantage of the donor.  Rather, the Court of Appeal made a factual finding in Stivactas of dependence where the circumstances were vastly different – an elderly, sick, Greek widow, no children, gave away all her assets without the benefit of any legal advice – or rather, the solicitor could not recall having given advice.

NETTLE J:   What do you say about the effect or accuracy or correctness of the Court of Appeal’s comprehension of the effect of mutual wills?

MS TRESTON:   Thank you, your Honour, we will go to that.  There are two parts to this question.  The first, is whether at application book 60, paragraph [81], the Court of Appeal departed from the reasoning of this Court in Birmingham v Renfrew, which is critical to the appellant’s argument and the second is the improvidence consideration on its own. 

Can we go to Birmingham v Renfrew itself?  The critical paragraph appears at page 689.  Justice Dixon at 689, firstly said, starting towards the first full paragraph:

The purpose of an arrangement for corresponding wills must often be, as in this case, to enable the survivor during his life to deal as absolute owner –

So often, but not always.  Secondly, and further on the same page, the sentence beginning:

No doubt gifts . . . calculated to defeat the intention of the compact, could not be made . . . his right of disposition, inter vivos, is, therefore, not unqualified.

The extension of that second caveat goes on:

But, substantially, the purpose of the arrangement will often be . . . the residue shall pass as arranged.

So, at application book 73 ‑ ‑ ‑

NETTLE J:   Can you hear us, Ms Treston, because we cannot hear you?  I assume, Mr Greinke, you have lost her, too, have you?

MR GREINKE:   Yes, your Honour.  She seemed to freeze and then was gone.

NETTLE J:   We will stand down briefly.

AT 11:04 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.06 AM:

NETTLE J:   I am pleased to see you are back, Ms Treston.  We lost transmission.

MS TRESTON:   Thank you, your Honour.  I do not know how to explain what happened.  So I was taking your Honours through what we would describe as the caveats to using property as an absolute owner, as established by Birmingham v Renfrew.  At application book 73, paragraph 67, the appellant seeks, in our submission, impermissibly to invoke what this Court said in Birmingham’s Case as mandating in all cases that the assets the subject of a mutual will can be dealt with by the survivor during their lifetime as absolute owner, including to convert the assets and expend the proceeds. 

No such immutable concept was laid down by this Court.  Rather, the floating obligation concept crystallising on death was couched between the caveats to which we have taken you.  So the starting proposition is not that the survivor can always deal with the assets.  Rather, in Birmingham it was the case where a wife had inherited substantially from her uncle and she and her husband agreed to leave the estate to each other with a gift over to her relatives and when she died first he changed his will.  But the relatives conceded at page 675 that the agreement did not prevent the husband from dealing with the assets during his lifetime, with a floating trust attaching to such property as was left after his death.

In contrast to Birmingham, the applicant here was subject to equitable obligations to see that a specific property, not residuary estate, would end up with the respondent.  So, not only did the applicant’s and her husband’s mutual wills refer to a specific asset but for each of them it was a part only of an entire property. 

The mutual wills did not purport to give the value of Fairyland or the cash after Fairyland had been sold.  Here the reciprocity running through the instrument was the delivery of the actual parcel of land itself, and that can be seen by that correspondence which we have taken your Honours to earlier.

So here we have the respondent owned a third of the property already, the applicant held a third and a life interest in the other third and by the operation of the mutual wills when the applicant dies the respondent is to pay the estate a prescribed amount under the wills and that can be distributed in accordance with the terms of the will to siblings. 

That obligation upon the respondent would be effected in the event of a dealing with the applicant by her one‑third share such that it would affect its full value.  So in the discrete factual matrix of this case the Court of Appeal was in fact correct to find that there were equitable obligations on this applicant not to do anything to affect the full value of her third because that was the discrete sort of exception contemplated in Birmingham’s Case.  That is not inconsistent with the reasoning in Birmingham because the concept of a floating obligation crystallising on debt was not said to be the only permissible outcome.  To use this Court’s words, it must often be, but it is not always the case.

There are other reasons why in terms of that mutual will concept this is not an appropriate vehicle for special leave because it does not have a matter of general application, and there are really three points to be made here.  The first is, even if the applicant succeeded on any of the undue influence grounds such that an order for a mutual will was ultimately made, because the applicant concedes the mutual will, they argue only about the form of order.  Now, there is no matter of broad public interest about a form of order that would require this Court to consider a matter like that on an appeal.

The second is a utility point.  If the purpose of the order is to provide for the applicant’s care and welfare, as has been the submission that has been made and repeated in this Court, that can be achieved by, as I have said earlier, the relinquishing of the applicant’s life interest, the triggering of the sale of the third share owned by the husband, the use of the proceeds of sale for her care, needs and debts, if there are any, in the very way contemplated by Birmingham v Renfrew, and distributing the balance after her death.  So the outcome that is sought to be achieved is one that can be achieved without the intervention of this Court, demonstrating that it is really not a matter that is suitable for special leave. 

The third is the extent to which the orders which the applicant appears to seek goes behind the very concept of the mutual will.  Can we take your Honours briefly to application book page 58, paragraph [73], where the declaration that the applicant sought was exposed as one of no public importance. 

At application book 58, paragraph [73], the declaration is that she be permitted to sell her one‑third share, there be a right of first refusal to the respondent, a use of the proceeds for her care, welfare and the discharge of unspecified debts, divide the proceeds, if any, on her death to include the respondent and his siblings when the respondent had no such entitlement under the 2008 mutual will and then at footnote 54, further order that the respondent pay a one‑sixth share for his father’s life interest, which under no version of either of the mutual wills would the applicant ever have had to do. 

So the order sought concedes the mutual will, but then seeks to completely rewrite the mutual will concept and undermine the compact.  The payment of the third and the sixth and the distribution of proceeds in a way which the wills do not contemplate show that this is a very fact‑specific case and the orders which our learned friends seek are not ones which this Court should entertain, because it is not of sufficient importance.

Briefly as to the improvidence question generally, which is the second part of paragraph [81] of Justice McMurdo’s judgment at application book page 60, to decide whether this transaction is improvident calls for a consideration of circumstances beyond merely the proportion of the notional value of the asset to the totality of the assets she owned.  Rather, it is important, as his Honour identified, that Fairyland was not the applicant’s home, she had not lived there for years, she lived elsewhere, she had a bank account with funds, and she retained, importantly, the life interest in her husband’s share.

So as to those improvidence considerations, the Court of Appeal placed significant reliance on the unchallenged facts before the primary judge that this was an asset that she was never going to sell.  Starting from the words at application book 60, paragraph [81]:

Most importantly, for some years (at least from when the 2004 wills were made), Betty and Jim had been intent on Doug inheriting their shares in Fairyland.

She would not have regarded Fairyland as an asset for her to deal with as she pleased because she:

felt an obligation to give effect to the intention which she and Jim had held –

There is the correspondence of 2008 and 2012, to which we have taken your Honours and, importantly, the unchallenged finding of the primary judge that she made the gift because she wished to avoid the risk that her interest would be challenged by her other children.  So not only was it an asset she was not going to deal with herself, she actually wanted to make sure that no other members of her family were able to interfere with the interest.

NETTLE J:   I see you are out of time.

MS TRESTON:   Thank you, your Honours.

NETTLE J:   Mr Greinke, any reply?

MR GREINKE:   Yes, your Honour, just briefly.  A lot has been said about the compact that has been involved, but one of the consequences of what occurred in this case was the compact, which was to do two things, one was to provide for Doug Birch after Mrs Birch’s death, did not happen, that was accelerated in his lifetime, but the other parts of that which had an impact on was that an important part of the mutual wills with the husband were a settlement between Doug and his other children in relation to a share of the value of that property.  That is gone, and as your Honours will see in the materials, the commercial cattle, which were also a significant asset that were to go to the other children, were gone, and it was that loss of those cattle which brought about, on our submission, the emancipation, because it was only after the discovery of that effect.

Your Honours will see that in the application book at page 48 in the reasons of the Court of Appeal, which quotes the letter from Wonderley & Hall from which we obtained advice - she obtained advice after she had removed herself, in our submission, from the influence of her son – your Honours will see that at lines 45 to 50:

We confirm our advices to you that now that those cattle are located within the Trust, that now you no longer have ownership of those cattle and you do not have control of the Trust.

It explains the effect of that, over the page:

from our discussions and from the paperwork that voluntarily you have divested yourself of all of your cattle and your interest in Fairyland and therefore you are now in the position as we have discussed where you have no assets or income yourself and are reliant upon Douglas for whatever funds that you do receive -

That is the point at which, on my submission, she realises her precarious position in relation to what she had done with Doug and at that point she becomes emancipated.  Again, it highlights the issue that there was absolutely no financial advice given by anybody at the time of the original transfers and one cannot, in accordance with principles laid down by this Court and the New South Wales Court of Appeal, simply overlook that on the basis that she had capacity and that she had made up her mind to do this in favour of her son for whom she obviously had love, affection and great trust which are the hallmarks of a party that is within a subject of influence and not outside it.

Accordingly, the special leave questions go to the heart of the case in this case.  The wash-up of that in terms of what orders might be made for the sale and dealings with the proceeds of the property I do not suggest are special leave questions themselves, but they simply would flow from the other questions being decided by this Court.

Unless there is anything further, your Honours, those are the submissions in reply.

NETTLE J:   Thank you very much. 

Although there are reasons to doubt the correctness of some of the Court of Appeal’s application of established principles to the facts of the case, we are not persuaded that this application sufficiently identifies a question of principle which, in the particular circumstances of this case, would be in the interests of justice for this Court to consider.  Accordingly, the application is refused.

MS TRESTON:  Thank you, your Honours.  We ask for costs.

NETTLE J:   Mr Greinke?

MR GREINKE:   I cannot say anything about that, your Honours.

NETTLE J:   Thank you.  The application is dismissed with costs.

MS TRESTON:   Thank you, your Honours.

NETTLE J:   Thank you both.

AT 11.18 AM THE MATTER WAS CONCLUDED