DVB v NSW Trustee and Guardian

DVB v NSW Trustee and Guardian - [2021] NSWCATAD 105 - NSWCATAD 2020 case summary — Zoe

[3]

Introduction

In October 2017, then 92-year-old Maria Rydzewski signed documents transferring three residential properties, two to her daughter-in-law, Jenny Rydzewski, and one to her grand-daughter Krystina Rydzewski, each for consideration of $1 (the disputed transfer). The total value of the properties was estimated to be $1,840,000 at the date of transfer.
Maria inherited the properties from her daughter Danuta, with whom she had been living until shortly before Danuta's death in July 2016. As she died intestate, by the operation of the Succession Act 2006 (NSW), Maria inherited Danuta's entire estate.
Maria has three surviving children, Kevin Rydzewski, Wieslawa Snopkowski, and Stanislaus (Stan) Rydzewski. Wieslawa has been diagnosed with dementia and since December 2016 has been living in residential aged care. Wieslawa's husband, Andrew Snopkowski, and Stan Rydzewski are the applicants in these proceedings. Jenny Rydzewski, Krystina Rydzewski (daughter of Kevin and Jenny Rydzewski) and the NSW Trustee and Guardian (the Trustee) are the respondents in these proceedings.
In April 2018, the Guardianship Decision of the NSW Civil and Administrative Tribunal (NCAT) found that Maria lacked capacity to manage her affairs and made orders committing the management of her estate to the Trustee. In addition, the Tribunal made a guardianship order in respect of Maria, appointing the NSW Public Guardian as Maria's guardian.
In May 2018, the solicitor acting for Stan and Andrew, Darryl Browne, of the firm Browne Linkenbagh Legal Services, wrote to the Trustee requesting that Jenny and Krystina be asked to return the properties the subject of the disputed transfer, and, if they refused, to commence action on behalf of Maria in the NSW Supreme Court "seeking appropriate redress". Mr Browne asserted that the disputed transfer could be set aside on several grounds, including Maria's alleged lack of mental capacity, unconscionable conduct, undue influence and because the transfer was "unjust" within the meaning of the Contracts Review Act 1980 (NSW).
After investigation and referral to external lawyers for advice, the Trustee decided not to commence legal action to set aside the transfers. In March 2019, after conducting an internal review, the Trustee affirmed that decision.
Dissatisfied with that decision, Stan and Andrew have applied to NCAT for administrative review. They urge the Tribunal to set aside the Trustee's decision and, in substitution for that decision, to make a decision that the Trustee commence legal action to have the disputed transfer set aside. The respondents, on the other hand, urge the Tribunal to affirm the Trustee's decision.
In making the "correct and preferable" decision, I must give paramount consideration to Maria's welfare and interests. Making that decision requires an assessment of the prospects of success of the proposed set-aside action together with the likely impact on Maria's estate, in particular her ability to fund her future medical treatment, care and support if the proposed actions were to succeed or fail.
Because most of the lay witnesses share a common surname, for convenience I will refer to them and the person the subject of the Trustee's decision, Mrs Maria Rydzewski, by their first names. In these proceedings the Trustee made brief submissions about the ultimate issue but did not make any substantial submissions about the evidence. Again, for convenience, unless otherwise stated, all references to "the respondents" are to the second and third respondents, Jenny and Krystina.

[4]

Administrative review

In a decision made on 24 April 2018 under s 25E(1) of the Guardianship Act 1987 (NSW), NCAT committed Maria's estate to the management of the Trustee. As a consequence, the Trustee has, and may exercise, all functions necessary and incidental to the management and care of Maria's estate: s 56 of the NSW Trustee and Guardian Act 2009 (NSW) (the Trustee Act).
The decision not to commence legal action to set aside the disputed transfer (the Trustee's decision) was a decision made in exercise of the Trustee's functions under Division 1 of Part 4.5 (Management of estates by NSW Trustee) of the Trustee Act and is reviewable by NCAT: s 62. When acting in a "protective capacity" the Trustee may "bring and defend actions, suits and other proceedings ": s 16(1)(s) of the Trustee Act.
Each applicant is an "affected person" and as a consequence was entitled to apply to NCAT for administrative review of the Trustee's decision: s 62 of the Trustee Act. In determining their application for administrative review, I may affirm or vary the Trustee's decision, set aside that decision and make another decision in substitution for the decision, or set aside the decision and remit the matter for reconsideration by the Trustee: s 63(3) of the Administrative Decisions Review Act 1997 (NSW).
The nature of a review under s 63 of the Administrative Decisions Review Act was recently considered in Youssef v NSW Legal Services Commissioner [2020] NSWCATOD 85 (Youssef). Citing Donaghy v The Council of the Law Society of New South Wales [2013] NSWCA 154, the Tribunal (NCAT President, Armstrong J presiding) emphasised at [21] that a review under s 63 is a "review on the merits" and is "not concerned ... whether there was challengeable error in the process or reasoning" by the original decision-maker. Rather, the role of the Tribunal is to "decide what the correct and preferable decision is having regard to the material before it", which includes "any relevant factual material".
In summary, in reviewing the Trustee's decision, I "stand in the shoes" of the Trustee and am required to make the correct and preferable decision having regard to any "relevant factual material and any applicable written or unwritten law". The review is to be conducted "without any presumption as to the correctness of the decision": McDonald v Guardianship and Administration Board [1993] 1 VR 521 at 530; Youssef at [24].

[13]

Maria allegedly discusses transfer of disputed properties with Kevin, Jenny and Krystina

According to Kevin and Jenny, between November 2016 and March 2017 they and other members of their immediate family worked for no payment on the family home at Rooty Hill and the three NSW properties Maria had inherited from Danuta, which were in varying states of disrepair. Kevin claimed that despite approaching Stan for assistance in late 2016, he refused: "Stan, Andrew and their families did nothing". It is agreed that over the years, members of the Rydzewski family helped each other repair and maintain their respective properties.
Kevin and Jenny claim that in 2017 Maria raised with them her intention to transfer the disputed properties to Jenny and Krystina.
Kevin claims that in July 2017, while he was working on the family home, Maria announced that she wanted to "give him extra": Maria: "Why are you working so hard? Where is Stan? Why isn't he helping you?" Kevin: "I don't know. When we went to his place previously, he said he wasn't going to help and that he had done enough." Maria: "I have had enough of him. He won't help with the houses. He did not take me to the funeral. I am going to give everything to you." Kevin: "You can't do that. It has to be divided equally. If you want to do something different, that is up to you, but you cannot give it all to me." Maria: "I want to give you extra." Kevin: "I cannot take it." Maria: "He is not getting Danuta's properties. If you won't take them, I will give them to Jenny and Krystina. They look after me. They treat me like a queen. They make me happy.' Kevin: "What about Wieslawa?" Maria: "She has a husband to look after her. He got his parents' money. She does not need anything extra from me." Kevin: "Let's discuss it later, not now."
Jenny claims she was present during that conversation and corroborated Kevin's account.
Kevin claims that on several occasions after that conversation, Maria raised with him her desire to "give him more" and each time he refused "to accept anything beyond an equal share". He claims that, nonetheless, Maria persisted and ultimately said: "Well they are not getting the extra. They won't even come and say hello. Stan is just greedy. I will give Danuta's properties to Jenny and Krystina."
Jenny gave a similar account, adding that Maria said: "[Jenny and Krystina] work hard to look after me and do a lot of work on the properties. I am very happy with them." Jenny claims that Maria then asked her to arrange an appointment with a solicitor, which she did.
According to Kevin, the final straw, as his mother saw it, was receiving a letter from Stan's solicitor demanding information about the administration of Danuta's estate: "That's it. He just wants to have the money. Contact to [sic] my solicitor and tell him that I want to give 1 property to Krystina and 2 to Jenny."
Krystina claims that in October 2017 Maria told her to go to the "solicitors to sign something… it's a surprise". Krystina said that Maria explained she wanted to give her one of Danuta's houses because she had done a lot for her and Danuta over the years. Krystina claims she felt conflicted and asked about the others to which Maria replied: "Don't worry about the others. They only look out for themselves. Look at how they have treated Danuta and me. They didn't appreciate Danuta's efforts. They just burnt her out. I am not doing anything more for them. Danuta did not have nice things to say about all of them for a long time, because of what they did to her. I don't forget those things."

[14]

4 October 2017: Andrew, Susan and Rebecca visit Maria

On 4 October 2017, Andrew Snopkowski and Maria's granddaughters, Susan Curran (daughter of Wieslawa and Andrew) and Rebecca Rydzewski (daughter of Stan), arrived unannounced at Kevin's house to visit Maria. According to Stan, he had planned to attend but had fallen ill and was unable to join them.
At the time of the visit, neither Andrew, Susan nor Rebecca had seen Maria for over 12 months. As children, Susan and Rebecca had regular contact with Maria. However, in the five or so years before the disputed transfer, they, particularly Susan, had limited contact with Maria.
Andrew, Susan, Rebecca and Kevin gave evidence about the 4 October 2017 meeting. While several facts are in dispute, they agree that during that visit: 1. Maria did not appear to recognise Andrew, Susan or Rebecca; 2. Susan handed Maria an invitation to Rebecca's engagement party and repeatedly urged her to attend; 3. Maria spoke in Polish. Susan interpreted for Rebecca who does not speak Polish; 4. when informed that Stan would be attending the engagement party, Maria smiled and said she would like to see him. Later she asked why Stan had not visited her. Kevin then said, "my door is open… Stan is free to visit Maria"; 5. at some point during that visit Rebecca and Kevin left the room, leaving Maria, Andrew and Susan alone.
Rebecca stated that when she arrived, she was shocked to see how much her grandmother had physically deteriorated and "felt quite emotional". She was unsure when she had previously seen Maria and thought it might have been in January 2016. She claimed that her grandmother was using a walking stick, was "very wobbly and shaky" and "hunched over". She claimed that despite it being the afternoon her grandmother was still in her pyjamas and smelt like she had not showered for a few days.
Susan claims that, after greeting her grandmother, she asked in Polish "Do you recall who I am?" to which Maria replied, "No". Susan explained that she was her granddaughter, the daughter of Andrew and Wieslawa, and Rebecca was the daughter of Stan. According to Susan, when she told Maria they last met about 12 months ago while Maria was living with Stan at St Mary's, Sydney, Maria replied that she did not know where St Mary's was and did not think that she had been there.
According to Susan, when she asked Maria whether she spoke English, Maria replied in Polish, "My English is very poor". After informing Maria that Rebecca did not speak Polish, Maria chided her for not teaching Rebecca Polish, appearing to believe that Rebecca was her daughter. Susan said she reminded Maria of Susan's sisters and two of Maria's lifelong friends. Maria said she could not recall them.
According to Susan, when she raised with Maria the invitation to attend Rebecca's engagement party, she replied "I don't know, I don't think I go to parties."
Susan claims that while Kevin and Rebecca were out of the room, the following conversation took place: Susan: "Can you tell Andrew about the legal paperwork you had sent to Andrew via Kevin in July? What would you like us to do about it?" Maria: "What paperwork?" Susan: "Did you see a solicitor?" Maria: "No, I didn't see anyone. I don't not [sic] know what paperwork you are talking about". (Susan showed Maria the paperwork that consisted of a letter from Paine, Ross and Co with a form for Andrew to sign to confirm that Wieslawa is the daughter of Maria and that Wieslawa gives permission to Maria to administer the Western Australia property, and any decisions Maria makes in regard to the property, Wieslawa cannot hold Maria liable for. The paperwork compromised [sic] the letter that Andrew and Stan had sent through Mr Darryl Browne to Paine, Ross and Co, to request a visit with Maria to discuss Danuta's estate and Maria's wellbeing.) Maria: "I can't read the paperwork anyway. I would need to ask Kevin and Jenny about it, they do that". Susan: "Do you receive your aged pension in your bank account?". Maria "I don't know, Kevin and Jenny take it all". Susan "So you know about Danuta's houses?" Maria "No I don't, I can't say as I don't remember". Susan "Do you know that you are to get all Danuta's money and houses?" Maria "I don't know about them. If she gave them to me, I don't know." Susan "What about Danuta's money. Did you get that?" Maria "Don't ask because I don't remember, or if I did know, I have forgotten. Ask Kevin and Jenny, they would know what they did". Susan "Well the paperwork says that you got all Danuta's houses and money". Maria "Did I? Then yes. I must have them". Susan: "Do you remember going to a solicitor to sign documents and ask for Andrew to sign documents?" Maria "I don't know, maybe I have been, maybe I haven't been, I don't know. Kevin and Jenny would know. They do all that". Susan "What would you like Andrew to do with the letter sent to Andrew to sign?" Maria "What letter?" Susan "The letter that you sent to Andrew to sign as Wieslawa has dementia and cannot sign it. Maria "What? She has dementia? When did that happen?" Susan: "Since 2008. Mum told you back then. You saw Mum decline over the years." Maria "No I don't remember. Why didn't you tell me".
In a statement dated 3 April 2018, Andrew gave a similar account. Andrew did not give oral evidence or prepare a written statement for these proceedings. His statement made on 3 April 2018 was contained in the documents filed by the Trustee as required under s 58 of the Administrative Decisions Review Act.
According to Kevin, when Jenny arrived home shortly after Susan, Andrew and Rebecca left and Maria said: "They want me to go a party, but they did not take me to [Danuta's] funeral. Parties are not important to me. You can have parties anytime, but what was important is that they did not take me to funeral."
Jenny supported that claim.

[15]

Maria meets with Mr Ireland and transfers properties to Jenny and Krystina

On 14 September 2017 and 25 October 2017, Maria met with Mr Ireland. As noted, Jenny arranged the meetings, on her account, at Maria's request. Kevin and Jenny attended each meeting. A Polish interpreter attended the second but not the first meeting.
In answer to a summons issued at the request of the applicants, Paine Ross & Co produced to NCAT its files in relation to the disputed transfer, among other things. In addition, Mr Ireland attended and gave evidence in answer to a summons issued at the request of the respondents.
In a file note made of the 14 September 2017 meeting (the first meeting), Mr Ireland wrote: "Maria Rydzewski 1. Chase Police Transfers: 1. Wieslawa Jenny = 1 house -> [address deleted] 2. Jenny = 1 house -> [address deleted] 3. Krystina Rydzewski= 1 house -> [address deleted] All rents to go to Maria * potentially get an interpreter + sign a statement in Polish 1. docs to sign ??? 2. statement -> to be [???] to Polish + signed by Mum, witnessed by interpreter -> certificate from geriatrician? Or if interpreter says what she says + I say it's clear she has capacity, the OK * to calculate stamp duty * [???] -> dr Itr of advice -> get acknowledgement of advice + instructions -> not under duress + obtained legal advice -> will translated...? -> send her the translated will, advise + ask her to confirm"
In preparation for the meeting on 25 October 2017 (the second meeting), Mr Ireland arranged for three documents to be translated from English into Polish: a letter addressed to Maria dated 21 September 2017 setting out his understanding of Maria's "previous instructions"; an undated document headed "Acknowledgment of advice and instructions to solicitor" and a copy of Maria's will, dated 22 September 2016. Mr Ireland thought it likely that those translated documents were not sent to Maria in advance of the second meeting but rather were handed to her to read at that meeting.
Contained in the Paine Ross & Co file are two versions of the "Acknowledgment of advice and instructions to solicitor". One is undated and refers to Maria's "wish to give 1 NSW property to my daughter in law Janina Rydzewski and 1 NSW property to her daughter Krystina Rydzewski" (emphasis added). The second version, signed and dated 25 October 2017, refers to Maria's "wish to give 2 NSW properties to my daughter in law Janina Rydzewski and 1 NSW property to her daughter Krystina Rydzewski" (emphasis added) but is otherwise identical to the first version. Each contain the following: "5. I want to give [Jenny and Krystina] these properties because they have always been kind to me and looked after me while I have been elderly. My son, Stanislaus Rydzewski and my son-in-law, Andrew Snopkowski, have not been as kind to me or looked after me as Janina and Krystina have, so I have decided not to give a property to them. 6. These property transfers do not in any way affect my Will and the gifts made under it."
The Paine Ross & Co file also includes two versions of the letter from Mr Ireland to Maria setting out his understanding of the instructions given by Maria at the first meeting. One dated 21 September 2017 refers to the transfer of one property to Jenny and one to Krystina. The other, dated 25 October 2017, refers to the transfer of three properties, two to Jenny and one to Krystina.
In oral evidence, Mr Ireland said that at the first meeting Maria gave instructions to give away two properties, one to Jenny and one to Krystina. He said he was "taken aback" when, at the second meeting, Maria "added another property".
Mr Ireland did not meet with Maria after the second meeting nor arrange for an interpreter to read to Maria the amended translated documents. He said that sometime after that meeting he prepared an amended "Acknowledgment of advice" and letter setting out his understanding of Maria's "previous instructions". In re-examination, Mr Ireland said that at the second meeting the interpreter read out the two original translated documents (referring to two properties) and he then instructed the interpreter "to explain that the third property was to be included".
Mr Ireland prepared a handwritten and a typed file note of the second meeting. Each refer to the transfer of three properties. Neither refer to the claim made by Mr Ireland that Maria corrected his understanding that three, not two, properties were to be transferred, nor to the interpreter being asked to "explain that a third property was to be included in the transfer". The typed file note reads in part: "9. I asked Maria to confirm once again what properties she was giving away and to whom. She replied that she wanted to give [address deleted] to Jenny, [address deleted] to Jenny and [address deleted] to Christina. 10. I asked Maria to explain again why she was giving away the properties to Jenny and to Jenny and Kevin's daughter Krystina, and not to her son Stan or her son-in-law Andrew. Maria explained that she wanted to give Jenny and Krystina property because they and Kevin were the only people helping her and had done a good job of looking after her. 11. I presented the 3 translated documents in duplicate to Maria for her to read them and sign them. Maria read the documents and signed them at the meeting and left the originals with me. I gave Maria copies of the documents she had signed for her to take away with her from the meeting."
When taken to the entry in the file note of the first meeting, which records Wieslawa's name as crossed out as the transferee of the third property and Jenny's name written in substitution, Mr Ireland said he could not recall the third property being discussed at that meeting, nor what prompted him to amend the file note by substituting Jenny as the transferee of the third property or when that occurred.
Jenny disputes that at the first meeting Maria said she wanted to give away two properties. She claims that at all times Maria's stated intention was to give away three properties.

[19]

Maria's mental capacity

Mr Ireland said that, in his view, on the six or so occasions he met with Maria she did not appear to lack understanding or to be vague. When asked about the entry contained in the file note of the first meeting, "certificate from a geriatrician?", Mr Ireland denied making that entry because he held concerns about Maria's mental capacity. He said he made that entry because he was conscious that Maria was "quite old" and was about to give away "huge amounts of property" to some members of her family. In those circumstances, "it was a natural lawyer's instinct, to try and protect what she wanted to do".
Contained in the Paine Ross & Co file was a medical certificate prepared by Maria's GP, Dr Yusuf Bassa, dated 15 September 2017. It read: "Mrs Maria Rydzewski has been assessed for capacity. She lives with her son Kevin and his wife Janina in Kurrajong. I review her monthly for the last 12 months. She is 92 yr old who is on warfarin therapy for AF. She is mobile with stooped posture. She is able to make decisions regarding her health and financial affairs."
Mr Ireland denied having any dealings with Dr Bassa or requesting Dr Bassa to assess Maria's mental capacity. He said he probably left the task of obtaining an assessment to Kevin and Jenny.
Kevin and Jenny also deny requesting Dr Bassa to provide the certificate or having requested him to conduct tests to assess Maria's capacity. Jenny stated she had attended all Maria's consultations with Dr Bassa. A timeline prepared by Krystina, attached to her statement dated 4 April 2020, apparently prepared in the context of the proceedings before NCAT, states: "15/9/17 Kevin and Jenny took Maria to Dr Bassa Appointment."
Mr Ireland claimed that he asked Maria "at least three times" whether she "really wanted" to proceed with the disputed transfer and her reasons for wanting to do so. He said he recalled "pushing" and asking Maria to explain why she was singling out Jenny and Krystina. He claimed Maria said words to the effect that Stan was a "bit bossy" and a "bit financially motivated" but in his view she otherwise did not appear ill-disposed towards Stan. He said he understood that Maria treated the properties she had inherited from Danuta differently from the remainder of her estate and considered them to be "a windfall". The file notes of the first and second meetings contain no reference to Maria being questioned about why she had decided to make the disputed transfer or Maria describing the properties as a windfall.
Mr Ireland said that he was aware when he met with Maria that she was living with Kevin and Jenny and that they were acting as her carers. He said he was unaware if Maria had any other confidants. When asked whether he held any concerns about Maria apparently not having anyone to talk to about the transfers apart from the beneficiaries, he said he would have liked the opportunity to speak to Maria alone but "of course there were English difficulties". He said when he asked Maria whether she would like to meet with him alone, she said no. Jenny and Kevin support that claim.
Mr Ireland denied holding any concerns that Maria might have been subject to duress or undue influence but agreed there might be a perception of duress or undue influence.

[23]

Dr Bassa's clinical records

Maria commenced seeing GP, Dr Bassa, in March 2016 and saw him on a regular basis until she was admitted to hospital in February 2018. As noted above, in a letter dated 15 September 2017, Dr Bassa certified that Maria "is able to make decisions regarding her health and financial affairs". In a record of consultation dated 15 September 2017, Dr Bassa recorded: "appearance … normal behaviour … good speech … clear mood … appropriate thought form and content … appropriate perception issues and hallucination … nil cognition good, insight and judgement … good rapport …. good. faulty thinking … no generalisation … nil personal … black and white … catastrophe … no mindreading … no"
In a letter dated 3 April 2018 addressed to the "NSW Guardianship Tribunal" [sic], apparently provided at the request of the respondents, Dr Bassa wrote that he reviewed Maria on a monthly basis and was "very happy" with the care provided by Kevin and Jenny over the past 22 months. He wrote that he had "tested Maria's memory" and she was "always aware of the questions and exhibited reasonable capacity".
In the context of making the decision the subject of these proceedings, the Trustee obtained an opinion from Christopher Zucker of Zucker Legal about the prospects of success of the legal actions proposed by the applicants. For the purpose of providing that advice, Mr Zucker wrote to Dr Bassa requesting further information. In a letter in response dated 19 December 2018, Dr Bassa wrote: "… It has become evident to me that Maria Rydzewski's mental awareness and her capacity to make decisions has changed. In my opinion a potential cause of this change in her cognitive capacity is the recurrence of her breast cancer. This diagnosis is of course very stressful and it may be the sudden change in her morbidity and the commencement of her treatment that has caused her decline in her mental capacity. Maria Rydzewski was questioned by me regularly during our consultations regarding her mental state in the previous 12 months. Her responses indicated to me that she was aware of her treatment and care provided by her son Kevin and his wife Janina and was able to make decisions about who she lived with."

[24]

Observations on Maria's mental capacity

The parties agree that when assessed in March 2018 by neuropsychologist, Dr Shelley Simpson, Maria lacked the mental capacity to make decisions of any complexity, such as the decision the subject of these proceedings, and this remains the case. However, they disagree about whether Maria had the requisite mental capacity at the time she made the disputed transfer. I summarise below the evidence given by family members and friends of their reported observations of Maria. I will return to consider the submissions made by the parties about the reliability of that evidence.
Stan's evidence is to the effect that by September 2016 (the last time he saw Maria before she was admitted to hospital in February 2018), Maria's cognitive capacity was significantly impaired. Among other things he claims that: 1. prior to her death, Danuta complained to him about the amount of care she was now required to provide Maria and said that Maria had dementia and wandered, wetted the bed at night and had trouble finding the toilet. For that reason, she slept with Maria. Stan claims that Kevin was party to that conversation; 2. after Danuta's death Maria kept forgetting that Danuta had died. He chided Jenny for reminding Maria about Danuta's death as it made her "upset all over again"; 3. during a consultation, immediately after Dr Bassa had taken her blood pressure, Maria asked "when will the doctor take my blood pressure?". When, at Dr Bassa's request, he translated that comment, Dr Bassa said that is "a worry". Stan claims he then raised with Dr Bassa his concern that Maria was taking Losec, which he understood "accelerates dementia". Dr Bassa said he would look into prescribing an alternative medication. (Stan could not recall when this consultation occurred. The only time he could have accompanied Maria to see Dr Bassa was between March 2016, when Maria commenced seeing Dr Bassa, and 1 September 2016, when Maria went to live with Kevin).
Stan was cross-examined about Maria's decision in May 2016 to make a new will and to appoint Kevin and himself as joint enduring attorneys and joint enduring guardians. Stan acted as interpreter for Maria at the meeting with Ms Paine. Stan said that he did not raise "any concerns" with Ms Paine, and was "happy that she understood… but I don't know if she understood". He said he knew that Maria always trusted him and looked to him for guidance. With respect to Maria's decision made four months later to appoint him as sole enduring guardian and sole attorney, Stan said he was confident that Maria did not feel pressured to make that appointment and did so freely.
Kevin denied Stan's claim that Danuta had raised concerns about Maria's mental capacity or suggested that she had dementia. Kevin claims that Dr Bassa had never mentioned to him that Maria may have dementia. He agrees that he and/or Jenny always accompanied Maria to appointments but said this was because she needed transport, not because she could not communicate with Dr Bassa. He claimed that Dr Bassa and Maria spoke to each other in English, and he would translate any "complex issues".
Jenny, Kevin and Krystina recounted in some detail conversations each claimed to have had with Maria, including during the last period she lived with them (September 2016 to February 2018). See, for example, Jenny and Kevin's account of conversations with Maria about her decision to "give more" to Kevin at [40]-[42] above, which, if accepted, would tend to indicate that during those conversations Maria was lucid and responsive.
The respondents tendered affidavits prepared by Jenny and Kevin's daughters, Janina Zahra and Wanda Spiteria, and family friends, Rose Spiteria and Wanda Kupczak. None were required for cross examination.
Janina Zahra and Wanda Spiteria stated that they visited the family home on a reasonably regular basis throughout the period Maria was living with their parents. Each claimed that during those visits: 1. Maria recognised them and members of their respective immediate families; 2. Maria engaged in conversation with them and their respective families. Each recounted conversations they had with Maria during that period. Janina, for example, reported Maria warning her and her children to stay away from the family dog because he bites. The dog was eventually put down for biting a child; 3. they saw no evidence to suggest that Maria may have some mental disability or impairment; 4. Maria was able to communicate with her non-Polish speaking grandchildren.
Rose Spiteria met Maria about 20 years ago when her son married Jenny and Kevin's daughter, Wanda. She said that during the period Maria was living with Kevin and his family, she visited every fortnight, usually for between three to four hours. During those visits, she and Maria would socialise and talk about their respective families. Rose claims she and Maria conversed in English (Rose does not speak Polish) and because English is not their first language, they kept the conversation simple. She said that during their conversation Maria did not merely respond to what she was saying but initiated topics of conversation.
Rose claimed that she has been involved with helping elderly people for many years, some of whom had dementia. She claimed that Maria did not display any of the difficulties she had observed in people with dementia, such as forgetfulness.
Wanda Kupczak has known Maria for 50 years. They met when Kevin and Jenny married. Wanda's first language is Polish. She claims that she and Maria spoke to each other in Polish. She observed that Maria spoke to Kevin and Jenny's children, none of whom are fluent in Polish, in English with some Polish words thrown in. In Wanda's opinion, Maria was "the full quid".

[25]

Assessment by neuropsychologist, Dr Simpson

On 26 March 2018, following a referral from the hospital treating team, neuropsychologist, Dr Simpson, met with Maria and conducted a neurological assessment. An interpreter was present.
In a report dated 26 March 2018, Dr Simpson recorded that Maria presented as "vague and confused" and her affect was reactive. Dr Simpson noted that Maria's treating team reported concerns about Maria's capacity to make informed decisions regarding her accommodation options on discharge from hospital. In addition, she noted that during her admission Maria had been assessed by geriatrician, Dr Demontiero, who concluded that she did not have capacity to make informed decisions about financial management or her health care needs.
In the course of her assessment, Dr Simpson administered several tests including the Rowland Universal Dementia Assessment Scale (RUDAS), in which Maria scored 11/30.
Dr Simpson concluded in her report: "Mrs Rydzewski's current performance on cognitive testing indicates that she is currently performing at floor / Basal levels on all basic cognitive screening tools. That is, she is performing at the lowest percentile band across ail cognitive domains. She is markedly disoriented and has extremely limited knowledge regarding her own current and past personal history. Further she has difficulty both understanding and at times even expressing basic information. Overall her current cognitive profile is consistent with a moderate to severe stage neurodegenerative process most likely consistent with an Alzheimer's disease. In regards to Mrs Rydzewski's capacity to make fully informed decisions regarding her current and future accommodation care needs, it is my professional opinion that, based on her current moderate to severe dementia impacting on all areas of cognitive functioning, combined with her limited insight, that she does not possess the depth of cognitive processing required to make decisions regarding her current and future accommodation needs." (Emphasis added.)
On 11 March 2019, at the request of the applicants, Dr Simpson conducted a further neurological assessment and repeated the RUDAS test. On this occasion, Maria score had decreased to 5/18 from 11/30 in March 2018. Dr Simpson concluded that the assessment provided evidence of: "[F]urther deteriorated cognitive abilities (relative to initial 2018 assessment) which indicated that she now presented with a severe end stage neurodegenerative process that was considered consistent with Alzheimer's Disease, with possible concomitant vascular related brain changes."

[27]

Impact of physical illnesses on Maria's cognitive function

Associate Prof Rosenfeld is the only expert to express the opinion that Maria had the cognitive capacity to understand the import of the disputed transfer. He agrees with the other experts that in October 2017 Maria was probably suffering from vascular brain disease and dementia which had resulted in cognitive impairment. But, in his opinion, that impairment was not of such a degree as to extinguish Maria's capacity to make significant decisions, such as the decision relating to the disputed transfer.
In Associate Prof Rosenfeld's view, the onset of physical illnesses in early 2018 - cancer, pneumonia, sepsis and possibly a stroke, together with radiation treatment - likely resulted in delirium and a reduction in Maria's cognitive function from about late January 2018. In his view, Maria had effectively been "hit by a truck" and her cognitive capacity in March 2018 was "very different" from her cognitive capacity in October 2017.
In Associate Prof Rosenfeld's opinion, "sub-clinical brain disease" of the type revealed on the 2014 and 2015 CT scans taken of Maria's brain is likely to have made her especially susceptible to the effects of an acute physical illness and led to an acute worsening in her cognition. In his view, the most likely explanation for the evident confusion Maria displayed during testing in March 2018 was that she was suffering from delirium, namely "the acute, usually reversible - if the cause of that delirium is removed - reduction in cognitive function associated with acute confusion, change in consciousness, reduced attention, concentration and distractibility". Associate Prof Rosenfeld stated that older, frail people with "underlying but subclinical reduction in brain reserve" who suffer a physical illness are particularly susceptible to delirium which can take "weeks sometimes months to resolve".
In reaching his opinion, Associate Prof Rosenfeld considered the following contemporaneous medical records to be especially significant: 1. the report dated 7 November 2016, in which vascular surgeon, Dr Anthony Gray-Weale, stated that he "had a long chat to Mrs Rydzewski and her son and daughter-in-law…[Mrs Rydzewski] appears to understand the ramifications of not proceeding with her aneurysm repair"; 2. the report dated 23 January 2018, in which oncologist, Dr Linh Trinh, stated that Maria was able to state a history of previous mastectomy. (Associate Prof Rosenfeld acknowledges that Dr Trinh did not actually state that Maria herself gave that history (she was accompanied by family members) and noted that Maria could not recall the name of the surgeon or hospital. In his opinion, Maria's inability to recall that information was unremarkable.); 3. Dr Bassa's letter dated 17 September 2017.

[28]

Response to Associate Prof Rosenfeld's opinion that Maria was suffering from delirium

Prof Kiernan disagrees with Associate Prof Rosenfeld's opinion that Maria was probably suffering from delirium when tested by Dr Simpson in March 2018. The evidence of Drs Simpson and Lonie was consistent with that given by Prof Kiernan.
According to Prof Kiernan, there is no medical evidence to indicate that Maria was suffering from delirium when assessed by Dr Simpson in March 2018. In support he pointed to the contemporaneous medical records which stated that the physical illnesses that had triggered Maria's admission had resolved by the time she was assessed and the opinion of her treating team that she was ready for discharge. These include the report prepared by Dr Tasnoora Ali, dated 23 March 2018, stating that Maria's pneumonia had resolved and her renal function had returned to the normal range.
In addition, Prof Kiernan disagreed with Associate Prof Rosenfeld that the onset of breast cancer and subsequent treatment may have adversely affected Maria's cognition. Referring to the studies relied upon by Associate Prof Rosenfeld in support of his opinion, Prof Kiernan asserted that they are of little relevance because they primarily relate to forms of treatments Maria did not receive, such as chemotherapy and intensive radiation. He pointed out that Maria had received a small amount of targeted radiation which was reported to be "well tolerated".
Describing a formal neurological assessment as a "bread and butter assessment", Prof Kiernan asserted that its "very common" for neuropsychologists to decline to undertake such assessments if the patient is suffering delirium and no experienced and qualified neuropsychologist would do so. While accepting that delirium is sometimes misdiagnosed by health practitioners, Prof Kiernan asserted that a neuropsychologist trained in the assessment of cognitive impairment would not miss the presence of delirium.
In response, Associate Prof Rosenfeld stated that it can be difficult to detect delirium in a frail, elderly person with underlying brain disease and cognitive impairment, such as Maria, and "single organ specialists" are often ill equipped to do so. He asserted that because delirium can manifest in many different ways, it is often difficult to distinguish between delirium and underlying dementia. Geriatricians, because of their "whole person" focus, are especially well placed to distinguish delirium from dementia.
Referring to Dr Simpson's repeated use of the word "confusion" in her report of the 2018 assessment, Associate Prof Rosenfeld asserted that in medicine the word "confusion" is commonly used to indicate delirium. Prof Kiernan disagreed. He argued that if, as Associate Prof Rosenfeld contended, Maria was suffering from delirium when assessed by Dr Simpson, it would be expected that at some point there would have been some improvement in her cognition. However, Dr Simpson's 2019 assessment, together with family reports, reveals a progressive decline.
In a detailed report dated 3 April 2020, Dr Simpson responded to the opinion expressed by Associate Prof Rosenfeld that, when tested in March 2018, Maria was probably suffering from delirium. Dr Simpson stated that she is "acutely aware of delirium affecting older patients with and without dementia" and, if Maria had been suffering with delirium, consistent with her practice she would have discontinued the assessment.
Dr Simpson stated that "it is clinically accepted" that individuals with delirium typically present with: 1. markedly impaired attention that is fluctuating in nature; 2. impaired level of consciousness which is again fluctuating in nature; 3. variable orientation to person, place and time. 4. slow and often incoherent language/inappropriate language; 5. variable memory skills (often fluctuating in nature dependent on level of alertness and attention).
Dr Simpson stated that Maria did not present with any of these features, claiming: 1. while she was "notably fatigued", Maria's level of consciousness did not fluctuate at all throughout the two-hour assessment. She was not noted to be restless, agitated, irritable or present with combative behaviour; 2. there was no evidence of perceptual disturbances, including hallucinations or delusions and, as recorded in the report of the 2018 assessment, Maria attempted to concentrate throughout the assessment. Dr Simpson noted no fluctuations in Maria's level of alertness or sustained attention throughout that assessment; 3. throughout the assessment Maria engaged well and attempted to answer all questions asked. According to Dr Simpson, in her clinical experience, a patient with delirium would find it impossible to complete a basic 15-minute cognitive screen. In stark contrast, throughout the two-hour assessment Maria was able to reasonably sustain concentration and to attempt tasks; 4. Maria was notably disoriented to person, place and time throughout the assessment. For example, she was unable to report the date, her address, her age, the names of her children or her husband, or recall if she had any grandchildren. According to Dr Simpson, it is highly unlikely that a person with delirium would be unable to recall any such extensive autobiographical information; 5. Maria's speech throughout the assessment was coherent and there was no rambling or difficulties with her thought form. The attending Polish interpreter reported that Maria's language was clear and intelligible. According to Dr Simpson, some of Maria's responses to questions did not make sense, for example, when asked who she would like to be her guardian, she said she could ask her "neighbours next door" but she was not sure "they would want do it". Nonetheless, it was apparent that Maria understood the questions asked.

[31]

Reliability of Dr Bassa's opinion on capacity

In support of his opinion that Maria had the mental capacity to make an informed decision concerning the disputed transfer, Associate Prof Rosenfeld placed reliance on, among other things, Dr Bassa's clinical notes dated 15 September 2017. He stated that those notes indicate that a "screening test" was conducted, which, while "not comprehensive and not part of the testing that I undertake", is likely to have alerted Dr Bassa to problems had they been present.
Associate Prof Rosenfeld disagreed with the proposition that Dr Bassa's 15 September 2017 notes, which included the entry, "behaviour… good", were merely a list of Dr Bassa's opinions. Rather he asserted the notes listed Dr Bassa's observations of Maria.
Drs Lonie and Simpson were critical of the reliance placed by Associate Prof Rosenfeld on Dr Bassa's clinical notes. Pointing out that there is no evidence of Dr Bassa administering any "test" of cognition - a point conceded by Associate Prof Rosenfeld - Dr Simpson stated that "at best" the conclusions stated in his notes were based on "basic observations of a non-English speaking lady in the absence of a qualified interpreters… relying solely on her children as interpreter". They assert that without a qualified interpreter, Dr Bassa could not have assessed, in any reliable manner, whether Maria's thought form and content was "good", whether she had "perceptual issues/hallucinations", and whether her cognition, insight and judgement were "good". They said it is not possible to ascertain from Dr Bassa's "checklist" the basis on which "the boxes were crossed or the opinions reflected therein were formulated".
Drs Lonie and Simpson strongly disagree with the proposition that had there been problems with Maria's cognition in September 2017 it is improbable Dr Bassa would have failed to detect those problems, given that, by then, he had seen Maria on 38 occasions over a period of about 18 months. Dr Lonie stated that it is entirely possible that Dr Bassa did not detect any problems, especially given that Maria was largely communicating through a third party. Dr Lonie asserted that in developed countries dementia remains undetected in 50 per cent of people who regularly see their GP. Referring to her 20 years of clinical experience, Dr Lonie stated that she regularly sees people with significant cognitive problems which have gone undetected. She stated that it is not a surprise but "a source of frustration" that GPs regularly fail to detect dementia, even where it is moderately severe. Dr Simpson agreed.

[42]

Assessment of the lay evidence

Before considering each of the proposed actions, it is necessary to address the submissions made by the parties about the proper approach to the assessment of the lay evidence, in particular the evidence given by witnesses who interacted with and had the opportunity to observe Maria around the time of the disputed transfer.
The applicants contend that the Tribunal should give little weight to the lay evidence as it relates to past events and (lay) opinions about Maria's mental capacity. They contend that, given the contested and emotively charged nature of these proceedings, the evident antagonism between the parties and those within their respective "camps", and the widely recognised phenomenon of the fallibility of human memory, the Tribunal should give greater weight to contemporaneous documents and to evidence given by independent, disinterested witnesses, in particular the expert witnesses.
The respondents contend that in circumstances where the only expert to meet with Maria did so six months after the disputed transfer was made, the expert evidence is at best "supplemental" and greater weight should be given to the lay evidence, including the observations of Maria's GP and Mr Ireland, each of whom had significant interactions with Maria before she made the disputed transfer. In support, they point to the following passage from Tobin v Ezekiel; Estate of Lily Ezekiel [2011] NSWSC 81 at [32]: [T]he evidence of those with experience in dealing with elderly people, and who have personally observed the testator at and around the relevant time, is of considerable significance, often more than the opinions of others, medically qualified or not, who have not personally observed the testator at relevant times. (Citations omitted.)
In addition the respondents rely on the comments of Windeyer J in Revie v Druitt [2005] NSWSC 902 at [34]: [L]ay evidence of the activities, conversations, family circumstances and relationships of the deceased and evidence from doctors, often general practitioners who were treating doctors during the lifetime of the deceased, usually is of far more value than reports of expert specialist medical practitioners who have never seen the deceased.

[43]

(1) Lack of mental capacity to make the disputed transfer

As Gleeson CJ observed in Re Estate of Griffith (dec'd); Easter v Griffith (1995) 217 ALR 284 at 290: "The power freely to dispose of one's assets by will is an important right, and a determination that a person lacked (or, has not been shown to have possessed) a sound disposing mind, memory and understanding is a grave matter." The same can be said of gifts made by living donors. A gift made to a child or a grandchild may be an expression of love or gratitude. Antipathy, even unreasonable antipathy, towards less favoured family members does not necessarily evidence mental incapacity.
A transaction may, however, be set aside if the relevant party lacked mental capacity at the time they entered into that transaction. In making that assessment, the starting point is the presumption that the relevant party had the requisite mental capacity: Attorney-General v Parnther (1792) 29 ER 632; Murphy v Doman [2003] NSWCA 249 at [36]; Szozda v Szozda [2010] NSWSC 804 at [20]-[21]. Whether the relevant party had the requisite mental capacity to enter into the subject transaction is to be assessed by reference to the particular transaction and the time it was made: Croft v Sanders [2019] NSWCA 303 at [126], citing Gibbons v Wright (1954) 91 CLR 423 at 438; [1954] HCA 17 (Gibbons).
In Gibbons, the High Court held that "the law does not prescribe any fixed standard of sanity as requisite for the validity of all transactions." Rather, each party to a transaction must have "a capacity… to understand the general nature of what he is doing by participating in that transaction." The complexity (or otherwise) of the transaction is one variable that must be considered when determining a person's capacity to enter it: see Croft v Sanders at [126].
In Gibbons, the capacity of two sisters to execute a mortgage and a memorandum of transfer which had the indirect effect of severing their joint tenancy was challenged. It was held that it was not sufficient for the sisters merely to have had the capacity to understand the direct legal effect of the respective instruments. Rather, it was necessary (at 438-439): [T]hat the two sisters should have been capable of understanding, if the matter had been explained to them, that by executing the mortgages and the memorandum of transfer they would be altering the character of their interests in the properties concerned, so that instead of the last survivor of the three joint tenants becoming entitled to the whole, each of them would be entitled to a one-third share which would pass to her estate if she still owned it at her death.

[44]

Did Maria have the capacity to understand the import of the disputed transfer if explained to her?

The question to be determined is not whether, when Maria transferred the three properties to Jenny and Krystina, she suffered some degree of general cognitive impairment, but whether she was able to understand the general nature of the "particular transaction" in question "when explained": Gibbons at 438.
Whether Maria lacked the mental capacity to make the disputed transfer is not easily determined.
The applicants argue that Maria was elderly, ill, suffering from brain disease and so cognitively impaired at the time of transferring the properties that she was disabled from understanding, even in a general sense, the nature and consequences of the disputed transfer. While some emphasis is placed by the applicants on the observations made by Andrew, Susan and Rebecca of Maria's mental health and cognition shortly before the transaction was entered into, they place greatest weight on the documented history of cognitive decline and the clinical opinions of Prof Kiernan and Drs Lonie and Simpson.
In some respects, the expert evidence for the applicants is quite impressive. Nevertheless, as numerous courts have observed, the evidence of people who have personal knowledge of an elderly person may carry greater weight than the opinions of others, even experts, who have less (or no) personal experience of the elderly person and their cognition at the relevant time: see, for example, Revie v Druitt [2005] NSWSC 902; Atwell v Morgan [2019] WASC 182; Nicholson v Knaggs [2009] VSC 64.
While the expert evidence for the applicants is, prima facie, persuasive, its shortcomings, due to no fault of those experts, is that it was given by witnesses who had not had the chance to assess Maria at the relevant time. Only one of them, Dr Simpson, actually had a chance to observe Maria and those assessments were made several months after the disputed transfer. The opinions of other experts about her capacity at the time of the transfer is based on inferences drawn from Maria's history as they interpreted it.
As the applicants point out, the weight of expert evidence is that Maria was suffering from cognitive impairment of such a degree at the time of the disputed transfer that she was incapable of understanding the nature of the transfer, even if it were explained to her. Prof Kiernan and Drs Lonie and Simpson stress that there are contemporaneous documents which tend to support a finding that Maria's cognitive capacity had been gradually deteriorating since about 2010.
However, as the respondents indicate, there is evidence which, if accepted, casts doubt on the reliability of that opinion. This includes: 1. the evidence given by family and friends who had contact with Maria throughout the period she was living with Kevin and his family; 2. the account given by Mr Ireland of his two meetings with Maria to discuss the disputed transfer, in particular her responses to his questions about the reason she was giving the properties to Jenny and Krystina, and his claim that at the meeting where the interpreter was present she said that she considered the properties she had inherited from Danuta to be a windfall; 3. the fact that in the 18 months before making the disputed transfers, Maria had met with three different solicitors, none of whom are reported to have raised concerns about her decision-making capacity; and 4. Dr Bassa's opinion as recorded in the certificate dated 15 September 2017 and the letter to Mr Zucker dated 19 December 2018, together with the absence of any mention of cognition recorded in his clinical notes made over the 20 months in which he saw Maria.
The respondents submit that in respect of Maria's capacity at the time of the disputed transfer, much greater weight should be placed on Mr Ireland's recollections of the legal meetings and on the general observations by Dr Bassa, than on the opinions of the three experts who support the applicant's position.
In respect of the lay witnesses, each party criticises the evidence of the other in terms of general reliability, memory and motivation and lack of independence. In my view, it is unnecessary to analyse the evidence of each these witnesses in fine detail. None of the family members is disinterested. Some have a direct interest in this litigation; others are supporters of those with those interests. Both sides are antipathetic to each other and this may have infected the evidence they have given. However, while that evidence would be scrutinised and approached by the Supreme Court with caution, it puts it too high, in my view, to suggest that because of those factors the lay evidence is likely to be dismissed by the Court as unreliable. Corroboration or support from expert opinion evidence will be weighed when making those assessments.
Mr Ireland presents a different evidentiary problem. It is not clear how much weight should be placed on his evidence to the effect that he had satisfied himself of Maria's capacity. He had a difficult situation to deal with: a client who was obviously elderly, barely spoke English, was not a well person and who was clearly reliant on the relatives who accompanied her to the meeting to translate what was being said and to interpret Mr Ireland's legal explanations. Mr Ireland was not conversant with the Polish language. He placed himself in a situation where he was not able to talk to Maria alone or through an independent intermediary but was entirely reliant on relatives who had a direct interest in the transfer proceeding. This was very unfortunate. He sought to satisfy himself that Maria had capacity and was firm in his evidence to the effect that she was. But, because of the way those conversations were conducted, some doubts remain about the reliability of his observations. That doubt is increased by the expert evidence that people suffering dementia can often maintain a shallow social façade suggestive of normal (or sufficient) cognitive capacity. In my view, Mr Ireland's over-reliance on the directly-interested relatives suggests that he may have overstated his evidence. That is not to say it must be rejected out of hand, but it cannot bear the weight the respondents seek to place on it.
In addition, the unanswered issues surrounding Maria's meetings with Mr Ireland raise further questions about the reliability of Mr Ireland's account of those meetings. It is not clear why Wieslawa's name was crossed out in the file note of the first meeting. Nor is it clear what, if anything, was discussed at those meetings about Maria's entitlement to rent from the transferred properties and the circumstances surrounding Maria signing the amended transfer documents.
Dr Bassa's evidence, in its current form, is also problematic. While he kept some clinical notes, they were sparse and except for the note dated 15 September 2017, did not address the question of Maria's mental capacity. He appears to have looked after Maria's general health, but the available material does not create the impression that he paid great attention to her mental capacity, much less to have assessed it rigorously in terms of her ability to understand a legal document or transaction.
In all of the conflicting evidence, there appear to be one constant and reliable thread of evidence: Maria's gratitude, first to Danuta, then to Jenny and Krystina, for looking after. Coming very late in her life, with members of family taking care of her, it is plausible that she decided to reward those who had been most recently caring for her by giving away Danuta's properties. That conclusion is bolstered by the fact, as emphasised by the respondents, that when she made the disputed transfer Maria had not seen Stan, reputedly her favourite child, for some time. That conclusion is also strengthened by Maria's history of using her estate to "punish" a child who had fallen out of favour. Maria and her husband wrote Kevin out of their respective wills, when he fell out of favour as a young man. When the relationship improved, Kevin was reinstated as a beneficiary.
A transaction of this kind is not, of itself, complex. It merely transfers title from one person to another. Of course, there were ramifications - stamp duty issues, loss of potential income, capital gains implications, the legalities of documentation and registration of title and other things. But the essence of the transaction was simple. Maria may have lacked capacity to understand the general import of that transaction. On the other hand, given the relative simplicity of the transaction, and Maria's apparent motivation, it is plausible that, despite her cognitive decline, at the time the transfer was made she had sufficient capacity to understand the general nature of the transaction and the explanation she received about the documentation.
In my view, on the evidence currently before the Tribunal, both parties would have an arguable case in terms of the capacity question if the matter were to proceed to the Supreme Court. On the basis of their expert evidence, the applicants in my view have a stronger case. While close to the line, I am not satisfied that an action bought on the basis of Maria's alleged lack of mental capacity is likely to succeed on this ground.

[46]

(2) Unconscionable conduct

A transaction may be set aside on the basis of unconscionable conduct where one party to that transaction is at a special disadvantage and the other party takes advantage of their superior position or bargaining power to use that opportunity unconscientiously: Blomley v Ryan (1956) 99 CLR 362; [1956] HCA 81; Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; [1983] HCA 14; Hanna v Raoul [2018] NSWCA 201. As Deane J explained in Commercial Bank of Australia Ltd v Amadio at 474: Unconscionable dealing looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity or good conscience that he should do so.
In contrast to the doctrine of undue influence, which requires that the will of the weaker party be overborne, the doctrine of unconscionable conduct can apply even in relation to transactions that are entered into voluntarily by a weaker party: Commercial Bank of Australia Ltd v Amadio per Mason J at 461; Hanna v Raoul at [90]-[91].
In Mentink v Olsen [2020] NSWCA 182, the Court of Appeal (Meagher and Payne JJA) at [2] listed the elements necessary to set aside a transaction on the basis of unconscionable conduct: (1) that one party to the transaction is placed at a "special disadvantage" vis-à-vis the other in the sense that the disabling condition or circumstance is one which seriously affects the ability of that party to make a judgment as to his or her own best interests; and (2) that the other party understood the plaintiff to be at a special disadvantage and its effect with respect to his or her not being in a position to look after his or her interests. Where those circumstances make it prima facie unfair or "unconscientious" that the "stronger party" procure or accept the weaker party's assent to the impugned transaction, the onus is cast on the stronger party to show that it was fair, just and reasonable: Commercial Bank of Australia v Amadio (1983) 151 CLR 447 at 461-462 (Mason J), 474 (Deane J, Mason and Wilson JJ agreeing); [1983] HCA 14.

[49]

Was the disputed transfer "fair, just and reasonable"?

In my view, there are strong prospects that the Supreme Court would find proven the first two elements in a claim of unconscionable conduct. In reaching that conclusion I have assumed that Maria's level of cognitive impairment at the time of the disputed transfer was at the level as assessed by Associate Prof Rosenfeld. (I apply this assumption in considering the remaining proposed actions.)
Therefore, the onus shifts to Jenny and Krystina to establish that the disputed transfer was "fair, just and reasonable": Commercial Bank of Australia Ltd v Amadio at 474; Blomley v Ryan at 428-429. In their submission, the applicants submit that the respondents have failed to discharge that onus.
The evidence of Maria's situational dependency on those caring for her, the combined effects of her multiple physical and cognitive deficits, her lack of financial experience and acumen, the questions that hang over the manner in which she received advice and gave instructions to Mr Ireland, the absence of advice about the likely implications of the disputed transfer on her overall financial position, the uncertainty surrounding her entitlement to receive rent from the dispute transfer, taken together, suggest unfairness. Neither Jenny nor Krystina took steps to ensure Maria received professional and/or independent advice about the likely impact of the disputed transfer on her financial position. They and Mr Ireland were aware that when the disputed transfer was made, Kevin's immediate family were effectively her only confidants. Maria gave away some 60% of her property assets where Mr Ireland did not know about her financial circumstances. Further, the weight of evidence is that Maria did not know what stamp duty was, and that she was erroneously informed that she was obliged to pay it. When it is also considered that Maria had no source of income (apart from interest), her cash reserves were low and, as a consequence, her financial independence diminished, thus ensuring her continued financial dependency on the respondents' family, the impression of the disputed transfer being not fair, just and reasonable becomes even stronger.
This is not to say that the respondents, or members of their family, deliberately set out to exploit Maria. Her position of special disadvantage, however, meant that she was probably not in a position to judge, much less look after, her own best interests without independent legal and financial advice.
In my view, given the weight of evidence, together with the onus of proof that would lie upon the respondents to prove that the transactions were fair, just and reasonable, it is likely that an action based on unconscionable conduct would succeed.

[50]

(3) Undue influence

In Commercial Bank of Australia Ltd v Amadio, Mason J distinguished unconscionable conduct from undue influence at 461 in the following terms: In the latter the will of the innocent party is not independent and voluntary because it is overborne. In the former the will of the innocent party, even if independent and voluntary, is the result of the disadvantageous position in which he is placed and of the other party unconscientiously taking advantage of that position.
In Olsen v Mentink [2019] NSWSC 1299, Sackar J at [341] explained the distinction in these terms: Undue influence in particular is concerned with whether or not an individual's free will has been subordinated by another whether through the application of pressure or exertion of some kind of other influence. Unconscionability, on the other hand is concerned with whether one has taken advantage of another who is vulnerable.
Applying those principles to this case, the following questions arise for determination: 1. Were there factors personal to Maria whereby she was vulnerable to undue influence, for example, being illiterate, or having little or no experience or capacity in business? 2. Was Maria a free agent and capable of protecting herself? 3. Was Maria under the influence of Jenny and Krystina to such an extent that her acts were not free acts and her will was subordinate to theirs? 4. Was the act of making the disputed transfer well understood by Maria? 5. Was Maria's freedom to make a decision constrained in terms of assessing alternatives and deciding between them? 6. To prove undue influence: 1. Is there any direct evidence of the circumstances of the disputed transfer that is consistent with undue influence? 2. Is there a presumption, based on a relationship of ascendency or influence and carer/dependent, that the disputed transfer was the result of undue influence? 3. In circumstances of such a presumption, have Jenny and Krystina positively proved that the disputed transfer, nevertheless, was the result of Maria's free will?
Many of these issues have been discussed above.

[56]

Conclusion - the correct and preferable decision

I conclude that it is arguable that each of the proposed set-aside actions would succeed. However, in my view, the prospects of the disputed transfer being set aside on the basis of unconscionable conduct and in an action brought under the Contracts Review Act are stronger, and each is likely to succeed. I acknowledge that if the proposed actions were to be commenced, it is possible, if not probable, that additional material would become available, which may strengthen or weaken the prospects of having the disputed transfer set aside.
The question then arises, given the attendant risks of litigation, whether it is in Maria's best interests to commence one or more of the proposed actions, or at least those actions I have concluded are likely to succeed.
If the only likely outcome of the disputed transfer being set aside would be that Stan and Wieslawa would inherit a greater share of Maria's estate, I would be inclined to the view that the attendant risks of litigation would not be justified. However, setting aside the disputed transfer would strengthen Maria's overall financial position and financial independence and, importantly, significantly expand the options available to her for her future medical treatment, care and support. While Maria is of an advanced age it is possible that she may live on for a number of years. Her ability to survive the constellation of conditions which led to her hospitalisation in February 2018 suggests that, despite her many problems, her health is resilient.
For these reasons, I have decided that the correct and preferable decision is to set aside the Trustee's decision, and in substitution for that decision to decide to commence action in the NSW Supreme Court to have the disputed transfer set aside on the basis of unconscionable conduct and in an action brought under the Contracts Review Act. In reaching this conclusion I have had regard not only to the statutory instructions that Maria's welfare and interests be given paramount consideration and that she be protected from exploitation, but also the importance of preserving family relationships: s 39 of the Trustee Act. With respect to the latter, in my view, given the evident antipathy within the family, commencing legal action to set aside the disputed transfer is unlikely to materially impact on those relationships.
In addition, I recommend that the Trustee immediately seek the advice of Senior Counsel experienced in the equity jurisdiction as to whether claims on the grounds of Maria's lack of mental capacity and undue influence should also be pursued.
Giving the evolving nature of litigation of this type, in the event that additional material becomes available which materially alters my assessment of the prospects of success of the proposed litigation, it will be necessary and appropriate that the Trustee reassess whether to commence and/or to continue any legal action.

At a glance

Court

Decision date

Catchwords

Source

Catchwords

Judgment (58 paragraphs)

Parties

Legislation Cited (6)

Cases Cited (27)

Cited By (3)