Daunt v Daunt [2015] VSCA 58

Daunt v Daunt [2015] VSCA 58 - VSCA 2015 case summary — Zoe

[5]

In 2010, Mr Edward Daunt ('Mr Daunt') and his wife Mrs Valerie Daunt ('Mrs Daunt') were the registered proprietors of a property known as 95 Junction Road, Heathcote Junction, Wandong ('property').
Mr and Mrs Daunt had three children: Stephen Daunt ('Stephen') (who is the appellant), Michael Daunt ('Michael') (who is the respondent) and Helen Rodgers ('Helen'). Stephen and Michael are identical twins.
The relationship between Mr and Mrs Daunt and Stephen and Helen was strained, as was the relationship between Michael, on the one hand, and Stephen and Helen on the other. It also seems that Michael was the primary carer for his parents. During 2010, it appears that Mrs Daunt's access to a pension was affected by her joint ownership of the property.
On 16 June 2010, Mr and Mrs Daunt executed a transfer of the Wandong property in favour of Michael and Mr Daunt ('the transfer').
On 6 October 2011, Stephen lodged a caveat on the title to the Wandong property.
On 26 October 2011, Mr Daunt died. He was survived by Mrs Daunt.
Had the transfer not occurred, Mrs Daunt would have succeeded to sole proprietorship of the Wandong property by right of survivorship. By reason of the transfer and the later death of his father, Michael succeeded to the sole proprietorship of the property by right of survivorship.
On 22 May 2012, Michael was registered as the sole proprietor of the property by right of survivorship.
In response to the caveat lodged, Michael made an application to Land Victoria pursuant to s 89A(1) of the Transfer of Land Act 1958 for the removal of the caveat.[1]
On 28 December 2012, Stephen issued proceedings against Michael in the Supreme Court of Victoria. He claimed that, in order to defeat his legitimate claims and those of his sister to their share of their father's estate, Michael had breached fiduciary duties owed to his parents and had misused his position as a fiduciary to procure the transfer of the property to himself. Stephen sought declarations of constructive trust and an account of profits as well as an order for the continuation of the caveat.
On 14 August 2013, Hargrave J referred the hearing of the proceeding to an associate justice pursuant to r 77.05 of the Supreme Court (General Civil Procedure) Rules 2005 ('Rules').
The trial judge heard the matter in August and September 2013.[2] Stephen represented himself.
The trial judge summarised 'the core' of Stephen's claim as follows:

[17]

Dear Stephen,

Registered mail is an accepted part of documenting correspondence. My intention is to avoid confusion in my future activities as the person appointed to holding Enduring Power of Attorney for our parents.

I will try to clarify what I understand of your letter of the 19th of Oct 09.

1. You don't wish to help because you don't want to be exploited by me, Mum and Dad or the 'indifferent' Rogers. By this I gather you are not feeling naturally drawn to giving time and energy to Mum and Dad.

2. You say the house is insured so the Fire Season is not a problem. From this statement I gather you do not want to give your time to cleaning up the fire risks that surround the house. You have no concern for the contents of the house.

3. You say the improvements I suggest are not necessarily going to add much to the eventual market value of the property. From this statement I gather you don't wish to do any work on the property.

4. You state, 'I am prepared to act in "our parents" interest if you are absent. There is no role for me at present'. I AM offering to be absent.

If Mum and Dad are in agreement, you can collect their mail, pay bills and be a taxi driver and an errand person. You can accompany Mum and Dad to their difficult appointments and sit with them in waiting rooms. You can do the paper work with the clinics and Medicare. You can be accountable to the Hostel, the Doctors, the hospitals and Government. You can have the enjoyment of taking them on outings to the shops and local parks etc. You can attend to their health challenges and research medical matters. You can take over maintenance of the property. You can be available for consultations with the Hostel and doctors if there is an emergency. I am not speculating. All the above things are what I am dealing with right now**. Will you commit to the above activities if I go back to Mylestom?** This is not an ultimatum; it is a process of getting clear communication with you.

5. Contrary to your speculation, I won't be abandoning my role; I will just be taking time out if you can help. I will continue my daily phone contact with Mum and Dad.

6. If you take time to understand Mum and Dad's situation it will become evident to you that you won't be 'assuming control and solving problems in your own way.' Mum and Dad are still in control. The Hostel has its own rules you will need to fit in with. Dad is the boss accountant. We have set up Internet banking facilities. Mum and Dad both have bankcards and can see their accounts any time they wish.

7. You say 'it would be better to extract something of value now than wait for some uncertain event.' Better for whom? Our parents' pensions and their eligibility for it and other Government assistance would be significantly diminished by the premature sale of the property. As well, their accommodation fees would be increased. Mitchell Shire Council has devalued their property by a third. The fires of last February have caused a slump in land values.

From your above statement I gather you don't mind getting a poor return on the sale of the property. It appears you haven't factored in Mum and Dad's financial security through the current Global Economic Crisis. Yes I am well researched. You could be too. The Internet is excellent. Government departments are very helpful.

8. In reference to your statements about normal relations: I have separated myself from you because I am troubled by you. It is my problem. I am sorting it out in my own way. Whether you help or not, certain work has to be done. I am not demanding anything of you. You are being kept informed.

I hope I have interpreted your letter, of October 19th 2009, accurately.[5]

[19]

Dear Stephen,

Centrelink will be including the Wandong property in our parents' Asset Tests as of February 27th 2011 onward unless Mum returns home. The property will be deemed to be worth a certain amount. They will put a value on the property if it is not sold. If it is sold then the sale price is taken as the value of the asset.

Do you wish to be a co-owner of the Wandong property? The deposit we need to put down would be in the order of 10% of the value of the property. The settlement date would be soon after the 27th of February 2011. i.e. two years after their being billeted at Waterdale Hostel while the fire damage to the property was attended to.

Centrelink says they will accept what they consider is a reasonable market value as stated by a licensed real estate agent.

We need to work out what we can afford. (Ref. Mitchell Shire rates notice for rates and valuation) I am prepared to take out a mortgage on my property and return to work.

We would be taking on the role of small-time developers, doing works that make the property more attractive to potential buyers and waiting for a better market.

Mum and Dad will not gift the property to us because it would leave them financially insecure. Centrelink would still deem the property as if it had been sold and Mum and Dad's pension would be reduced or even withdrawn totally if land prices recover from the fires in the coming years.

Assuming their (sic) will be no collapse of the housing market and the global economy recovers, I am very sure that we will all benefit in the long term by acquiring the property now.

If you decide not to be a co-owner then whatever the property realizes, whether by auction, normal sale through an estate agent or private sale, is what will finally make its way to us (Minus the expenses that Mum and Dad incur during the final years of their lives and the cost of selling the property, stamp duty, probate and executing of the Will).

I wish to emphasize that the main objective of us acquiring the property is to protect Mum and Dad's pension from further depletion. Without the pension, their financial situation could deteriorate very rapidly back to being dependent again on the pension but this time stripped of their assets.

Please do some research of your own to support any suggestions you wish to make. Mum and Dad have the final say. They have Power of Attorney over each other.

Centrelink provides a financial advice service. There is also the Department of Fair Trading.[7]

[50]

The trial judge held that Stephen did not have standing to bring the present proceeding. She said: 'Any such claim can only be made by or on behalf of Mrs Daunt. It is apparent from her evidence that she has no intention or desire to bring such a claim.'[20] Against the possibility that she was wrong on the question of standing, the judge also considered whether the transfer ought to be set aside on the basis that it was procured by a breach of fiduciary duty, exertion of undue influence, or unconscionable conduct by Michael. She considered the evidence and, in particular, the evidence of the relationship of Michael to his parents at the time that the transfer was made. She dismissed the contention that Michael owed his parents fiduciary obligations: 'There is no overarching doctrine at law that an adult child otherwise owes a fiduciary duty to his or her parents.'[21] She then considered the claim that Michael had procured the transfer by exerting undue influence. In this regard, she considered the principles articulated by Kaye J in Christodoulou v Christodoulou.[22] She held that by reason of the facts and circumstances of the relationship between Michael and his parents, there was an antecedent relationship between him and his parents such as to raise presumption of undue influence which must be rebutted by him in order to avoid the gift to him effected by the transfer being set aside.[23] However, she found that Michael had discharged the relevant onus: 'It is apparent from the evidence of Mrs Daunt that she voluntarily gifted her share of the Wandong property to Michael, with a full understanding of the consequences of the transaction, and a rational basis for embarking upon the transaction.'[24]
The trial judge dismissed a claim that the transfer should be set aside on the grounds of unconscionable conduct on the part of Michael. First, she held that neither Mr or Mrs Daunt were under some particular disadvantage that made them vulnerable; on the contrary, she said that Mrs Daunt had given an explanation for the transfer which was 'lucid and reasoned'.[25] Finally, she held that, were she to have found that Mrs Daunt was under some special disability or disadvantage vis-à-vis Michael, such that there arose a presumption of unconscientious conduct, she found that the transfer was part of a transaction that was fair and reasonable in all the circumstances: 'Mr Daunt senior and Mrs Daunt were keen to find some mechanism for maintaining Mrs Daunt's access to the Wandong property while maximising their ability to receive financial assistance from the Commonwealth Government, and it appears that objective has been achieved by reason of the Transfer of Land'.[26]

[56]

The immediate effect of the transfer was to deprive Mrs Daunt of her interest in the property as joint tenant. The remote effects were more numerous and, to a large extent, speculative. The transfer deprived Mrs Daunt of any expectation that she would acquire the whole of the title by survivorship in the event that she survived her husband. Were she to survive her husband, the property might have formed part of her estate. Then again, it might have been sold before she died, in which case it would not form part of her estate. If the property had remained part of her estate, she might have made provision for it in her will. She might have left it to one or other of her children or to all or a combination. If she failed to make adequate provision for one of her children, that child may have standing to seek further provision under Part IV of the Administration and Probate Act 1958. In the event that such an application was successful, the Court may make orders affecting the title to the property.
Obviously enough, if Mrs Daunt was disaffected by the transfer, she would have had standing to seek relief of some kind. The question is whether Stephen had standing to seek orders consequent upon the circumstances in which his mother parted with her interest in the property? He was not the owner of the property. Whether he ever gained some interest in the property depended upon the contingencies described in the previous paragraph.
In his written submissions, Stephen contended that he had standing either as a potential beneficiary of his mother's estate or as a potential claimant under s 91 of the Administration and Probate Act 1958 against his mother's estate. Stephen also submitted that he has standing in a representative capacity for his sister (who would have the same grounds as he asserts in paragraph [47] above) and for his mother.[27] Finally, he submitted that this Court should prefer the reasoning of McMillan J in Mataska v Browne[28] to that of Sifris J in Wood v McLean.[29] He submitted that this reasoning should be followed in relation to his claim, notwithstanding the fact that his mother is still alive and that the facts in Mataska v Browne are distinguishable.
In his oral submissions, Stephen said that he had standing on the grounds of 'kinship'.
It is a fundamental principle that, in the absence of specific exception, a wrong done by B to A cannot be vindicated by C.
The transfer was a transaction inter vivos; it was not one that was to occur under a testamentary disposition. Accordingly, those authorities that deal with the standing of beneficiaries under a will or contingent beneficiaries under an application for family maintenance or provision under Part IV of the Administration and Probate Act 1958 are of limited, if any, relevance. Mrs Daunt was the person who had standing to seek relief in respect of the transfer. In certain circumstances, a person 'standing in her shoes' may be authorised to apply for any relief that she was entitled to. For example, depending upon the terms of the grant, a power of attorney (general or enduring) or the holder of an enduring power of guardianship could bring proceedings in her name. Legal proceedings may be commenced by a guardian or an administrator appointed by VCAT under the Guardianship and Administration Act 1986. Similarly, an application may be made by a person to be appointed a litigation guardian of a person under a disability pursuant to r 15.03 of the Rules.
In the present case, Stephen was not his mother's power of attorney. Further, his application under s 43 of the Guardianship and Administration Act 1986 had been dismissed. He had made no application under r 15.03 of the Rules to be appointed her litigation guardian. As the evidence stands, it is unlikely to have been successful.
The application was not commenced as a representative proceeding under the Rules_._ There was no indorsement of representative capacity under r 5.06. No application was made under r 16.01 (representation of unascertained persons); any such application would have failed. Stephen's sister is identified: her interest is no different from that of Stephen. A representative proceeding cannot be established by mere assertion. And, in the present case, there was not even an assertion that the proceeding was being brought in a representative capacity. And, where A does not have standing, he cannot confer standing upon himself by effecting to be the representative of B, whose entitlement to commence proceedings is no different from that of A.
There are many obstacles to holding that Stephen had standing in the present case. However, as it is clear that Stephen's claim cannot succeed on other grounds, it is unnecessary to resolve finally the issue of 'standing'. 'Standing' is a topic that has many complex features. The term better expresses a conclusion than it does a principle. While courts are loath to depart from the basic principle that a wrong done by B to A may not be vindicated by C, they are also astute to ensure the protection of the vulnerable from the undue influence or unconscionable conduct of those who would take advantage of them, and to ensure that matters of procedure are not an impediment to the availability of such protection.
We would leave open the question whether a person who has a contingent interest as a potential beneficiary under a will or may be a potential applicant under s 91 of the Administration and Probate Act 1958 has standing to set aside an inter vivos disposition said to be procured by undue influence or unconscionable conduct.

[72]

Stephen submitted that the trial judge erred in not finding that Mrs Daunt was under a special disability or disadvantage such that the transfer amounted to unconscionable conduct. He submitted that the trial judge erred in having regard only to Mrs Daunt's capacity and not to her strong emotional dependence on Michael. He also submitted that the emotional dependence, in combination with the age and frail health of Mrs Daunt, seriously affected her ability to make a judgment as to her own best interests, and Michael must have known of that effect on her. He submitted the transaction was not in her best interests because it effectively resulted in the estrangement of her other two children.
Stephen also submitted that the trial judge should have found that, as well as being under a special disability or disadvantage, Mrs Daunt was not in a position to protect her interests.
The trial judge held that '[t]here is no overarching doctrine at law that an adult child otherwise owes a fiduciary duty to his or her parents'.[45] Stephen said that, while that proposition was correct, the issue remained: whether by reason of Mrs Daunt's vulnerability and her reliance upon Michael, a fiduciary a relationship had none the less been established which prevented Michael from placing himself in a position where his duty to his parents conflicted with his own interest.
At the hearing of the appeal, Stephen's counsel pointed to several pieces of evidence which, he said, showed that Mrs Daunt was under a disability, and, in particular, that she could not have understood the implications of the transfer and that she was acting under the influence of Michael. In his affidavits, Stephen was direct: at one point, he said that his mother had become a 'decrepit puppet'. Second, Stephen said that, in writing her letters, his mother was simply a cipher for Michael. He gave evidence of a letter from his mother: 'The style of handwriting is very characteristic of our mother but the thought, the phrasing and wording is most characteristic of my twin brother, Michael Daunt'.
The material before the trial judge also included two DVDs that showed Mrs Daunt speaking. As with all the other evidence adduced by Michael, Stephen discounted this evidence. He said: 'Her DVD testimony is scripted and produced by [Michael]. Her compliance is the result of undue influence by [Michael]. It was not made under oath. She is not aware of Section 125B(b) (sic) of the Instruments Act 1958'.[46] At the hearing before the trial judge, he said that the DVDs comprised 'fabricated evidence'.

[75]

The whole paragraph together with the rest of the report must be considered. Mrs Daunt was alive to the criticisms that Stephen and Helen were making about Michael's involvement in her life, but she did not share their estimation of it.
Stephen referred to his mother's letter to VCAT dated 8 February 2011.[51] He said that it showed her confusion about the effects of the transfer. Given that she had transferred her interest in the property, it was not possible for it to be kept as a 'financial and physical resource'[52] for herself and her husband.
Again, the whole letter must be read. It demonstrates that Mrs Daunt understood that, so the requirements of Centrelink could be satisfied, she had to part with her interest in the property but, by transferring it to a member of her own family, she and her husband could continue to have access to it and to enjoy it. The remainder of the letter, particularly its reference to the fact that Michael would get the property on the death of his father and to what would be contained in her estate showed that she fully understood what was involved in the transfer and that she was pleased that she would continue to have access to it.
Much the same must be said of Mrs Daunt's reference of 6 December 2012 to 'your caveat ... interfering with my freedom to acquire a new and more suitable place to live'.[53] The whole letter must be read. It is of a piece with all the other evidence of what Mrs Daunt had been saying: she was frustrated with Stephen's unwillingness to help her and his determination to frustrate the strategy whereby she could do what was necessary to ensure that Centrelink was satisfied that her pension was not prejudiced and at the same time have continued access to the property as it was in the hands of one of her children. Stephen's contention that Mrs Daunt was confused as to the effects of the transfer is simply not tenable.
A further difficulty in all these contentions is that none of them was put to any of the witnesses at trial. Neither Michael nor Mrs Daunt was given any opportunity to comment on them.[54] The transcript of the hearing before the trial judge makes clear that Stephen had made it plain, at one or more directions hearings, that he did not wish to cross-examine any witness and that he wanted the matter determined 'on the papers'. In fact, there was a hearing. At that hearing, Stephen confirmed that he did not wish to cross-examine any witness. A court must explain to an unrepresented litigant the consequences of not cross-examining a witness.[55] If the evidence of the witness is not challenged, the court is left without having heard what the witness would say in response to the challenge. Counsel were not able to tell the Court exactly what had been said at the directions hearings to Stephen; counsel for Michael said that he had a 'vague recollection' that the matter had been explained to Stephen. Stephen was present at the hearing of the appeal; he made no protest when this was said. Moreover, this Court has been able to read the transcript of the hearing before the trial judge and it is clear that Stephen was given every opportunity to say whatever he wished to say.[56]
There was abundant evidence that the transfer was a spontaneous act of Mrs Daunt in exercise of an independent and informed will. Mrs Daunt herself gave evidence. She was able to show the opinions as to her capacities that had been formed by Dr Coulson and Dr Doig a short time before she executed the transfer. Ms Carbone witnessed the execution of the transfer and gave evidence that she did not detect 'any reluctance or lack of understanding' on the part of any of the signatories to the transfer. Soon after the execution of the transfer, both Mr and Mrs Daunt had their own solicitor prepare enduring powers of attorney in favour of Michael. A short time later, Dr Baker certified that she was 'aware of the past history and present medical state of Mrs Daunt and that she has testamentary capacity and the ability to understand information and its implications'.[57] When Mrs Daunt wrote to VCAT, she had her solicitor witness the letter to 'avoid any suggestion that I had been coerced or unduly influenced by any other person'.
In addition, the evidence contained several letters in Mrs Daunt's own hand. They have been extracted above. The firmness and clarity of her handwriting are striking. Their content is all to the same effect. She wanted the transfer to take place in order to carry out advice that she had received from Centrelink to the effect that her continued ownership of the property was interfering with her pension entitlements. She was frustrated by the refusal of Stephen and her daughter to accept that this is what she wanted.
In our opinion, Michael has rebutted any presumption of undue influence with respect to the transfer. Moreover, we are satisfied that the transfer was fair, just and reasonable when viewed from Mrs Daunt's perspective, and that Michael did not unconscionably exploit any disability in his mother for his own advantage.

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