Michael John Anderson (Formerly Michael John Lauridsen) v Daphne Lauridsen & anor

Judgment (ex tempore) 1HIS HONOUR: The plaintiff Michael John Anderson sues his mother, the first defendant Daphne Lauridsen, and his sister, the second defendant Sharon Julie Franey, to set aside on grounds of undue influence or unconscionable dealing the transfer of Michael's one-third interest in property at Kalaroo Road to Daphne, the issue to Daphne and Sharon of additional units in the Laurisden and Franey Unit Trust and the redemption of his and his former wife Michelle's units in that trust, and the giving of a mortgage over Michael's interest in Kalaroo Road to Daphne. This morning, Michael sought leave to amend his statement of claim, and to file a reply to the defence to the amended statement of claim. Additionally, the plaintiffs applied to have me revoke an order that I had previously made, to the effect that the "special defences" plead by the first defendant be determined as separate questions prior to the substantive hearing. These reasons deal with these various applications, and the determination of the affirmative defences plead by the first defendant. 2I grant leave to amend the statement of claim substantially as sought, although to require some repleading of it better to articulate the claims for the additional relief in the proposed amended statement of claim. 3I refuse leave to file the reply. In short, paragraphs 2 and 3 of the proposed reply are unnecessary; they merely traverse the defence, on which there would be an implied joinder of issue in any event. 4The claim for relief in paragraphs 7 and 8 of the proposed reply cannot succeed, essentially because, insofar as it relies on incapacity, or disadvantage on the part of the plaintiff, it was for that very reason that the plaintiff had a next friend in the Family Court proceedings; insofar as it is asserted that the next friend was a friend of the first and second defendants, there is no assertion that she preferred their interests to those of the plaintiff or otherwise acted improperly and, in those circumstances, the mere alleged fact of friendship goes nowhere; and insofar as it is alleged that the next friend did not receive adequate legal advice as to the consequences, or assumed that the plaintiff's position would not be disadvantaged by the order made in the Family Court proceedings, the mere absence of adequate advice, if established, would not found a case of unconscionability or estoppel and, in any event, there is evidence that the next friend was advised that Michael's potential causes of action against his mother might be defeated by laches if they were not raised in the Family Court proceedings. The same observations pertain to the matters raised in paragraph 8. 5So far as paragraph 9 is concerned, while I accept that an order dismissing a claim for relief under (CTH) Family Law Act, s 79, is an order made under section 79 for the purposes of section 79A [see Robson v Robson (2003) FLC 93-145], a claim for relief under s 106B of the Family Law Act is not a claim for an order under s 79, and an order dismissing such a claim is not an order made under s 79. Accordingly, the orders of the Family Court, insofar as they dismissed the s 106B application, are not amenable to being set aside under s 79A. 6In addition, the reasons given for concluding that the claims under paragraphs 7 and 8 of the proposed reply cannot succeed, apply also to the claim under s 79A, reinforced in that context by the observations, in In the Marriage of Clifton and Stuart (1990) 14 Fam LR 511, to the effect that mere inadequacy of legal advice or legal representation is not a sufficient circumstance, for the purposes of s 79A(1)(a) to justify the setting aside of an order made under s 79. 7The plaintiff also seeks revocation of an order made by the Court on 23 November 2010, that the affirmative defences be determined separately and before the other issues in the proceedings. I see no basis on which that order should be disturbed. 8To my mind, the utility of those "special defences" in the nature of estoppel, if they are valid, would be seriously undermined if the whole matter were allowed to go to trial, before those defences were determined. The purpose of the doctrines invoked by those defences is to preclude the re-litigation of matters, rather than to allow re-litigation to take place but decide retrospectively whether that re-litigation was appropriate. In any event, I do not see how revoking the order for separate determination would substantially address the difficulties of which complaint is presently made on behalf of the plaintiff. The issue as to whether or not the plaintiff's evidence should be read and is admissible will remain an issue on any final hearing, just as it may be on a hearing of the separate questions. There is no unfairness in the plaintiff having to decide now whether to seek to rely on his evidence. 9When this matter was before the Court on 28 October 2010, it was adjourned to 23 November for further directions and I indicated that I then proposed to set the matter down for final hearing, at least in respect of the separate questions previously identified. On 23 November 2010, the Court was advised and noted that the evidence of both parties on the hearing of the separate questions was complete. Directions were made in respect of evidence on the application for leave to amend and for submissions in respect of the separate questions, which were set down for hearing today. Whether they must be determined today or not is another matter, but it seems to me that the interests of justice require that the special defences be determined as separate questions, before the other issues in the proceedings. 10Accordingly, I decline to revoke the order for determination of the affirmative defences as separate question. 11Pursuant to the leave to amend which I have granted, although requiring some reformulation of the pleading, Michael also seeks to have set aside an acknowledgment of debt of 10 April 1987 and a number of subsequent transactions, the ultimate effect of which appears to be that funds which Michael claims were beneficially his, became assets of the Laurisden and Franey Unit Trust. By her defence, the first defendant Daphne pleads, in addition to general and more specific traverses of the various allegations of undue influence or unconscionable dealing, which appear to be the basis of Michael's claim, a number of affirmative defences: in particular, res judicata (paragraphs 44 to 52), Anshun estoppel (paragraphs 53 to 57), estoppel by reliance and detriment (paragraphs 58 to 72), and unclean hands (paragraphs 73 to 81). Each of these defences raised, albeit in different ways, the proposition that the issue of the validity of the impugned dealings had been concluded by the outcome of proceedings in the Family Court of Australia in which a claim by Michael's ex-wife to set aside the transfer of his interest in Kalaroo Road and the issue of the additional units in the unit trust had been, by consent, dismissed. As has been previously indicated, an order was made for the determination of the issues raised by those paragraphs of the defence as preliminary questions. A further affirmative defence of laches (paragraphs 82 to 86), which relied on delay and prejudice by loss of evidence and recollection, but did not involve any matters arising out of the Family Court proceedings, and was not included in the matters for determination as preliminary questions. 12On the present hearing, the defendants read affidavits of Daphne Lauridsen, Jennifer May Drennen and Adrian Stewart Holmes. The plaintiff tendered some documentary evidence, but did not cross-examine any of the defendant's witnesses and did not adduce evidence, notwithstanding that he had filed affidavits at an earlier stage of the proceedings. No doubt this was for good reason, but - especially bearing in mind that the Court had made it as clear as it could that the circumstance that the plaintiff had been found to be "incapable" so as to require the appointment of a tutor was a different question from whether he was incompetent so as to be unable to give evidence - I must therefore proceed on the basis that the defendant's evidence is unchallenged and uncontradicted; and as there is nothing implausible about it - indeed, the important aspects of it are established more by contemporaneous documents than by the more recent affidavit evidence itself - I should accept it. 13After Michael separated from his former wife Michelle, she brought proceedings against him in the Family Court of Australia at Newcastle. In those proceedings, she filed an amended application, joining Daphne as second respondent and seeking an order pursuant to (CTH) Family Law Act 1975, s 106B, setting aside the transfer, dated 29 April 1999, by Michael to Daphne of his one-third share in the Kalaroo Road property. She also sought, pursuant to Family Law Act, s 79, an order that Michael transfer his interest in that property to her. Michael filed a response in the Family Law proceedings, which was subsequently amended to seek, inter alia , a declaration that Michelle had no claim action or demand against him or Daphne in any way relating to the Kalaroo Road property and/or the Lauridsen and Franey Unit Trust. 14In the course of the Family Law proceedings, Jennifer May Drennen (then under the surname of Watson) was appointed Michael's next friend: he suffers from a number of psychiatric illnesses, which resulted in his being held to be an incapable person at an earlier stage in these proceedings. In support of the appointment of Ms Drennen as next friend, the plaintiff's then solicitor - Kim Monnox, who was also the solicitor acting when these proceedings were instituted, swore an affidavit on 30 January 2002, which came to the notice of Daphne (as I infer from the exhibit to Daphne's solicitor's affidavit), in which, inter alia , she deposed to having given Michael advice concerning the transfer of his interest in Kalaroo Road to his mother and also concerning the issue of the additional units in the unit trust, including his right to institute proceedings against his mother and his sister in respect of the issuance of those units. 15The Family Law proceedings were ultimately set down for hearing on 12 September 2002. In anticipation of that hearing, the parties exchanged case outline documents. In support of her section 106B application, the wife alleged, inter alia , that the husband was controlled by Daphne and was under the influence of Daphne, which had been exercised in such a way as to deprive Daphne of claims against Michael for alteration of property interests in respect of property which, but for its disposition to Daphne, would have been property of the parties available for division under s 79. In reply, Daphne inter alia submitted that the transactions were bona fide and regular transactions. 16The case was settled in principle on the first day of the hearing and adjourned while terms were prepared. On 19 September 2002, Waddy J, by consent, made orders, notations and declarations in terms of a document entitled, "Terms of Settlement", dated that day, which relevantly provided: