GOLDIE -v- GETLEY [No 3] [2011] WASC 132 (26 May 2011)

GOLDIE -v- GETLEY [No 3] [2011] WASC 132 (26 May 2011) - WASC 2011 case summary — Zoe

[208]

Not long after AMP issued shares Getley said to me: 'the shares that were issued by AMP to Janet's estate have been transferred into the Children's Trust'.

From the words Getley said to me, I understood that AMP shares had been allocated in the name of Janet's estate and Getley was the executor so I had no power or authority to do anything with respect to them.

In any event, I had become accustomed to relying on Getley for financial advice and trusted that given my then close relationship with Getley and the Children it didn't matter where the money was, provided it was safe and invested wisely.

When I found that the shares were in the trust, I assumed it was because I had failed to take a necessary step. I recalled having the signed the transfer forms after Janet's death and thought that since the shares had not been issued to me I must have failed to transfer the policies properly.

I reassured myself that the money would be safer if I left it in the trust as I was, at that time, a director of several companies involved in the motor business and had given personal guarantees for company debts. The money in the Children's Trust, was, I thought, family money and would be available to the family if we needed it.

I didn't ask Getley how it happened that the shares ended up in the Children's Trust and I took no steps to transfer the shares back ot me after all, it seemed to me that it was clear that the shares were mine.

I believed that because it was clear that the shares (the value of which previously formed part of My Policies) were a gift to me me from Janet, when she died, that if I ever really needed them Getley would simply transfer them back to me or sell them and pay the proceeds to me.

Because of this, when Getley told me about the transfer, I said: 'Ok. Fair enough.'

Getley never said to me, words to the effect of: 'do you want the shares on the insurance policies transferred to you or to the Trust.'

I have never said to Getley words to the effect of: 'I am content to receive the 5 AMP insurance policies and not the shares.'

Getley has never asked me: 'do you want the AMP shares transferred into your name' or words to that effect.

I would speak with Getley on average at least once a fortnight and he never said to me that I was the rightful owner of the AMP shares.

The only discussions Getley had with me regarding the shares was to advise me that he was going to transfer them from the estate to the Trust.

At that time I did not know that I could challenge him regarding these shares. He was my financial advisor, insurance agent and close personal friend.

Getley controlled the estate and the Trust and I felt that I was not in a position to question him, or challenge his decisions.

I never provided Getley with oral or written instructions about what to do with the shares associated with My Policies.

I was never provided with a copy of the letter from Getley to AMP dated 30 October 1998 requesting transfer of the shares to the Children's Trust. ...

The only written records that Getley ever provided to me related to three loans from the Trust to me which I describe in more detail below.

I did not gift the shares to the trust.

The money was always family money, for me and the children. It made no difference to me how it was held.

I did not in writing or verbally ever say to Getley that he could transfer the shares to the trust as a gift.

At no time from late 1998 to mid 1999, or at any other time, did I say to Emma or Chris words to the effect that: 'I had given the AMP shares to the Trust.'

At no time did I ever say to Emma or Chris words to the effect that 'I have given you a great start in life by giving the Trust the AMP shares.'

[224]

COBBY, MR: Let's discuss this concept of family money, Mr Goldie. You had read your wife's will shortly after she died?---Yes.

You were aware of the trust that was created by the Will for the maintenance and advancement of your children?---Yes.

There was no reference to you in the Will in relation to that trust, was there?---No.

And you understood and in fact you planned on the fact that if you gave the shares to the trust there would be no legal right for you to recover them?---I don't fully understand that. The legal right, yes, that's correct. Yes, I understand that. If I'd gave to them, but I didn't give them to them. They finished up in the trust.

Having finished up in the trust, you left them there for that reason?---Yes, because of my concept of family money.

Explain to me the concept of family money, Mr Goldie?---Well, I believed I had a very close relationship with my children and Mr Getley was a dear friend and I didn't believe that there - if I ever needed the - just to the money that it would be advanced to me.

This time you were the sole controller - and I say 'this time' being 1997, say from January 1997 forward. You were the sole controller of companies which were trustees of something like eight or nine trusts?---Yes, that's correct.

And they all had trust deeds?---Well, I'm sure they would've had to or else they wouldn't have been legal entities.

You understood the purpose of the trust deeds was to set out the trustee's powers?---Yes, I don't think most businessmen really understand the full ramifications of the legal things on trust

That wasn't my question?--- so therefore I'd

Firstly I'm not connected with most businessmen. I'm only concerned with what you knew?---Yes, okay. Would you mind repeating the question again?

You understood the purpose of the trust deeds was to set out, amongst other things, the powers of the trustee?

---Yes; yes.

You would understand that?---Yes, I do.

Was there anything that you thought gave Mr Getley power as trustee to give money to you?---Legally, no. Morally, yes.

Did you ever discuss that with Mr Getley?---No.

Did you hold that view because of anything Mr Getley said to you?---No. It was just my

That was your own assumption?---That was my own belief.

Whenever Mr Getley dealt with you he pointed out to you that he was the trustee on behalf of the children, didn't he?---Yes.

And you never contradicted him in that respect, did you?---No, because that was a fact.

And this moral right that you say that you had, you never raised that with him?---No.

[241]

A person who completes the making of a gift cannot recall the gift, simply because it is a gift: Henry v Armstrong (1881) 18 Ch D 668; [1885] All ER Rep 702; Standing v Bowring (1885) 31 Ch D 282; Brunker v Perpetual Trustee Co [1937] HCA 29; (1937) 57 CLR 555, at p. 582; [1937] HCA 29; [1937] ALR 349. Courts of equity have never set aside gifts on the grounds of imprudence, folly or want of foresight on the part of donors.
But such gift may be voidable if the donee has exercised over the donor undue influence in the relevant sense as developed and understood in the courts of equity. Two classes of case have developed in these courts. The first class is where by the evidence, it is established that the gift was the result of influence expressly used by the donee over the donor. The second class of case is when the relations between the donor and donee have at or shortly before the execution of the gift been such as to raise a presumption that the donee had influence over the donor. Allcard v Skinner (1887) 36 Ch D 145, at p. 171; [1886-90] All ER Rep 90, adopted by the Privy Council in Inche Noriah v Shaik Allie Bin Omar, [1929] AC 127, at p. 132; [1928] All ER Rep 189. See also Re Pauling's Settlement Trusts, [1964] Ch 303, at p. 336; [1963] EWCA Civ 5; [1963] 3 All ER 1. It is into the second class this case must fall if the plaintiffs are to succeed.
A court of equity will presume undue influence on the part of the donee when the evidence establishes a fiduciary relationship between the donor and donee, whereby at the material time of the gift the donor reposed complete trust and confidence in the donee and thereby placed the donee in a position to exercise ascendancy or dominion over the Will or mind of the donor: see Huguenin v Baseley, supra; Dent v Bennett (1839) 4 My and Cr 269, at p. 277; [1839] EngR 434; 41 ER 105; Coomber v Coomber, [1911] 1 Ch 723, at p. 730; Johnson v Buttress [1936] HCA 41; (1936) 56 CLR 13; [1936] ALR 390; Jenyns v Public Curator, supra; Fysh v Page, supra. 'The principle on which relief is given by Courts of Equity applies to every case where influence is acquired and abused, where confidence is reposed and betrayed': per Rich, J, in Haskew v Equity Trustees Executors and Agency Co Ltd [1919] HCA 53; (1919) 27 CLR 231, at p. 235; 25 ALR 350. See also Tufton v Sperni (1952) 2 TLR 516, at p. 522. Mere agency or a similar relationship will not of itself raise the presumption. There must also exist a trust and confidence reposed by the donor in the donee whereby the donor relying on the donee for advice and assistance may be easily influenced: Dowsett v Reid [1912] HCA 75; (1912) 15 CLR 695, at pp. 703-7; [1912] HCA 75; ; , supra.
Even though a donor may be perfectly competent to understand and intend what he or she did, the equitable principles may be invoked to set aside the gift. As Lord Eldon pointed out in Huguenin v Baseley (at p. 536): 'Take it, that she intended to give it to him: it is by no means out of reach of the principle. The question is, not, whether she knew what she was doing, had done, or proposed to do, but how the intention was produced: '(the italics are mine)' whether all that care and providence was placed round her, as against those, who advised her, which, from their situation and relation with respect to her, they were bound to exert on her behalf.' See also Rhodes v Bate (1866) 1 Ch App 252, at p. 256; [1861-73] All ER Rep 805; Allcard v Skinner, supra.
It would also seem that, even if the proposal to make the gift came from the donor, it would not preclude the donor from relying upon the equitable principles: per Griffiths, CJ, in Spong v Spong [1914] HCA 52; (1914) 18 CLR 544, at p. 549.
Once facts are proved whereby a relationship of the character set out above is established, then the onus is imposed upon the donee to make out the case that the gift was 'the pure voluntary well-understood act of the donor's mind': Griffiths v Robins [1818] EngR 331; (1818) 3 Madd 191; 56 ER 480; Rhodes v Bate supra, at p.257 (1 Ch. App.); Powell v Powell, [1900] 1 Ch 243, at p. 245; Inche Noriah's Case, supra, at (AC) p. 133; Johnson v Buttress, supra. He must satisfy the court 'that the gift was the independent and well-understood act of a man in a position to exercise a free judgment based on information as full as that of the donee': per Dixon, J in Johnson v Buttress, supra, at (CLR) p. 134. One of the most difficult matters which the donee is required to prove is to establish how the donor's intention was produced, the requisite emphasized by Lord Eldon (see proposition 7). The Privy Council has stated that it is 'most important from the point of view of public policy to maintain the rule of law which has been laid down and to insist that a gift made under circumstances which give rise to the presumption must be set aside unless the donee is able to satisfy the court of facts sufficient to rebut the presumption'; Inche Noriah's Case at (AC) p. 136.
In dealing with the evidence of the relationship, and its effect in law a number of important considerations must be constantly borne in mind: -

[242]

(a) The standard of intelligence and education, and the character and personality of the donor, are relevant matters. Age, state of health, blood relationship, experience, or lack of it, in business affairs of the donor, length of friendship or acquaintanceship between the donor and donee and the intricacy of their business affairs may be factors to influence a donor to depend upon the donee. Equally, the relative strength of character and personality of the donee, the period and closeness of the relationship and the opportunity afforded the donee to influence the donor in his business affairs are correlative considerations to the foregoing: see Clark v Malpas (1862) 4 De G F and J 401; [1862] EngR 876; 45 ER 1238.

(b) When certain well-established relationships, such as solicitor and client, trustee and cestui que trust, guardian and ward, parent and child, priest and penitent are proved, the presumption referred to arises with and on proof of such relationship. The characteristic common to all these relationships appears to be that the first named in such relationship will advise and afford guidance to the other in and for the purpose of such relationship solely in the interest and for the benefit of the other.

(c) But the classes of relationship have not been closed: Hobday v Peters (No 1) (1860) 28 B 349; [1860] EngR 665; 54 ER 400; Johnson v Buttress, supra; Tufton v Sperni, supra. The court has deliberately left this matter at large. The vital matter for consideration is whether the relationship existing between a donee and donor possesses such characteristics as to raise a presumption that the donee had the requisite influence over the donor: see Allcard v Skinner, supra; Johnson v Buttress, supra; Zamet v Hyman, [1961] 3 All ER 933. It is necessary for the plaintiffs, if they are to succeed in this case, to establish such characteristics in the relationship between Miss Dunn and the defendant.

(d) Although there is no rule of law that where such a relationship exists the donor should have independent advice at the time of making the gift in order to rebut the presumption (Kali Bakhsh v Ram Gopal Singh (1913) 30 TLR 138; Haskew v Equity Trustee Executor and Agency Co Ltd, supra; Inche Noriah's Case, supra; Bank of New South Wales v Rogers [1941] HCA 9; (1921) 65 CLR 42; Tufton v Sperni, supra, and, particularly if the court is of opinion that independent advice would not have had any effect on the transaction (Linderstam v Barnett [1915] HCA 5; (1915) 19 CLR 528; Barr v Union Trustee Co of Aust Ltd[1923] VicLawRp 35; , [1923] VLR 236; 29 ALR 67, or that the gift was trifling or of a simple character (Rogers' Case, supra, at p. 87), nevertheless independent advice is an important factor in determining whether the gift is the pure voluntary and well-understood act of the donor. This is particularly so if the gift should be of a large sum of money (Rhodes v Bate, supra; Haskew's Case [1919] HCA 53; (1919) 27 CLR 231, at p. 235; 25 ALR 350; Johnson v Buttress [1936] HCA 41; (1936) 56 CLR 113, at p. 120; ; , or the circumstances of the relationship, however proper the court may regard them, strongly suggest that the donor was in a position of grave inequality in relation to the donee (see , supra; , supra; , ; ; , supra, or where the transaction may be of a complicated character (see , at p. 87). The Privy Council in , supra, pointed out that the donee may rebut the presumption in any manner open to him on the facts which enables him to persuade the court that the gift was really the spontaneous act of a party, comprehending what he did and as a result of his own free will. But it is undoubtedly true that in many authorities the presence or absence of independent advice has had a great influence on the court's decision on this vital question. If the donor, however, should receive independent advice, and either misunderstands the advice or is given possibly erroneous advice whereby he fails to appreciate or realize the financial implications and the detriment to himself involved in the gift, a court of equity will not set aside the gift if the donor otherwise understood the nature of the transaction and acted therein in the full exercise of his will: , supra.

(e) A donee often suffers a grave handicap in making out a case of a gift produced by affection or gratitude by laying the foundation for the proof of a relationship which with very little more can be transmuted from an innocent one into one raising the presumption of undue influence against him: see Tufton v Sperni, supra. The line of demarcation between the two relationships is very difficult to discern or define. In the early case of Hunter v Atkins (1834) 3 Myl and K 113, at p. 140; [1834] EngR 548; 40 ER 43, at p.54 Lord Brougham, LC, said:

[263]

What financial transactions were you seeking Mr Getley's advice in relation to in 1995?---I would seek his advice on matters relating to insurance and I would talk to him regularly and to use him a sounding board on because of his vast experience. I would talk to him about things that I was considering.

What was his vast experience?---Well, Mr Getley is a very experienced business person and director.

More so than you?---I believe so. He came into contact with more - he came into contact with a lot of people, and a lot of these people were influential and running successful operations, so I relied - not relied. I valued his opinion.

About insurance matters?---On insurance matters and other matters.

What were the other matters in 1995?---Other matters could have related to - I would sometimes talk to him about personnel but they weren't decisions on which - I would just ask his opinion about particular aspects of a particular person and he would offer his considered opinion for me to make a determination.

So you were making the decisions?---Yes.

Mr Getley was no more than a sounding board?---Yes, I would think that would be accurate.

That's in 1995?---For many years.

In 1996 the same situation?---I relied on his input for more than two decades, probably, and if you ask me to put a particular date on it, I would really find it difficult but we had a long and fruitful relationship.

But you sought Mr Getley's views and then you made your own decision?---Yes, because I was the director and had to put my final stamp of approval on the commitment.

That would be any commitment, was it?---Most commitments, yes. He wasn't a partner in the business.

Was there something that you relied him completely that you haven't mentioned?---He was an expert on insurance.

...

'My financial affairs' means the trust?---Well, to a large degree it was, yes. It was a substantial amount of family money.

So Mr Getley wasn't doing anything in relation to your personal finances in late 1997?---Well, it depends on your opinion about whether the

Leaving the trust to one side, Mr Goldie?---Well, leaving the trust to one side. He was looking after our insurance.

What did that entail?---I'm sure that entailed just doing what good insurance people do. Just look at what was - the amount of cover, the

Had you asked him to do that?---He had as a matter of course always kept a review of the amount of insurance.

In 1997 did you change any of your insurance arrangements?---I can't say I recall any notable change.

Any change at all?---Not that I can specifically recall.

Other than life insurance policies, did Mr Getley ever recommend any investment to you?---No, I can't say that he - we're talking 1997? Is that what you're saying?

Yes?---No. I can't say I recall that.

More generally, can you recall any investment he suggested to you?---No. He would talk about superannuation, that that - the only discussion that I can recall was that I should at some stage have considered having my own superannuation fund and he said that he could help me with recommending how the portfolio should be spread; but because I'm not that good at things like that I decided to let it run with the AMP.

So you didn't accept his advice in that regard?---No. I would've liked to but I just couldn't trust myself to do it as efficiently as he could.

When was that?---I can't recall a date on that.

In paragraph 91 of your statement where you refer to trusting Getley 'to take care of all the details of the various financial arrangements he suggested I take,' what were the various financial arrangements?---They related to the two areas that I've spoken about: the insurance; some of his recommendations on the superannuation, which I didn't take up; and the trust.

[282]

What were the necessary and prudent steps you wanted Mr Getley - expected him to take?---Mr Getley would - for example, when I sold a property and at different times over a number of years he would put in writing some recommendations on how that money should be appropriated in providing financial advice. That's one point.

Did you accept those recommendations?---Some of them, yes. Others, no.

When did you accept the recommendations?---I can't say that I can recall specifically. I'm just giving you a general observation.

Was it after 1995?---It was during that period that I was talking about.

Which period are you talking about?---From the period that you referred to earlier.

Sorry, which period are you talking about?---From 1995 through to 2005.

Mr Getley made a recommendation to you during that period that you accepted?---Could you be a bit more specific? I didn't quite understand the question.

Which part didn't you understand?---Could you restate the question and I will

No, which part of my question didn't you understand?---I didn't understand what the question was.

SIMMONDS J: Yes. I think, Mr Cobby, he is asking you to repeat the question and that's an appropriate request.

COBBY, MR: Yes, your Honour.

Which recommendation did Mr Getley make to you after 1995 that you accepted?---I can't remember the specific details.

How many were there?---There would have been numerous but I can't say; numerous being under maybe half a dozen.

You refer to property transactions?---After a property transaction had taken place he wrote to me by way of email and made some recommendations on how I should spend the proceeds of the sale.

Which property transactions did you partake in after 1995?---The property transaction that I am specifically referring to was the sale of the Mosman Terrace property.

That's 4A Mosman Terrace?---4A Mosman Terrace, yes, and we received quite a substantial amount of money for it and he subsequently wrote to - by way of email and made some recommendations on how he thought we should appropriate and spend the money

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Judgment (419 paragraphs)

GOLDIE -v- GETLEY [No 3] [2011] WASC 132 (26 May 2011)

Legislation Cited (2)

Cases Cited (23)