Gaitz v Donovan
[2022] NZHC 2107
•24 August 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-1692
[2022] NZHC 2107
UNDER Part 18 of the High Court Rules 2016 IN THE MATTER
of the estate of VILMOS GAITZ
BETWEEN
BILYNDA GAITZ
Plaintiff
AND
JAMES GAVIN DONOVAN and GIZELLA
GAITZ as executors of the estate of VILMOS GAITZ
First Defendants
GIZELLA GAITZ
Second Defendant
Hearing: 17 August 2022 (memorandum subsequently filed on 22 August
2022)
Appearances:
C G Smith for Plaintiff
No appearance for defendants (no steps taken)
Judgment:
24 August 2022
JUDGMENT OF LANG J
This judgment was delivered by me on 24 August 2022 at 3 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date……………
Solicitors:
Mac and Co, Auckland
C G Smith, Barrister, Auckland
GAITZ v JAMES GAVIN DONOVAN and GIZELLA GAITZ as executors of the estate of VILMOS GAITZ [2022] NZHC 2107 [24 August 2022]
[1] This proceeding concerns the ownership of assets that formerly belonged to Mr Vilmos Gaitz (Vilmos). Vilmos died at Auckland on 22 March 2021. He was survived by his wife, Gizella Gaitz (Gizella), and three children including the plaintiff, Bilynda Gaitz (Bilynda).
[2] Vilmos was born in Hungary. He moved to New Zealand in 1956 when he was 18 years of age. Thereafter he lived permanently in New Zealand apart from a period between 1984 and 1996, when he lived and worked in Australia.
[3] Vilmos entered into a relationship with Gizella when he visited Hungary in 2009. He had known her before he moved to New Zealand as she was a distant relative. Gizella joined Vilmos in New Zealand shortly after his return from Hungary. They were married a short time later. Thereafter, contact between Vilmos and Bilynda, his daughter from his first marriage, deteriorated markedly. As at the date of his death, there had been no contact between them for approximately two years.
[4] Between 2009 and 2019 Vilmos and Gizella lived together in a property situated at 9 Coral Crescent, Panmure (the Panmure property). Vilmos inherited this property from a close friend, Mr Otto Kelecseyi (Otto), in 2007. He transferred an undivided one-half share in the property to Gizella in May 2010, just a few months after they were married (the 2010 transfer). He then signed a new will in November 2011 (the 2011 will) under which he gave Gizella the right to remain living in the Panmure property during her lifetime. He also gave her a life interest in his estate.
[5] Gizella and Mr James Donovan, Vilmos’s solicitor, were the executors and trustees under Vilmos’s last will, which he signed on 19 August 2015 (the 2015 will). Under this will Gizella inherited Vilmos’s entire estate. It is not known what assets Vilmos owned at the date of his death.
[6] Vilmos signed a further transfer in Gizella’s favour at or about the same time as he signed the 2015 will (the 2015 transfer). This resulted in his remaining half share in the Panmure property being transferred to Gizella.
[7] In this proceeding Bilynda challenges the validity of both the 2011 and 2015 wills and the 2010 and 2015 transfers. She contends Vilmos signed these documents when he was subject to undue influence by Gizella. Bilynda seeks declarations that all four transactions are void and of no effect.
[8] Gizella has been served with this proceeding but has taken no steps to defend it. The process server who served her with the proceeding has provided a photograph of Gizella throwing the documents back at him after she realised what they were. The proceeding has also been served on Bilynda’s two siblings, but they have similarly taken no steps to support or oppose it.
[9] Bilynda’s claim has therefore proceeded on a formal proof basis. She nevertheless bears the onus of proving her claim on the balance of probabilities.
[10] Bilynda has formally abandoned alternative claims based on estoppel, unjust enrichment and constructive trust. She reserves her right to resurrect the claim based on estoppel if any party appeals against this decision. The claim based on undue influence is therefore the only claim to be determined.
The law
[11] The principles relating to undue influence have developed as equity’s response to situations in which the free will of a person who enters into a transaction has been overborne or impaired by the influence of another person, usually but not always the other party to the transaction. This makes the influence undue.1
[12] One of the leading authorities on the principles to be applied in this context is the decision of the House of Lords in Royal Bank of Scotland v Etridge (No 2).2 In Green v Green Winkelmann J (as she then was) analysed and summarised these principles as follows:3
(a)The overall burden of proof rests on the person seeking to establish undue influence.
1 Green v Green [2016] NZCA 486, [2017] 2 NZLR 321 at [40].
2 Royal Bank of Scotland v Etridge (No 2) [2001] UKHL 44, [2001] 2 AC 773 at [9]–[11].
3 Green v Green [2015] NZHC 1218 at [100]. The Court of Appeal confirmed that the Judge’s summary was correct: See Green v Green, above n 1, at [48].
(b)The burden of proof is the balance of probabilities.
(c)The person asserting undue influence must show the alleged influence led to the making of the impugned transaction, and the influence was undue in the sense that the transaction was not the result of the free exercise of an independent will on the part of the person at whose expense the transaction was made.
(d)The question of whether a transaction was brought about by undue influence is a question of fact. A party can succeed in establishing this either directly by proving ‘actual undue influence’ or recourse to an evidential presumption which arises where it is established that:
(i)the person said to have been subject to undue influence placed trust and confidence in the other; and
(ii)the transaction called for an explanation.
…
(h)The presence of independent advice is one of many factors that may be taken into account in determining whether undue influence is proved. Whether the independent advice helps to establish that the transaction was the result of a person's free will depends on the facts of the case. Independent advice can help establish that a person understood the decision they were making. But establishing that a person fully understood the act is not the same as establishing that the act was not brought about by undue influence. A person can fully understand an act and still be subject to undue influence.
…
[13] It is not necessary for the person allegedly exerting undue influence to act with impropriety or in an unconscionable manner. The focus is on the mind of the person consenting to the impugned transaction rather than the motives or conduct of the person said to be exerting the pressure or influence.4
[14] In the present case Bilynda contends that from the time Gizella arrived in New Zealand, she exerted significant influence over every aspect of Vilmos’s life. Bilynda says this led to her father becoming isolated from his family and subject to total control and dominance by Gizella. She contends this led directly to her father electing to sign the wills and transfers in Gizella’s favour. She alleges Vilmos signed those documents not in the exercise of his own free will but as a direct result of the pressure Gizella placed on him to do so.
4 Green v Green, above n 1, at [40] and [44].
The evidence
[15] Vilmos married Bilynda’s mother, Linda Barker, in 1961. Linda was his first wife. Bilynda was born on 3 July 1963. Then, on 10 May 1965, Linda gave birth to Bilynda’s brother Frerenc (Frank).
[16] Linda and Vilmos separated in 1966. On 25 August 1967 Vilmos had another son, Roland (Ronnie), to a woman he was in a relationship with at that time.
[17] Vilmos married on two further occasions. He moved to Australia in 1984 to live with his fourth wife, but returned to New Zealand in 1996 following their separation. On his return he moved in with Otto, whom he had met in 1957 after arriving in New Zealand.
[18] During this period Bilynda was living a short distance away. She says she and her father visited each other almost every day. Bilynda’s youngest daughter, Shari, became particularly close to Vilmos as she grew up.
[19] Bilynda says Otto was her godfather and they were very close. She and Vilmos were present in July 2004 when Otto spoke about his estate. She knew Otto was unwell at the time, and says he told them that he was going to see a lawyer to prepare a new will. Otto told Vilmos that he intended to leave the Panmure property to him on the basis that, when Vilmos died, he would leave it to Bilynda. Bilynda says her father agreed with this proposal and that he and Otto shook hands. Vilmos also assured Otto that he would sign a will that left the Panmure property to Bilynda. From that point on Bilynda believed she would inherit the Panmure property when her father passed away.
[20] Otto subsequently executed a will that appointed Bilynda as his sole executor. He died a short time later on 16 November 2007. He left two properties to Bilynda, one in Ponsonby and the other in the same street in Panmure as the property he left to Vilmos. The residue of the estate was also left to Vilmos. Bilynda moved into the Ponsonby property in 2008 and continued to see her father on a regular basis after that.
[21] Bilynda says that by the middle of 2009 her father was in a depressed state. He seemed lost following Otto’s death and was also suffering from chronic ill health. At or around this time Bilynda’s brother Frank persuaded Vilmos to return to Hungary for a holiday. He was able to use some of the money he had inherited from Otto to fund the trip, which was planned to last for approximately 12 weeks.
[22] Bilynda says that for the first or two three weeks of the trip she maintained regular contact with her father. Thereafter, however, she did not hear from him again for approximately six weeks. During this period she learned that Vilmos had begun seeing Gizella, who was the mother of his nephew’s wife.
[23] Vilmos returned from Hungary on 27 September 2009. Bilynda says she immediately noticed a change in his behaviour. He was hostile towards members of the family and spent long periods speaking with Gizella using Skype. On one occasion he spoke to her for nearly eight hours.
[24] On 22 October 2009, less than a month after Vilmos returned from Hungary, Gizella moved to New Zealand and into the Panmure property. Eight days later, Vilmos announced that he and Gizella would be getting married the following week. They married on 2 November 2009. Bilynda declined to witness the wedding. She says Gizella was hostile to members of Vilmos’ family from the outset.
[25] Around this time Vilmos told Bilynda he had converted to Christianity. He had previously been a committed atheist. He told Bilynda that Gizella did not want him to associate with anyone who was not a member of their church. She also accompanied him everywhere he went. Bilynda considers this demonstrates the level of influence Gizella was able to exercise over Vilmos after she arrived in New Zealand.
[26] A significant incident occurred in November 2009. By this stage Frank was living in Australia and he asked Vilmos for some money to enable him to buy a house there. On 5 November 2009 Vilmos transferred the sum of $100,000 into Frank’s Australian bank account. He did so on the basis that Bilynda was to receive half of this sum and that it constituted an advance on the inheritance they would each receive when he died. Bilynda was happy for the funds to be paid into Frank’s bank account
because she was considering moving to Australia. It suited her to have money in an Australian bank account in case she wished to place a deposit on a house in Australia.
[27] As matters transpired, Frank used the whole of the funds for his own purposes. When Bilynda realised this, she made a formal complaint to police. Vilmos later made a formal complaint himself accusing both Frank and Bilynda of defrauding him of the funds, but the police took the matter no further. This incident caused Frank and Bilynda to become estranged.
[28] Bilynda says that from 2010 her interactions with her father reduced dramatically. Contact that was previously daily turned highly intermittent because she was unable to gain access to the Panmure property. When she visited the address she found the gate was locked and Gizella would refuse to come to the door or answer the phone. Gizella and her father also declined all invitations to family gatherings.
[29] In May 2010, approximately six months after Vilmos and Gizella were married, Vilmos transferred an undivided one-half share in the Panmure property to Gizella. Mr Donovan acted for both Vilmos and Gizella on the transfer. A file note that Mr Donovan made on 28 May 2010 records as follows:
I pointed out to him that in light of the very short time the marriage has existed it was an extremely risky thing to do in the event that the marriage would fail.
[30] Mr Donovan’s file note also records that Vilmos responded by telling him that he and Gizella were members of the Elim church and they had no concerns about the possibility of the marriage failing.
[31] On 18 November 2011 Vilmos executed the 2011 will. This appointed Gizella and Mr Donovan as executors and trustees. Under the will Gizella was to have a life interest in Vilmos’s estate. She had the right to remain living in the Panmure property until her death or to sell it and buy a more suitable home should she so wish. On Gizella’s death the residue of Vilmos’s estate was to be held for his three children in equal shares. Bilynda only became aware of the 2011 will and transfer through the present litigation.
[32] Bilynda says that on the few occasions she was able to see her father he was very happy to see her. However, Gizella barely acknowledged her and constantly demanded that Vilmos translate everything she said. Vilmos also seemed unaware that Gizella had been blocking access to him.
[33] Matters came to a head in late 2014. On 13 December 2014 Bilynda’s daughter Shari received a distressing telephone call from Vilmos. Vilmos asked Shari and Bilynda to come and help him. They went to the Panmure property and found Vilmos sitting at the dining table looking nervous and pale. Gizella was acting in a threatening manner.
[34] Bilynda and Shari then became involved in a heated discussion with Gizella and Vilmos that lasted nearly 50 minutes. Shari recorded the conversation on her cellphone and a transcript of it has been prepared. During the conversation Bilynda and Shari tried to tell Vilmos that Gizella was cutting him off from his family and placing pressure on him to conform to her wishes. Vilmos told them he wanted to stop Gizella from stealing his money. He also said Gizella wanted him to put everything in her name and threatened to divorce him if he refused. He said that Gizella had demanded that he pay her large sums of money. He also said he had deposited
$100,000 into her bank account whilst he was in Hungary and had provided financial support to Gizella’s two grown up children who live in Hungary.
[35] Bilynda and Shari then took Vilmos to his bank, where he blocked Gizella from being able to access his bank accounts. When they returned to the Panmure address Gizella was extremely angry and began screaming at Vilmos. The visit ended after Gizella picked up a chair and struck Shari with it.
[36] The following day Bilynda managed to contact her father by phone. He told her Gizella had forced him to go back to the bank and reverse the changes he had made the previous day. This meant Gizella had been reinstated as a signatory to the bank account.
[37] In February 2015 Vilmos was admitted to hospital with a severe headache. Bilynda only learned of this because Vilmos’s neighbour had told her that Vilmos had
been taken away by ambulance. Bilynda visited her father in hospital and he was very happy to see her.
[38] Matters took a turn for the worse in early March 2015 when Vilmos issued Bilynda with a trespass notice. This stated that the notice was issued because of alleged harassment by her and the fact that Vilmos did not feel safe in her company. The service of the trespass notice further reduced Bilynda’s ability to visit the Panmure property.
[39] Bilynda was not aware of the 2015 will and transfer her father had signed. However, she subsequently obtained a copy of a file note Mr Donovan prepared at the time he implemented these transactions. This reads as follows:
I have, this day, just completed the drafting and completion of the Wills of Mr and Mrs Gaitz. At the time I completed the requested transfer of Mr Gaitz’ one half share to Mrs Gaitz, this effectively now means that when registration has been completed that she will be the sole owner of this property. I am advised by Mr Gaitz that he has a daughter and son. The son lives in Auckland here but there has been no contact for the past five years and prior to this commencement of five years of no contact that the contact between the two of them was sporadic and unhappy. I am also advised by Mr Gaitz that prior to his eventually having no contact with the son he had assisted both his son and daughter with substantial funds paid to them; none of which have been repaid. It is on the basis that they have already received their share of the estate that he now leaves everything to his wife, Mrs Gaitz.
It should be noted that Vilmos has limited command of English and Mrs Gaitz even less. However this situation was overcome by virtue of the fact that they brought with them on both occasions “Gabriella Weiner”, a Hungarian lady with an excellent command of English, who explained all the documentation to Mr & Mrs Gaitz and can confirm that they understood and appreciated exactly what they were doing and further that they had been advised of my concern regarding possible claims by Mr Gaitz’ children. At the time of his making the Will and the transference of his remaining half share in the matrimonial property, he was at pains to point out to me that this was being done having regard to the fact that neither of his children had made any attempt to contact him or have ongoing discussions with him, in fact their attitude to his new wife was considerably upsetting and was possibly the cause of his having to be admitted to hospital.
[40] Bilynda takes issue with several of the matters recorded in the file note. First, she points out that she never received any of the funds that were paid to Frank in Australia. Other than some money to upgrade the Ponsonby property, she says she never received any financial assistance from her father during his lifetime. The file
note is therefore wrong to record that Bilynda has already received her share of her father’s estate.
[41] Bilynda also disputes the assertion that Vilmos had a limited command of English. She says her father was able to converse fluently in English. Bilynda also says that Ms Gabriella Weiner was and remains a very good friend of Gizella. She was not independent and did not need to be present as a translator. Furthermore, Bilynda points out that Mr Donovan did not suggest that either Gizella or her father obtain independent legal advice. Instead, he acted for both of them in relation to the 2015 will and transfer. Finally, she disputes the assertion that she made no attempt to have contact with her father or to have ongoing discussions with him.
[42] There was little or no contact between Bilynda and Vilmos between 2015 and 2019. In 2019 Bilynda became aware that Gizella had left New Zealand to travel to Hungary on her own. She and Shari went to the Panmure property and, when her father did not answer, they rang the police. The police gained entry to the house but Vilmos was not there.
[43] During this visit Shari and Bilynda discovered that the property contained a “hidden room” behind a concealed door that had a lock on it. The room appeared to have been designed so that no one knew it existed. Shari and Bilynda gained entry to the room through a window and found that it was their father’s bedroom.
[44] Bilynda and Shari did not find out where Vilmos had gone until 2021, when they discovered he was living at a rest home in Waipuna. They visited him there and were shocked at the deterioration in his physical condition. At the end of the visit the rest home manager told Bilynda and Shari that, in accordance with Gizella’s instructions, they would not be permitted to visit Vilmos again. She also said that no family members were to have further contact with him. Gizella had also instructed the rest home that it was not to advise Vilmos’s family when he passed away.
[45] On 22 March 2021 the rest home advised Shari’s lawyer that Vilmos had died earlier that day. No family member other than Gizella was permitted to have access to Vilmos even after he had died. However, Bilynda was able to view the rest home
logbook. This showed that Gizella arrived at the rest home on 22 March 2021 at 10.20 am. She then signed out at 1.22pm, approximately 30 minutes before Vilmos died.
[46] Shari corroborates much of Bilynda’s evidence. In particular, she confirms she was present when Vilmos told Otto he would arrange for the Panmure property to go to Bilynda when he died. She also recalls Vilmos going to Hungary and the events that occurred following his return, including the heated and lengthy discussion that occurred on 13 December 2014. In addition, she produces a transcript of that discussion. Furthermore, Shari describes the visit she and her mother made to the Panmure property in 2019 and the hidden bedroom they found there.
Decision
[47] The narrative of events set out above demonstrates that Vilmos was subject to significant influence by Gizella from the time she arrived in New Zealand. This extended to every facet of his life, including his financial affairs and his contact with members of his wider family. I am satisfied she deliberately sought to isolate Vilmos and prevent him from having contact with Bilynda and Shari so she could advance her own financial interests.
[48] This is demonstrated by the fact that, less than six months after they were married, Vilmos elected to transfer one half of the Panmure property to Gizella. He took that step even though his lawyer advised him about the risk involved in doing so. I am prepared to accept, however, that it is likely Vilmos exercised independent judgment in signing the transfer. He was plainly infatuated with Gizella following her arrival in New Zealand and probably wished to demonstrate his commitment to her from an early stage in the marriage. Gizella would in any event have been entitled to one half of that property after she had been living in it with Vilmos for three years.
[49] It also needs to be borne in mind that Vilmos made provision for his three children in the 2011 will. They were to receive his residuary estate following Gizella’s death. This demonstrates that Vilmos was capable of exercising independent judgment in November 2011 when he signed the 2011 will. I am satisfied this is also likely to have been the case in May 2010 when he signed the first transfer in favour of Gizella.
[50] The position is different in relation to the 2015 will and transfer. There is nothing in the evidence to suggest that the actions of Vilmos’s children after 2011 contributed to his decision to transfer full ownership of the Panmure property to Gizella and to exclude his children from any entitlement to his residuary estate. I consider Vilmos’s decision to sign these documents is explicable only by the likelihood that Gizella placed pressure on him to take that step. This was just months after the incident on 13 December 2014 when Gizella forced Vilmos reinstate her as a signatory to his bank account.
[51] It is also noteworthy that Vilmos gave Mr Donovan his instructions to implement these transactions in the presence of both Gizella and Ms Weiner. It is arguable that, at the very least, Mr Donovan ought to have spoken to Vilmos alone to ensure he was not being placed under pressure to sign the documents in his wife’s favour. It is also arguable that he ought to have ensured that either Vilmos or Gizella obtained independent legal advice before Vilmos signed the documents. There is nothing in his file note to suggest he advised Vilmos this was necessary or appropriate.
[52] These concerns are highlighted by the issues Bilynda raises regarding the information contained in Mr Donovan’s file note. It is difficult to see why Mr Donovan believed Vilmos needed the services of an interpreter to instruct Mr Donovan in 2015, when he did not in relation to the 2010 transfer or the 2011 will.
[53] Nor is there any evidence to contradict Bilynda’s claim that Frank obtained the entire benefit of the money Vilmos paid into Frank’s bank account in November 2009. Similarly, there is nothing to contradict her assertion that, other than some funds that she used to renovate the Ponsonby property, she did not receive any other money from Vilmos during her lifetime. I also accept Bilynda’s evidence that she tried for a very long period to maintain contact with her father but Gizella made this impossible.
[54] It follows that the reasons that Vilmos gave Mr Donovan for his actions in 2015 do not stand scrutiny. Rather, they suggest Vilmos signed the documents after succumbing to pressure placed on him by Gizella.
[55] Given the above, I am satisfied that the will and transfer in 2015 were not the result of Vilmos’s independent will, and that it would be unconscionable for Gizella to retain the benefit of them. Bilynda has therefore established her claim based on undue influence.
[56] The ownership of Vilmos’s assets reverts to the position that pertained prior to the execution of the 2015 will and transfer. This means Gizella and Mr Donovan now hold Vilmos’s assets on the terms set out in his will dated 18 November 2011. She has a life interest in those assets and has the right to occupy the Panmure property for the rest of her life. She also has the right to sell that property and purchase another if she so wishes. On her death, however, a one-half share of that property is to pass to Vilmos’s three children in equal shares.
Relief
[57] As to relief, Ms Smith submits I should follow the approach taken by Palmer J in Round v Round.5 In that case a father had transferred his property to his son under the undue influence of his son, amounting to an unconscionable bargain. Palmer J said that “the obvious relief” was to revest the property in the father.6
[58] This approach would have been attractive if Vilmos was still alive. However, for obvious reasons Mr Donovan and Gizella have not yet sought probate of the 2011 will and they may never do so. I therefore see problems arising if I was to vest an undivided one-half share of the Panmure property in Gizella and Mr Donovan. I consider the appropriate way to deal with the situation is to make declarations that they hold the property in accordance with the terms of the 2011 will.
Result
[59]I make declarations as follows:
(a)The 2015 will is void and of no effect.
5 Round v Round [2017] NZHC 428.
6 At [99].
(b)Gizella and James Gavin Donovan hold an undivided one-half share of the Panmure property in accordance with the terms of the will dated 18 November 2011.
(c)Gizella and James Gavin Donovan also hold Vilmos’s remaining assets in accordance with the terms of his will dated 18 November 2011.
[60] I reserve leave to Bilynda to seek such further directions and/or orders as she considers are necessary to give effect to this judgment.
Lang J
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