Mosqueira v Garate
[2023] NZHC 3737
•18 December 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2018-404-000497
[2023] NZHC 3737
BETWEEN CIRILO EDUARDO SEQUEIROS MOSQUEIRA
by his litigation guardian, Eduardo Sequeiros Garate
Plaintiff
AND
JORGE SEQUEIROS GARATE
Defendant
Hearing: 7 – 10 and 14 – 16 November 2022
15 December 2022
Counsel:
J B Murray for Plaintiff
C R Goode and H T Rogers for Defendant
Judgment:
18 December 2023
JUDGMENT OF VAN BOHEMEN J
This judgment was delivered by me on 18 December 2023 at 12 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
……………………………..
Counsel/Solicitors:
Vallant Hooker & Partners, Auckland C R Goode, Auckland
H T Rogers, Auckland
Chambers Craig Jarvis, Auckland
SEQUEIROS MOSQUEIRA v SEQUEIROS GARATE [2023] NZHC 3737 [18 December 2023]
Table of Contents
INTRODUCTION [1]
RELEVANT FACTUAL BACKGROUND [14]
The Sequeiros family members and how they came to New Zealand [17] Eduardo purchases John Davis Road property and View Road property [29] Cirilo and Flor move to New Zealand [33]
Accounting for the use of Lima Funds [37]
Repairs to John Davis Road [40]
Transfer of title to John Davis Road to Flor and Cirilo; Eduardo keeps View Road
[42]
Eduardo purchases Boundary Road property on behalf of Gabriel [49] Cirilo writes to his brother-in-law about events since arriving in New Zealand [50] Jorge buys Boundary Road [51]
Cirilo writes to a friend about events since arriving in New Zealand [54] Beneficial ownership of Boundary Road changes between Jorge and Gabriel [56] Eduardo agrees to buy back Boundary Road property [59]
Jorge moves into John Davis Road property [60]
Eduardo sells View Road property [64]
Cirilo has appointments with specialist geriatrician and is referred to Alzheimer’s Auckland [65]
The 2010 transaction [68]
The 2010 wills [80]
Eduardo makes handwritten amendments to Flor’s 2010 will [83] Cirilo has further engagements with Dr Harris and Dementia Auckland [85] Cirilo and Flor make new wills [89]
Further engagement with medical care [90]
The 2013 transaction [93]
Cirilo sees Dr Harris again [107]
Cirilo and Flor make new wills [108]
Eduardo lodges caveat against title to John Davis Road [109]
Eduardo makes complaint to the New Zealand Law Society [113] Gabriel returns from the US and uplifts Cirilo and Flor from John Davis Road [118] Proceedings begin [123]
FIRST CAUSE OF ACTION – LACK OF CAPACITY [125]
Relevant evidence [127]
The reports of Dr Harris [128]
Reports and evidence of Ms Venville and Ms Ellerby-Mutu [142]
The evidence and reports of Mr Dower [150] Correspondence with NZLS and decision of the Auckland Standards Committee 3 [168] Evidence of Dr Casey [171]
Evidence of Dr Jenner [174]
Joint statement by Dr Casey and Dr Jenner [185]
Submissions for Eduardo [192]
The 2010 transaction [193]
The 2013 transaction [199]
Submissions for Jorge [204]
Analysis of first cause of action [210]
SECOND CAUSE OF ACTION – UNDUE INFLUENCE [246]
Submissions for Eduardo [249]
Transactions call for an explanation [250]
Unsatisfactory aspects of the transactions [251]
Submissions for Jorge [253]
Analysis of second cause of action [256]
THIRD CAUSE OF ACTION – UNCONSCIONABLE BARGAIN [277]
Submissions for Eduardo [280]
Submissions for Jorge [284]
Analysis of third cause of action [285]
OTHER MATTERS RAISED IN EVIDENCE [295]
COUNTERCLAIM [304]
RESULT [306]
COSTS [309]
Introduction
[1] This proceeding was commenced in March 2018 by Eduardo Sequeiros Garate (Eduardo) and his brother Gabriel Sequeiros (Gabriel), acting as litigation guardians for their parents, Cirilo Eduardo Sequeiros Mosquiera (Cirilo) and Flor Sequeiros (Flor), who were both then still alive. The proceeding challenges the lawfulness of two transactions concluded in 2010 and 2013 by which ownership of a property at 53 John Davis Road, Mount Roskill, Auckland (John Davis Road) was transferred by Cirilo and Flor to a third brother, Jorge Sequeiros Garate (Jorge), the defendant.
[2] Until late 2016, John Davis Road was the home of Cirilo and Flor after their arrival in New Zealand from Lima, Peru, in 1998. From 2007/8, Jorge lived at John Davis Road with Cirilo and Flor and was their primary caregiver until they were moved from the property by Gabriel after he returned from living in the United States.
[3]Purporting to act in the interests of their parents, Eduardo and Gabriel say that:
(a)Cirilo did not have the mental capacity to enter into the 2010 and 2013 transactions and Jorge knew or should have known that Cirilo did not have the mental capacity to enter into those transactions;
(b)Cirilo and Flor had placed their trust and confidence in Jorge and, because of their age, health and mental conditions and reliance on Jorge, were subject to the undue influence of Jorge; and
(c)Jorge’s undue influence caused Cirilo and Flor to enter into the 2010 and 2013 transactions, which were unconscionable bargains.
[4] Flor died in May 2022. As a consequence, Gabriel could no longer act as Flor’s litigation guardian. The proceeding was continued by Eduardo on behalf of Cirilo. Gabriel gave evidence in support of the case advanced by Eduardo.
[5] Cirilo died in May 2023, some months after the hearing in November and December 2023 but before I was able to complete this judgment. Despite Cirilo’s
death, it is appropriate to issue my judgment. The outcome of the proceeding will be important to the disposition of the estates of Cirilo and Flor.
[6] In their statement of claim, Eduardo and Gabriel sought orders setting aside the 2010 and 2013 transactions and an order directing Jorge to sign a registrable transfer of his interest in the John Davis property, subject to Eduardo and Gabriel, (acting on behalf of Cirilo and Flor) assuming liability for the mortgage over the property granted to the Bank of New Zealand. However, in closing submissions, Mr Murray, counsel for Eduardo, advised that a sale of the property is the desired remedy so that Cirilo (now Cirilo’s estate) would become entitled to the proceeds of sale.
[7] By way of counterclaim, Jorge sought damages of $75,000 ($25,000 for himself and for each of his parents) for separating Flor and Cirilo from their home at John Davis Road and from Jorge and for filing misleading pleadings and failing to disclose relevant information during discovery.
[8] For the reasons that follow, I am satisfied that Cirilo had the mental capacity to enter into both the 2010 and 2013 transactions and that those transactions were in accordance with the wishes of Cirilo and Flor and were not unconscionable. I am also satisfied that, in bringing these proceedings, Eduardo and Gabriel have been acting in their own interests and not in accordance with the wishes of their parents. I am satisfied that they have sought to use Cirilo’s dementia as the rationale for the Court to set aside transactions which I am satisfied were deliberately made by their parents for Jorge’s benefit because:
(a)Jorge had been their primary caregiver;
(b)Eduardo and Gabriel had already obtained significant financial benefits from their parents and were financially better off than Jorge; and
(c)Jorge had suffered financially as a consequence of property transactions in which Eduardo and Gabriel had taken advantage of Jorge’s lack of financial acumen and his willingness to trust his brothers.
[9] While Cirilo had dementia by 2010, I am satisfied that the evidence establishes that at that time, the dementia was mild and that Cirilo had the mental capacity to understand and agree to the essential elements of that transaction.
[10] The position regarding Cirilo’s mental capacity at the time of the 2013 transaction is less clear cut. However, I am not satisfied that it has been established, on the balance of probabilities, that Cirilo did not have sufficient capacity to understand that, in the 2013 transaction, he was agreeing to complete arrangements that had been foreshadowed at the time of the 2010 transaction for which I am satisfied Cirilo had the capacity to understand and approve.
[11] For these reasons, no issue arises as to whether Jorge knew or should have known that Cirilo did not have the mental capacity to enter into those transactions.
[12] I am also satisfied that, in the circumstances of this family, there is nothing about the 2010 and 2013 transactions that calls into question the conscionability of those transactions or provides any basis for the Court to conclude that Jorge took advantage of Cirilo and Flor. To the contrary, if there has been unconscionable conduct, it has been that of Eduardo and Gabriel in purporting to act in the interests of their parents when, in reality, that they have been pursuing their own personal ambitions of securing a share of the modest value represented by John Davis Road which, prior to its transfer to Jorge, was the only significant asset of Cirilo and Flor.
[13] I am also satisfied that, in pursuing this claim, Eduardo and Gabriel gave overly negative assessments of their parents’ ability to understand English, exaggerated the extent of their father’s mental decline, exaggerated the extent to which they cared for their parents and helped with the upkeep of John Davis Road, and unfairly cast doubt on the integrity and honesty of Jorge.
Relevant factual background
[14] There is some difficulty in reconstructing what happened over twenty years ago. At the time of the hearing, Flor was dead. Cirilo’s dementia had become moderate to severe, and he could not give evidence. There are few witnesses of what occurred within the family at relevant dates. The dates of some events, particularly
the informal and undocumented property arrangements among the brothers, have not been identified in the evidence. The recollections of the three brothers conflict in various respects.
[15] As I have indicated, I have doubts about the veracity of some of the evidence of Eduardo and Gabriel. I consider their accounts of their interactions with their parents and their dealings with Jorge to be partial and, in some respects, implausible. I note that, when giving evidence, both Eduardo and Gabriel became belligerent and evasive when challenged on the accuracy of their evidence and contested the relevance of questions put to them in cross-examination. By contrast, Jorge was direct and straightforward in his evidence and did not dispute or seek to put any gloss on evidence that might be unhelpful to his own position.
[16] Necessarily, however, the following summary is drawn principally from the evidence of Eduardo, Gabriel and Jorge.
The Sequeiros family members and how they came to New Zealand
[17] Cirilo and Flor were born in Peru in March 1932 and May 1935. Prior to 1962, Cirilo had two children (Alfredo, now resident in Australia, and Elizabeth, resident in Peru) with another woman.
[18] In 1962, Cirilo and Flor married in Lima, Peru. Together, they had Eduardo, born in 1963; Gabriel, born in 1964; and Jorge, born in 1966. Cirilo’s previous relationship was a source of tension with Flor. After their mother died, Alfredo and Elizabeth also lived with the family and continued to do so until they were about 18 years of age.
[19] For much of his working life, Cirilo worked in the Peruvian Department of Labour in Lima dealing with budgetary and other financial matters. He had responsibility for managing significant sums of money and prepared financial reports. His three sons by Flor agree that he was usually polite, calm and reserved, unless angered. They also agree that Cirilo was experienced in financial matters, including the preparation and management of financial accounts.
[20] Flor worked for about 22 years in the Health Department as an aid nurse in public hospitals. Her sons agree she was the more forceful personality and tended to dominate Cirilo. She looked for projects to improve people’s lives. However, she suffered from depression and could become negative and difficult to live with. In her negative periods, she would find fault with Cirilo and complain about the impact that his former relationship had on their marriage. On occasions, she lived separately from Cirilo and contemplated ending their marriage.
[21] To supplement their income, Cirilo and Flor set up a small shop, which they ran in combination with their public service jobs. As a result of their combined endeavours, they were able to purchase a large home, with 11 bedrooms and five bathrooms, in which the family lived in Lima. Later, they established a successful restaurant on the ground floor of the family home. They also took in tenants.
[22] At some point, Cirilo and Flor became members of the Jehovah’s Witness Church. They travelled to Canada, the United States and Europe. Flor decided she wanted to emigrate to an English-speaking country. Eduardo says that Flor thought that would give her sons more opportunity and a better future.
[23] In 1987, Cirilo and Flor came to New Zealand where they lived for about three years. However, they were unable to obtain New Zealand residency and returned to Peru in 1990.
[24] Eduardo came to New Zealand in September 1989 while his parents were still in the country. Prior to coming to New Zealand, he obtained a Bachelor’s degree in Biomedical Science from a university in Peru. He had also served as a police officer in Peru for a number of years, although he disclosed that information only under cross- examination and with some reluctance.
[25] Eduardo obtained New Zealand residency in 1991 and citizenship in 1993. He obtained a Bachelor’s degrees in Medical Laboratory Science and a Master’s degree in Molecular Biology. He also undertook various property developments, some in conjunction with his wife.
[26] Jorge came to New Zealand with his then wife and their daughter in 1991. Prior to coming to New Zealand, Jorge had trained and worked as a dance instructor. Following his arrival in New Zealand, he obtained New Zealand residency. He worked in a factory for a period but then resumed his career as a dance instructor.
[27] Gabriel came to New Zealand in 1994. His pregnant wife, Rocio, and two- year-old daughter travelled to New Zealand before him. Their son was born in New Zealand. Prior to coming to New Zealand, Gabriel had worked for the Peruvian Police. Initially, Gabriel and Rocio were denied residency and steps were taken to deport them. However, Gabriel claimed refugee status because of the asserted risk of retribution for actions he had taken as a police officer in Peru. Whether on that basis or on other grounds, Gabriel and his family were then granted residency in New Zealand.
[28] In 1996, after the three brothers had obtained New Zealand residency and, in Eduardo’s case New Zealand citizenship, they arranged for their parents to join them in New Zealand on a family reunification basis.
Eduardo purchases John Davis Road property and View Road property
[29] In May 1997, in preparation for their departure for New Zealand, Cirilo and Flor sold their family home in Lima. From the sale, they realised a sum equivalent to approximately USD100,000. Cirilo transferred that amount to Eduardo, pending their arrival in New Zealand (the Lima Funds). At the time, the Lima Funds came to approximately NZD140,000.
[30] In July and August 1997, Eduardo entered into agreements for the purchase of John Davis Road and a further property at 2/15 View Road, Mount Eden (View Road). Eduardo used the Lima Funds as follows:
(a)$25,400 as the deposit for John Davis Road (July 1997);
(b)$19,300 as the deposit for View Road (August 1997);
(c)$54,780 in part settlement of John Davis Road, with the balance of the purchase price met from a loan of $175,000 from the BNZ, secured by a first mortgage over John Davis Road (September 1997);
(d)$27,000 in part settlement of View Road, with the balance of the purchase price met from a loan of $147,000 from the Westpac Bank, secured by a first mortgage over View Road (September 1997);
(e)the balance of the funds: on legal and real estate fees, valuations and other pre-purchase reports, costs associated with the properties and communicating with his parents in Peru.
[31] The purchases of John Davis Road and View Road settled on 15 September 1997. Eduardo was recorded on the titles as the sole proprietor of both properties.
[32] After settlement of the purchases, Gabriel and Rocio occupied John Davis Road and paid rent to Eduardo. One room was also let out to a boarder. Eduardo occupied View Road.
Cirilo and Flor move to New Zealand
[33] In January 1998, Cirilo and Flor arrived in New Zealand. Gabriel and Rocio moved out of John Davis Road. Cirilo and Flor moved into John Davis Road and took over the loan repayments and other outgoings on the property which they met from their New Zealand superannuation and Peruvian pension funds and from rent received from tenants which they took in at some stage after moving in.
[34] Jorge’s evidence is that Cirilo and Flor were very unhappy to find that the Lima Funds had been completely committed by Eduardo and that they were unable to use the Lima Funds to buy their own home as had been their intention and had no option but to move into John Davis Road, which was in poor condition and in need of substantial repair. He says his parents tried to insist that Eduardo sell both John Davis Road and View Road and return their money but the property market had crashed and the values of the properties had plummeted. Jorge says Eduardo had expected to on- sell the properties at a profit before their parents arrived but had been caught out by
the downturn in the property market. Jorge says that this situation caused significant tension within the family for many years.
[35] The evidence of Eduardo and Gabriel is that Cirilo and Flor knew and approved of the purchases of John Davis Road and View Road. Gabriel denies there was any upset in the family over Eduardo’s purchases. However, when being cross-examined about the state of repair of John Davis Road, Eduardo sought to place responsibility for the poor condition of the house on Jorge because he (Eduardo), had become estranged and separated from his parents “because of the transfer” and he could not go to his parents anymore.
[36] I am satisfied, therefore, that Jorge’s account of events is truthful and generally accurate. That is, I am satisfied that Eduardo’s use of the Lima Funds to buy John Davis Road and View Road was not known to Cirilo and Flor and was not approved by them. I am also satisfied that these events caused considerable distress within the family, to the point that there was a period when Eduardo could not visit his parents because of their unhappiness at what he had done. I am also satisfied that Eduardo and Gabriel have deliberately sought to underplay the significance of Eduardo’s use of the Lima Funds and the impact that these events had on their parents.
Accounting for the use of Lima Funds
[37] In June 1998, Cirilo or Eduardo prepared a detailed statement recording how the Lima Funds had been invested, which was signed by Cirilo and Eduardo.
[38] On 28 August 1998, Eduardo signed a statement in English, witnessed by Cirilo, declaring that John Davis Road and View Road were:
… ON MY NAME AND THAT IF BY ANY CIRCUMSTANCES (DISABILITY OR DEATH) THAT COULD HAPPEN TO ME, THESE TWO HOUSES ARE TO BE TRANSFERRED TO MY PARENTS : EDUARDO SEQUEIROS MOSQUIERA AND FLOR GARATE DE SEQUEIROS, WHO WILL BE LEGAL OWNERS.
I DECLARE THAT I WRITE THIS DOCUMENT BY MY OWN WILL AND WISH.
[39] I am satisfied that this statement was made to protect the interests of Cirilo and Flor in the properties if anything was to happen to Eduardo before he was in a financial position to settle up with his parents over his use of the Lima Funds.
Repairs to John Davis Road
[40] It is common ground that significant repairs were undertaken to John Davis Road after Cirilo and Flor had moved in and that Gabriel was involved in some of those repairs. Gabriel’s evidence is that he provided his labour free of charge to his parents. Eduardo says that he and Gabriel spent a lot of time, money and effort working on the house, but that Jorge never did any work on the home. Jorge’s evidence is that the repairs were undertaken by a number of Peruvian contractors with whom Gabriel worked and that the contractors and Gabriel were paid for their work. Jorge’s evidence is more consistent with a letter written some years later by Cirilo to his friend, Hermano Gibbons, as discussed below.
[41] At some stage after Cirilo and Flor had taken up residency at John Davis Road, but while Eduardo remained the sole registered proprietor, Eduardo borrowed a further
$35,000 from the BNZ which was also secured by the mortgage over John Davis Road.
Transfer of title to John Davis Road to Flor and Cirilo; Eduardo keeps View Road
[42] In May 2002, by a Deed of Family Arrangement, Eduardo transferred 99 per cent of John Davis Road to Cirilo and Flor. The deed recorded that Eduardo retained a one per cent interest in the property to satisfy Bank requirements but would hold that interest on trust for his parents and would transfer that interest to his parents upon their request and with Bank approval. At that time, it was believed that Cirilo and Flor would not be able to take out a loan in their own names, so the loan taken out by Eduardo remained in place. Cirilo and Flor continued to meet the repayment obligations and other outgoings.
[43] The Deed of Family Arrangement made no provision for any payment by Eduardo to his parents for the use of their funds. Nor did it address View Road.
[44] In October 2003, Eduardo transferred his one per cent interest in John Davis Road to Cirilo and Flor, who took out a loan of $201,500 from the BNZ, secured by mortgage against the title to the property. The loan in Eduardo’s name was repaid and the mortgage against the property securing Eduardo’s loan was discharged.
[45] Jorge says that his parents took the initiative to obtain the loan and complete the transfer of title to John Davis Road. He says their intention had been to obtain title to View Road as well, but that Eduardo had interrupted a meeting Cirilo and Flor were having at the BNZ and made a big fuss about the transfer of View Road. Jorge says Flor told him that she told Eduardo that he could keep View Road, but he could never ask them for anything else and that View Road would be his inheritance.
[46] Eduardo says he was the one who took the initiative to transfer title of John Davis Road to his parents and that he had done so because it was the right thing to do. Eduardo does not refer to any fight over his retaining title to View Road. He says his retention of title was a form of advance inheritance and that, in gratitude, he paid his parents $20,000. There is no documentary evidence of that payment.
[47] Eduardo says his parents gave the money he paid them to Gabriel and Jorge, who each acknowledge receiving $10,000 about that time. However, given that the debt on the John Davis Road property was $181,000 at the time and that Cirilo and Flor topped up the loan they had arranged with the BNZ by $20,000, I consider it more likely that the payments to Gabriel and Jorge came from the BNZ loan and were paid by Cirilo and Flor as partial offsets to the benefit that Eduardo obtained by retaining View Road in which $46,300 of the Lima Funds had been invested and had not been returned to Cirilo and Flor. Jorge says Gabriel asked his parents for the $10,000 and that he accepted the gift but had not asked for it.
[48] I do not accept, therefore, that Eduardo paid his parents any money for his use of their funds in the purchase of View Road.
Eduardo purchases Boundary Road property on behalf of Gabriel
[49] In December 2002, Eduardo purchased a property at 44A Boundary Road in Blockhouse Bay (Boundary Road). The purchase price was $220,000. The purchase
was paid for by funds provided by Gabriel and Rocio and a loan from the National Bank, secured by a mortgage against the title to the property. Although the purchase was made and registered in Eduardo’s name, it was bought on behalf of Gabriel and Rocio who had yet to obtain permanent residence in New Zealand. Gabriel and Rocio occupied the property and met the mortgage repayments and other outgoings on the property.
Cirilo writes to his brother-in-law about events since arriving in New Zealand
[50] At some point in 2003, Cirilo moved out of John Davis Road and, with Eduardo’s assistance, secured accommodation in Hamilton, where he went with his typewriter and personal effects. In a lengthy letter in Spanish dated 20 July 2003, Cirilo explained to his brother-in-law in Lima, Rafael Aro, what had been going on since he and Flor had arrived in New Zealand. Based on the English translation provided, in that letter Cirilo said that:
(a)Flor had decided that they should separate or get divorced, which he did not want to do. He said the reason for Flor’s decision was Cirilo’s wish to write a history of his family in their hometown of Tipin, which was a project to which Flor objected. However, he had decided to press ahead regardless and had made the arrangements to move to Hamilton.
(b)Flor complained about having to use money she had brought back from Canada on their house in Lima, but that this money had been recovered once their house was sold and the sale proceeds (the Lima Funds) were brought to New Zealand. Cirilo explained that the Lima Funds were now invested in two houses that Eduardo had bought without his authorisation, but which they had had to accept. Cirilo said John Davis Road was now in their name and that they had given the apartment in Mt Eden (View Road) to Eduardo, who had used it as a base asset and was making money from buying and selling houses.
(c)When he and Flor had arrived in New Zealand on 8 January 1998, he “found not one cent of [his] USD100,000” because Eduardo had bought John Davis Road and View Road, adding NZD330,000 in bank loans,
for which they were now paying a high rate of interest fortnightly. Cirilo said this had ended up spoiling their enthusiasm and said troubles and problems had begun.
(d)The beginning of 1998 had been so bad that Cirilo had also been taken over by depression but he had been able to overcome that without medication.
Jorge buys Boundary Road
[51] At some point in 2004, Gabriel and Rocio looked to move out of Boundary Road and listed it for sale, with an asking price of $300,000. Gabriel says they received a written offer to purchase for $295,000 but did not accept the offer. There is no documentary evidence of the offer. I am not satisfied that any genuine offer was received.
[52] In October 2004, there were discussions among the three brothers about Jorge and his family moving into Boundary Road. Eduardo and Gabriel say this was Jorge’s idea. Jorge says he had never wanted to live at Boundary Road but was badgered into the purchase by his brothers, particularly Gabriel, who had borrowed money from Jorge to fund various property transactions in which Gabriel was involved.
[53] On 27 October 2004, title to Boundary Road was transferred from Eduardo to Jorge and his then partner, Toshie Komai.1 The mortgage on the property securing the loan to Eduardo was discharged. On the same date, a new mortgage to the BNZ was registered against the title securing a loan of $295,000 taken out by Jorge to cover the purchase price of $300,000. Jorge says he agreed to pay that price because that was what Gabriel told him the property was worth. Jorge did not obtain a separate valuation.
Cirilo writes to a friend about events since arriving in New Zealand
[54] On 20 December 2004, Cirilo wrote a five-and-a-half-page letter in Spanish to Hermano Gibbons, a friend in Peru. The letter covered a number of subjects, including
1 Jorge became sole proprietor in October 2006 when he and Ms Komai separated.
developments in relation to John Davis Road. According to the translation provided of passages of the letter, Cirilo wrote that:
(a)Eduardo had cleverly (but not at the correct time) invested the Lima Funds invested in buying View Road and John Davis Road. To buy these properties, Eduardo had borrowed from the bank $300,000 plus interest which they were paying at the moment.
(b)Luckily the properties had come up in value in recent years, so it was a good investment. However, in January 1998 when they arrived, there was no money; the houses were very old (nearly 40 years) and they had started renovations which they had just finished.
(c)They had had to ask the bank for a further $30,000 when he and Eduardo had travelled to Lima2 and he had used $10,000 of that money in fixing up John Davis Road, for which he used Peruvian workers, through formal and informal arrangements, for among other things: general painting inside and outside the house; upgrading electric lights; fixing the hot water cylinder; tiling the terrace; fixing and painting doors and stairs; and replacing the old toilet, shower, kitchen bench (which was infested with cockroaches) and the carpet of the main bedroom. He had also bought soil, plants and vegetables for the garden.
[55] Jorge says that the costs of Eduardo’s travel to Peru were met from the increase in the loan on John Davis Road.
Beneficial ownership of Boundary Road changes between Jorge and Gabriel
[56] It is common ground that Jorge was unhappy living at Boundary Road although the brothers disagree on the reasons for that unhappiness. In any event, at some point Gabriel offered to take back Boundary Road at a price he and Jorge agreed. However, because Gabriel was over-committed with other investments, it was agreed that the property and the loan arrangements would stay in Jorge’s name, but that Gabriel would
2 Flor had become unwell during a visit to Peru and needed an operation from which she had taken some time to recover.
resume responsibility for the loan repayments. Jorge also agreed to increase the loan so he could advance funds to Gabriel.
[57] Some time later, Jorge resumed occupation and beneficial ownership of Boundary Road and responsibility for the loan repayments. Jorge says he took back the property because Gabriel had defaulted on some of the loan repayments.
[58] Jorge lived at Boundary Road for a few years. He converted it from a three- bedroom house into a five-bedroom house and took in tenants. For a period, his then girl-friend Po-suen Ng, lived with him there. Flor also lived there for approximately 10 months during a period when there were difficulties in the marriage with Cirilo.
Eduardo agrees to buy back Boundary Road property
[59] In September 2007, Eduardo offered to buy Boundary Road from Jorge at its then capital value of $350,000. Jorge agreed. Eduardo took over responsibility for Jorge’s loan, which then stood at about $318,000, and paid Jorge $32,000, being the difference between the valuation of the property and the amount of the loan outstanding.3 However, title to the property remained in Jorge’s name, as did the loan, but it was agreed that Eduardo would make the loan repayments.
Jorge moves into John Davis Road property
[60] In June 2009, Jorge moved into John Davis Road. He lived in one of the upstairs bedrooms for about two years. He and Cirilo signed a tenancy agreement under which Jorge agreed to pay rent of $200 per week and to pay a bond of $200.
[61] Ms Ng stayed on at Boundary Road for a few months and paid rent to Eduardo. She then rented another property where she lived with her son. On occasion, she also stayed over at John Davis Road. However, she did not want to live there because Flor was difficult to live with and she believed Jorge should have his own place.
3 In his brief of evidence, Jorge said this transaction occurred at some point between 2011 and 2013. However, it is clear from Eduardo’s bank account that the payment of $32,000 was made on 28 September 2007.
[62] Ms Ng says she tried to persuade Jorge to come and live with her at their own place, but he refused because he had promised to look after his parents. Jorge renovated the downstairs garage area of John Davis Road and took up residence there, thereby freeing up another room for tenants. At Flor’s insistence, he stopped paying rent but continued to pay his share of other outgoings.
[63] Jorge says that, from about this time, his parents started telling him that they wanted to put John Davis in his name, but he declined because he did not like the house and he saw it as a source of unhappiness and family squabbles. Even so, Jorge says that in 2010 his parents told him that Eduardo was still pressuring them for access to the equity in John Davis Road. He says they also told him that they wanted to make sure he received John Davis Road when they died.
Eduardo sells View Road property
[64]On 18 March 2010, Eduardo sold View Road for $368,000 at a capital gain of
$175,000 over the purchase price of $193,000. Jorge says Flor was upset when she heard that Eduardo had sold for a profit the house that had been given to him as his inheritance and he had not even invited his parents over for dinner to celebrate.
Cirilo has appointments with specialist geriatrician and is referred to Alzheimer’s Auckland
[65] In May, August and September 2010, Cirilo had appointments with Dr Roger Harris, a consultant geriatrician at the Auckland District Health Board (ADHB), who assessed Cirilo for dementia. Cirilo was accompanied to the May appointment by Flor. Cirilo was not accompanied by any family members at the August appointment, but the doctor had an interpreter. At the September appointment, Cirilo was accompanied by Flor and “a son”, who is likely to have been Jorge, although Jorge has no clear memory of the visit.
[66] After each appointment, Dr Harris wrote a report to the physician who had referred Cirilo. At the appointment on 10 May 2010, Dr Harris carried out a RUDAS
dementia screen in which Cirilo scored 26/30.4 At the appointment on 9 August 2010, Dr Harris carried out an EXIT-25 cognitive test for elderly patients, in which Cirilo scored 18 out of 48.5
[67] On 6 October 2010, Elaine Venville of Alzheimer’s Auckland called at John Davis Road and left information in English and Spanish about dealing with Alzheimer’s disease. On 11 October 2010, Ms Venville had a one-on-one consultation with Cirilo in the company of an interpreter. On 17 November 2010, Ms Venville called again at John Davis Road. The family were working in the garden and there were other visitors, so she did not stay long.
The 2010 transaction
[68] The 2010 transaction was given effect through documents prepared by Jorge’s solicitor, Winston Wang, as amended following three meetings in November and December 2010 between Cirilo and Flor and Mr Aaron Dower, a partner at Recordon Dower, the successor to a firm which had previously acted for Cirilo and Flor.
[69] In July 2010, Jorge sent Mr Wang the title to John Davis Road for Mr Wang to “start doing the paperwork”. The email noted that the manager of the BNZ was “all fine” and provided her details.
[70] On 19 October 2010, Cirilo, Flor and Jorge called on the BNZ for the purpose of restructuring the loan secured against John Davis Road. The BNZ record of the call recorded that Flor and Cirilo wanted Jorge’s name on the loan and on the title because they were getting older, that Jorge would pay off the loan if they are not able to and that Jorge would get the property. The loan restructure was approved on 5 November 2010. The approval was conditional on Cirilo and Flor obtaining separate legal advice before drawdown of the loan.
4 Rowland Universal Dementia Assessment Scale. According to the Dementia Australia website a score of 22 or less should be considered as possible cognitive impairment and referred on for further investigation by the relevant physician. See “Rowland Universal Dementia Assessment Scale (RUDAS)” Dementia Australia < is an acronym for Executive Interview. An interviewee is given 25 questions or tasks to perform and is usually scored out of 50. However, because Cirilo was not able to understand one question, his baseline score was 48.
[71] On 19 November 2010, Cirilo and Flor met with Mr Dower. They had with them documents prepared by Mr Wang, at Jorge’s instruction, which included:
(a)an agreement for sale and purchase, under which Flor and Cirilo would sell a one third share of John Davis Road to Jorge;
(b)a draft deed of acknowledgement of debt, under which Jorge, Flor and Cirilo would acknowledge that Jorge had borrowed the amount of the purchase price from Flor and Cirilo to finance the purchase of a one- third share of John Davis Road; and
(c)a draft deed of forgiveness of debt, under which Flor and Cirilo would forgive Jorge a debt of $54,000;6 and a gift statement in the Department of Inland Revenue form IR 196.
[72] At the meeting, Mr Dower recommended that Cirilo and Flor should enter into a property sharing agreement with Jorge for their own protection. However, they were resistant to this idea, probably because they did not want to incur further legal fees.
[73] Following the meeting, Mr Dower sent an email to Mr Wang requesting various amendments to the documents Mr Wang had prepared. He also sent Cirilo and Flor a letter setting out the terms of engagement and an estimate of fees for acting on the sale and in preparing wills, for which they had also asked Mr Dower to act.
[74] On 19 November 2010, Mr Wang replied to Mr Dower’s proposed amendments and advised that Jorge had instructed that the property would be registered in the joint names of Jorge, Cirilo and Flor.
[75] On 23 November 2010, Mr Dower met again with Cirilo and Flor. On this occasion, they arrived with Jorge but, at Mr Dower’s direction, Jorge did not take part in the meeting, which was held in a meeting room with the door closed.
6 That is, the combined entitlements of Cirilo and Flor to gift up to $27,000 without attracting gift duty.
[76] At the meeting on 23 November 2010, Cirilo and Flor signed some of the documents relating to the 2010 transaction but not the Agreement for Sale and Purchase. Mr Dower again recommended that they and Jorge should conclude a property sharing agreement and he raised that question directly with Jorge when Jorge joined his parents at the end of the meeting. Cirilo and Flor again declined to take up that recommendation. Mr Dower also recommended that they obtain a registered valuation of John Davis Road before concluding the transaction.
[77] Cirilo and Flor met again with Mr Dower on 3 December 2010. They had not obtained a registered valuation as recommended by Mr Dower. Cirilo and Flor advised that they were happy to proceed on the basis of an up-to-date QV e-valuation which Mr Wang provided, at Mr Dower’s request. The valuation gave an estimated value of
$453,000.
[78] At the meeting on 3 December 2010, Flor and Cirilo signed the agreement for sale and purchase under which they sold a one-third share in John Davis Road for
$83,320.87.7
[79] The transfer of John Davis Road jointly to Cirilo, Flor and Jorge was registered on the title on 9 December 2010.
The 2010 wills
[80] At his meeting with Flor and Cirilo on 19 November 2010, Mr Dower gave each a “Will Instruction Sheet” which he asked them to complete. Cirilo and Flor brought the forms with them to the meeting on 23 November 2010. They had each filled in the front part of the forms in their own handwriting with their personal details and those of Jorge, whom they each named as executor of their estates. Mr Dower then filled in the latter part of the forms and recorded in each case that they wanted to give “everything to Jorge”.
7 It was accepted by Mr Dower in cross-examination and by counsel for Eduardo and Jorge that the purchase price was one-third of the equity in John Davis Road based on an estimated market value of $453,000 less the loan amount then owing to the BNZ of approximately $205,000.
[81] Mr Dower wrote on Flor’s Instruction Sheet, “Mirror wills, then Jorge as beneficiary”. This reflected Mr Dower’s understanding that Flor and Cirilo intended to leave their estate to each other in the first instance with Jorge to be the beneficiary if either pre-deceased the other. Mr Dower sent draft wills to Flor and Cirilo in accordance with this understanding. However, at the meeting on 3 December 2010, Cirilo and Flor said they no longer wanted to make the other the residuary beneficiary of their estates and asked that the draft wills be amended to make Jorge the residuary beneficiary, with Gabriel to be the residuary beneficiary if Jorge pre-deceased either of them.
[82] Mr Dower finalised the 2010 wills in accordance with the instructions of Cirilo and Flor while they were still at his offices. The wills were executed by Cirilo and Flor and their signatures witnessed before they left Mr Dower’s offices.
Eduardo makes handwritten amendments to Flor’s 2010 will
[83] At some point, which may well have been some years after the execution of the 2010 wills, Eduardo made handwritten amendments to Flor’s 2010 will. Under these amendments, Flor would appoint all three sons as executors of her estate and leave the residue of the estate to Eduardo, Gabriel and Jorge.
[84] In cross-examination, Eduardo admitted that he had written the amendments but said he could not remember when he had done so. He says Flor showed him her will and he thought that was around the end of 2013. Eduardo denies that he told Flor to change her will to align with his amendments. He agrees, however, that the intention was for Flor to have a new will prepared to reflect the amendments.
Cirilo has further engagements with Dr Harris and Dementia Auckland
[85] On 21 March 2011, Dr Harris reviewed Cirilo in his clinic, together with Flor and an interpreter.
[86] On 26 October 2011, Dr Paul Fur of the Mount Roskill Medical and Surgical Centre, referred Cirilo to Dementia Auckland.
[87] Ms Venville of Dementia Auckland telephoned Flor on 28 October and 8 November 2011 and called at John Davis Road on 21 November 2011.
[88] On 1 May 2012, Jean Ellerby-Mutu, a disability advocate with Dementia Auckland, called at John Davis Road. She was accompanied by a registered nurse and a Spanish interpreter. The nurse undertook a needs assessment.
Cirilo and Flor make new wills
[89] On 12 September 2012, Cirilo and Flor met with Mr Dower to discuss making new wills, which were executed and witnessed that day. Under the new wills, Cirilo and Flor left their residuary estate to each other and, if either predeceased the other, to Jorge, and, if he predeceased either, Gabriel and Eduardo.
Further engagement with medical care
[90] On 14 September 2012, Ms Ellerby-Mutu rang Flor who told her that she and Cirilo were preparing to go to Michigan for six weeks with their son (Gabriel), who was living half the year there and half the year in New Zealand. After the call, Ms Ellerby-Mutu sent Flor a pack of information about travelling with dementia and communicating with a person with dementia.
[91] On 11 March 2013, Cirilo had a further appointment with Dr Harris on referral from Dr Fur. Cirilo was accompanied by Flor.
[92] On 15 April 2013, Ms Ellerby-Mutu visited John Davis Road and met with Flor and Cirilo for a discussion about dementia, which included a discussion about dementia medication. Jorge was also present for most of the visit and acted as interpreter. He agreed to go through a service agreement with his parents and get them to sign it. Ms Ellerby-Mutu left an information pack with Jorge, who had said he would like some information.
The 2013 transaction
[93]The 2013 transaction was initiated and completed over March and April 2013.
[94] On 22 March 2013, Mr Wang, Jorge’s solicitor, emailed Mr Dower advising that he had been instructed by Jorge that his parents wanted to transfer the remaining two-thirds (except five per cent) of the title to John Davis Road to him and that the loan on the property would transfer from Cirilo and Flor to Jorge. The transfer would be by sale with an acknowledgement of debt on settlement. The debt would be gradually forgiven. Mr Wang asked Mr Dower to take instructions and confirm.
[95] On 27 March 2013, Jorge telephoned Mr Dower’s office and spoke to Mr Joseph Bradley, a solicitor of two-years’ experience, who was working under the supervision of Mr Dower. Mr Bradley’s file note of the calls recorded that Jorge advised that his parents wanted to move things along quickly and he put Flor on the phone. Mr Bradley told Flor of Mr Wang’s email and she confirmed that they wanted to transfer the remaining two-thirds of the property to Jorge. Mr Bradley advised Flor that they would need their fees up front and that he would send her the firm’s conditions of engagement.
[96] On 2 April 2013, Jorge called Mr Dower, who told him he could not speak to Jorge and that the firm could only act for his parents.
[97] On 5 April 2013, Mr Bradley sent Flor a letter of engagement with the terms of engagement and asked her to contact the firm to arrange a meeting.
[98] On 8 April 2013, Jorge called and asked why Mr Dower had not contacted Mr Wang. He was told the firm did not act for him and could not speak to him.
[99] On 9 April 2013, Cirilo and Flor met with Mr Bradley. Mr Dower joined the meeting for a period. Mr Dower says he wanted to ascertain why Cirilo and Flor wanted to transfer the remaining two-thirds of the property (less five per cent) to Jorge. Mr Dower made a file note of the discussion.
[100] Mr Bradley continued the meeting after Mr Dower had left. Cirilo and Flor handed over the letter of engagement with amendments, which they had initialled, to remove the retention of five per cent of the property for them.
[101] On 12 April 2013, Mr Bradley wrote to Cirilo and Flor confirming the firm’s instructions and recording their understanding of key elements of the 2013 transaction. These included that they would seek a discharge of the mortgage to the BNZ at settlement date upon receipt of funds from Jorge sufficient to repay the amount owing, which was understood to be $182,000, and Jorge’s solicitor would provide an acknowledgment of debt equal to their share of the equity of the property, which was understood to be approximately $185,000.
[102] The letter also confirmed the firm’s advice that under the Family Protection Act Cirilo and Flor had an obligation to provide for all their children and that if they did not do so, their children could make a claim against their estate after their death. The letter recorded the firm’s understanding of Cirilo and Flor’s reasons for the 2013 transaction as being:
·Jorge lives in the Property with you both;
·Jorge pays the outgoings in relation to the Property;
·Jorge takes care of you both;
·You are in poor health; and
·Your other children (Eduardo and Gabriel) are sufficiently well off are and aware of this transaction and agree with it.
[103] The letter also sought instruction on whether Cirilo and Flor wished to retain some of the debt rather than gift all of it in one transaction. The letter further noted relationship property considerations and that the rules on rest home subsidies meant subsidies could be refused where one or both of them had given away funds in excess of the thresholds in the rules in the relevant time periods.
[104] On 17 April 2013, Cirilo and Flor met with Mr Bradley at his office. Mr Bradley’s file note of that meeting recorded that they wished to gift all of the debt to Jorge and were not concerned about the potential effect on rest home subsidies because they were not going to a rest home. The note also recorded that Cirilo and Flor wanted settlement as soon as possible because, once the property had been sold
to Jorge, he would be on-selling to another brother and that brother was going to Peru the following week.8
[105] On 18 April 2013, Cirilo and Flor signed the transfer documents and associated deeds. Settlement occurred on 23 April 2013.
[106] On 24 April 2013, Jorge was registered as the sole proprietor on the title to John Davis Road. On the same date, Eduardo and his wife were registered as proprietors on the title to Boundary Road.
Cirilo sees Dr Harris again
[107] On 15 July 2013, Dr Harris met with Cirilo, together with Flor. Dr Harris also had the assistance of an interpreter. Dr Harris conducted another RUDAS assessment. Cirilo’s score this time was 19/30.
Cirilo and Flor make new wills
[108] On 17 October 2013, Cirilo and Flor made new wills. In these wills, they made Jorge, Eduardo and Gabriel their executors and trustees. Each named the other and, in the event of the other’s death, Jorge, Eduardo and Gabriel, as their residuary beneficiaries.
Eduardo lodges caveat against title to John Davis Road
[109] On 31 October 2014, Eduardo registered a caveat against the title to John Davis Road. No action has been taken to obtain the removal of the caveat, which remains on the title. The caveat was lodged on the basis of Eduardo having a beneficial interest in the property.
[110] By letter dated 25 November 2014, a solicitor retained by Eduardo wrote to Jorge, purportedly on behalf of Flor, to challenge the transfer of title of John Davis Road to Jorge. The letter stated that Flor had recently ascertained that John Davis
8 I infer that the reference to on-selling was not intended to mean that Jorge was on-selling John Davis Road but referred to the contemporaneous transfers of John Davis Road and the Boundary Road property.
Road “which was registered in the names of our client, your father Cirilo and yourself, is now registered solely in your name.”
[111] The letter asserted that it had never been Flor’s intention that Jorge become sole owner of the property and that it was always her intention that the property be retained by Flor and Cirilo so that, in future, it would be for the benefit of her three sons, Gabriel, Eduardo and Jorge. The letter stated that Flor required the property to be transferred back to the names of herself and Cirilo. The final paragraph requested Jorge’s confirmation within seven days that he would take the necessary action, failing which the solicitor was instructed to take further action to protect “their interests”.
[112] There is no evidence of any reply to this letter. There is also no evidence that Flor met with the solicitor who drafted this letter. There is no evidence of file notes or other correspondence recording any instructions given by Flor.
Eduardo makes complaint to the New Zealand Law Society
[113] On 18 December 2014, Eduardo filed a complaint with the NZLS about Mr Dower and his firm in relation to the 2010 and 2013 transactions and the wills made by Cirilo and Flor in 2012 and 2013.
[114] In a letter filed with the complaint, Eduardo asserted that Jorge had maliciously manipulated his parents into signing documents that they did not understand at all and without knowing what they were doing. The letter said Cirilo and Flor wanted the house back. Eduardo also said Mr Dower should have realised that his parents’ first language was not English and that he should have obtained a translator.
[115] On the basis of Eduardo’s complaint, the NZLS Complaints Service formulated three formal complaints against Mr Dower and his firm as follows:
(a)They transferred property belonging to Cirilo and Flor in April 2013 in circumstances where Cirilo lacked capacity due to having Alzheimer’s dementia.
(b)They did not ensure that Cirilo and Flor understood the transaction they were entering into and that they should have done, particularly due to their age, illness and because English was not their first language;
(c)When taking instructions to prepare the 2013 wills, they did not point out to them that John Davis Road would not form part of the estates of Cirilo and Flor because ownership had been transferred to Jorge.
[116] In response to a request for comment by the NZLS, Mr Dower wrote a nine- page letter that set out his interactions with Cirilo and Flor and attached copies of his contemporaneous file notes and denied all three complaints. Mr Bradley also wrote a letter to the NZLS Complaints Service in which he explained his understanding of the capacity of Cirilo and Flor and their ability to give instructions.
[117] By decision dated 5 August 2015, the Auckland Standards Committee 3 decided to take no action on the issues of the complaints on the basis that any further action was unnecessary and inappropriate.
Gabriel returns from the US and uplifts Cirilo and Flor from John Davis Road
[118] At the end of 2016, Gabriel returned from the United States to resume residency in New Zealand. Gabriel says that, when he went to John Davis Road to see his parents, he found them in a bad state. He says they were wearing old and torn clothing; they did not appear to be having regular meals; Flor as unwell; they had not had a shower and the house was not being looked after.
[119] Jorge disputes most aspects of Gabriel’s account. Jorge says it was made up after the event to justify Gabriel and Eduardo isolating Cirilo and Flor from Jorge.
[120] It is not in dispute, however, that Gabriel uplifted Cirilo and Flo and took them to live with him and his wife in their home. Later, Gabriel arranged for Cirilo and Flor to live in a nearby flat. When he went to live and work in Huntly in 2017, Gabriel took Cirilo and Flor with him. By January 2019, Gabriel and his wife had moved to a new house in Manurewa. Cirilo and Flor lived in a converted garage at the bottom of the property.
[121] While Gabriel and Eduardo say there was nothing to stop Jorge from seeing their parents while they were living with Gabriel, it is plain from the evidence, particularly from the fact that Flor and Cirilo were kept from attending the wedding of Jorge’s daughter because of the then on-going legal proceedings, that there was a deliberate decision by Gabriel and Eduardo to keep their parents away from Jorge as they sought to undo the 2010 and 2013 transactions.
[122]Cirilo and Flor never returned to John Davis Road.
Proceedings begin
[123] In October 2017, Eduardo and Gabriel applied to be appointed as litigation guardians for Cirilo and Flor respectively. That application was opposed by Jorge but was granted by Whata J in February 2018.9
[124]The current proceeding began in March 2018.
FIRST CAUSE OF ACTION – LACK OF CAPACITY
[125] In the first cause of action, Eduardo, on behalf of Cirilo, alleges that Cirilo did not have the mental capacity to enter into the 2010 and 2013 transactions and that Jorge knew or should have known that Cirilo did not have the mental capacity to enter into the transactions.
[126]Accordingly, the questions for determination under the first cause of action are:
(a)Did Cirilo have the mental capacity to enter into the 2010 transaction?
(b)Did Cirilo have the mental capacity to enter into the 2013 transaction?
(c)Did Jorge know or should he have known that Cirilo did not have the mental capacity to enter into the transactions?
9 Sequeiros v Garate [2018] NZHC 128.
Relevant evidence
[127] The documental and oral evidence that bears on the first two questions includes:
(a)the reports of Dr Harris;
(b)the reports and evidence of Ms Venville and Ms Ellerby-Mutu;
(c)the evidence of Mr Dower, including the file notes and correspondence of Mr Dower and Mr Bradley at the time of the transactions;
(d)the correspondence with and the decision of the Auckland Standards Committee 3; and
(e)the evidence of specialist geriatricians, Dr Janey Casey and Dr Alan Jenner, who gave evidence for Eduardo and Jorge respectively and who also prepared a joint statement.
The reports of Dr Harris
[128] The Court was informed that Dr Harris has retired and was not available to give evidence. Accordingly, Dr Harris’s written reports are the primary contemporaneous evidence of Cirilo’s mental health and capacity at the time of the 2010 and 2013 transactions.
[129] In his report to Dr Solomon of the Epsom Medical Centre after the appointment on 10 May 2010, Dr Harris said that Cirilo’s memory appeared to have been poor for a year or two and seemed to be getting gradually worse. He forgot immediate things and asked for repeats three to four times. The Doctor noted that Cirilo and Flor spoke “some amount of English” but he “found it difficult to get a clear story.” The Doctor said Cirilo’s score on the RUDAS dementia screen “was within the normal”. The Doctor said Cirilo had some difficulty with construction, but his short-term memory was “quite good”. However, Dr Harris also said that Cirilo’s ability to carry out
complex repetitive movements and judgement were impaired. Dr Harris concluded his report as follows:
I am uncertain what to make of this. I will organise a CT head scan and then review the situation in my clinic. Hopefully his son will come to the clinic and I will be able to get a better story.
[130] In his report to Dr Mackereth of the Ranfurly Medical Centre after the appointment on 9 August 2010, Dr Harris said it was again difficult to establish a history of exactly the nature of Cirilo’s cognitive problems because no family members were present. With the help of the interpreter, he was able to explain the result of the CT head scan and carry out some more cognitive tests.
[131] Dr Harris gave his interpretation of the CT scan, which, among other things, showed some early atrophic change in the frontal and temporal lobes.
[132] Dr Harris also reported that he had carried out the EXIT-25 cognitive test for elderly patients. Of that test, Dr Harris said:
This went remarkably well despite being carried out on Spanish. On this he scored 18/48 (there was one question that was not possible to do because of the language barrier). He scored 18/48 which is above the cut off of 15/50 suggesting he has executive impairment.
[133]Dr Harris concluded his report as follows:
I have no doubt that Mr Sequeiros will have a dementing illness, probably vascular in nature although this is far from certain. I suggest that you start him on some aspirin and keep a close eye on his blood pressure as preventive measures.
In view of the fact that I am still lacking in history I will arrange to see Mrs Sequeiros again when other family members can attend as well as the interpreter and I will write to you again.
[134] In his report following the appointment on 27 September 2010, Dr Harris said that he had used the appointment to try to get a better history. He recorded that he learnt that Cirilo’s memory had been deteriorating for two or more years, that he often asked the same questions such as the day and date and that Cirilo tended to forget what his objective was when he moved about the house. However, there did not appear to be any “abnormal or difficult behaviour problems”. Cirilo could largely feed, wash
and clothe himself but needed occasional prompting to dress and shower. He still drove himself, but Flor always went with him because issues sometimes arose, such as Cirilo losing confidence, being distracted, having difficulty with parking and coping with unexpected situations.
[135] Dr Harris did not carry out any further examination of Cirilo. He concluded his report as follows:
It is apparent that his wife has been stressed and is evidently under psychiatric care for depression. It was apparent today that the son has very little insight into dementia, and his wife is somewhat better, but still limited.
They did agree to a referral to the Alzheimer’s Foundation and I hope they can help with education. At the moment, the family appear to be managing satisfactorily and there was no concern for additional help.
I will review the situation again in March 2011.
[136] In his report after seeing Cirilo on 21 March 2011, Dr Harris said that things were stable. Cirilo was losing things around the house, usually by putting them in inappropriate places. He remained independent with his personal activities of daily living and was still driving but only with his wife in the car. He needed supervision with food preparation and was unable to cook by himself. But he did reasonably well with cleaning and could manage the phone reasonably well. He also needed supervision with shopping and his wife did the bills.
[137] Dr Harris recorded that he had a long discussion with Flor by herself discussing the issues. It appeared that, since the Alzheimer’s Foundation visit, she was better informed and more accepting of the situation. Dr Harris recorded that he had discharged Cirilo from the clinic but would be happy to see him again should the need arise.
[138] In his report to Dr Fur of the Mount Roskill Medical and Surgical Centre after the appointment on 11 March 2013, Dr Harris recorded that:
As you point out Mrs Mosquira insists that her husband has deteriorated and his memory is much worse. Her relatives in Peru have sent two medications and she has brought these with her today for discussion. …
Mrs Mosquira herself appears to be somewhat isolated as their sons do not appreciate her situation. She reports feeling stressed and is receiving support and treatment from Mental Health services.
[139] Dr Harris recorded that he agreed with Dr Fur’s suggestion that a trial of Donepezil may be worthwhile and that he had provided Flor with a prescription for Cirilo and that he would see Cirilo in his clinic to review progress in about three months’ time. In the meantime, he would reactivate referrals to the Needs Assessment Service and Alzheimer’s Foundation.
[140]In his report after seeing Cirilo on 15 July 2013, Dr Harris stated:
Once again, Mrs Sequeiros Mosquira reports that [Cirilo’s] general function and cognitive abilities have deteriorated. She seems to be coping with this.
… [Cirilo] was still able to carry out simple chores such as to go and pay bills at the Post Office or to buy one or two things at the local shop. He remains independent in his personal activities of daily living.
[141] Dr Harris noted that there did not seem to be any side effects from Donepezil. He also reported the RUDAS score (19/30) without comment. The Doctor concluded his report as follows:
Overall, the current situation is reasonably stable, although as expected Mr Sequeiros Mosquira’s general function is slowly deteriorating.
At this stage, I have not arranged to see Mr Sequeiros Mosquira again, but of course, we would be happy to review the situation at your request.
Reports and evidence of Ms Venville and Ms Ellerby-Mutu
[142] The evidence of Ms Venville and Ms Ellerby-Mutu is based largely on the contemporaneous written notes they made after their interactions with Cirilo and Flor.
[143] Ms Venville’s notes of her first visit to John Davis Road described her interaction with Cirilo as follows:
Extremly reserved quiet gentleman. He was aware of his memory loss and was quite happy to talk to me about his memory and the frustration he has with forgetting what he is meant to be doing and where he has put things.
[144] Ms Venville’s notes of her consultation with Cirilo on 11 October 2010 recorded that Cirilo was driving short distances and that his short-term memory loss (STML) could be difficult at times.
[145] Ms Venville’s notes of her call at John Davis Road on 16 November 2010 recorded that Flor was struggling with Cirilo, who was very repetitive, which Flor found very frustrating.
[146] Ms Venville’s notes of the call on 28 October 2011 recorded that the family was struggling with managing Cirilo’s behaviour with his dementia and that Flor was not well and her depression and arthritis were worse. However, because “their son” was going to America the following week Flor did not want to see the Dementia Foundation until the following week. The note recorded that Flor’s sons were in denial that there was anything wrong with Cirilo, which made things harder for Flor to manage.
[147] Ms Venville’s notes of the telephone call with Flor on 8 November 2011 recorded that Cirilo was managing well and was able to cope with his personal care. Flor’s main concern was that Cirilo kept losing things such as his car keys or wallet. Ms Venille’s notes of the in-person visit on 21 November 2011 recorded that Cirilo’s short term memory loss was not good and he continued to misplace things. He could become angry at times due to frustration and accused others of stealing things.
[148] Ms Ellerby-Mutu’s notes of her one-on-one consultation on 1 May 2012 recorded that Cirilo helped with meals and housework but needed prompting. He also needed prompting to take his medications – but was not taking anything for dementia. Flor dealt with “all financial things” although this used to be Cirilo’s responsibility. Her call to Flor on 14 September 2012 recorded that Flor said she was finding it hard managing Cirilo who forgot everything and repeated things many times. However, he was not getting angry anymore and relied on Flor for many things, which was a struggle for her.
[149] In her notes of her call at John Davis Road on 15 April 2013, Ms Ellerby-Mutu recorded that she had used the session to talk about dementia and to do a bit of
education. However, she noted that Cirilo seemed to have only short-term memory problems and in other areas was reported to be functioning fine. He was apparently still driving and did not have problems with sequencing issues. Ms Ellerby-Mutu recorded that she did not see much difference in deterioration since she last saw Cirilo.
The evidence and reports of Mr Dower
[150] Mr Dower met alone with Cirilo and Flor in November and December 2010. He says he gave specific consideration to both the mental capacity of Cirilo and Flor and their ability to understand English and the transactions they were proposing to enter into. Mr Dower said he was satisfied that both possessed legal capacity with a sufficient level of English to give clear instructions, which were that they wanted to sell a one-third share of their property to their son, Jorge, with whom they were living.
[151] As recorded in his letter to the NZLS Complaints Service, and as Mr Dower stated in evidence in this proceeding, Mr Dower says that:
7. I knew upon meeting Cirilo and Flor Sequeiros that English was not their first language and that they were elderly. As is my standard practice in first meetings with elderly clients that do not have a strong level of English, I made an initial assessment of their ability to speak and understand English, and their capacity. After spending half an hour with them, I had no concerns in relation to either. I assessed them both to possess legal capacity with a sufficient level of English to give clear instructions, to understand and meaningfully contribute to the detailed discussion that took place, and the meaning and implications of their instructions and the proposed transaction.”
8. I found Cirilo and Flor Sequeiros to be coherent and as articulate as one would expect when English is a second language. Their instructions were very clear. They wished to sell a 1/3 share of their property to their son Jorge, who they were living with.
[152] Mr Dower says he regularly acted for culturally and linguistically diverse clients while practising law in Onehunga, that he had used the services of a translator when required and that, if doubts arose about the capacity of elderly clients, he would not hesitate to seek a clinical consultation or a formal evaluation of a client’s mental capacity by a clinician with expertise in cognitive capacity assessment.
[153] Mr Dower says that, at his first meeting with Flor and Cirilo on 19 November 2010 he deliberately asked Flor and Cirilo a number of open-ended questions for the
purpose of assessing their ability to understand and speak English and their mental capacity. He says they answered in an articulate and coherent manner and that he had no difficulty communicating with them in English. Mr Dower also says that Flor and Cirilo participated in the meeting to a more or less equal degree, although Flor, as the more dominant personality, spoke slightly more than Cirilo. He says that they communicated to him verbally and non-verbally that they understood what he was saying to them and they that spoke English for the duration of the meeting.
[154] Mr Dower says he also asked Cirilo and Flor why they wished the purchase price to be satisfied by an acknowledgement of debt and an immediate forgiveness of
$54,000 of that debt. He also explained to them that gift duty was likely to be abolished in 2014. Their response, as recorded in Mr Dower’s file note, was that they were getting old, that Jorge would receive the property under their wills anyway, that Jorge was contributing to repairs and maintenance and that he would pay a greater share of the mortgage and other outgoings (rates, insurance, electricity, water) on the property over the coming years.
[155] Mr Dower says he also discussed with Cirilo and Flor their moral obligations to their other children under the Family Protection Act 1955. He says that their response was that Eduardo and Gabriel were financially well off and did not require the level of maintenance and support that Jorge did.
[156] Mr Dower says he raised the advisability of concluding a property sharing agreement. Despite his strong recommendation that this would be a prudent step, he gained the impression that they were sensitive to the time and cost implications and decided not to take that step, once they understood that such an agreement was not legally required.
[157] Mr Dower says that, at the second meeting on 23 November 2010, he again asked Flor and Cirilo a number of open questions to assess their mental capacity. He says he had no difficulty communicating with them and each of them answered in English in an articulate and coherent manner. He determined each of them to be of sound mind and of the requisite mental capacity to understand the nature and implications of the proposed property and gifting transactions. Mr Dower accepts that
he did not record separately what Flor and Cirilo each said to him, but he says that, as at the previous meeting, Flor spoke more than Cirilo but Cirilo appeared focused and gave both verbal and non-verbal responses to indicate he understood what Mr Dower was saying.
[158] Mr Dower says he again assessed Cirilo and Flor to have full capacity and considered that their English was more than sufficient to provide him with clear instructions. He again asked Cirilo and Flor why they wished to sell a third share of the property to Jorge, to exclude Eduardo and Gabriel and to immediately forgive
$54,000 of the total debt of $83,320.87. Their response was that Jorge paid a lot of the outgoings on the property and would continue to pay more of the BNZ loan, that Jorge undertook a lot of work around the house carrying out repairs and maintenance at his own expense, that Jorge had purchased a lot of beautiful furniture for the house, and that Eduardo and Gabriel were financially well off and did not require the financial support that Jorge did.
[159] Mr Dower says that Cirilo and Flor also said that Eduardo owned four or five houses and they had gifted Eduardo USD100,000 (that is, the Lima Funds) when they had sold their house in Peru. Cirilo and Flor explained that Gabriel was living in a large house that he had built and owned, and that Gabriel would receive a lot of money in compensation from the Peruvian Government as a result of an injury he had sustained.10 He also advised that Cirilo and Flor obtain an independent valuation from a registered valuer.
[160] Mr Dower says that, in accordance with his standard practice, he confirmed that Cirilo and Flor understood that if Jorge and they were joint tenants of John Davis Road, Jorge, as their survivor, would automatically take their share in the property and that share would not form part of their estate.
[161] Mr Dower also says he provided verbal advice, and written advice by letter, on 3 December 2010, about their moral obligations to their other sons. The letter
10 I consider it likely that, in his brief of evidence, Mr Dower did not recall with complete accuracy what was said about the nature of the transaction with Eduardo. In his file note of that discussion, Mr Dower recorded “When we sold house in Peru we sent to NZ US$100k to Eduardo.”
confirmed their instructions to prepare their wills without any provision for two of their three children and confirmed Mr Dower’s advice that this exposed their estates to a potential claim by the excluded children under the Family Protection Act. The letter stated that the Court would uphold a claim from Eduardo or Gabriel if it believed that they failed to fulfil their moral duty to provide adequately for the maintenance and support of family members. The letter concluded:
You have explained to me the reasons for the exclusion – that both Eduardo and Gabriel are well off and that you have previously provided for them to the exclusion of Jorge.
[162] Mr Dower’s file note of the meeting on 12 September 2012 recorded that the assets of Cirilo and Flor were the shares of John Davis Road, which was subject to a mortgage, and their bank accounts. They had no life insurance, and their income was from New Zealand superannuation and income from “flatmates”.
[163] The note recorded that Gabriel was in the US and was not interested in Flor’s estate or his father’s, that he had a house in Massey (NZ) and in Michigan (US). The note also recorded that Eduardo had three houses in New Zealand and that Cirilo and Flor lived with Jorge, who cared for them well. The note recorded that Mr Dower had had an in-depth discussion with Cirilo and Flor about the Family Protection Act and the moral obligation to provide for their children but that Cirilo and Flor were very certain; they would leave everything to Jorge. The note stated that Gabriel did not want an interest and Eduardo was always asking them for money and that sometimes they had provided him with money.
[164] Mr Dower’s note recorded that Jorge lived with them and cared for them, that they did not have anything and that Flor wanted to be buried close to Jorge’s residence while Cirilo wanted to be cremated. The note also recorded that Jorge had waited outside for the duration of the meeting.
[165] Mr Dower’s file note of his discussion with Cirilo and Flor on 9 April 2013 recorded that the reasons Cirilo and Flor gave for the 2013 transaction were similar to those they gave in 2010 for the original one-third transfer: Gabriel had two houses; one in Massey and one in Michigan. He had also received the money for his injury and was comfortable financially. Eduardo owned three houses and had sold one or
two houses. The note also recorded that Gabriel and Eduardo knew about the plan and agreed. They did not want any part of John Davis Road.
[166] The note also recorded that Jorge lived at the property, paid the outgoings and looked after them. In his evidence, Mr Dower says that they also said that the outgoings paid for by Jorge included the mortgage repayments, that the house was old and in poor condition and that Jorge undertook the repairs and maintenance at his own time and cost.
[167] Mr Dower’s note also recorded that the transfer was to be a gift and that Flor said it was urgent. The notes then recorded: “Why? Very sick.”
Correspondence with NZLS and decision of the Auckland Standards Committee 3
[168] In the concluding section of his letter to the NZLS Complaints Service, Mr Dower stated:
60. By October 2013 Cirilo and Flor Sequeiros were reasonably well known to all of the staff at Recordan Dower. In the 2 years and 10 months since Cirilo and Flor Sequeiros had first instructed us, we had 5 separate sets of instructions from them. Although language was a barrier (and therefore the meetings took longer than would be the case with elderly clients that spoke English as a first language) we were all confident beyond question that they both possessed the requisite legal capacity and understood the meaning and effect of the transactions. We wrote to them to clarify and confirm their instructions, and we met with them in person to discuss in detail the written advice we had given them and to ensure that they had a clear understanding of the meaning and effect of the implications of their instructions.
[169]In his letter to the NZLS Complaints Committee, Mr Bradley said:
4.Based on my assessment of Mr and Mrs Sequeiros during my face to face meetings, telephone conversations and written correspondence with Mr and Mrs Sequeiros in April 2013 it is my view that Mr and Mrs Sequeiros had the legal capacity to engage in the transaction with their son Jorge.
5.It is my view that at the time Mr and Mrs Sequeiros understood our advice and were capable of giving us clear instructions in relation to the transaction. While acting for Mr and Mrs Sequeiros they both appeared to be of sound mind and we had no reason at that time to suspect that either Mr or Mrs Sequeiros were mentally incapable.
[170]In the course of its decision, the Committee stated:
36.The Committee found that Mr Dower had substantial dealings with Mr Sequeiros’s parents over a long period of time. The meetings and the nature of his instructions are supported by documentary evidence in the form of advice and file notes. The amount of contact that Mr Dower had with the Sequeiros was particularly significant to support Mr Dower’s assertion that no circumstances arose that suggested he ought to have made further enquiries to determine the Sequeiros’ legal capacity to enter into the April 2013 transfer. The junior solicitor who acted on the variation of the Sequeiros’ wills also reached the same conclusion.
37.In the Committee’s view the Sequeiros also understood the transaction they were entering into. Although Mr Sequeiros jnr wished to emphasise their age, illness and limited English, Mr Dower had acted for the Sequeiros on numerous occasions and the need for a translator had not arisen. The Committee could not see how Mr Dower could have accepted such instructions over the course of his retainer if the Sequeiros’ English was as limited as Mr Sequeiros jnr maintains.
Evidence of Dr Casey
[171] Dr Casey is a consultant psychiatrist who specialises in old age psychiatry. Dr Casey assessed Cirilo in 2017 for the purposes of Eduardo’s application to be appointed litigation guardian. However, Dr Casey had not met Cirilo before that assessment. Dr Casey’s brief of evidence confirmed an opinion dated 5 October 2018 that Dr Casey had prepared for Mr Murray, counsel for Eduardo. That opinion was based principally on the reports of Dr Harris, although Dr Casey says she had access to the other material on Cirilo’s medical records. In preparing that opinion, Dr Casey had not read the evidence of Mr Dower or the file notes and correspondence to which Mr Dower refers.
[172] In her opinion, Dr Casey summarised and commented on Dr Harris’s reports, in particular the reports following the appointments on 9 August 2010, 27 September 2010, 21 March 2011 and 15 July 2013. Dr Casey also referred to a report Dr Harris wrote following an appointment with Cirilo on 16 November 2015.
[173]Dr Casey’s opinion stated:
27. The diagnosis of Dementia with frontal lobe impairment in Mr Sequeiros was firmly established by August 2010. Given this significantly compromised cognitive function, and the length of time required for Dr Harris
[242] While Mr Dower’s meeting with Cirilo and Jorge in April 2013 was relatively brief and while Mr Bradley was relatively inexperienced, the assessment of Mr Dower, as stated to the NZLS Complaints Service, was that he and his staff were “confident beyond question” that Cirilo and Flor both possessed the requisite legal capacity and understood the meaning and effect of the 2013 transaction. The validity of that assessment was upheld by the NZLS Committee which was satisfied that Cirilo and Flor understood the transaction they were entering into.
[243] Given that evidence, the presumption of capacity,13 the straightforward and familiar nature of the arrangements and the lack of any contemporaneous opinion that Cirilo did not have capacity, I am satisfied that Cirilo had the capacity to understand and enter into the 2013 transaction.
[244]For all these reasons, I dismiss the claim under the first cause of action.
[245] For completeness, I note that, even if I had held that Cirilo did not have capacity to enter into the 2013 transaction, because I have held that Cirilo had the capacity to enter into the 2010 transaction, Cirilo’s interest in John Davis Road, like that of Flor, would have passed to Jorge under Jorge’s rights of survivorship as joint tenant, irrespective of the 2013 transaction, provided it is not set aside for reasons of undue influence or unconscionability.
13 O’Connor v Hart [1985] 1 NZLR 159 (PC) at 163. See also Stephen Todd “Capacity” in Burrows, Finn and Todd on the Law of Contract in New Zealand (7th ed, LexisNexis, Wellington, 2022) at 557.
SECOND CAUSE OF ACTION – UNDUE INFLUENCE
[246] In the second cause of action, Eduardo, on behalf of Cirilo, alleges that Cirilo and Flor had placed their trust and confidence in Jorge and, because of their age and medical conditions and reliance on Jorge, were subject to the undue influence of Jorge.
[247] Accordingly, the question for determination under the second cause of action is whether Jorge exercised undue influence over Cirilo and Flor.
[248] The evidence relevant to that question is primarily the evidence of Eduardo, Gabriel and Jorge. Also relevant is the evidence of Ms Ng, Jorge’s former partner, and Helga Moran, a Jehovah’s witness who was introduced by Jorge to Cirilo and Flor. Ms Moran visited Cirilo and Flor at John Davis Road and at some of the places where they stayed after Gabriel removed his parents from John Davis Road.
Submissions for Eduardo
[249] Mr Murray submits that, in accordance the principles stated by Winkelmann J in Green v Green14 and restated by Ellis J in Sinclair v Sinclair,15 Jorge was in a position of trust and confidence with respect to his parents. Mr Murray says that because of their age, health conditions, financial and other circumstances, Cirilo and Flor were vulnerable to the influence of Jorge. He says Jorge’s influence can be seen by the fact that Jorge initiated the discussions with the bank in 2010 and his lawyer started the 2010 transaction.
Transactions call for an explanation
[250] Mr Murray submits that the 2010 and 2013 transactions call for an explanation and that the claimed justification for the transactions should not satisfy the Court. Mr Murray says the transactions resulted in the loss of the only real asset of Cirilo and Flor at a time when they most needed it – when they went into care. Mr Murray says there was no proved event in 2010 or 2013 that made it desirable for them to lose any interest in the property. He says Jorge’s claim that Eduardo was pressuring them in
14 Green v Green [2015] NZHC 1218 at [100].
15 Sinclair v Sinclair [2019] NZHC 2640 at [56].
2010 for access to the equity in the property is not supported in the evidence and that Eduardo was not cross-examined on the point.
Unsatisfactory aspects of the transactions
[251] Mr Murray says there are a number of other unsatisfactory aspects to the 2010 and 2013 transactions. Mr Murray notes that Cirilo and Flor received no payment for the transfers of title in John Davis Road and says there is no financial information to establish that Jorge ever paid anything to the mortgage. He suggests that Jorge should have paid for the costs of getting a property-sharing agreement and of getting a registered valuation after Mr Dower had recommended both of those steps. He also says that it has not been shown that Jorge contributed in any way to the reduction of the mortgage on John Davis Road between the 2010 and 2013 transactions. Mr Murray questions the reasons that Cirilo and Flor gave Mr Dower for the transactions; namely, that Eduardo had received money already and that Gabriel did not need help. Mr Murray says these explanations did not take into account the accounting between Cirilo and Eduardo over the expenditure of the Lima Funds, Eduardo’s acknowledgement he held John Davis Road and View Road on trust for Cirilo and Flor, or the deed of family arrangement and the transfer of title to John Davis Road to Cirilo and Flor. Mr Murray notes that Cirilo and Flor did not mention to Mr Dower the alleged unfair treatment of Jorge over Boundary Road.
[252] Mr Murray also says there were many red flags in the legal advice provided in relation to the two transactions which mean that the advice should not be taken as counteracting Jorge’s undue influence. Among many factors Mr Murray points to the fact that::
(a)Cirilo and Flor were elderly and new to Mr Dower;
(b)they brought with them documents prepared by Jorge’s lawyer and which did not change much as a result of discussions with Mr Dower;
(c)Jorge brought them to one of the important meetings in November 2010, was outside the meeting room and joined the meeting at the end for the discussion on a property sharing agreement;
(d)Jorge pressed for the 2013 transaction to happen by telephoning Mr Dower and, on one occasion, putting Flor on the phone so she was talking to Mr Dower in Jorge’s presence;
(e)Mr Dower and Mr Bradley did not check with Eduardo and Gabriel to confirm that they knew of and did not object to the 2010 and 2013 transactions; and
(f)the association of the 2010 and 2013 transactions with the making of new wills risked confusion on the actual effect of the transactions.
Submissions for Jorge
[253] Ms Goode accepts that Jorge’s relationship with his parents raises a presumption of undue influence. She submits, however that there is no evidence of Jorge requesting favours or money or any recompense for the many things he did for his parents, including involving them in his life, caring for them, taking them to events and to holidays in New Zealand and overseas. Ms Goode submits that Jorge’s evidence in relation to the 2010 and 2013 transactions about what that they told him and asked him to do should be accepted.
[254] Ms Goode also accepts that the transactions call for an explanation. She says, however, that the evidence establishes that Eduardo in particular, but also Gabriel, asked their parents for money to further their real estate ambitions. By contrast, Jorge never asked his parents for anything. He had no ambition to develop a real estate portfolio beyond finding a home for himself. He effectively gave that away when he re-transferred beneficial ownership of Boundary Road to Eduardo and moved into John Davis Road. Ms Goode says this evidence supports Jorge’s explanation of the reasons for the 2010 and 2013 transactions: namely that the transactions were instigated by Cirilo and Flor and were not at Jorge’s behest. Ms Goode says the evidence establishes that Cirilo and Flor wanted to stop Eduardo and Gabriel from making further claims against the equity of John Davis Road and to ensure that Jorge would be provided for. Ms Goode further submits that the ways in which Eduardo and Gabriel took advantage of Jorge in relation to Boundary Road support that explanation.
[255] Ms Goode notes that Cirilo and Flor had the benefit of independent legal advice before they entered into the 2010 and 2013 transactions. That advice was delivered impartially and without influence from Jorge who was kept out of any meetings except when invited to by Mr Dower.
Analysis of second cause of action
[256] In Green v Green,16 Winkelmann J set out the principles of law in relation to undue influence which she adopted from the decision of the House of Lords in Royal Bank of Scotland v Etridge (No 2)17 as approved by the Court of Appeal in Hogan v Commercial Factors Ltd.18 The Court of Appeal confirmed Winkelmann J’s statement of principles in a subsequent appeal.19 Ellis and Palmer JJ reiterated Winkelmann J’s statement of principles in their respective judgments in Sinclair v Sinclair20 and Round v Round.21
[257]Those principles are:
(a)The overall burden of proof rests on the person seeking to establish undue influence.
(b)The burden of proof is on the balance of probabilities.
(c)Those who assert undue influence must show that the alleged influence led to the making of the impugned transactions, and that the influence 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
16 Green v Green, above n 14, at [100].
17 Royal Bank of Scotland v Etridge (No 2) [2002] 2 AC 773 (HL).
18 Hogan v Commercial Factors Ltd [2006] 3 NZLR 618 (CA) at [36].
19 Green v Green [2016] NZCA 486, [2017] 2 NZLR 321 at [48].
20 Sinclair v Sinclair, above n 15, at [56].
21 Round v Round [2017] NZHC 428 at [66].
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.
(e)Whether there is a relationship of trust and confidence can either be established factually or by reference to a class of special relationships such as lawyer-client, parent-child, doctor-patient. In the latter category, the law presumes irrebuttably that one party had influence over the other. The presumption is only as to proof of influence. The person alleging undue influence still needs to establish a transaction calling for an explanation.
(f)Whether a transaction calls for an explanation depends on the circumstances of the case. The question is simply whether failing proof to the contrary, the transaction is explicable only on the basis that undue influence had been exercised to procure it.
(g)Once the persons claiming undue influence have established both the relationship of trust and confidence and a transaction calling for explanation, the evidential burden shifts to the person seeking to uphold the transaction to show that the transaction was not the result of undue influence. However, the overall burden of proof remains on the persons alleging undue influence.
(h)The presence of independent advice is a factor 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 and act and still be subject to undue influence.
(i)Allegations of undue influence may succeed in relation to the exercise of powers not just the transfer of property.
[258] As Palmer J noted in Round v Round, ordinarily, there is no presumption of undue influence by children over parents.22 However, the English Court of Appeal has observed that influence may exist in “the relationship between a son in the prime of life and parents in the evening of life”.23
[259] As Ms Goode accepts, there can be little doubt that Jorge was in a position of trust and confidence with respect to Cirilo and Flor. While he was the child and they were his parents, he was their primary caregiver and he resided with them. They were elderly, in an unfamiliar country. In dealing with others outside the home, they had to operate in a language and in a culture that were not their own. It is also apparent that Cirilo was beginning to have short-term memory issues and became confused, and that Flor was subject to her on-going issues with depression. In accordance with the above principles, therefore, it must be presumed that Jorge had influence over Cirilo and Flor. The essential question, therefore, is whether the 2010 and 2013 transactions call for an explanation and are explicable only on the basis that undue influence had been exercised to procure them.
[260] I am satisfied that, on the balance of probabilities and not by a fine margin, the evidence establishes that the 2010 and 2013 transactions are not explicable only on the basis that Jorge exercised undue influence to procure them.
[261] Jorge’s evidence, which was not challenged in cross-examination, is that his parents were the ones who initiated the conversations about transferring title of John Davis Road to him. He says their reasons were that they wanted to stop Eduardo accessing the equity in John Davis Road and they were unhappy at the way Gabriel
22 Round v Round, above n 21, at [84], citing ASB Bank Ltd v Harlick [1996] 1 NZLR 655 (CA) at 657.
23 Avon Finance Co Ltd v Bridger [1985] 2 All ER 281 (CA) at 288 per Brandon LJ.
had treated Jorge over Boundary Road and that Gabriel had also put pressure on Cirilo and Flor to access the equity in John Davis Road.
[262] The evidence strongly supports Jorge’s account with respect to his parents’ attitude to Eduardo. As I have found, Eduardo’s use of the Lima Funds to purchase John Davis Road and View Road was without the knowledge and approval of Cirilo and Flor and caused considerable distress that lasted for several years. The fact that Cirilo had become more accepting of what Eduardo had done some years later when writing to Hermano Gibbons does not diminish the seriousness of what he had done or its impact on the family. In addition, it is unlikely that Cirilo would have been as critical of his son in a letter to a friend as he was in the letter to his brother-in-law a year or so earlier.
[263] In addition, it is common ground that Cirilo and Flor agreed that Eduardo could retain View Road as a form of advance inheritance and that he had profited handsomely from that transaction – for which, as I have found, Eduardo did not pay his parents anything. In these circumstances, it is hardly surprising that Cirilo and Flor decided that they wanted to ensure that Jorge, the son with whom they were living and who looked after them on a daily basis, except when away traveling, should receive their only asset, John Davis Road.
[264] It is also not surprising that Cirilo and Flor would want to make sure that John Davis Road was protected from Eduardo who had not only committed the bulk of the Lima Funds to the purchase of John Davis Road and View Road but who had then raised a further loan of $35,000 against John Davis Road while he was the sole registered proprietor and had benefitted personally from the additional loan of $30,000 that had been taken out when he and Cirilo had travelled to Lima when Flor was in hospital.
[265] In addition, and contrary to Mr Murray’s submission, there is evidence to suggest that Eduardo was continuing to pressure his parents for access to the equity in John Davis Road well after the 1998 accounting and well after the transfer of title of John Davis Road to Cirilo and Flor. Mr Dower’s file note of his meeting with Cirilo
and Flor on 12 September 2012 when receiving instructions on the making of the 2012 wills records:
– very certain – will leave everything to Jorge. Gabriel def does not want an interest.
Eduardo – always asking us for $. S/times we have provided him w $
[266] Jorge’s explanation with respect to Gabriel does not have significant direct evidential support. As Mr Murray notes, there is no record of Cirilo and Flor referencing what happened over Boundary Road in their meetings with Mr Dower and Mr Bradley. Nor do they refer to Gabriel asking them for money. While there is evidence of Gabriel asking his mother for money from 2012, the only evidence of Gabriel asking for money prior to the 2010 transaction relates to the $10,000 he received when Cirilo and Flor agreed that Eduardo could keep View Road.
[267] However, Mr Dower’s notes clearly recorded that Cirilo and Flor considered that Gabriel had no interest in John Davis Road and that he had no need for any money because of the pension he was to receive and did receive from Chile. Whether or not Cirilo and Flor were correct in their belief that Gabriel had no interest in John Davis Road, I am satisfied that what they told Mr Dower provides an objective basis for concluding that the 2010 and 2013 transactions, as far as they affected Gabriel, were not procured by Jorge’s undue influence.
[268] More generally and leaving aside the impact the 2010 and 2013 transactions had on Eduardo and Gabriel, the evidence clearly establishes that, unlike his brothers, Jorge had little interest in or understanding of real estate. He was prepared to buy Boundary Road at an overprice set by Gabriel, without questioning him or seeking any independent valuation. He was prepared to sell Boundary Road to Gabriel while remaining on the title and responsible for the loan. After he had resumed possession and ownership of Boundary Road, he was prepared to sell the property to Eduardo for a nominal amount while remaining on the title and formally liable for the mortgage, despite Gabriel’s various repayment defaults. When Eduardo eventually took legal ownership of Boundary Road, Jorge did not seek any further payment from Eduardo, despite the uplift in the market. Nor did he complain when Eduardo on-sold Boundary Road for a considerable profit.
[269] This evidence strongly counters any inference that Jorge had any inclination to seek to profit from his family in real estate dealings. In that, he is quite unlike his brothers. Even less does the evidence suggest that Jorge had any interest in profiting from his parents, whom he knew had suffered from Eduardo’s actions. The consistent theme in all the evidence, up until 2017 when Gabriel removed Cirilo and Flor from John Davis Road was that Jorge, rather than Eduardo or Gabriel, was the son who looked after his parents and was committed to looking after them as long as they were alive.
[270] The fact that no money changed hands under the 2010 and 2013 transactions does not negate the validity of the transactions or establish that they were the product of Jorge’s undue influence. Eduardo paid nothing for his use of the Lima Funds, for increasing the debt against John Davis Road or for acquiring View Road without any payment back to Cirilo and Flor. It is hardly surprising, therefore, that Cirilo and Flor did not seek cash in hand from Jorge for either of the 2010 and 2013 transactions.
[271] Most significantly, under the arrangements that Cirilo, Flor and Jorge all expected would apply after both transactions, Cirilo and Flor would live with Jorge at John Davis Road for the rest of their lives. They would have continued to have the full use of what had been their major asset until death, but without the responsibilities of ownership. Whether or not the expectation that Cirilo and Flor could see out their days at John Davis Road was realistic or sensible, I have no doubt it was genuinely held by Cirilo and Flor, and by Jorge. In those circumstances, there is nothing to suggest that Cirilo and Flor had been deprived of real value, despite the transfer of ownership. Nor do those circumstances suggest that Jorge was taking advantage of his parents.
[272] While Jorge may have been the one to contact the bank in the first instance and instructed his lawyers to prepare the documents to give effect to the transfers, given the ages and circumstances of Cirilo and Flor, it is hardly surprising that they would expect their son to do the legwork necessary to implement the 2010 and 2013 transactions. I do not accept that Jorge’s actions in this respect, or his phone calls to Mr Dower in 2013, establish that Jorge was the instigator of the 2010 and 2013 transactions. I consider that the initiative to transfer title to John Davis Road came
from Flor, in particular, but with the knowledge and support of Cirilo. That conclusion is consistent with the evidence of Ms Ng, who says Flor told her before 2010 that she wanted to give John Davis Road to Jorge because she knew he would look after her and Cirilo until they died and would always be there to look after them.
[273] I am satisfied, therefore, that there is a satisfactory explanation for the transactions that is sufficient to establish, on the balance of probabilities, that the 2010 and 2013 transactions were not the product of undue influence by Jorge over his parents.
[274] In addition, there is the additional safeguard that Cirilo and Flor received independent legal advice from Mr Dower before the 2010 transaction, as was a condition of the loan from the BNZ. I do not accept that there were red flags about that advice. Mr Dower may have been unknown to Cirilo and Flor, but he was also unknown to Jorge. Mr Dower took his responsibilities seriously. He ensured that Jorge was not present when meeting with Cirilo and Flor, except when he sought to engage Jorge’s support for his recommendation that Cirilo, Flor and Jorge should conclude a property sharing agreement. There was nothing inappropriate in involving Jorge in that discussion. The purpose of the agreement was to protect Cirilo and Flor but, necessarily, Jorge would have been a party to it.24
[275] I am satisfied that Mr Dower acted appropriately and was satisfied not only that Cirilo and Flor had the requisite capacity but also knew what they were doing when transferring title to John Davis Road to Jorge and wanted to do that for their own reasons. Importantly, the advice and conduct of Mr Dower and Mr Bradley were scrutinised by a NZLS Standards Committee and were not found wanting in any material respect. For these reasons, I am satisfied that the legal advice received by Cirilo and Flor supports the conclusion that Cirilo and Flor not only understood and agreed to the 2010 and 2013 transactions, but those transactions were the result of the exercise of their free will.
[276]For all the above reasons, I dismiss the claim under the second cause of action.
24 It appears from Mr Dower’s notes that Jorge was amenable to the idea, but his parents were not.
THIRD CAUSE OF ACTION – UNCONSCIONABLE BARGAIN
[277] In the third cause of action, Eduardo, on behalf of Cirilo, alleges that the 2010 and 2013 transactions were unconscionable bargains and should not be allowed to stand.
[278] Accordingly, the question for determination under this cause of action is whether the 2010 and 2013 transactions were unconscionable having regard to the doctrine of unconscionable bargain.
[279] The evidence relevant to that question is again primarily the evidence of Eduardo, Gabriel and Jorge. Also relevant is the evidence of Ms Ng and Ms Moran.
Submissions for Eduardo
[280] Mr Murray submits that Cirilo and Flor were under a disadvantage because of their ages, health – especially their mental health, and other factors of vulnerability. Mr Murray says that, even if Cirilo is held to have had capacity in 2010, the fact and extent of his mental deterioration make it unconscionable that the transaction should stand. Mr Murray says Cirilo’s incapacity in 2013 should make it unarguable that the 2013 transaction was unconscionable. Mr Murray also says that the fact that Flor had full capacity cannot make up for Cirilo’s incapacity. He says further that Jorge was or should have been aware of his parents’ vulnerability.
[281] With regard to overall unconscionability, Mr Murray says Cirilo and Flor lost the ownership of their major asset without payment for their equity. Mr Murray submits there is no evidence which objectively justifies Jorge’s claim that the transactions were fair. Cirilo and Flor did not need Jorge’s name on the title to stop Eduardo leveraging the equity in John Davis Road because there was no evidence this was happening at that time. They did not need to transfer their interests in the property to secure Jorge’s support. They did not need Jorge to pay off the mortgage because repayments were covered by tenant rental. They lost their ability to apply their home towards their full-time care when the need arose, as it eventually did.
[282] Mr Murray also submits that the assertion that Eduardo made a windfall does not take into account the accounting of the Lima Funds between Cirilo and Eduardo and Eduardo’s acknowledgement that John Davis Road and View Road were held on trust, the transfer of title of John Davis Road in 2002 and the gifts of $10,000 each to Gabriel and Jorge. It also does not into take into account Cirilo’s acknowledgement to Hermano Gibbons in 2004 that Eduardo had invested the Lima Funds wisely, even if Cirilo had complained about what Eduardo had done in his earlier letter to his brother-in-law.
[283] Mr Murray submits that the fact that the 2013 transaction occurred at the same time as the final transfer of Boundary Road was no coincidence as Jorge alleges. Mr Murray also says the fact Eduardo and Gabriel did not know of the 2013 transaction, despite Flor saying that they did, highlights the importance of the brothers knowing of both transactions because it would have enabled proper scrutiny of the transactions, especially in the light of Cirilo’s dementia.
Submissions for Jorge
[284] Ms Goode says that the medical evidence as to Cirilo’s cognition is inconclusive and that the evidence of Mr Dower establishes that Cirilo and Flor entered into the 2010 and 2013 transactions after independent legal advice. Ms Goode submits that the transactions were not unconscionable but were in accordance with the wishes of Flor and Cirilo. Ms Goode submits that there was no disparity of benefit between Cirilo and Flor on the one hand and Jorge on the other and that the real complaint made by Eduardo and Gabriel is not with regard to the interests of their parents but with respect to their own personal interest in securing a share of John Davis Road.
Analysis of third cause of action
[285]In O’Connor v Hart, Lord Brightman for the Privy Council said:25
An unconscionable bargain [is] a bargain of an improvident character made by a poor or ignorant person acting without independent advice which cannot be shown to be a fair and reasonable transaction. “Fraud” in its equitable
25 O’Connor v Hart, above n 13,at 171.
context does not mean, or is not confined to, deceit; “it means an unconscientious use of the power arising out of the circumstances and conditions of the contracting parties” …It is victimisation, which can consist either of the active extortion of a benefit or the passive acceptance of a benefit in unconscionable circumstances.
[286]More recently, in Gustav & Co Ltd v Macfield Ltd, the Supreme Court said:26
Equity will intervene when one party in entering into a transaction, unconscientiously takes advantage of the other. That will be so when the stronger party knows or ought to be aware, that the weaker party is unable adequately to look after his own interests and is acting to his detriment. Equity will not allow the stronger party to procure or accept a transaction in these circumstances. The remedy is conscience-based and, in qualifying cases, the Court intervenes and says that the stronger party may not take advantage of the rights acquired under the transaction because it would be contrary to good conscience to do so. The conscience of the stronger party must be so affected that equity will restrain that party from exercising its rights at law. All necessary consequential orders may be made in aid of the primary remedy.
[287] There is an obvious interrelationship between the principles of undue influence and unconscionable bargain. In Round v Round, Palmer J described that relationship as follows:27
[64] The law of equity has developed ways of redressing unfairness in transactions. The doctrines of undue influence and unconscionable bargains are two such ways. While they are closely related they are distinct: “a plea of undue influence attacks the sufficiency of consent; a plea that a bargain is unconscionable invokes relief against an unfair advantage gained by an unconscientious use of power by a stronger party against a weaker”. Undue influence focuses so strongly on the mind of the person consenting that wrongdoing by the person exerting influence is unnecessary. Unconscionable bargain focuses on the unconscientious taking of advantage which involves inquiry into the disadvantage, the fairness of the transaction and the defendant's conduct.
(footnotes omitted)
[288] As Cooke J observed in Sen v Public Trust, undue influence focuses on the mind of the person said to be influenced, whereas unconscionability focuses on the conscience of the person said to be benefitting.28
[289] Similar to the approach taken by Palmer J in Round v Round, my application of the law of undue influence to the facts informs my application of the law of
26 Gustav & Co Ltd v Macfield Ltd [2008] NZSC 47, [2008] 2 NZLR 735 at [6].
27 Round v Round, above n 21.
28 Sen v Public Trust, above n 12, at [44].
unconscionable bargains.29 It follows from my findings on undue influence, and also from my findings as to Cirilo’s capacity, that I am satisfied that Jorge did not unconscientiously take advantage of Cirilo and Flor.
[290] As discussed above, the understanding between Cirilo, Flor and Jorge under the 2010 and 2013 transactions was that Jorge was to have a joint interest in, and later, to become the sole owner of, the home in which they all lived and expected to live in for the rest of the lives of Cirilo and Flor. Cirilo and Flor did not ask for any money because Jorge had taken over responsibility for the loan over the house and would pay for the outgoings, including the loan repayments. Inherent in that understanding was that Jorge was to continue to be his parents’ caregiver for the rest of their lives.
[291] Given that understanding, I do not accept that the arrangements made in 2010 and 2013 were improvident, when viewed from the perspective of Cirilo and Flor or amounted to Jorge taking unfair advantage of his parents. As discussed above, the transactions did not significantly affect the day to day lives of Cirilo and Flor, except that Cirilo and Flor were relieved of any legal responsibility for the loan, rates and other incidentals of home ownership. They had the assurance that they would continue to be cared from by Jorge. The people most significantly affected by the transactions were not Cirilo and Flor but Eduardo, who had already benefitted substantially from his parents and who had already received his inheritance in the form of View Road, and Gabriel, whom Cirilo and Flor were satisfied, was already well enough provided for and whom they believed had no interest in John Davis Road.
[292] In addition, Cirilo and Flor had the benefit of independent legal advice from an experienced practitioner who was satisfied that Cirilo and Flor had the requisite capacity and knew what they were doing when transferring title to John Davis Road to Jorge for their own reasons.
[293] I am satisfied that Jorge did not unconscientiously take advantage of his parents and that, given the understanding between Cirilo, Flor and Jorge with respect to the 2010 and 2013 transactions as discussed above, there was no inherent unfairness in the transactions.
29 Round v Round, above n 21, at [90].
[294] For these reasons, I am satisfied that the 2010 and 2013 transactions were not unconscionable bargains. Accordingly, I dismiss the claim under the third cause of action.
OTHER MATTERS RAISED IN EVIDENCE
[295] For completeness, it is appropriate to record that I do not accept Gabriel’s evidence that Cirilo and Flor were in a bad state when he called around to John Davis Road in late 2016 on his return from the United States. Nor do I accept Eduardo’s evidence that, when Cirilo and Flor visited Eduardo and his family in 2012-14, they arrived a bit smelly and in old clothes and he had to ask them to have a shower.
[296] There is no independent evidence to support either account, which was obviously intended to discredit Jorge and justify the removal of Cirilo and Flor from John Davis Road and to keep them apart from Jorge as Eduardo and Gabriel sought to unwind the effect of the 2010 and 2013 transactions. The evidence is also inconsistent with the evidence of Ms Moran, who visited John Davis Road on a number of occasions and also visited Cirilo and Flor when they were in Huntly and in the converted garage at the bottom of Gabriel’s property in Manurewa. I find Ms Moran to be a credible and reliable witness. Ms Moran’s evidence is that, when Cirilo and Flor were living at John Davis Road with Jorge, the house was clean and tidy and that they were all very happy living together.
[297] Although it does not form the basis of my analysis, it is also appropriate to record that I consider it more likely than not that Eduardo and Gabriel were aware of the 2010 and 2013 transactions well before Gabriel’s return from the United States in 2016 and probably before the 2013 transaction. Eduardo’s evidence shows he was aware of Flor’s intention to leave John Davis Road to Jorge at least by 2014. The fact that he made his handwritten amendments to the will made in 2010 and not to those made in 2012 or 2013 suggests he may well have been aware of his parents’ intentions much earlier. The fact that Jorge’s ability to take over the loan on John Davis Road was contingent upon his exiting his liability for Boundary Road, which then passed legally to Eduardo and his wife, and the fact that Cirilo and Flor referenced the connection between the two transactions in their discussions with Mr Bradley, also
suggest that it is likely that Eduardo was well aware of the 2013 transaction at the time it was executed.
[298] In any event, the evidence suggests that Eduardo at least, and possibly Gabriel, were working to undermine the 2010 and 2013 transactions from much earlier than October 2017 when they applied to be appointed litigation guardians. Gabriel said that one of his reasons for removing Cirilo and Flor from John Davis Road was that Flor had told him that she and Jorge had had an argument; the Police had been called; Jorge had told the Police he owned the house so did not have to leave; and that if Flor had a problem with that, she and Cirilo should leave.
[299] Jorge and his former partner, Ms Ng, give two different accounts of Police calls at John Davis Road.
[300] Ms Ng says that around 2015/16 when she was staying regularly at John Davis Road, Flor told her that Eduardo and Gabriel had told her that, as Jorge’s girlfriend, Ms Ng was entitled to half of John Davis Road and that she would get all of it if anything happened to Jorge. Ms Ng said she told Flor not to worry and that she did not want John Davis Road. However, Flor had become very agitated and had told Ms Ng that she had changed her mind about the transfer of the house and she wanted John Davis Road transferred back to them. Flor had called the Police to remove her from the house. When the Police arrived and found that Jorge was the owner, they had told Flor that, because she was not the owner, they could not remove Ms Ng.
[301] When asked about Gabriel’s account when being cross-examined, Jorge had said his parents had been on the phone to Eduardo at some time around 2015 / 2016 and he had heard Eduardo say to them, “You are living with the enemy, you should kick him out of the house”. Eduardo had also told his parents to call the Police, which Flor had done. However, when the Police had come and found out that Jorge was the owner of the house they had left.
[302] It is possible that the two accounts do not relate to the same incident. Importantly, however, in cross-examination Gabriel did not deny that he and Eduardo had told Flor that Ms Ng could take half of John Davis Road.
[303] This evidence suggests that Eduardo and Gabriel worked for a considerable period to try to undermine the arrangements that Cirilo and Flor had put in place for themselves and for Jorge with respect to John Davis Road. As long as Cirilo and Flor were living with Jorge, they could not make much progress. They then removed Cirilo and Flor from Jorge. When Flor as well as Cirilo, was suffering from dementia, they took steps to have themselves appointed litigation guardians, purporting to act in their parents’ interests when, in reality, the interests they were pursuing were their own.
COUNTERCLAIM
[304] Despite the above findings, I am not satisfied that there is a proper basis for an award of damages against Eduardo. Eduardo has brought this proceeding in the name of Cirilo and in accordance with the decision of Whata J.30 It is not appropriate, therefore, to award damages in this proceeding against Eduardo in his personal capacity.
[305] Moreover, the rationale given for the damages sought by Jorge goes to matters that are usually addressed in costs or in exemplary damages. Even if I had jurisdiction to award such damages in this case, I am not satisfied that there is sufficient basis for the award of exemplary damages.
RESULT
[306] I dismiss all of the claims brought by Eduardo on behalf of Cirilo in the three causes of action.
[307]I dismiss Jorge’s counterclaim.
COSTS
[308] As the successful party, Jorge would usually be entitled to an award of costs. In this case, he might be justified in seeking an uplift on scale costs. However, because, as I understand the situation, Jorge is legally aided, he is not able to seek an award of costs.
30 Sequeiros v Garate, above n 9.
[309] However, if Ms Goode and Ms Rogers wish to address me on costs on behalf of Jorge, they may file a memorandum of no more than six pages by 30 January 2024. Any reply on behalf of Eduardo, also of no more than six pages, may be filed by 29 February 2024.
G J van Bohemen J
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