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[2019] VSC 700
General information, not legal advice.
Supreme Court of Victoria
2019-10-23
LYONS, J
Original judgment source is linked above.
EQUITY - Powers of attorney - Instruments Act 1958 (Vic) - Duty to account - Onus on attorney to establish payments for benefit of donor - Onus not met - Informed consent - Whether attorney established fully informed consent - Fully informed consent not established
EQUITY - Undue influence - Son attorney of aged father - Trust and confidence placed in son by father - Emotional and financial reliance on son - Father estranged from other family members - Gifts totalling $2,250,000 given in 10 months by father to son - Presumption of undue influence conceded - Whether presumption rebutted - Alleged plan of father to distribute assets to son during lifetime not established - No independent legal advice on gifts or alleged plan - Consequence of gifts on asset position unappreciated by father or solicitor - Presumption not rebutted
EQUITY - Unconscionable conduct - Son attorney of aged father - Trust and confidence placed in son by father - Emotional and financial reliance on son - Father estranged from other family members - Gifts totalling $2,250,000 given in 10 months from father to son - Special disadvantage established - Knowledge of special disadvantage established - Son unconscientiously took advantage of father's special disability to procure gifts - Prima facie gifts not fair - Alleged plan of father to distribute assets to son during lifetime not established - No independent legal advice on gifts or alleged plan
ELECTION - Waiver - Estoppel - Whether defences established if father received independent legal advice on transactions subject to claims for breach of duty, undue influence and/or unconscionable conduct - No independent legal advice received - Defences not established
1 The plaintiff, George Hrycenko, is 96 years old. He has two surviving sons, Nick and Victor. There has been a progressive breakdown of the relationship between Nick and Victor since the early 2000s which has had a significant impact on George.
2 That breakdown came to a head in late 2014 or early 2015 when Nick was concerned that Victor was making or influencing decisions about family assets (including those held in a family trust). These included the decision to sell the family home in late 2014.
3 In late 2015, Nick issued proceedings seeking orders that George and his wife Ludmilla held half of the family home on trust for Nick (the 'first proceeding'). In early 2016, Nick issued proceedings against the trustee company of the family trust, its director Victor, and against George (the 'second proceeding').
4 As a result, George was practically estranged from Nick from mid-2015 until late 2017, and George relied very much on Victor. On 30 July 2015, George appointed Victor as his enduring power of attorney (the 'power of attorney'). In early 2016, George went to live in a nursing home near Victor's home in Mount Martha. Victor spent much time with George and he looked after him. Victor also managed George's financial affairs.
5 The way in which Victor looked after George's financial affairs and exercised his power of attorney is in issue in this proceeding. This is because between April 2016 and October 2017 (the 'relevant period'), Victor received over $3.5 million from George as gifts, of which $2,540,000 is claimed in this proceeding. As a result, George was left with a unit in Essendon valued at approximately $1 million, and approximately $800,000 in a bank account. In addition to his continuing living expenses, he had a tax liability of approximately $400,000.
6 After George became aware of his true financial position in late 2017, George instituted this proceeding, with the assistance of his son Nick, against Victor. Given George's capacity to conduct this proceeding (which became a concern during the course of his evidence at trial), the Court appointed a litigation guardian to act on behalf of George in December 2018.
7 George alleges that during the relevant period, when Victor was in charge of his financial affairs, Victor:
(1) breached the fiduciary duties owed as donee of the power of attorney in making payments totalling $396,365.97 listed in Schedule A to the amended statement of claim (the 'Schedule A payments');[1] and
(2) engaged in unconscionable conduct and exercised undue influence over George in relation to payments made to Victor totalling $2,250,000 listed in Schedule B to the amended statement of claim (the 'Schedule B payments').
8 In summary, Victor admits making the Schedule A payments but says they were made either for George's personal expenses or for Victor's benefit with George's knowledge and consent. One of those payments was a gift to Victor of $290,000.
9 Victor also admits receiving the Schedule B payments but says these payments were gifts made by George to Victor.
10 While Victor acknowledges that a presumption of undue influence arises because of the relationship between George and him during the relevant period, Victor submitted that George made his own judgement and exercised free will in relation to these payments. This is because Victor submitted there was a plan devised by George to give Victor his 'share' of George's estate during George's lifetime, taking into account the additional benefits that Nick had already received.
11 Further, Victor asserted that, on 10 October 2017, George received independent legal advice about these payments and withdrawals when a new will was drafted which recorded that George had gifted to Victor his inheritance in advance and left the balance of his estate to Nick. Victor submitted that, as a result of receiving this advice, even if these payments or withdrawals involved a breach of duty, George ratified them, waived any such breach or was estopped from bringing a claim against Victor for them.
12 For the reasons that follow, I have concluded that:
(1) Victor has not rebutted the presumption of undue influence by establishing that the Schedule B payments were made by George exercising his own free will and judgment (and understanding their effect and significance);
(2) Victor has not established that the Schedule A payments were for George's expenses or, if they were not for George's expenses, that they were made with George's fully informed consent;
(3) the Schedule B payments were procured by Victor in circumstances where he unconscientiously took advantage of George's special disability arising from George's reliance on, and trust and confidence in, Victor; and
(4) George did not ratify or waive any breach of duty by Victor relating to these payments, nor is he estopped from bringing a claim against Victor for them.
13 With the assistance of counsel for the parties, a number of issues or questions were agreed to be determined in this proceeding. They relate to the principal allegations made and defences raised in this proceeding. The questions for determination are:
(a) where he obtained a benefit from any of them; and/or
(b) where he was in a position of conflict?
(a) by reason of the relationship of attorney and donor alone; and/or
(b) in the circumstances particularised under paragraph 10 of the plaintiff's further amended statement of claim?
Ratification, waiver, election and estoppel
(a) did the plaintiff ratify those transactions;
(b) did the plaintiff waive any such breach of fiduciary duty, unconscionable conduct or undue influence;
(c) did the plaintiff elect between inconsistent rights; and/or
(d) is the plaintiff now estopped by conduct from denying the legal efficacy of the transactions
by reason of the plaintiff obtaining legal advice on 10 October 2017?
Does the plaintiff need to do equity to the defendant?
14 I note that the questions for determination were prepared before final submissions. As a result, some parts of those questions require modification or do not need to be answered. For example, as set out below, George granted his power of attorney to Victor before the Powers of Attorney Act 2014 (Vic) (the 'Powers of Attorney Act') came into force. As a result, questions of knowledge, authorisation or consent are to be determined in accordance with the general law applicable at that time.
15 Further, in final submissions, counsel for Victor made sensible concessions in respect of some of these issues. In relation to question 1, he conceded that the payments made on 17 October 2016 and 19 July 2017 were also made by Victor. In light of the evidence relating to the control Victor had over George's financial affairs during the relevant period set out below, that was a proper and appropriate concession.
16 In relation to question 6, counsel for Victor conceded that the presumption of undue influence arises from the father-son relationship further particularised in paragraph 10 of the amended claim during the relevant period. Counsel for Victor also conceded that George trusted Victor (which was reciprocated) and that George relied upon Victor during the relevant period to assist him with banking, paying bills, taking him on outings, etc. In light of the evidence relating to the relationship between Victor and George during the relevant period set out below, these were also proper and appropriate concessions.
17 In relation to questions 5, 9 and 13, counsel for Victor conceded that, if the relevant questions were answered in favour of George, then George would be entitled to have any payments repaid to him by way of equitable compensation.
18 The amounts claimed in Schedule A were allegedly withdrawn between April 2016 and November 2017 from George's bank account under the power of attorney granted by George to Victor on 30 July 2015. I note that there was some dispute at trial as to whether some payments were made under the power of attorney or directly withdrawn by George. However, consistent with the admissions in question 1 and the concession referred to in [15] above, all these Schedule A payments were treated as having been withdrawn by the defendant pursuant to the power of attorney in final submissions.
19 With one exception, the Schedule A payments are for sums less than $32,000. They fall into six categories.
20 First, there are withdrawals which Victor asserts were for the payment of George's expenses (the 'alleged personal expenses'). These payments were made between June 2016 and December 2016, totalling approximately $57,000, made up as follows:
(4) a withdrawal on 11 August 2016 of $5,000;[3]
(5) a withdrawal on 9 December 2016 of $20,000; and
21 Second, there are withdrawals which Victor asserts were for the payment of his legal fees relating to the second proceeding which George agreed to pay (the 'Stanton Grant legal fees'). These total approximately $22,000 made up as follows:
(3) a withdrawal on 19 July 2017 in the sum of $3,025.
22 Third, there are two withdrawals that Victor alleges were loans from George, being the withdrawal of $4,000 on 17 October 2016 (which George admits Victor has repaid) and the withdrawal of $25,000 on 23 December 2016 (the 'alleged loans').
23 Fourth, there is the withdrawal of $30,348 on 5 May 2017. Victor asserts this withdrawal was pursuant to an agreement with George whereby George would reimburse Victor for any payments which Victor had to make to Nick resulting from the fact that Victor could not justify certain expenses paid from funds of the family trust (the 'family trust reimbursement').
24 Fifth, there was the withdrawal of $290,000 on 2 June 2016 which Victor asserts was paid to him as a gift like the other gifts alleged in Schedule B given to Victor by George during his lifetime.
25 Sixth, there is the withdrawal of $1,700,000 on 16 November 2017 which George admits was repaid on that day. Victor says this was an accident. He was intending to transfer funds between his own accounts and, by mistake, deposited the sum of $1,749,000 into George's account. Victor then withdrew the sum of $1,700,000 from George's account. I accept that evidence and will not further address this payment in these reasons.
26 The amounts claimed in Schedule B are withdrawals paid directly to Victor. Like the payment of $290,000 on 2 June 2016, Victor submits that these were gifts made to him by George during his lifetime. They consist of the following withdrawals:
27 I will refer to these three payments and the payment of $290,000 on 2 June 2016 as the 'major withdrawals'. Until the commencement of the trial, all the major withdrawals were in fact listed in Schedule B. When it became apparent that sum was withdrawn using the power of attorney, it was transferred to Schedule A. However given the nature of the 2 June 2016 payment, being a substantial gift, at trial as it was often treated together with the other Schedule B payments.[4]
28 Before turning to the relevant facts, it is appropriate to say something about the principal witnesses in this proceeding.
29 As I set out below, George and Ludmilla were hardworking, successful immigrants who acquired substantial assets during their lifetime.
30 George was born in the Ukraine and, while he speaks some English, he gave his evidence through an interpreter. He was 95 years old when he gave his evidence. As a result, arrangements were made for him to give evidence between 9:00 am and 11:00 am each day. He gave evidence on 3, 5 and 8-10 October 2018. In the course of his evidence on 10 October 2018, I observed that George seemed less able to give sensible or responsive answers to questions. As a result, I determined to investigate his capacity to conduct the litigation. After a hearing in camera with counsel for George, I ordered that George undergo a neuropsychological assessment to determine whether he had the capacity to continue to conduct the proceeding himself as a party.
31 As a result of that assessment, I formed the view that George did not have capacity to continue to conduct the proceeding himself as a party. After consultation between the parties, Mr Michael Kornitschuk was appointed George's litigation guardian on 30 November 2018. However, I formed the view that George should continue with his evidence and I would determine the weight to be given to that evidence after it had been given. As a result, George gave further evidence on 12 and 13 February 2019.
32 I closely observed George give his evidence in October 2018 and in February 2019. I formed the view that George was a hardworking, decent, honourable and honest man. George's evidence had some limitations given his age and mental state. He had little recollection of the detail of events which were the subject of his evidence. His answer did not always address the question asked. He sometimes had difficulty with more complex questions. From time to time, he confused one event with another. This is all understandable given his age and mental state. As a result, I relied very much upon the contemporaneous documents in assessing his evidence.
33 However, on matters that were important to George, I found that his evidence was clear and consistent. For example, George maintained throughout his evidence that he only wished his sons to get along. It caused him great distress that his sons were fighting and that this proceeding was necessary at all. George also maintained that he did not lend money to his family: if a family member needed or wanted money and George had it, he gave it to that person. I accept that evidence.
34 In my view, George is a man who is keen to get along with his sons. As a result, I formed the view that George has the capacity to be influenced by each of his sons at different times. For example, as I set out below, at the request of Nick, he signed a document for the transfer of the houseboat owned by the family trust to Nick in February 2013. When Victor found out about this transfer in 2014, George signed a document at the request of Victor stating that he had been pressured into the signing the document for the transfer to Nick.
35 George also maintained that he generally wanted the assets which he and Ludmilla had accumulated to be split 50/50 between Nick and Victor after his death. I accept that evidence. It is true that the proceedings issued by Nick resulted in changes to George's will from time to time during the relevant period which favoured Victor. There seemed to be two reasons for this. First, George was very disappointed that Nick instituted the first proceeding and the second proceeding. Second, the effect of these proceedings issued by Nick (or the threat of them) was that George became estranged from Nick and grew much closer to Victor from mid to late 2015.
36 From this time until late 2017, George was heavily reliant upon Victor: by contrast, he saw little or nothing of Nick. It is during this period that the payments which are now the subject of this proceeding were made. George's clear and consistent evidence was that during the relevant period he trusted Victor with his power of attorney and left Victor in control of his financial affairs.
37 Victor is a qualified carpenter and has worked in the building industry for over 35 years. I formed the view that Victor is a good businessman. He has accumulated significant assets during his lifetime with the result that he now lives off rental income.
38 Victor looked after George's physical needs very well during the relevant period. Further, Victor regularly visited George and frequently took him on outings from the nursing home: for lunch, for coffee and for drives. Victor also looked after George's financial affairs.
39 In my view, Victor is a particular and precise man. However, as I set out below, I found Victor's evidence unconvincing on key issues in this proceeding. For example, in oral evidence, Victor stated for the first time that George's lawyers came up with a plan in mid-2016 to give effect to George's intention to give Victor his share of George's estate during George's lifetime. However, that evidence was not included in Victor's prior affidavits or witness outline. It was never put to George's lawyers, Mr Okno and Mr George Bourandanis, when they gave evidence.
40 Victor has no relationship with Nick: there has been and remains much distrust and animosity between them. This was no doubt contributed to by the legal proceedings which Nick issued and Victor's belief that Nick had received much more than Victor during George's lifetime. Indeed, throughout his evidence, Victor was keen to point out the benefits that Nick and his family had obtained from his parents when Victor received no equivalent benefit. He estimated those benefits to be in the order of $1.2 million. I will deal with this issue of the benefits Nick received further below.
41 Nick also gave evidence. Nick went to Essendon Grammar School, finishing the equivalent of year 11. He did one year of engineering at Footscray Institute of Technology and a second year at RMIT. However, he did not obtain any tertiary qualifications. Since that time, for the most part, Nick has worked for members of his family: either his parents or his brother, John who died in 2000. He has also undertaken some property development of his own as well as freelance drafting and the like. He is now retired.
42 In his evidence, Nick was determined to convey his view of his relationship with his parents and his brother and the reasons for the deterioration of those relationships. He considered that Victor and the decisions that Victor made were the reasons why there was a breakdown of the relationship between Nick and his parents.
43 While Victor was keen to point out the benefits that Nick and his family received from their parents, Nick was equally keen to point out the benefits obtained by Victor. In my view, his animosity towards Victor became evident in the way he answered questions. In short, he was argumentative and always keen when giving evidence to 'put the boot' into Victor.
44 However, it is important to note that it is not Nick's conduct that is the subject of this proceeding. Nick's evidence was most relevant to Victor's defence that George's plan or intention as set out in [10] above involved the adjustments which were alleged to reflect the substantial benefits Nick had received over and above the benefits obtained by Victor.
45 For the last 40 years, George and Ludmilla relied upon their solicitor Jacob Okno of Alan Wainwright J Okno & Co Lawyers ('Mr Okno'). George was a client of Mr Okno's late father. Mr Okno was an experienced and trusted legal adviser. He mainly acted for George and Ludmilla in property related transactions, acquisitions, sales, leases and in drafting wills. He also acted as an 'honest broker' in disputes between the children of George and Ludmilla.
46 As set out below, Mr Okno prepared a number of wills for George between late 2015 and October 2017 and met with him for this purpose. Nearly all of his meetings with George were recorded in detailed typed file notes.
47 Mr Okno was aware of the close relationship between George and Victor during the relevant period brought about, for the most part, by the legal proceedings which Nick had issued. Mr Okno drafted the power of attorney executed by George in favour of Victor.
48 From about mid-2015 and during the relevant period, it was Victor who would usually call Mr Okno on George's behalf to arrange meetings. During these calls, sometimes Victor would convey George's instructions, usually in relation to amendments to George's will. Victor usually accompanied George to Mr Okno's office for meetings. Sometimes Victor would stay while matters were discussed with George. From sometime in 2016, Mr Okno usually asked Victor to leave the room while he spoke to George about his instructions.
49 Mr Okno said that George's 'guiding principle always [was] that ... he wanted his sons to share things fifty-fifty'[5] both during his lifetime and after his death. He acknowledged that some of the wills reflected George's disappointment and anger at Nick as a result of the legal proceedings brought by him.
50 Mr Okno maintained in his evidence that he was not informed of the major withdrawals at or about the time they were made. They were certainly not referred to in his detailed file notes and Mr Okno had no recollection of being told about them. Mr Okno was asked what he would have done if he had felt that any of George's transactions during the relevant period were improvident. He replied that that would depend upon the particular transaction. For example, he said that if he had been aware of large transfers of money to Victor during the relevant period, he would have raised those transfers and any concerns he might have had with George directly. I accept that evidence.
51 George was born in Ukraine in 1923. He met his wife, Ludmilla, in Ukraine when he was 20 and she was 17. They got married in 1943. They moved to Germany after the war and then came to Australia in 1949. They were married for more than 42 years. Ludmilla died on 8 December 2015.
(1) John, born in 1947 in Germany, who died in 2000 following a serious illness. He had two sons, Andre and Mark;
(2) Nick, born in 1958. He and his wife Danka have two daughters, Cassie and Melanie; and
53 George and Ludmilla worked hard in Australia. George started off working at the Essendon Aerodrome. Eventually, they saved enough money to purchase a mixed business in Elwood. They later operated a grocery and liquor store. They managed to accumulate significant wealth by investing in property over the years. George and Ludmilla bought and sold something in the order of 26 properties during their life together. They lived much of their later years around Essendon. They had a long-standing connection with the Orthodox Church of Ukraine nearby: they donated pews and Ludmilla painted some icons for the Church.
54 George and Ludmilla set up the Hrycenko family trust (the 'family trust'). The purpose of the family trust was to hold property on behalf of the Hrycenko family. Over time, the family trust bought and sold many properties. Aniva Nominees Pty Ltd ('Aniva') was the trustee of the family trust.
55 By early 2014, the family trust held the following properties:
(1) shops located at 5, 7 and 9 Ferguson Street, Williamstown (the 'Williamstown shops'); and
(2) a unit located at 3/82 Glass Street, Essendon (the 'Glass Street unit').
56 In addition to the properties held by the family trust, George and Ludmilla personally owned:
(1) the family home at 82 Richardson Street, Essendon; and
(2) a unit located at 2/72 Richardson Street, Essendon (the 'Richardson Street unit').
57 George and Ludmilla moved into the renovated family home in about 2002. In about 2012, they moved into the Richardson Street unit. In late 2013, George and Ludmilla went to live in the Windermere Aged Care Facility ('Windermere'). At that time, Ludmilla was suffering from dementia. Windermere was only about two kilometres from the Richardson Street unit. George and Ludmilla lived there until Ludmilla moved into a high care nursing home in Fletcher Street, Essendon, shortly before she died in December 2015.
58 As to their children, John went on to become a successful businessman who developed a lottery business called 'TMS'.
59 After studying, Nick went to work in his parents' shop for about nine years. During this time, he also worked in another shop that was acquired by his parents with his brother John. After that, he worked on the development of nine townhouses in Tasman Avenue, Strathmore Heights, which was owned by his parents (the 'Tasman Avenue development'). On this development, he did labouring, fit-out work, carpentry and supervision.
60 Nick then worked with John for about seven years at TMS doing fit-outs for lottery stores. His wife Danka also worked for TMS. At the same time, he attended to the maintenance of some of the properties owned by his parents and/or the family trust including the units in the Tasman Avenue development. After John's death, Nick ceased working at TMS.
61 At about that time, George and Ludmilla bought the large property at 82 Richardson Street, Essendon, which was renovated to become the family home. It was an old house on a large corner block which George thought would be good to redevelop later into units. Nick said that the original intention was for Victor and him to undertake the renovation works. However, after a short time, Victor did not undertake further work at the family home. As a result, George and Ludmilla agreed to pay Nick $600 a week to complete the renovations which took 12 to 18 months.
62 After that time, Nick also undertook some property development on his own, as well as freelance drafting. He is now retired.
63 As noted above, Victor left school at the age of 16 and undertook an apprenticeship as a carpenter. He worked in a number of carpentry firms after that time. He ended up working as a carpenter in residential property. He was financially successful. Victor has been in a de facto relationship since 2008; his partner has two teenage children. Victor supports his partner and her children.
64 Over the years, George and Ludmilla provided substantial financial assistance to their children and their families. As I set out below, this included distributing assets and making large cash payments to them from time to time.
65 George agreed that he and Ludmilla were generous to their sons: if they could afford it, they would give them some of the proceeds of sale when a property was sold. The assistance provided to Nick and Victor was one of the principal issues in dispute in this proceeding.
66 John died in 2000. George considered that he had already provided for John adequately over the years so decided not to make any further provision for John's family after John died. George said that, from that time, all of his property, including assets of the family trust, would be divided equally between Nick and Victor.
67 This is consistent with George's will dated 19 May 2000 drafted by Mr Okno (the '2000 Will'). It gave his estate to Ludmilla but, in the event she predeceased him, it gave his estate to Nick and Victor in equal shares. It is also consistent with a deed dated 6 June 2000 executed in respect of the family trust (the 'Deed of Appointment') which provided that, on the death of George and Ludmilla, the family trust would vest in and be distributed to Nick and Victor in equal shares.
68 After John died, the relationship between Nick and Victor deteriorated. This was reflected in, if not caused by, disputes about the financial assistance each of them had received, or which each of them thought he was entitled to receive, from George and Ludmilla. In particular, Victor considered that Nick and his family had received more financial assistance from his parents than he had.
69 The nature of the relationship between Nick and Victor is evident by the dispute in relation to the two units in the Tasman Avenue development undertaken by George and Ludmilla. At the time the units were built, Victor was given Unit 4 and Nick was given Unit 5. However, Victor considered that Unit 4 was inferior to Unit 5, and that, therefore, Nick had received an additional benefit. This resulted in a disagreement between Nick and Victor.
70 As a result, Mr Okno wrote to Victor on 30 March 2005 on behalf of George, Ludmilla and Nick (the '30 March 2005 letter'). That letter recorded that Victor sold Unit 4 for $292,000 in about 2005 and that Nick had obtained two estimates of the value of Unit 5 in February 2005 of between $290,000 and $310,000. That letter contained an offer for Nick to pay Victor $15,000 on the basis that Unit 5 was of greater value than Unit 4. Victor did not accept that offer. It was later withdrawn. In this proceeding, over a decade later, Victor maintains that Nick received a benefit of $45,000 by being given Unit 5, over and above the benefit that Victor received by being given Unit 4. Nick disputes that Unit 4 was inferior or that he had obtained a relative benefit of $45,000.
71 I note in passing that the 30 March 2005 letter also refers to a family beach house at 12 Elgan Avenue, Rye (the 'Rye property'). The letter states that the Rye property is 'currently regarded as belonging' to Victor and Nick. The evidence before me was that the Rye property was purchased and owned by the family trust. The 30 March 2005 letter contained a proposal for Nick to buy the Rye property for an assumed value of $750,000 with the proceeds to be split between Nick and Victor. That offer was not accepted by Victor. However, Victor received $300,000 from George in relation to this property. Nick later received $300,000 from George on the sale of the Rye property. This is an example of George and Ludmilla treating Nick and Victor equally and assisting their sons where they could.
72 As noted above, if George and Ludmilla could afford it, they would give Nick and Victor equal shares of the proceeds of sale of a property when it was sold. By way of example, when one of the assets of the family trust, a shop in Glenroy, was sold in 2012 or 2013, Victor and Nick each received $100,000. George was clear about what he thought he had always done. He said, 'Whenever I was giving to Nicholas, at the same time I was giving straightaway to Victor'.
73 Each of Victor and Nick was asked about the nature of the assistance given to them by their parents. Victor agreed that his father was generous to Victor and Nick throughout their lifetime and that they both received benefits. He acknowledged that, if there was a sale of an asset, George would distribute money equally between them. As to individual gifts, Victor said he could not keep a record. However, he stated that, as Nick is married and has children, Nick received much more assistance.
74 In this context, I found some of Victor's evidence unconvincing. For example, Victor did not recall getting assistance from his father for his first home: he said George 'may have paid the deposit' but he does not now recall.[6] In my view, Victor is a particular man who would remember such matters. I consider this was an attempt to minimise the benefits he received from his parents. It did him no credit.
75 Nick also agreed that he and Victor had received substantial assistance from their parents including assistance in the purchase of a first home for each of them. He appeared to concede that he may have received more assistance than his brother at times, noting that the family members were at different stages, had different interests and different needs. However, he considered that he and Victor were treated 'fairly equally'. He said that his parents tried to distribute their assets fairly between them.
76 There is one more matter to raise at this stage. In my view, each of Victor and Nick had a sense of entitlement over the assets of their parents and the family trust. As is evident from the chronology of events (including the Tasman Avenue development and Rye property referred to above), each of Nick and Victor haggled over the assets or the share of those assets that each considered belonged to him, or that each considered should belong to him. This is notwithstanding that the assets belonged to George and Ludmilla and/or had been acquired with their money and hard work.
77 This is particularly so where George indicated an intention for assets to be dealt with in a particular way. For example, it appears that the genesis of the first proceeding was Nick's belief that George intended the proceeds of the family home to be split equally on his death between Nick and Victor. When the family home was sold before then, Nick believed he had a present entitlement to half of the proceeds of sale and sued for them. So too, Victor maintained that George promised Victor that he would get the Richardson Street unit. I will deal this issue further below. As a result, when George changed his mind about this, Victor nevertheless considered he was entitled to it, or to receive compensation for it. Indeed, in this proceeding, Victor alleges he is entitled to retain $1 million which George agreed to pay him in return for the Richardson Street unit being given to Nick under George's October 2017 Will.
78 This sense of entitlement does not reflect well on Victor or on Nick. It is one of the motivating features behind these proceedings, the other proceedings and the ongoing animosity between Victor and Nick.
79 During the 1990s, the family built a houseboat at Eildon which was owned by the family trust. It became the subject of much dispute between Nick and Victor which continued in this proceeding. George said that his sons built the houseboat at a cost of about $150,000. He said that the purpose of the houseboat was to go there on holidays rather than Surfers Paradise.
80 By contrast, Nick said the houseboat was mainly built by himself and John with some help from Victor. He said after John died, over time, he was the only one who used the houseboat. In fact, it appears that George only visited the houseboat once or twice in the last 20 years. After John died, there were also disputes about who was to pay for costs, maintenance and repairs of the houseboat. Nick said that he paid for some repairs but did not undertake sufficient maintenance of the houseboat and it deteriorated.
81 There was also a dispute about who could purchase the houseboat. Nick was keen to purchase the houseboat for him and his family. As a result, the 30 March 2005 letter also contained an offer by Nick to purchase one half of the houseboat from Victor in accordance with a valuation Nick had obtained of it of between $160,000 to $185,000. Victor did not accept that offer.
82 In 2012, Victor spoke to Nick about Nick buying Victor's share in the houseboat. Victor told Nick that he thought the houseboat was worth $480,000 to $500,000. Victor offered to sell his half 'share' to Nick for $240,000, or $220,000 if paid within 60 days. Nick did not accept that offer.
83 In February 2013, Nick arranged with George for the houseboat to be transferred from the family trust to Nick. At that time, the houseboat had fallen into disrepair. It was then insured for a value of $200,000. The terms of the transfer are set out in a document signed by Nick, George and Ludmilla on 11 February 2013. That document provided that:
(1) Nick indicated that he wished to purchase the houseboat from Aniva for $100,000 based upon an 'agreed' valuation of $200,000;
(3) the balance of the purchase price would be deducted from Nick's share of the future sale of the family home.
84 In oral evidence, George did not remember the document or signing it. He said the houseboat was just an issue between the two brothers. He said that nobody suggested a value of $200,000. The transfer of this houseboat in February 2013 is an example of George being influenced by one of his sons, this time Nick. In my view, George signed the document when Nick presented it to him to keep him happy and avoid any conflict with him. Further, it seems likely that George did not have an appreciation of the value of the houseboat at the time other than what Nick told him.
85 A further document in relation to the houseboat was signed by George, Ludmilla and Victor on 4 September 2014. This document was prepared after Victor found out that the houseboat had been sold to Nick. It recorded that George and Ludmilla acknowledged that the houseboat was undervalued and that the price still remained $220,000 for a half share. I also find that it is likely that George had little appreciation about the value of the houseboat at this time other than what Victor told him. In my view, this September document is another example of George being influenced by one of his sons, this time Victor, and signing documents when presented to him. When asked about this document, George said: 'Whatever they put in front of me, I was not interested. I just signed it ... I trust everybody'.[7]
86 Another dispute related to the Richardson Street unit. As noted above, George and Ludmilla lived there for a short period of time before they moved into Windermere.
87 Victor gave evidence that George said he was going to give the Glass Street unit to Nick and the Richardson Street unit to Victor. It is unclear when George said this. As I set out below, it appears that the proposed division of assets, which was intended to reflect an equal split between Nick and Victor, changed over time. On the evidence before me, George only decided to leave Victor the Richardson Street unit in his will dated 23 December 2015 and this gift was later removed. Further, the Glass Street unit did not go to Nick. It was an asset of the family trust and was sold in 2016.
88 Sometime in the second half of 2014, Nick's daughter, Cassie, asked George if she and her boyfriend could move into the Richardson Street unit. There is some dispute as to whether Cassie agreed to pay rent. In the file notes prepared by Mr Okno and in an affidavit sworn by George in 2016, there is reference to Cassie not paying an agreed amount of rent of $400 per week. George's oral evidence was not entirely clear. At times he said he did not ask for rent. At others, he said he did not insist on it when it was not paid so that Cassie could save for her own house.
89 I find that there was an agreement for Cassie and her boyfriend to pay rent and that the non-payment of that rent concerned and annoyed George from time to time during the relevant period. However it seemed to be more of concern for Victor. This is in circumstances where George decided to leave Victor the Richardson Street unit in his will dated 23 December 2015 and Victor said that George agreed to pay him the rent from Cassie. In my view, Cassie's non-payment of rent was another example to Victor of Nick's family getting preferential treatment and contributing to the animosity between Victor and Nick.
90 I will return to the Richardson Street unit later in these reasons. For present purposes, it is important to note three things. First, in January 2017, George changed his will so that the Richardson Street unit was no longer left to Victor. Second, although no rent was paid, Cassie continued to live in the Richardson Street unit during the relevant period. Third, in his October 2017 Will George left the Richardson Street unit to Nick and his daughters.
91 On 11 August 2014, the family home was sold for $2,950,000 on a 12 month settlement. As I set out below, Nick believed the sale of the family home was organised by Victor and was contrary to the wishes of his parents. Nick said George always wanted the property to be sold upon his death and the proceeds to be split between the two boys.
92 An initial deposit of $290,000 was paid on 11 August 2014. A further instalment of $290,000 was to be paid by 10 July 2015. From these monies, George gave each of Nick and Victor $100,000. It was also intended that each of Nick and Victor would get a further $120,000. Victor got that money but Nick did not. I will return to this later.
93 In August 2014, Victor became aware that the houseboat had been transferred to Nick and that Nick did not pay for it at the time. This angered Victor. As a result, he prepared the document signed by George and Ludmilla dated 14 September 2014 referred to above.
94 It was at about this time, in August 2014, that Victor became a director of Aniva. In fact, he was appointed the sole director on 26 August 2014. George and Ludmilla resigned on that day.
95 George was asked about this change in the directorship of Aniva. Although his evidence was not entirely consistent, George said that he appointed Victor as sole director because Ludmilla was becoming unwell and he was looking after her in the retirement home. He said that Victor was collecting money from the shops which were family trust assets at the time. He said he only wanted one director because if there were two directors 'one would want to sell it ... and another won't want to sell it'.[8] George said that he spoke to Victor and told him that he only wanted one director. He said he did not speak to Mr Okno about this decision and that he did not recall speaking to Nick about it. Mr Okno confirmed he was not informed of this change of directors at the time.
96 The dispute between Nick and Victor escalated after this time. It appears that Nick made a demand for some of the proceeds of sale of the family home. Mr Okno advised Nick to get his own solicitors as he could not act for him in any dispute with his parents. Nick engaged Kennedy Guy Lawyers.
97 In late March 2015, Mr Okno prepared a document entitled 'Hrycenko Family-Summary of Agreement'. The background to the agreement recorded the reason for and purpose of it, namely that:
(1) difficulties had arisen over a period of many years in the relationship between Nick and Victor and it was clear that they would not be able to work together to maintain and enhance family assets;
(2) recently Victor had acted to remove George and Ludmilla as directors of Aniva and appoint him in their place without the knowledge of Nick;
(3) George and Ludmilla were both extremely elderly and, in the case of Ludmilla, in failing health;
(4) George had requested Mr Okno to find a solution for the division of the family assets between Nick and Victor which was fair to both of them taking into account the circumstance; and
(a) to provide for the ongoing care and financial support for George and Ludmilla;
(b) subject to paragraph (a), the division of family assets between Nick and Victor; and
(c) that it be the final agreement to resolve these family issues.
98 Under the proposed agreement drafted by Mr Okno:
(1) all money for the financial support of George and Ludmilla would be paid from the family trust;
(2) the mortgage repayments in respect of the Richardson Street unit and the Glass Street unit would be paid by the family trust;
(3) the mortgage payments of Nick and Danka would be paid by the family trust during the lifetime of George and Ludmilla;
(4) the balance of the sale of the family home would be paid to Nick;
(5) the Richardson Street unit would be transferred to Nick at which time Nick would take responsibility for the mortgage;
(6) Nick and his family would renounce all claims with respect to the family trust to take effect on the death of the survivor of George or Ludmilla. From that time, Victor would have total control of the family trust and the benefit of its assets and income;
(7) in the event that a capital sum is required for George or Ludmilla, Nick and Victor would equally contribute toward that sum provided that, in the case of Victor, such contribution comes from the family trust;
(8) all other assets would be divided equally between Nick and Victor upon the death of the survivor of George and Ludmilla; and
(9) the parties acknowledged that the arrangements were to constitute a final settlement of claims within the family including the family trust and that the provisions of the wills of George and Ludmilla would not operate to change the arrangements.
99 George said this document was prepared by Mr Okno at George's request.
100 I note that the proposed agreement was provided to Kennedy Guy. In their letter dated 2 April 2015, Kennedy Guy suggested a round table discussion between George, Nick, Victor and their respective lawyers to discuss the proposed agreement.
101 Mr Okno made a file note of conversations he had with each of George and Victor on 16 April 2015. In respect of his conversation with Victor, the file note records that:
(1) Victor was not prepared to attend a round table conference;
(2) Victor was prepared to settle on the basis that he obtain the Williamstown shops plus $1,000,000 in cash from the proceeds of sale of the family home;
(3) Nick could have the Richardson Street unit and the Glass Street unit and the balance of the cash and the houseboat; and
(4) Victor was aware that his father was coming to see Mr Okno that afternoon. Victor asked Mr Okno to raise the issue of a power of attorney with his father: he was concerned about the ongoing care of his parents and the necessity for someone to have authority to make decisions.
102 In respect of Mr Okno's subsequent conversation with George, the file note records that:
(1) George thought that Nick had threatened to take court proceedings (in the context of the dispute about the sale of the family home);
(2) Nick had consulted another solicitor because Mr Okno had told Nick that if he and Victor were fighting with each other, Mr Okno could not represent either of them;
(3) George was not prepared to participate in a round table conference suggested by Kennedy Guy;
(4) George did not object to the proposals that Mr Okno had put or that Victor had put: his problem was that Nick and Victor could not agree on anything and ultimately he is going to be put in the position of proposing something and telling them to take it or leave it. In any event, in George's view, nothing can be done until the settlement of the family home;
(5) George told Mr Okno he wanted approximately $800,000 kept back from the sale of the family home to cover contingencies relating to himself and his wife, in addition to the funds he was already holding;
(6) Mr Okno raised the issue of a power of attorney. George said it was a good idea. However, he said he did not want to appoint either Nick or Victor and he would rather have a third person.
103 George was asked about this conversation. He had little recollection of it but said he did not want Nick or Victor as his attorney in essence because they disagreed about everything. Mr Okno had little recollection of the conversation beyond his file note.
104 On 20 April 2015, Mr Okno wrote to Kennedy Guy setting out a summary of these discussions with Victor and with George including Victor's proposal. It also recorded that he could not take the matter any further at this time.
105 The family dispute worsened when Nick lodged a caveat over the title of the family home on 24 June 2015. The basis of the claim was an implied resulting or constructive trust. In his oral evidence, Nick said he left this to his lawyers. He said his concern was that Victor had organised the sale of the family home without his knowledge or consent. He said his father always wanted the property to be sold on his death and split between the two boys. He said he wanted to protect himself and his parents' wishes and he was not going to sit back and wait to get his 'half'.[9]
106 On 30 July 2015, George granted Victor his power of attorney.[10] In fact, it appears, based on the file note of Mr Okno, that there were discussions about whether to lodge an application to remove Nick's caveat on that day.
107 George said that he granted Victor his power of attorney because Nick 'closed all the finances, money' and 'to make sure that [Nick] ... would not take the money away'.[11] I understood this to be a reference to Nick's request to freeze the proceeds of sale of the family home until the proceeding he instituted could be determined.
108 Victor deposed that the power of attorney was given to him in the context of the caveat lodged by Nick which caused delay in the settlement of the family home and in the context of threats by Nick to issue legal proceedings. Victor deposed in his affidavit sworn 3 May 2018 that he attended the meeting with George when Mr Okno explained the power of attorney. He said that Mr Okno explained to his father that 'it means that Victor will have full control of everything' and that George was happy with that. Victor confirmed this in his oral evidence.
109 Victor said the power of attorney did not change things very much: before that time, he had been looking after his parents and paying bills. However, he agreed that one of the reasons why George granted him the power of attorney was that he was very much depending upon Victor to defend the claim made by Nick.
110 On 17 September 2015, Nick commenced the first proceeding, being Supreme Court proceeding number 0492 of 2015 against George and Ludmilla. Nick claimed he was entitled to a share in the proceeds of the sale of the family home, based upon proprietary estoppel, common intention constructive trust or a joint common endeavour constructive trust. Mr Okno declined to act for George and Ludmilla in the proceeding. George and Ludmilla retained Mr Arthur Bourandanis of Frenkel Partners Lawyers ('Frenkels').
111 The first proceeding had a major effect on the relations within the family. Nick gave evidence that copies of the first page of the writ was photocopied and handed to friends of George and Ludmilla and the Ukrainian community. Someone had written on photocopies 'Here's a person that's ... pinching money from them.'[12] Nick suggested that Victor was responsible for this. I make no such finding. However, the existence of such a document emphasises the major effect the first proceeding had within the family and the community it was part of. In this regard, I refer to the evidence of Mr Herman below. From the time when the first proceeding was issued, Nick saw very little of his mother or his father. He ultimately agreed this was because his father was angry and disappointed about the first proceeding.
112 Settlement of the family home took place in October 2015. After adjustments, costs and disbursements, and a payment of $547,000 to George, the sum of $2,361,166 was placed into Mr Okno's trust account in return for Nick's caveat being removed. These funds were held pursuant to an undertaking by Mr Okno not to disperse them until the first proceeding had been resolved.
113 As noted above, each of Nick and Victor was also to get a further $120,000 from the proceeds of sale of the family home. Nick did not receive his $120,000. In his evidence in chief, Victor said that Nick refused to pick up his $120,000 from George because the first proceeding was instituted. Victor said, as a result, George told Victor that he could use that money now and give it back later.
114 However, in cross-examination, Victor conceded he never spoke to Nick to tell him that the cheque was available for collection. Nick said he did not learn that Victor was holding this money until he read George's affidavit sworn 1 March 2016 in the first proceeding which referred to it. Nick then arranged a letter to be sent to Victor on 20 May 2016 demanding repayment of that money. Victor said he did not pay the money because his father told him not to. In my view, that evidence is disingenuous. First, Victor should have made plain in his evidence in chief that he did not tell Nick that the cheque was available for collection. Second, as set out in [167] below, George deposed in early 2016 that Victor was holding that sum on trust for Nick. Even if George said not to pay Nick that amount (which I do not accept), it was open for Victor to repay that money when Nick demanded payment of it in May 2016. I find Victor's conduct in this regard far from satisfactory and consistent with his animosity towards Nick. It does not reflect well on Victor.
115 George made a series of wills in late 2015: on 11 November, on 24 November and 23 December 2015.
116 On 30 September 2015, Mr Okno prepared a written file note relating to a new will for George. On its face, it is not clear whether it records a conversation with George or with Victor. It records that George wanted his executors to be Victor, Nick and Mr Okno. It also records that he wanted the estate to go to Ludmilla for her life and then, after her death or if she predeceases him, as follows:
117 The meaning of this notation is not entirely clear. It appears to record that Nick and Victor had already received $100,000 each. It also appears to record that Victor has received $120,000 and that $120,000 was being held for Nick.
118 George was taken to this file note. He had little recollection of it. He denied a conversation with Victor to the effect that, as Nick did not come to collect $120,000, Victor could use the money now and pay it later. Mr Okno recalled the $120,000. He said it was a reference to the fact that a further payment of $120,000 was intended to be made to each of Nick and Victor. He said Victor had received his payment but Nick had not.
119 A new will was executed on 11 November 2015 (the '11 November Will'). It is consistent with the matters recorded in the 30 September 2015 file note. The executors were Nick, Victor and Mr Okno. Under the 11 November 2015 Will, George's estate was given to Ludmilla for life and, upon her death or if she predeceased him, to Nick and Victor in equal shares.
120 The 11 November 2015 Will also referred to the assets owned by the family trust and the Deed of Appointment which provided that, upon the death of George and Ludmilla, the assets of the family trust were to be distributed equally between Nick and Victor.
121 It then recorded George's wish that the Williamstown shops be given to Victor and the Glass Street unit be given to Nick on the basis that the family trust properties and the Richardson Street unit were to be valued and, to the extent of any difference in the value of the family trust property and in order to equalise the position, the Richardson Street unit was to be transferred to Nick and the balance of the difference in value if any is to be paid to Nick from George's estate. Mr Okno said this provision was included in an endeavour to equalise the position as between Nick and Victor, taking into account that the family trust properties could not be dealt with in the will.
122 There is another file note of Mr Okno dated 19 November 2015. On its face, it is not clear whether it records a conversation with George or with Victor. It records that George wished to change his will by deducting from Nick's share the costs of defending the first proceeding and half the value of the houseboat ($240,000, based on a valuation of $480,000).
123 Mr Okno was shown this file note. In relation to the houseboat, Mr Okno said he understood that Nick more or less appropriated it and Victor obviously considered there should be some credit for it. Both the file note and the subsequent will Mr Okno prepared refer to the houseboat having a value of $480,000. Mr Okno said that the reference to $480,000 came from George but he believed that the figure would originally have come from Victor. Mr Okno prepared a will in accordance with these instructions. It was executed by George in Mr Okno's presence on 24 November 2015 (the '24 November 2015 Will').
124 Mr Okno also prepared a file note of the meeting at which the 24 November 2015 Will was discussed and executed. It records that George attended and that he read through the will and talked about it at some length. It also provides that George advised he was in agreement with what the document contained and that Mr Okno formed the view that George understood what was provided and that it was in accordance with his wishes. The file note records that George was clear about the fact that he wanted Nick to pay for the legal costs that were incurred in relation to the court proceeding. He was also clear that Nick should compensate Victor for one half of the value of the houseboat.
125 Clause 3(iii) of the 24 November 2015 Will refers to the houseboat. It records that Nick 'prevailed upon' George to transfer the houseboat to Nick and his wife. It also records that George agreed to this on the understanding that Nick would pay half the value of the houseboat to Victor and that the value at the relevant time was $480,000.
126 In oral evidence, George denied he was pressured into signing this document by Nick. He said Nick only wanted to buy the houseboat so that his family could use it. George said Victor always wanted $400,000 for the houseboat but George thought this was too much as there were a lot of repairs to be done by this time.
127 Clause 3(v) of the 24 November Will mirrored clause 3(iii) of the 19 November Will in relation to the family trust. The 24 November 2015 file note records that Mr Okno explained to George that the will specified the outcome that George wanted: he did not want a situation where there was endless fighting between his two sons. It also records George had a clear understanding of what constitutes his estate and what is held by the family trust.
5.4 The death of Ludmilla and the 23 December 2015 Will
128 Shortly before her death, Ludmilla moved from the Windermere Nursing Home to a nursing home which had a higher level of care in Fletcher Street, Essendon. On 8 December 2015, Ludmilla died. Nick gave evidence to the effect that he was excluded from the funeral arrangements. Indeed, he said he was not aware of the time and place of his mother's funeral for some time. He did attend her funeral but was not in the cortege hire cars like George and Victor. I did not understand this to be disputed by Victor. Again, this emphasises the nature of the breakdown of the relationship between Nick and his family.
129 On 22 December 2015, George and Victor went to see Mr Okno. Mr Okno prepared a file note of that meeting. The file note records that:
(1) George and Victor attended a mediation with Nick which had 'failed totally';
(3) George was very upset with Nick and could not understand why he was behaving in this way.
130 The file note records that, after some discussion, George wanted the new will to be as follows:
(2) the Richardson Street unit was to go to Victor;
(3) Victor was to be compensated for one half of the value of the houseboat with a valuation at that time of $450,000;
(4) as George was upset about the costs incurred in the first proceeding, provision was to be made for an equal amount of the costs to be paid from the pool to Victor; and
(5) the balance was then to be divided equally between Nick and Victor but Nick had to wait five years to get his share.
131 The file note records that Victor attended during the whole meeting. Mr Okno was asked if Victor always attended conferences with him and George. He said it became his practice after this time to speak to George alone. Of course, the fact that Victor appeared to convey instructions on behalf of George and then attend conferences with him and Mr Okno indicates the degree of trust and confidence placed by George in Victor.
132 Mr Okno had little recollection of this meeting. He recalled it was soon after Ludmilla's death. He also recalled that George was upset with Nick issuing the proceedings in relation to the family home and that he showed it during that meeting. Mr Okno believed that Victor had suggested the value of the houseboat. He thought it was George's idea to vary his will because of the legal costs incurred by him in defending the proceedings instituted by Nick.
133 Mr Okno prepared a new will pursuant to these instructions. The file note records that the new will was sent to Victor so that he could arrange for his father to execute it at the aged care accommodation facility. The new will was executed on 23 December 2015 (the '23 December 2015 Will'). I note there was no evidence before me about the reason why George decided to leave the Richardson Street unit to Victor in his will at this time. In his affidavit sworn 3 May 2018, Victor deposed that, prior to August 2017, George told Victor he would leave him the Richardson Street unit to compensate Victor for what George had given to Nick and his family. The details of when this was said are not deposed to. Mr Okno's 22 December 2015 file note does not record a statement to this effect or any intention of George to compensate Victor for what George had given to Nick and his family.
134 In early 2016, George was admitted to hospital with a urinary tract infection. Victor thought that, given that he was the primary carer for George at that time, George should move to a place near him in Mount Martha. When George was discharged from hospital, Victor arranged for him to live in an aged care accommodation facility called 'The Elms' in Safety Beach which was the closest facility to Victor's home in Mount Martha.
135 In this proceeding, it was put that it was a deliberate decision by Victor to isolate George from his family and friends in Essendon. Victor denied this. He agreed that The Elms was chosen because it was close to him. He said George had a beautiful room and good friends there. He said he also had visitors come from Essendon. He said he arranged for his parents' old telephone number to be transferred to The Elms. Nick disputed his parents' old telephone number was transferred to The Elms.
136 I do not consider it necessary to make any findings about whether Victor deliberately chose to isolate George by moving him to The Elms. However, the consequence of that move was to remove George from Essendon and from his friends and family. It meant that George became increasingly reliant upon Victor. Indeed, Victor would see his father on a regular basis, at least two or three times each week. Summaries of the visitor log book for The Elms showed that Victor visited him more than 300 times between February 2016 and October 2017. However, they also recorded that there were only a handful of other visitors to George during that period.
137 Nick gave evidence that he did not contact Victor to find out where George went after he left Windermere. Nick gave evidence that he attempted to visit his father on one occasion. He saw Victor's partner pull up in a car in the car park. He decided to leave. He said that, when driving down the freeway on his way home, a car swerved towards him on the right hand side and that Victor was driving the car. He said that, after that time, he was uncomfortable going back to The Elms.
138 Nick said his daughters made attempts to visit George but, on each occasion, they said it was extremely uncomfortable.
139 In mid to late 2017, Nick went to visit George with Mr George Herman, the former bookkeeper of John's company. Mr Herman had known the Hrycenko family since his teens. Both families were members of the Ukrainian community. Mr Herman said that, on that occasion, George gave Nick a hug and kissed him on the forehead.
140 Mr Herman also gave evidence that he visited George with his mother-in-law in April 2016. He said his mother-in-law wanted to know why George had 'disappeared from the scene', meaning he was not at the Ukrainian Church or around Essendon. Mr Herman said they knew from the Ukrainian community that Nick was suing George. George confirmed that Nick was suing him and said that Victor was 'in charge and ... he's controlling things'.[13]
141 As I have said, George became very reliant upon Victor during this period. Victor ran errands for George, did his shopping, took him to medical appointments, paid his bills, took him on outings and generally managed his affairs. In my view, Victor was good to his father. George agreed, giving evidence that Victor was very good to him and was looking after him.
142 The trust and confidence which George placed in Victor during the relevant period was great and took many forms. First, there was the emotional trust and confidence given that George was practically estranged from Nick during the relevant period. Victor was the only family member with whom George had regular contact and on whom he could rely.
143 Second, there was the decision to appoint Victor the sole director of Aniva at a time when Aniva had substantial assets built up by George and Ludmilla over their lifetime.
144 Third, there was the decision to grant George's power of attorney to Victor. I refer to my comments in section 5.1 above. It is significant that the decision to appoint Victor as George's attorney was made in the context of Nick threatening and then issuing the first proceedings.
145 As noted above, Victor agreed that one of the reasons George granted him the power of attorney was that he was depending upon Victor to defend the claims made by Nick as it was just too much for George. Of course, at the time Victor was granted the power of attorney, George was 92 and Ludmilla was very unwell. By the time George was living at The Elms, he was a widower and became more reliant than ever upon Victor.
146 George also became more reliant upon Victor to manage his financial affairs.
147 From the time Victor became George's attorney, Victor arranged for all of George's bank statements to be sent to Victor. Victor had control of George's credit card and other bank cards. It appears that at this time George also had two saving accounts with the ANZ: a pensioner account and an online savings account.
148 Indeed, George's evidence was that, after Victor was granted his power of attorney, Victor was deciding everything and George had nothing to do with financial decisions because George trusted Victor. Further, George gave evidence that when Victor held the power of attorney, 'I didn't check on him, what he took, how much he took'.[14]
149 Some bills were sent directly to Victor. Others were sent to George. Victor said that sometimes he made a number of payments himself at one time, withdrawing a lump sum from George's account. This is consistent with most of the figures in Schedule A, which are 'round figures'. On other occasions, Victor said he withdrew money from George's account to pay a particular bill.
150 Victor was not able to recall each occasion on which the payments in Schedule A were withdrawn and that he told George about each of them. His evidence was more general. Victor said that George was usually with him when he made withdrawals from George's bank account. Victor said that, if George was not with him, he would 'always' notify George that a withdrawal had been made and/or what it was for.[15] This was challenged in cross-examination. It was put to Victor that the whole purpose of the power of attorney was for Victor to make payments on behalf of George without troubling him.
151 Victor maintained that he told George about each payment. I do not accept this evidence. In my view, it is very unlikely that Victor would inform George specifically of each payment of George's bills. I have no doubt that he would inform George from time to time that payments were being made. However, that is very different from Victor's evidence that he always told his father about the each payment and/or what it was for. In this context, it is important to note that Victor did not keep a running account of each such payment. Indeed, he was unable to explain what many of the payments in Schedule A were for.
152 George agreed that Victor was paying his bills from his account and that Victor would take George to the bank with him. Sometimes George was asked to sign bank forms. This is consistent with some of the documentary evidence. Sometimes the bank manager saw George and he did not need to sign. George said he did not read what Victor asked him to sign. He said he just signed because he trusted Victor.
153 George's evidence was to the effect that George would sit in the bank while Victor went over to the counter and undertook transactions, the details of which were not explained to him. He said often the bank manager saw him and, whatever Victor asked for, he was given because the bank manager saw George sitting there. While I am conscious of the limitations of George's evidence, he was consistent on this. I accept his evidence about this.
154 Further, Victor's version is inconsistent with the trust and confidence which George placed in Victor throughout the relevant period. George gave consistent evidence, which I accept, that he trusted Victor.
155 For example, George was asked about the $950,000 withdrawn on 1 February 2017. When asked whether Victor mentioned a particular sum he replied 'There were many - two or three times that he asked from me, and I was giving him. ... When he didn't ask, I didn't give him'.[16] When asked for clarification on this, George responded 'Because he was my boss, he was taking it out by himself. ... I didn't even know what; he just took it out. ... What he took, I don't know'.[17] George was then asked what he meant by saying Victor was 'my boss'. He replied 'he had the power of attorney'[18] Further, when asked about the $1 million paid to Victor on 26 August 2016 George gave evidence that he was prepared to give money to Victor: 'Whatever he asked of me I was giving, but for what I didn't ask'.[19]
156 As a result, I have concluded that during the relevant period Victor was in charge of George's financial affairs without any meaningful scrutiny or oversight by George.
157 This raises the issue of whether George was aware of his asset position during the relevant period. Victor gave evidence that, during this period, George would often ask, 'How's the money situation? Have we got enough, you know, because I've got to pay solicitors or barristers'.[20] This is consistent with George's evidence that he did not discuss with Victor about the money in his accounts: 'I only asked is there sufficient to pay for whatever'.[21] Victor replied that there was enough for 20 years.
158 There was no evidence that Victor informed George of his asset position from time to time, particularly after the release of the proceeds of sale of the family home and the distribution of the proceeds of the family trust. Victor suggested that he did not need to do so as he said George was always aware of his financial position: he was 'pretty good with money. ... He's never used a calculator'.[22] That is not the view I formed of George in 2018 and 2019 when he gave his evidence. I acknowledge that George's mental function is likely to have deteriorated between 2016 and when he gave his evidence at trial. But, in his evidence before me, he had little appreciation of his actual financial position during the relevant period, particularly as assets were converted from real estate to cash. This is in a context where it was difficult for George to track his financial position as Victor was receiving the bank statements. Further, I refer to the evidence of Mr Bourandanis in [180] below.
159 Further, as I set out below, on Victor's own evidence, George had to ask the bank manager how much he had left in his account after the transfer of $300,000 on 10 October 2017 and was concerned if he had enough to live out his life.
160 The relationship of trust, confidence and reliance between George and Victor was confirmed by other witnesses. It was confirmed by Mr Okno. It was confirmed by Mr Bourandanis, as I set out below. It was also confirmed by Mr Herman.
161 As noted in [140] above, Mr Herman gave evidence that he visited George with his mother-in-law at The Elms in April 2016. At that time, George expressed concerns about his financial position because of the effect of the proceeding brought by Nick. Mr Herman suggested that George should 'just solve the problem' as he '[owned] all the proper[23]es'.23 Mr Herman had been generally aware of George's assets from the time when he had been the bookkeeper for John's company. Mr Herman said that George replied 'Victor's in con[24]ol'.24
162 Mr Herman gave evidence that, when he subsequently visited George with Nick in mid to late 2017, George expressed concern about his ability to pay for his accommodation expenses and said that 'Victor's handling it. So don't worry about it'.[25] However, George told Mr Herman 'No matter what, in the end, both boys will get fifty-fifty'.[26]
163 On 19 February 2016, Nick commenced the second proceeding, being Supreme Court proceeding No 0038 of 2016 against George, Victor and Aniva. Frenkels acted for George and Aniva. Stanton Grant Legal ('Stanton Grant') acted for Victor.
(2) payment of distributions for the year ended 30 June 2014 and 30 June 2015;
(3) replacement of Aniva as trustee of the family trust;
(4) a declaration that the family trust holds half of its property for Nick; and
165 On 3 February 2016, George brought an application in the first proceeding for Mr Okno to be appointed his litigation guardian. This application was not otherwise the subject of evidence in this Court.
166 Further, on 26 February 2016, George issued an application in the first proceeding for:
(1) the release of some of the proceeds of sale of the family home, held pursuant to the undertaking given by Mr Okno; and
(2) summary judgment in the first proceeding insofar as Nick claimed more than half of the net proceeds of sale in the family home.
167 George swore a short affidavit in support of this application on 1 March 2016 (the '1 March 2016 affidavit'). In the 1 March 2016 affidavit, George deposed that:
(1) his sons were fighting for control and ownership of the proceeds of sale of the family home and the assets of the family trust;
(2) Nick had contributed labour to the family home but George and Ludmilla had paid him $600 a week for doing so and that George and Ludmilla had supported Nick's wife and children over the years;
(3) from the proceeds of sale of the family home, Victor was holding $240,000 on trust for Nick and Victor;
(4) George 'require[d] 1 million for an Accommodation Bond for a Nursing Home and for my ongoing, day to day medical care and other needs'.
168 This application was heard on 16 March 2016. On 22 March 2016, Ierodiaconou AsJ dismissed the application.[27] There was an appeal from that decision.
169 In March 2016, a transfer of the Richardson Street unit to Victor and his company, VHY Enterprises Pty Ltd was prepared. Victor said the transfer was not completed because George could not get Cassie out of the Richardson Street unit.
170 George then swore a further lengthy affidavit in the first proceeding on 18 May 2016 (the '18 May 2016 affidavit'). In the 18 May 2016 affidavit, George deposed, among other things, that Nick and his family had received benefits from George and Ludmilla and/or the family trust during his lifetime and that George believed that those benefits 'exceed $1 million ($1,000,000.00) if properly quantified and investigated'. He deposed that the benefits included:
(1) a benefit to the tune of $45,000 as a result of Nick receiving a superior unit in the Tasman Avenue development to that given to Victor;
(2) rental income received from the Glass Street unit in the order of $500 per week for up to 15 years totalling an estimated $150,000 to $180,000 which was used to pay a loan Nick had with the Dnister Credit Co-operative;
(3) contribution to the costs of the education of Nick's children at Penleigh and Essendon Grammar School estimated in the order of $200,000 noting that Victor had no such benefit as he does not have any children of his own;
(4) the use of the houseboat for some 15 years which was then transferred from the family trust to the plaintiff at Nick's insistence and for which the family trust received no money. George noted that his sons supplied the labour for the construction of the houseboat, that the family trust and/or George and his wife substantially contributed to the cost of building the boat ($200,000) and its service and registration, repairs and marina charges to the extent of a further $200,000;
(5) $50,000 used by Nick to repay a third party loan;
(6) Nick's daughter, Cassie, failing to pay the rent of $400 per week for her occupation of the Richardson Street unit from late October 2014. George deposed that he is in the process of taking steps to recover possession of the property;
(7) Nick and his family had the benefit of 'perhaps seven motor vehicles acquired for him and his family';
(8) Nick's first house at Glenscott Crescent, Strathmore Heights, was substantially funded by George and Ludmilla or the family trust;
(9) Nick was paid $600 a week in cash for his labour contribution to the renovation of the family home over an 18 month period totalling about $45,000.
171 The appeal from the decision of Ierodiaconou AsJ was heard on 9 May 2016. On 24 May 2016, Sifris J handed down a judgment allowing the appeal.[28] As a result, half of the proceeds of sale of the family home being held by Mr Okno were released to George. George received $907,083 on 3 June 2016.
172 There was much debate in this proceeding about the circumstances in which the affidavits sworn by George in the first proceeding were prepared. This was because the benefits deposed to in the 18 May 2016 affidavit were relied upon by Victor in this proceeding as evidence of the additional benefits obtained by Nick and their value for the purposes of his defence, in particular Schedule 1. Counsel for George suggested that these affidavits were prepared for the most part by Victor and/or on his instructions. The solicitor for George at the time, Mr Bourandanis of Frenkels, was called as a witness at the trial of this proceeding.
173 In oral evidence, George had little recollection of these affidavits or the circumstances in which they were prepared. However, he disputed that Nick received many of the benefits that he had deposed to in the 18 May 2016 affidavit.
174 Mr Bourandanis gave evidence about his instructions received in the first proceeding and the second proceeding to the effect that:
(1) instructions were received both from George and from Victor;
(2) on occasions, instructions were also obtained from Mr Okno; and
(3) Victor was the primary contact given that George was in a nursing home near Victor and Victor held his power of attorney.
175 Correspondence from Mr Bourandanis relating to George's affidavits was sent to Victor. For example, Frenkels sent an email dated 9 May 2016 to Victor attaching a draft of the 18 May 2016 affidavit for George to approve. The email noted that 'It will likely change but the tenor of it is clear for George to approve its contents. You [Victor] need to carefully check the facts as detailed'. Victor's evidence about this was unconvincing. At first, he said he probably would not have seen that email or the affidavit. He later agreed that he probably would have read over the email and the affidavit as well. This is in a context where the reason for the email was for Victor to check the facts and get George's approval.
176 Further, Frenkels sent a letter to George care of Victor's address dated 6 June 2016 which referred to a settlement proposal 'briefly discussed with you and dad' in light of the upcoming trial in the first proceeding. The letter stated:
We note that time is short, you should consider for dad and you subject to Victor's independent legal advice ..., a settlement which could and should be along these simplified lines ...
Mr Bourandanis agreed he was relying upon Victor to explain this to George and to get instructions from George about the proposed settlement. In my view, this is evidence of and consistent with the trust and confidence which George reposed in Victor. I note the proposed settlement provided generally for a 50/50 split between Victor and Nick of the family trust assets and the proceeds of sale of the family home, subject to the claim in the first proceeding and money being set aside for George.
177 As to the affidavits, Mr Bourandanis said that the information in the 18 May 2016 affidavit came from George and from Victor but that they were 'George's instructions'.[29]
178 In his evidence in chief, Mr Bourandanis said that 'George conceptually remembered everything'[30] but that specific details and dates would have come from Victor. He said there was a one page document with a lot of information on it that George had signed off on. That document and the circumstances in which it was prepared were not in evidence before me. However, Mr Bourandanis said George told him that Nick had benefited to the tune of $1 million over his lifetime.
179 In my view, at the time he gave his evidence, Mr Bourandanis did not have a clear recollection of the source of all the information for the particular benefits listed in the 18 May 2016 affidavit. He could remember some things clearly, but not others. By way of example, he remembered that George was very annoyed about the non-payment of rent for the Richardson Street unit by Cassie.
180 However, he had difficulty remembering the other benefits listed. For example, in his evidence in chief, he said George had mentioned the benefit of $45,000 relating to the Tasman Avenue development. His recollection of this was challenged in cross-examination. He then said he would have been told this by Victor and not by George. In giving this evidence he stated 'It's highly likely that was Victor, and I say in the context because George was always - whether it was a 45,000 or a 55,000 or a million dollars, he wouldn't - he wouldn't recall that. So it's the sort of thing that ... I would've been told from Victor and not from George'.[31] Further, he gave evidence in relation to cars stating that George 'would have mentioned a number of motor vehicles and Victor would have provided the specifics'. In doing so, in my view, he sought to reconstruct from whom these instructions came. This is no criticism of him. He was simply seeking to assist the Court as best he could. However, such evidence does not assist the Court in making any findings.
181 I note that, in cross-examination, Victor said George provided everything contained in the 18 May 2016 affidavit himself and that the information in it had nothing to do with him. In giving this evidence, I do not consider that Victor was telling the truth.
182 Based on the all the evidence before me, I have formed the view that Victor was primarily responsible for defending the first and second proceedings at that time and providing instructions to George's solicitors in respect of them. In this regard, I note that Victor was the sole director of Aniva and was himself a party to the second proceeding. This is generally consistent with the evidence of Victor that one of the reasons George appointed Victor his attorney was because George was depending upon Victor to defend the claims made by Nick. This is also consistent with the correspondence sent by Frenkels in relation to those proceedings. Further, it is consistent with the evidence of Mr Herman set out in section 6.2 above.
183 In making this finding, I do not conclude that George was not informed of how these proceedings were being defended or that George did not acquiesce in those defences. However, it must be borne in mind that those proceedings, and the applications and affidavits referred to above, were prepared shortly after Ludmilla died, after George had been in hospital and after he had just moved to The Elms. He was sick, old, bereaved and isolated from his community and placed under considerable stress by the move and the proceedings issued by Nick.
184 While I accept that some of the information contained in the affidavits came from George, I consider that much of the detail came from Victor. Further, the nature of the issues raised were of great concern to Victor, including the relative 'benefit' of $45,000 received by Nick over Victor in respect of the Unit 5, the contributions to the school fees of Nick's children, and the houseboat.
185 As to the Richardson Street unit, Victor gave evidence that two proceedings were issued to evict Cassie from the Richardson Street unit by George during the relevant period. In my view, it is likely that those proceedings were brought at the instigation, or at least with the encouragement and assistance of Victor. This is in light of the fact that Victor thought he was entitled to the rent for that property and because he could not get a transfer of the Richardson Street unit while Cassie remained in possession of it.
186 If I am wrong and Victor was not primarily responsible for defending the proceedings at that time, at the very least, I consider that Victor very much influenced George in how those proceedings were defended and in preparing the affidavits. As noted above, George gave evidence before me nearly two and a half years after he swore the affidavits. His mental function is likely to have deteriorated in that time. But the information and detail contained in the affidavits is very different to the evidence George gave before me and the detail he was able to recall.
187 Further, there was much dispute about whether George required $1 million for an accommodation bond at a nursing home and ongoing expenses as deposed in his 1 March 2016 affidavit. Once again, it is important to bear in mind that this affidavit was sworn soon after he had been released from hospital and taken up residence at The Elms. It was put to Victor that George was not required to pay an accommodation bond at The Elms and, in any event, George was not in a position at that time to know about such matters as all these things had been arranged by Victor.
188 Victor agreed that he was the one who would know about the accommodation bond. He gave evidence to the effect that an accommodation bond may have been required at one of the nursing homes that he and George were considering at the time. He said there was a quote for a nursing home in Rosebud of around $1 million. However, he agreed that no figure for an accommodation bond was ever raised at The Elms. On balance, I do not find Victor's evidence about this convincing. Regardless, his role at this time in dealing with the nursing homes and providing information for the purpose of the legal proceedings emphasises the degree of control and influence he had had over all aspects of George's affairs.
189 As noted above, Victor asserted that Nick obtained financial benefits and assistance from his parents over and above that obtained by Victor. This was referred to in Schedule 1 to Victor's amended defences. I will refer to Schedule 1 further below. Relevantly, Schedule 1 to the third amended defence refers to the houseboat which Victor valued at $700,000 and approximately $1.2 million of additional benefits which Nick received from 1983. At trial, Victor relied upon the benefits set out in the 18 May 2018 affidavit in support of the allegations in Schedule 1.
190 On the evidence before me, while I accept that it is likely that Nick received more financial assistance from his parents than Victor, it is not possible to ascertain the extent of the additional assistance Nick received or to place a value on it. However, it is appropriate that I address some, but not all. of the additional benefits which at trial Victor maintained Nick received.
191 First, Victor referred to the alleged benefit of $45,000 received by Nick, being the difference in the value of the units each received in the Tasman Avenue development. There is no evidence before me as to how this difference in value was calculated. As set out above, the only evidence was the difference in the order of $15,000 which Nick offered to pay Victor in the 30 March 2005 letter.
192 Second, Victor referred to the payment of the private school fees for Nick's children by George and Ludmilla estimated at $200,000 in the 18 May 2016 affidavit. Nick acknowledged that George and Ludmilla had made some payments towards his children's school fees in cash and via Aniva in 2001 and 2002. Nick gave evidence of four such payments: $5,618.60 on 25 May 2001, $5,701.35 on 17 August 2001 via Aniva, $5,878.40 on 1 March 2002 via Aniva and $6,020 on 14 May 2002.
193 However, Nick also produced evidence of regular payments made by him and/or his wife between 1993 and 2008 for school fees in excess of $180,000. It may be that some of those payments were funded by George and Ludmilla. However, on the evidence before me, I cannot conclude that George and Ludmilla paid school fees for Nick's children to the extent of approximately $200,000.
194 Third, Victor relied upon the salary which George and Ludmilla paid to Nick during the renovation of the family home. However, I did not understand it to be in dispute that Nick was involved in and oversaw the renovations to the family home. While the payments may have had some relevance to the claims in the first proceeding, it is difficult to understand why this is considered by Victor to be an 'additional benefit' or one that George intended to be taken into account in determining what Nick and Victor was each entitled to upon George's death.
195 Fourth, Victor relied upon the alleged benefits of 'perhaps seven motor vehicles acquired for [Nick] and his family'. Victor said that he had all the bank statements on registrations and insurance paid and everything for those vehicles. However, they were not produced in evidence.
196 Nick gave evidence that George gave a car to each of Nick's daughters as a gift: a Honda Civic and a Toyota Corolla. Such a gift to each of his granddaughters seems entirely consistent with George's love for his family. I find it difficult to conclude that this was a matter which George intended to be included in a 'balance sheet of benefits' between Nick and Victor in determining what each was entitled to upon George's death.
197 Further, Nick said that the family trust purchased one utility vehicle when he was doing work for it, which I understood to mean maintaining family trust assets. He said a second utility was purchased by Nick and his brother, John, when Nick was working for John. Nick said his first car was registered in his mother's name. He then bought his next car himself. Later, his parents offered him a car that they owned for him to trade in to buy a Mitsubishi Pajero valued at $40,000.
198 I note in passing that Nick gave evidence that his parents also bought Victor a speedboat for his 18th birthday and a Corvette car for his 21st birthday. Victor denied this. In particular, Victor gave evidence that he bought the Corvette from one of his employers and that, to pay for it, he agreed with his employer to sell his previous car and have the balance taken out of his wages over a period of time. Victor agreed, however, that George gave him a car for his 18th birthday.
199 Fifth, Victor relied upon the alleged benefit obtained by Nick by reason of a $50,000 contribution by George to repay a loan to a third party referred to in the 18 May 2016 affidavit. Nick gave evidence that this was part of a distribution to him and Victor from the sale of a property in Widcombe Street totalling approximately $100,000 but which was paid in smaller amounts. Nick said he received $37,000 which was applied to pay off the loan. This was evidenced by a transfer of $37,000 from his parents' account on 8 August 2012. I note that there was also a transfer from that account of $20,000 on 16 August 2012. The document evidencing the transfer in evidence records that it was a payment to Victor.
200 Sixth, Victor relied upon George and Ludmilla buying Nick's first house in Glenscott Crescent, Strathmore Heights after Nick was unhappy with a vacant block of land previously given to him by George. Victor said George told him that Nick was ungrateful for the block of land and wanted instead to live in Strathmore Heights.
201 Nick gave evidence that he and John were each given a block of land by his parents. Nick then purchased a property closer to his parents in Glenscott Crescent, Strathmore Heights. He said he sold the land to pay for the deposit and his parents contributed $80,000 to $90,000. He then took out a mortgage to fund the balance of the Glenscott Crescent purchase.
202 Nick said that Victor was also given $200,000 by his parents to buy a property at 8 Mabel Avenue, Strathmore in about 1997. As I have said in [74] above, Victor was unable to recall whether his parents contributed to the purchase of his first home. In my view, it is very likely that any person in Victor's position would easily and readily recall such a contribution by their parents.
203 Seventh, Victor relied upon the benefit obtained by Cassie by reason of the non-payment of rent of the Richardson Street unit, calculated in the 18 May 2016 affidavit to be in excess of $32,000. I refer to my comments above.
204 However, I note that paragraph 20(f) of the 18 May 2016 affidavit records that the loss of the rent of the Richardson Street unit had affected George's ability to pay for his living expenses. It was put to Victor that this was inconsistent with his own evidence that Victor was to receive the rent from the Richardson Street unit and George told Cassie to put the money into Victor's account. In response, Victor agreed that his father was not having any difficulties in meeting his day to day expenses in mid-2016. This evidence causes me to cast doubt on the contents of the 18 May 2016 affidavit and the instructions that Victor gave in relation to it.
205 In any event, the outcome of my analysis of the alleged benefits in the 18 May 2016 affidavit and the evidence in relation to them is that, while it is likely that Nick and his family did receive more assistance from his parents than Victor, I am unable to identify the extent of the additional assistance or quantify its value.
206 There is one other matter which I will to return later in these reasons. Victor's defence proceeded on the basis that George's intention was to give assets to Victor during his lifetime taking into account these additional benefits Nick had received from George. As the facts set out in these reasons demonstrate, there was no evidence from George or Mr Okno to this effect at this time or subsequently.
207 George met with Mr Okno again on 5 April 2016. Mr Okno prepared a file note of that meeting. It records that Mr Okno had previously been advised by Victor that George wanted to change his will in the following ways:
(2) splitting Nick's share of the residue of George's estate giving Nick 10% and his daughters 20% each; and
(3) the Richardson Street unit to go to Victor's trust company.
208 I note that the reference to the 'removal of the houseboat' was to the removal of the requirement that Nick's 50% share of his father's estate be reduced by $240,000, being half the value of the houseboat, as set out in the 24 November 2015 Will and the reference to the gift of $225,000 being one half of the value of the houseboat to Victor in the 23 December 2015 Will. It is not clear from the file note or the evidence before me why this sum was removed at this stage.
209 The file note records that George again told Mr Okno how upset he was by Nick's conduct. The file note also records the fact that:
(1) his granddaughters had recently visited him asking personal questions about his assets which had upset him;
(2) his granddaughter Cassie had occupied the Richardson Street unit for a considerable period with her boyfriend without paying rent;
(3) when Cassie first asked about being able to use the unit, he had told her that he needed rent from the property to support himself and his wife and that Cassie had promised to pay $400 per week;
(4) Cassie had not paid anything and George wanted her out of the unit.
210 The file note also records that George mentioned that while the family home was being renovated, Nick was paid $600 per week. It also records that George was clearly upset by the claims Nick was making in the first proceeding.
211 The file note also records that Mr Okno then went through the provisions of the draft new will which he had prepared and that they were discussed. It records that George confirmed he understood the contents of the draft new will and that it represented his wishes.
212 George signed the new will in the presence of Mr Okno and his secretary on that day (the '5 April 2016 Will'). It is in accordance with the matters discussed in the file note, namely:
(1) the Richardson Street unit was given to Victor's family trust company;
(2) an amount equal to the costs expended by George in defending the first proceeding were to be paid to Victor;
(4) 50% of the residue was to be split between Nick (10%) and his daughters (20% each).
213 George and Mr Okno were asked about this file note and the 5 April 2016 Will. George's recollection was vague and unclear. Mr Okno had little recollection other than what was recorded in his file notes and the matters set out above. Mr Okno recalled that Victor had previously raised with him that Cassie had occupied the Richardson Street unit rent free.
214 Victor made a number of withdrawals between April and August 2016 from George's accounts which are claimed in Schedule A. Some were for the payment of Victor's legal fees to Stanton Grant in relation to the second proceeding. The withdrawals were as follows:
215 It is not disputed that these moneys were withdrawn form George's account for these purposes. The withdrawal of 13 April 2016 was recorded by the ANZ Bank as an 'over the counter cash withdrawal' at the Rosebud branch pursuant to the power of attorney. The withdrawal on 26 July was recorded by the ANZ Bank as a cash withdrawal via card entry at the Rosebud branch.
216 The other smaller withdrawals between April and July 2016 are:
217 Each of the withdrawals on 28 June and 29 June 2016 was recorded by the ANZ Bank as an over the counter cash withdrawal at the Rosebud branch pursuant to the power of attorney. However, there is some evidence that a voucher for the withdrawal of $9,500 on 29 June 2016 was signed by George on that date. The withdrawal on 5 July 2016 was recorded by the ANZ Bank as a cash withdrawal at the Rosebud branch.
218 In his amended defences and in his oral evidence, Victor stated that these payments were for the personal expenses of George but that he had not kept any receipts or details of what the payments were for.
219 Further, there was a withdrawal of $5,000 on 11 August 2016. This withdrawal was recorded by the ANZ Bank as an over the counter withdrawal at the Rosebud branch pursuant to the power of attorney. In his amended defences and oral evidence, Victor stated that these funds were, to the best of his recollection, used to pay expenses for advertising related to the Williamstown shops. However, he did not keep any receipts or details of what the payments were for.
220 On 2 June 2016, $290,000 was withdrawn from George's bank account by bank cheque payable to Victor. George was unable to recognise his signature on the authority for the bank cheque. The circumstances in which this payment was made requires some explanation.
221 Victor purchased a farm at 231 Old Cape Schanck Road, Boneo, by contract dated 5 December 2015 for $1,300,000. A deposit was paid when the contract was signed. An instalment of $300,000 was due by 5 June 2016 with the remainder due at settlement on 5 October 2016. The $290,000 received from George was used by Victor to meet most of the June instalment: $10,000 came from Victor's own funds.
222 George's evidence was that Victor said he needed money for a deposit but did not say for what. He said Victor did not tell him how much money he wanted. He said 'No, he needed the money. ... He only said that he needs the deposit but he didn't say for what. ... He asked me and I gave him'.[32] He then said that 'when [Victor] had the power of attorney, I didn't check on him, what he took, how much he took'.[33]
223 In his amended defences, Victor stated that, in late May or early June 2016 at The Elms or on a day trip from The Elms, Victor told George he had bought the farm and he needed to borrow some money from the bank to fund the part of the purchase price. George said to Victor words to the effect 'don't borrow any money, I'll give you the money'. As a result, George gave the sum of $290,000 to Victor for the purpose of the instalment due in June and Victor contributed $10,000 from his own funds. This version was consistent with Victor's affidavits sworn 9 March 2018 and 3 May 2018 in this proceeding.
224 Victor's oral evidence was quite different. Victor stated that he discussed the purchase of the farm with George in December 2015. At that time, Victor discussed with George the option of getting a loan to pay the purchase price and George responded that Victor had 'inheritance coming' and, in that context, George said 'Don't borrow any more money. ... If I can help you, I'll help you'.[34]
225 Victor was cross-examined about this version of events, particularly about the timing of the conversation with George, the reference to the 'inheritance coming' and Victor's ability to get a loan at that time. I found Victor's evidence about these matters unconvincing. While Victor initially said it was pretty hard to borrow money and that he had a big mortgage at the time, he later said the problem was more about having to fill out paperwork and showing income to the bank. He later said it would not be difficult for him to get a loan for this purpose. Victor could not explain why his affidavits had not stated that this conversation with George took place in December 2015. He could also not explain why he had not previously referred to the 'inheritance coming': he said it did not make a difference.
226 However, Victor gave evidence that all this was part of George's plan or intention from December 2015 to give Victor his share of his inheritance as quickly as George could once Nick brought the first proceeding. This is inconsistent with his amended defences that it was only in August 2017 that George decided to give Victor his inheritance during George's lifetime. Further, in oral evidence, Victor also said that George's plan was developed in about July or August 2016 with the assistance of Mr Okno and Mr Bourandanis. As I set out below, this was not put to either of them.
227 I find Victor's evidence about the circumstances in which these funds were paid, and more generally, the adoption and implementation of George's plan or intention to give Victor his inheritance during George's lifetime (and subject to adjustments for the additional benefits Nick had received) unconvincing.
228 There were a number of attempts to resolve the legal proceedings. Settlement in the second proceeding was reached in principle in early May 2016. As a result, on 9 May 2016, Victor, Nick and Mr Okno were appointed as directors of Aniva. Further, on 23 June 2016, the directors of Aniva resolved to sell the Williamstown shops and the Glass Street unit. I will deal later with how the proceeds of sale of these properties were distributed.
229 On 9 August 2016, by consent, the first proceeding was struck out and Nick was ordered to pay George and Ludmilla's costs. The effect was that the balance of the proceeds of sale held by Mr Okno in the sum of $1,474,000 could be released to George. That occurred on 25 August 2016.
230 On 25 August 2016, the day on which the balance of the sale proceeds of the family home was released, $1,100,000 was transferred to George's account from Mr Okno's account.
231 Also on that day, George and Victor went to see Mr Okno. Mr Okno's file note records that, in addition to George, Victor and Marina Delgreco (an interpreter) were present. The file note records that Mr Okno went over the 5 April 2016 Will and that George instructed Mr Okno that:
(1) the executors were to remain as Victor and Mr Okno;
(2) the gift of the Richardson Street unit to Victor was to remain: George was adamant that he had promised this property to Victor some time ago;
(3) the provisions in the 5 April 2016 Will about legal costs and the houseboat were to be deleted; and
(4) the balance was to go equally to Nick and Victor.
232 I note in passing that there was no provision in the 5 April 2016 Will relating to the houseboat.
233 The file note records that it was proposed that part of Nick's share be given to his two daughters. That proposal was not adopted in the will that was subsequently executed.
234 The file note records that Mr Okno arranged for a new will to be prepared at that time. As a result, a new will was signed on that day (the '25 August 2016 Will'). It is in accordance with the file note. The Richardson Street unit was devised to Victor, not his family trust.
235 The file note records that an issue was raised concerning the situation if George died prior to settlement of the sale of the family trust assets. Mr Okno said that, if this occurred, the sale proceeds of the family trust would be equally divided between Nick and Victor as specified in the 'deed of appointment in relation to the trust', which I assume is a reference to the Deed of Appointment (dated 6 June 2000).
236 George was asked about this conference and the 25 August 2016 Will. His answers were for the most part non-responsive. It was as a result of George's evidence at this time that I determined that his capacity to conduct the litigation as a party to this proceeding needed to be investigated.
237 Mr Okno had little recollection of this meeting other than that recorded in the file note. However, his recollection was that, when he spoke to George about the new will, he asked Victor to wait outside.
238 It is significant that there is no reference in the file note to the gift from George to Victor on 2 June 2016. It is also significant that there is no reference to the gift of $1 million which George made to Victor the next day on 26 August 2016.
239 George transferred $1 million to Victor's account on 26 August 2016. This payment is not challenged in this proceeding. However, I note that the ANZ Bank withdrawal form records this as a 'transfer as a gift to Victor'. It is in Victor's handwriting. It is signed by George. The rear of the bank withdrawal form records 'KNOWN BY [illegible] CASE MANAGER 7145897 IN THE PRESENCE OF SON VICTOR'.
240 Mr Okno gave evidence that he did not recall being told on 25 August 2016 or thereafter that Victor received $290,000 from George on 2 June 2016 or that George was going to make a gift to Victor of $1 million on 26 August 2016. I accept that evidence. I am of the view that, if these gifts had been mentioned to Mr Okno, they would have been recorded in his file note of the 25 August 2016 meeting.
242 No equivalent gift of $1 million was given to Nick. George gave evidence to the effect that, when he gave Victor $1 million, he also gave $1 million to Nick: 'He [(i.e. Victor)] took that money and I said, "Make it fifty-fifty", but he was keeping quiet and he wasn't doing fifty-fifty'.[37] While I have some concerns about accepting this evidence given George's limitations, as I set out above, it was the practice of George and Ludmilla that, if they could afford it, they would give an equal amount of the proceeds of sale of an asset to Nick and Victor. Further, this evidence is confirmed by the terms of the will George executed in July 2018 to the effect that George's intention was to make a gift of $1 million to each of Victor and Nick from the proceeds of sale of the family home but the gift to Nick had never happened. I will deal with this further below.
243 Victor was cross-examined about this. Victor replied that the gift of $1 million was paid when George changed his will and Victor was taken out of it. However, based on the evidence before me, that was a reference to the payment of $1 million in August 2017, not August 2016. When this problem was raised with Victor, he said the first $1 million was for the farm. However, that is not consistent with his evidence that the gift of $290,000 on 2 June 2016 and of $950,000 on 1 February 2017 related to the farm.
244 Further, when questions were asked relating to the gift of $950,000 in February 2017, Victor said that Mr Okno and Mr Bourandanis came up with the plan at about this time in August 2016 to give effect to George's intention to give Victor's inheritance to him during George's lifetime. As noted above, this was not put to Mr Okno or Mr Bourandanis.
245 In these circumstances, I have concluded that Victor's evidence about the circumstances in which the sum of $1 million was given to him on 26 August 2016 is unconvincing.
246 On 17 October 2016, $4,000 was withdrawn from George's account by Victor. It is not disputed that Victor repaid this sum to George's account soon after that time. In his oral evidence, Victor maintained this was a loan from George to Victor. I do not accept this evidence. George's consistent evidence was that he did not lend money to his family: he gave money to them 'without return'.[38]
247 As a result, I reject the evidence of Victor that George lent him $4,000 on a short term basis. I conclude that Victor took this money and subsequently repaid it. Given that it has been repaid, it cannot properly claimed in this proceeding. However, in my view, it indicates the way in which Victor had control over and conducted George's accounts during the relevant period.
248 On 9 November 2016, $20,000 was withdrawn from George's account. This withdrawal was recorded by the ANZ Bank as a cash withdrawal at Rosebud using George's card. On 16 December 2016, a further $5,000 was withdrawn. In his amended defences and oral evidence, Victor stated that these payments were for George's personal expenses but that he had not kept any receipts or details of what the payments were for.
249 Further, on 23 December 2016, $25,000 was withdrawn from George's account. In his amended defence filed 6 August 2018, Victor alleged that these funds were withdrawn to pay George's expenses. In his second and third amended defences, Victor alleged that, to the best of his recollection, this sum was loaned by George to Victor.
250 In his evidence in chief, Victor gave evidence that, just prior to Christmas 2016, Victor needed to pay some bills and he asked George if he could borrow some money for that purpose. George agreed to lend him $25,000. I do not accept that evidence. As noted above, George's consistent evidence was that he did not lend money to his family: he gave money to them. Further, in cross-examination, Victor said he was not really sure if he borrowed that money from George. He said that there was a lot of money going out at that time. As a result, while I conclude that the $25,000 was withdrawn, the evidence does not allow me to conclude for what purpose the money was used.
251 The assets of the family trust, being the Williamstown shops and the Glass Street unit, were sold in the second half of 2016. It was agreed that the proceeds would be divided, subject to certain adjustments as follows: 50% to George, 25% to Nick and 25% to Victor. This was confirmed by a resolution of Aniva signed by Mr Okno and Victor on 14 December 2016 and by Nick on 3 February 2017. The resolution was prepared by Mr Okno. It records that the proportions distributed were in accordance with George's wishes.
252 The adjustments were the subject of much evidence in this proceeding. The principal adjustments related to:
(1) the costs of the legal proceedings payable by Nick, which were deducted from his share;
(2) the payment of $120,000 owing to Nick held by Victor from the proceeds of sale of the family home, which were deducted from Victor's share; and
(3) certain monies withdrawn from Aniva since Victor became a director that he had not accounted for and were the subject of further investigation.
253 George's initial entitlement was $2,050,000. The adjustments to this amount for George were:
(1) an additional $18,401.59 to refund George for the advertising expenses for the auction of the family trust properties;
(2) an additional $150,000 to refund George for the costs payable by Nick associated with the legal proceedings; and
(3) a reduction of $238,689.28 being a refund by George to Aniva of a mortgage loan payout in respect of the Richardson Street unit.
254 Nick's initial entitlement was $1,025,000. The adjustments to this this amount for Nick were:
(1) a reduction of $150,000 to pay George for the costs payable by Nick associated with the legal proceedings; and
(2) an additional $120,000 being the amount owing to Nick by Victor.
255 Victor's initial entitlement was also $1,025,000. The adjustments to this this amount for Victor were:
(1) a reduction of $120,000, being the amount owing by Victor to Nick; and
(2) $28,568.80, being one half of the monies withdrawn from Aniva since Victor became a director that had not been accounted for at that time and which was to be retained pending further investigation.
256 The resolution recorded that the capital gains tax on the distributed proceeds of sale was to be paid by the beneficiaries (George, Nick and Victor). In fact, the net capital gain of the Williamstown shops and the Glass Street unit was approximately $1.61 million, of which approximately $810,000 was to be attributed to George. George's likely capital gains tax liability was in the order of $400,000.
257 The resolution also recorded that investigations had been undertaken in relation to certain withdrawals since Victor became a director of Aniva which had been raised by Nick. They had been referred to Mr Okno for review. It recorded the amount of $56,531.65 had not yet been explained. It was for this reason that one half of this sum was deducted from Victor's distribution pending clarification.
258 The funds were distributed from Mr Okno's trust account to George on 27 January 2017, to Victor on 27 January 2017 and to Nick on 31 January 2017. There was a further resolution of the directors of Aniva in April 2017. I will deal with this in due course.
259 Shortly prior to these funds being distributed, on 19 January 2017, George and Victor met with Mr Okno. Mr Okno prepared a detailed file note of this meeting. It records that Victor brought George to the meeting but that Mr Okno spoke to George alone for a substantial period. The file note records that:
(1) George expressed anguish at Nick's conduct including that Nick did not contact him at Christmas;
(2) George wanted his two sons to come to a truce but recognised that is probably impossible given the positions they had taken;
(3) George would like to move back to the Essendon area where there are people he knows, who he could visit and where he could attend church;
(4) George agreed with the split of the family trust moneys generally as to 50 per cent to himself and 25 per cent to each of Nick and Victor;
(5) George wanted to open a new bank account into which his part of the money that Mr Okno was holding could be deposited: 'He wants to be in control of this account and he is happy for Victor to accompany him to the bank to have the account opened';
(6) George wanted to retain the Richardson Street unit. In the event that George needs to raise any more money, he can then sell it. But he was not inclined to disturb Cassie's occupancy;
(7) George generally wanted his assets after he dies to go 50/50 between Nick and Victor.
260 The file note records that Mr Okno raised the 'current will' (i.e. the 25 August 2016 Will) leaving the Richardson Street unit to Victor. It also records that the question of the houseboat ('a very sore point with Victor') and of Cassie's occupancy of the Richardson Street unit rent free were raised. The file note records that George felt that these matters caused inequality in favour of Nick and agreed with a suggestion that Mr Okno made to give $300,000 to Victor to remedy the position.
261 The file note records that Mr Okno then discussed these matters with both George and Victor so that Victor was aware of the issues affecting him. It records that:
(1) Victor would talk to George about his wish to move back to Essendon;
(2) Victor considered that the care George was currently receiving at the Elms was far superior to what he had at Windermere and, as Victor is on hand to attend to his father's needs, it would be preferable for George to remain in the current accommodation;
(3) another factor to be taken into account is George's feelings concerning the behaviour of Nick;
(4) Victor confirmed there was no possibility of any reconciliation with Nick.
262 In oral evidence, George confirmed that he wanted to go back to Essendon. This is because this is where his friends were and where he used to go to church. He also recalled that he wanted his assets generally divided 50/50 between Nick and Victor on his death. He said he always wanted that until Victor took all his money.
263 George was also asked why he no longer wanted to give the Richardson Street unit to Victor at this time. His evidence about this was not entirely consistent. The gist of his evidence was that, in the beginning, he was not against giving the Richardson Street unit to Victor. He said that Victor began complaining that the rent was not being paid and that he was not getting the unit. In response, George asked Victor why he needed it when he already had a number of properties and Cassie had none. This response is consistent also with the file note entry to the effect that George did not want to disturb Cassie's occupancy.
264 Mr Okno was taken to his file note of this meeting. Once again, Mr Okno did not have any detailed recollection of the meeting other than what is recorded in his file note. However, he recalled that Victor had raised on a number of occasions that Nick had appropriated the houseboat and Victor did not consider this was fair to him.
265 There are a number of points to highlight about this file note. First, George said that he wanted to move back to Essendon. Second, George said he was happy with the split of the trust moneys between himself, Nick and Victor. Third, and in the context of the second point, George said he wanted to open a new bank account into which his part of the family trust moneys would be deposited and that he wanted to be in control of that account. That is significant. It suggests that George wanted to keep this money separate and he did not want it to be controlled by Victor.
266 Fourth, notwithstanding George's anguish at Nick's conduct and the fact that there was no possibility of a reconciliation between Nick and Victor, George still generally wanted his assets to be split 50/50 between Nick and Victor when he died. Victor was no longer to get the Richardson Street unit. The 50/50 split of course was subject to the $300,000 bequest to Victor suggested by Mr Okno. However there were no adjustments suggested or mentioned in respect of any other additional benefits Nick might have received during George's lifetime.
267 Fifth, and in the context of the fourth point, there is no reference in this file note to the gift of $950,000 which George was to make to Victor on 2 February 2017 from his part of the moneys received from the family trust.
268 In his oral evidence, Mr Okno said that George did not raise or suggest at this meeting, or thereafter, that George was going to give a large part of the cash that he had received from the family trust to Victor. In my view, if this issue had been raised, it would have been recorded in Mr Okno's file note. Further, this evidence is entirely inconsistent with Victor's oral evidence that, from about mid-2016, Mr Bourandanis and Mr Okno organised the plan for George to give Victor his inheritance during George's lifetime.
269 Mr Okno prepared a will in accordance with these instructions. It was signed by George on that day (the '19 January 2017 Will'). Under that will, the assets of George were split equally between Victor and Nick subject to Victor receiving $300,000 which the will provided was to compensate him for the houseboat and Cassie living in the Richardson Street unit rent free.
270 There are two further issues to raise about Mr Okno's file note. First, despite George's wish that he would like to move back to Essendon, this did not occur. He stayed at The Elms, consistent with Victor's view that it would be 'preferable for him to remain in his current accommodation' at The Elms. That suggests to me the extent of the influence which Victor had over George. Further, despite his wish to have the money from the family trust deposited into a new account which he, not Victor, controlled, that money was deposited in George's existing ANZ pensioner account on 27 January 2017.
271 On 30 January 2017, that sum was transferred to George's account. On the same day, approximately half of that money was paid to Victor. I will now turn to that payment.
272 On 1 February 2017, $950,000 was transferred from George's account to Victor, being approximately 50 per cent of the distribution George received from the family trust on 27 January 2017. Victor said this payment was a gift by George. It is now challenged in this proceeding.
273 George's evidence about this payment was vague. George said Victor told him he wanted to buy something for the farm. George said that Victor did not give him any details. In response to being questioned about this payment, George said two or three times Victor asked for money from him and he gave it to him. It was in this context that George said that Victor was 'my boss, he was taking it out by himself. ... I didn't even know what; he just took it out'. I refer to my comments in [155] above.
274 Victor's account of how this payment came about is far from consistent.
(1) in about mid-August 2016, George told Victor that the proceeds of the sale of the family trust would be split as to 50 per cent to George and as to 25 per cent to each of Nick and Victor;
(2) in about January 2017, George asked Victor how he was going to pay for various improvements that he was building on the farm, including a large shed, a dam, a pergola and renovations to the property. Victor said he did not know. George told Victor he would give Victor half of George's 50 per cent of the family trust distribution to assist him;
(3) on 1 February 2017, $950,000 was paid to approximate that amount and for that purpose.
276 Victor's affidavit sworn 3 May 2018 is consistent with $950,000 being given by George for Victor to pay for various improvements on the farm.
277 In cross-examination, Victor gave evidence for the first time that the reason he got $950,000 from George was because George 'wanted to get rid of all the money ... while he was still alive'[39] and that Victor used the money to fund improvements on the farm.
278 Further, Victor gave evidence that George's decision to give Victor half of his share of the distribution of the family trust was organised by Mr Okno and Mr Bourandanis in mid-2016. He gave evidence that George's plan to give Victor his share of the inheritance during George's lifetime was discussed and put in place at this time. I note this was not put to Mr Okno or Mr Bourandanis in the course of their evidence.
279 As set out below, in the particulars to [9(b)(ii)(B)] of his third amended defence, Victor alleged that in August 2017 George informed Victor that, in the circumstances of the previous litigation, he was concerned that Nick would bring a claim against his estate after his death and, to protect Victor from such a claim, George intended to distribute part of his wealth to Victor during his lifetime.
280 When challenged about this in cross-examination, Victor said that, to the best of his recollection, George discussed this intention at a meeting with Mr Okno and Mr Bourandanis 'when the $1.1m was handed over. That's when I recall seeing the bubble drawings, and Dad was explained everything'.[40] The $1.1million was paid over on 25 August 2016. However, there is no oral or documentary evidence of any meetings about this from Mr Okno or Mr Bourandanis. As noted above, to the contrary, Mr Okno said he had no knowledge of the payment to Victor of $1 million on 26 August 2016 or the payment of $950,000 on 1 February 2017.
281 There was a subsequent distribution of the assets of the family trust in April 2017. The distributions were recorded in a resolution of directors signed by Nick, Victor and Mr Okno. The resolution records that a further sum of $400,000 was to be distributed from the family trust: 50 per cent to George and 25 per cent to each of Nick and Victor subject to certain adjustments.
282 The adjustments related to the expenses paid from the family trust which had been raised by Nick and which Victor was not able to explain to Mr Okno's satisfaction. Mr Okno had investigated these payments, as is evident from his letter dated 8 April 2017.
283 As a result, Nick was to receive a further $30,348.33, made up of:
(1) $28,265.83, being one half of the unexplained expenses which had been held back at the time of the distributions in early 2017; and
(2) a further $2,082.50, being one half of the additional unexplained withdrawals made by Victor during the period when he was a director of Aniva.
284 The resolution records that the sum of $2,082.50 related to:
(2) a withdrawal on 5 May 2016 of $2,500 paid to Stanton Grant; and
(3) a withdrawal on 13 December 2016 of $565 to the Australian Securities and Investment Commission.
285 I note that Victor applied these funds of the family trust to pay the legal fees of Stanton Grant. Mr Okno did not consider that it was justifiable that this fee be paid from the family trust assets.
286 The resolution also confirmed that the amounts distributed included the capital gains from the sale of the family trust assets which would be payable by the beneficiaries.
287 On 5 May 2017, Victor withdrew $30,348.30 via card from George's bank account at ANZ Rosebud. This was the exact amount that had been paid to Nick because Victor had been unable to justify some of the payments from Aniva made by him while he was a director.
288 George was asked about this withdrawal. His evidence was not entirely clear. George said he gave Victor 'permission' to withdraw this amount but then clarified to say it was because Victor had the power of attorney.
289 In his amended defences, Victor alleged that these funds were a reimbursement of the sum paid by him to Nick in settlement of the second proceeding. He alleged that the parties agreed that George and Victor would pay Nick the sum that Victor could not account for and that George informed Victor he would reimburse Victor for Victor's share.
290 In his affidavit sworn 9 March 2018, Victor said this withdrawal was pursuant to 'an agreement between me and George following the settlement of the [second proceeding]'.
291 In his oral evidence, Victor said it was the payment of Victor's share of the adjustments to go to Nick as part of the family trust settlement. Victor said George told him that George would pay this sum. In fact, Victor's evidence was that when Victor raised with George that he was being questioned by Nick, he told George all these expenses were for George, to which George said 'Don't worry. I'll pay you back'.[41]
292 In cross-examination, it was put that, if George had authorised Victor to make this payment, Victor or George would have told Mr Okno about it at the time, particularly the payment of the legal fees to Stanton Grant of $2,500. Victor disagreed.
293 On 19 July 2017, the sum of $28,199 was withdrawn from George's bank account. It included the sum of $3,025 which Victor acknowledged was paid to Stanton Grant for legal fees incurred by him as a result of the legal proceedings.
294 On 10 August 2017, $1,000,000 was transferred from George's ANZ online bank account to Victor. This payment is challenged in this proceeding.
295 George was asked about the circumstances of this payment. Once again, his evidence about it was not clear. This may be due to the fact that George paid the same amount to Victor a year earlier on 26 August 2016. George said there was a discussion about Victor taking $1 million. He said that Victor took $1 million twice. He said that Victor should have taken $1 million, but then he took another $1 million. He could not recall discussing the matter with Victor in August 2017.
296 I tried to clarify this evidence with George. He was asked whether he was saying he might have consented to Victor withdrawing $1 million but then there was another $1 million he did not consent to. He replied 'Yes, possibly. That's what I'm thinking. About one million I know about, and then maybe the bank manager or somebody told me that a similar (indistinct) was also taken out': he said to ask Victor about it.[42]
(1) the sum of $1 million was given to Victor in accordance with George's wishes to distribute his wealth in approximately equal shares between Nick (and/or his family) and Victor and to distribute Victor's share of his wealth to Victor during George's lifetime ('George's wishes');
(2) in about August 2017, George informed Victor that, in the circumstances of the previous proceedings, George was concerned that Nick would bring a claim against his estate after his death and to protect Victor from such a claim, George intended to distribute part of his wealth to Victor during his lifetime;
(3) this payment of $1 million made on 10 August 2017 was made for the purpose of giving effect to George's wishes, in particular, George decided to give the Richardson Street unit to Nicholas and/or his children through his will and $1 million was paid to Victor for the purpose of providing him with an approximately equivalent benefit.
298 In his 9 March 2018 affidavit, Victor deposed that:
(1) George had agreed to pay him $1 million to compensate him for the fact that George had decided to give the Richardson Street unit to Nick and his family;
(2) at around this time, George, Mr Okno and Victor agreed that the Richardson Street unit was worth around $1 million;
(3) George had previously said to Victor that he had bequeathed this property to Victor in his will but he now wanted to pay Victor $1 million and change his will to leave the property to Nick and his family.
299 In his affidavit sworn 3 May 2018, Victor deposed that:
(1) George had told him in about August 2017 that Nick should not benefit from the proceeds of the sale of the family home as a result of the previous proceedings and that he did not want Nick to initiate further proceedings based on his will after he died;
(2) George told Victor that, because of this, he wanted to remove Victor from his will and make provision for Victor during his lifetime;
(3) George had previously told Victor that he would leave Victor the Richardson Street unit to compensate him for what George had already given to Nick and his family including money for his children's expenses and schooling;
(4) because Cassie refused to move out of the Richardson Street unit, George said words to the effect of 'let them take the unit (Cassie and her sister) and I'll give you cash instead';
(5) George told Victor that he would give Victor the money from the family trust George was intending to give to Nick's children (i.e. the 25%) and he would give Nick's girls the Richardson Street unit in his will instead;
(6) to make this happen, George transferred a further $1 million to Victor on 10 August 2017;
(7) the value of the Richardson Street unit was approximately $1 million based upon a valuation which Victor exhibited dated 29 January 2018;
(8) in order to enable George to change his will, Victor made an appointment to see Mr Okno a couple of days after the $1 million was paid. George was anxious for Victor to make the appointment saying 'it's not fair that you've got the money and you've got the unit in the Will';
(9) Victor telephoned Mr Okno and told him that George wanted to make an appointment to change his will, that George had given Victor $1 million, and George wanted to change his will to leave the Richardson Street unit to Nick's children to make it balance out;
(10) an appointment with Mr Okno could not be organised until 10 October 2017.
300 This version was confirmed in Victor's detailed outline of evidence for trial filed on 24 September 2018. It is significant that George's then current will (i.e. the 19 January 2017 Will) did not bequeath the Richardson Street unit to Victor.
301 In his oral evidence, Victor said George said to him shortly before the $1 million was paid on 10 August 2017 - 'How about we leave Cassie in the units [sic] and ... you take the cash?'.[43] He said George told him to get a valuation of the Richardson Street unit and that at this time Mr Okno also got a valuation. George said his valuation came in at around $1,080,000 and that George was happy to give him $1 million.
302 In oral evidence, Victor also referred to a valuation he had obtained for $1,080,000 but then he referred to the market appraisal for that sum dated 29 January 2018 - five months after the relevant events. He then said he had an oral valuation which he discussed with Mr Okno at the meeting on 10 October 2017.
303 Victor also gave oral evidence that, when he contacted Mr Okno to arrange an appointment, Victor told Mr Okno that George was going to give the Richardson Street unit to the girls and give $1 million to Victor. Mr Okno did not recall this. Further, Victor said that Mr Okno had sourced his own valuation and, by the time they went to Mr Okno's office, Mr Okno had a valuation which came in as well at about $950,000. This was not put to Mr Okno in cross-examination. Further, no documentary evidence was relied upon in support of any such valuation being obtained by Mr Okno.
304 On 10 October 2017, Victor brought George to see Mr Okno. In his 3 May 2018 affidavit, Victor deposed that:
(1) when George and Victor got to the appointment, George, Victor and Mr Okno spoke together first;
(2) Victor remembered saying that, after he had received the money for Richardson Street and the houseboat money, he may as well be out of the will all together: It could go to Nick and this would avoid any disputes in relation to the will after George's death;
(3) afterwards, Victor went outside so that Mr Okno could speak to George alone;
(4) while Victor was outside, George executed a new will which reflected the wishes that George had expressed to Victor: He left the Richardson Street unit to Nick and the girls;
(5) subsequently, George told Victor he wanted to leave the Richardson Street unit to the girls but Mr Okno had convinced him to include Nick as well.
305 In his oral evidence, Victor deposed that, during this meeting, Mr Okno advised that 'The easiest way is to take Victor out of the will, and then there's no argument'.[44] Victor said the decision to take him out of the will was decided at the meeting with Mr Okno.
306 Further, in oral evidence, Victor said Mr Okno asked, 'what's left out of the assets?'. Victor replied, 'The houseboat'. Mr Okno asked, 'What's left as in the funds?'. Victor replied, George had roughly $1.2 million to $1.25 million and that, after Victor took the houseboat valued at $300,000, George would be left with 'roughly $850,000'.[45] I note this evidence was not contained in his affidavits or his detailed witness outline.
307 Victor said that George and Mr Okno felt it was the best way to provide for Victor during George's lifetime so there would not be any further litigation.
308 In his 3 May 2018 affidavit, Victor deposed that:
(1) the $300,000 was paid in recognition of the benefit received from the purchase of the houseboat and the rent Cassie had not paid while living at the Richardson Street unit;
(2) the sum was withdrawn at the bank after the 10 October 2017 meeting with Mr Okno. At the bank, George asked the bank manager how much money he had left, and the bank manager told him $850,000: he wrote it on a piece of paper for George;
(3) later, on that day, George asked Victor, 'I don't know how long I will live for - is $850,000 going to be enough?'. Victor replied words to the effect, 'Don't worry, if $850,000 isn't going to be enough, I can always sell something'.
309 In his amended defences, Victor alleged that, at the meeting of 10 October 2017, George informed Victor that he would pay the sum of $300,000 to Victor as an equivalent of the benefit Nick received from the transfer of the houseboat and Nick's daughters occupying the Richardson Street unit rent-free.
310 In his oral evidence, Victor said that the $300,000 was calculated by reference to:
(2) unpaid rent for the Richardson Street unit - $56,000; and
(3) the additional benefit Nick got from Unit 5 - $45,000.
311 Victor said Mr Okno just rounded off these sums to $300,000 at the 10 October 2017 meeting. Victor said the $45,000 figure was raised by George: he said George maintained that Nick never paid Victor the difference between the two units in the Tasman Avenue development.
312 Further, in his oral evidence, Victor said that George was concerned how much money was left. He also said George asked the bank manager how much he had left after this withdrawal. It suggests that George was not aware at the time what money he had in his bank accounts. Victor also confirmed that, after George was told the balance, George said, 'What about if I live for another 10/15 years?'. Victor replied, 'Dad, you know, if that was the case, I'm sure we could always sell something'.[46] I asked Victor what George had to sell at this time. He said he had the Richardson Street unit. I noted that it was going Nick and his children under the new will. Victor said if that was the case, he agreed he would have to sell something. He was working on George spending $70,000 - $75,000 a year to live.
313 It is evident from the above that there are numerous differences between the matters alleged in Victor's defences, in his affidavits and in his oral evidence in relation to the payment of $1 million on 10 August 2017, the meeting with Mr Okno, and the further payment of $300,000 on 10 October 2017.
314 Mr Okno's detailed, typed file note is the best evidence of this meeting. It records that Victor brought George in, but he then asked Victor to leave the room. For the rest of the time, Mr Okno was alone with George until Mr Okno's secretary came in when the new will was signed. The file note records that George and Mr Okno had a lengthy discussion about his will. It records George wanted to make the following changes:
(1) he wanted Nick's daughters to receive the Richardson Street unit. He agreed with Mr Okno's suggestion that it would be left to Nick and his two daughters in equal shares;
(2) George said he had 'in effect given Victor his inheritance in advance'. As a result, George had decided to leave the balance of his estate to Nick;
(3) George firmly believed that he is being fair to both Nick and Victor, taking into account that the unit is left to Nick and his daughters. It also takes into account the fact that Cassie has been living in the unit for about three years rent-free.
315 The file note does not refer to the gift of $1,000,000 on 10 August 2017, the basis on which it was paid, or the further payment of $300,000 to be made on 10 October 2017. It does not record what 'inheritance' Victor had received in advance. Nor does it record that there was any discussion about what assets were then available to George for the remainder of his lifetime and what might be available to Nick when George died. It does not refer to any adjustments for fairness based on any additional benefits Nick received during his lifetime.
316 The file note records a second issue was then discussed, namely, the fact that Nick had come to see George. The file note records that George was pleased about that. George also said he was aware that Nick was going to speak to Mr Okno and that Mr Okno confirmed that he had spoken to Nick. Mr Okno said that, in essence, Nick wanted Mr Okno to have ultimate control over the money in George's bank account. The file note records that George was not in agreement with this and, 'made it quite clear that he wanted the status quo to remain'.
317 The file note also records that George raised a third issue: that he wanted Victor to be in charge of his funeral and that George wanted to be buried near Ludmilla.
318 Mr Okno arranged for a new will to be prepared. George signed it on that day (the '10 October 2017 Will'). Mr Okno's file note records that he had no doubt that George understood and approved of its contents.
319 In oral evidence, George did not have any specific recollection of this meeting with Mr Okno, or of the payment of $300,000 to Victor on the same day.
320 Mr Okno did not have a detailed recollection of this meeting, other than what is recorded in his file note. However, Mr Okno recalled that Victor had, on a couple of occasions before this time, said words to the effect: 'I'd like dad to give me my share of my inheritance so that I can put all this business behind me and I don't have to worry about any further problems'.
321 Mr Okno gave evidence that he did not recall whether, at this meeting, he was asked or was told what 'inheritance' Victor had received in advance. Further, he said that, if specific items or sums had been mentioned, he would have recorded them in his file note. I accept that evidence.
322 Further, Mr Okno gave evidence that he was not aware at this time that, since June 2016 Victor had received approximately $3.2 million from George's accounts. He said if he had known this, he would have raised this issue with George and asked him if he was satisfied with the arrangement and consider whether, on that basis, Nick was going to get the balance of the estate. I accept that evidence.
323 Mr Okno did not recall whether George and Victor told him when they arrived that, after Victor had received the money for Richardson Street and the houseboat, Victor could be out of the will altogether. It is not in his file note. In my view, if these matters had been mentioned, they would have been included in Mr Okno's file note.
324 It was also put to Mr Okno that, at the end of the conference, Mr Okno asked how much money was left in George's account, and Victor replied there was about $1.1 million and by the time George received the remaining $300,000, George would be left with $850,000. Mr Okno did not recall this conversation. It is certainly not in his file note. Once again, in my view, if these matters had been mentioned, they would have been included in Mr Okno's file note. I note it was never put to Mr Okno that he was the one who suggested rounding off to $300,000 the amounts to compensate Victor for the houseboat, the unpaid rent and/or the benefit Nick obtained from Unit 5 in the Tasman Avenue development.
325 Mr Okno's evidence that he was not told of the payments which George had made to Victor and of George's remaining assets is also consistent with the information contained in his file note dated 13 November 2017 and his response to that information, which I will address in the next section.
326 As I have said, I generally accept the evidence of Mr Okno of this meeting including that he was not told about what inheritance Victor in fact received. However, I wish to point out that I consider it would be very difficult for Mr Okno to satisfy himself that George understood the terms of the new will if George did not appreciate both what assets he had and what share of inheritance he had given to Victor during his lifetime.
327 It is evident from the above that Victor's defences and evidence about the gift of $1 million on 10 August 2017 and the events leading up to the meeting with Mr Okno on 10 October 2017 are not consistent. I found Victor's evidence both contradictory and unconvincing. Further, there are significant conflicts and differences between the evidence of Victor and of Mr Okno on key issues. In case of conflict between Victor and Mr Okno, I accept the evidence of Mr Okno and reject the evidence of Victor. In particular, I have concluded that:
(1) Victor did not tell Mr Okno in the period between 10 August and 10 October 2017 that George had given or was about to give Victor $1 million and/or $300,000;
(2) Victor did not tell Mr Okno that George had $850,000 left in cash as a result of these transactions;
(3) Victor did not tell Mr Okno during this period that George was going to give the Richardson Street unit to Nick and/or his family on the basis that he gave Victor $1 million.
328 As noted above, and as Mr Okno's file note of the 10 October 2017 meeting records, Nick made contact with George in October 2017.
329 On 13 November 2017, Nick, George and Danka went to the ANZ bank in Mornington. The best evidence of what occurred on that day is in a file note of Mr Okno dated 13 October 2017. It records that:
(2) George, Nick and Danka went there to find out how much money George had in his accounts;
(4) George was 'shocked by this because in his mind there should have been something around $4.5m';
(5) as a result, Nick then rang Mr Okno and asked if they could come and see him. Mr Okno agreed and they attended Mr Okno's office for approximately 45 minutes.
330 The file note records that, at Mr Okno's office:
(1) George told Mr Okno there was something over $700,000 at the bank whereas George thought there should be $4.5 million;
(2) George told Mr Okno that he had given $1 million to Victor a short time ago 'which was apparently to be in exchange for Nick and his family getting the [Richardson Street unit]' (it is not clear from the note whether that was what George said at the time);
(3) Mr Okno went through some figures and told George that he thought there should be around $3.3 million held on his behalf.
331 The file note records that, having heard what he had been told by Nick over the telephone earlier that day, Mr Okno had prepared a power of attorney in favour of Nick. Mr Okno went through that document with George. The file note records Mr Okno was satisfied that George understood this would give Nick the power to look after his financial affairs and that Victor would no longer have that power. George then signed the power of attorney.
(1) Nick, George and Mr Okno then all spoke together;
(2) after some discussion, George stated that, before anything else was done by Nick, he wanted to talk to Victor and ask him what happened to the money;
(3) George said that, if Victor could show him that the money was held somewhere else and give him a statement, then he did not want Nick to take any further steps. But if Victor was unable to give a satisfactory answer, then he was agreeable to Nick going ahead and doing whatever he had to do.
333 The file note records that Mr Okno told Nick he would not be able to act if Nick decided he wanted to take action on behalf of George. He said he would need to get alternative legal advice. Mr Okno made certified copies of the power of attorney but retained them until such time as George indicated he was prepared to allow Nick to go ahead.
335 As noted above, the file note records, consistent with George's oral evidence, that George was 'shocked by this because in his mind there should have been around about $4.5 million'. Of course, this is consistent with George not being told by the bank manager on 10 October 2017 what was left in his account after the withdrawal of $300,000, as Victor deposed.
336 Mr Okno was also asked about his attendances on Nick and George and his file note. He recalled that George was very upset. He also recalled that George's reaction was one of complete surprise because he could not conceive that he only had that amount of money left in his account. He thought that the power of attorney remaining with Victor was inappropriate, that Victor had obviously taken a substantial amount of money out of George's accounts of which George was not aware.
337 In cross-examination, Mr Okno was asked how he reached the estimate that George should have $3.3 million in his account. Mr Okno said he did not now recall how he got to this figure: he would only be reconstructing if he tried to do so. It was put to him that his calculations might be wrong in light of the fact that he had been told on 10 October 2017 that Victor had received his inheritance in advance and that he was now aware that $1 million had been paid by George to Victor. Mr Okno replied that he would be surmising about all of this.
338 Regardless, in my view, the file note of Mr Okno, the calculations he undertook at the time and his reaction to the information provided to him on 13 November 2017 confirm that he was not informed of the major withdrawals from George's accounts at about the time they were made including at the meeting on 10 October 2017.
339 I note that the 13 November 2017 file records that George told Mr Okno that George had given $1 million to Victor a short time ago 'which was apparently in exchange for Nick and his family getting the Richardson Street unit'. This is relevant for two reasons. First, it confirms Mr Okno's evidence that when figures were mentioned, he would record them in his file note. Secondly, there would seem little reason to record the gift and its purpose in these terms if Mr Okno was already told of it on 10 October 2017.
340 In his 9 May 2018 affidavit, Victor said he got a call late on an evening in November 2017 from George. Victor was in Bright. George asked Victor to come and see him when Victor returned. When he did so, George told Victor that he was worried that he had no money left in his account. Victor replied that George had about $850,000. George said that Nick told him all the money is gone. Victor said that was not correct and that he would take George to see Mr Okno as soon as possible. George replied that Nick had taken him to the bank, they could not get any money out and that Nick now had the power of attorney. Victor asked George why he had done that. George said words to the effect of 'Now you're out of the will, you don't need a power of attorney - Nick can have it'. Victor replied that Nick would cause trouble.
341 In oral evidence, Victor said that he told George that he had $850,000 left in the account and that was enough to 'see him through'. When asked what that meant, Victor agreed it was based on approximately $70,000 - $75,000 per year for ten years. Victor said 'We' thought it was enough to see dad through for the rest of his life with accommodation and whatever other expenses he required. He said there was a capital gains tax liability of approximately $400,000 and he still had the Richardson Street unit which he knew he could rent out for $700 a week.
342 Victor also said George told him Nick had the power of attorney. Victor said to be careful as this could lead to more trouble. George said that Nick had assured him that there would be no more court.
343 The relationship between George and Victor broke down after this time. This proceeding was issued on 8 December 2017.
344 In March 2018, George transferred the Richardson Street unit to his granddaughter Cassie for natural love and affection.
345 On 16 May 2018, there was a meeting between George and Mr Okno which is recorded in a file note prepared by Mr Okno. The meeting related to the preparation of a new will. The file note records:
(1) George's intention 'is and has always been that my two sons share equally under my will. I do not want one of my sons to be advantaged or disadvantaged';
(2) the bulk of the estate should comprise moneys from the sale of the Williamstown shops and the Richardson Street unit;
(3) $1 million was given as a gift to Victor which was not equalised at the time and must be done as a 'first' thing;
(4) Victor had taken money when acting as George's attorney over and above his entitlement - there are now court proceedings to recover this;
(5) we need to have a situation that equalises matters between them but will need to deal with contingencies.
346 I interpose to note that I understand the $1 million which was not equalised was the $1 million made on 26 August 2016 from the proceeds of sale of the family home which is not challenged in this proceeding.
347 Mr Okno confirmed that these were George's instructions. A will reflecting these instructions took some time to finalise. On 31 May 2018, Mr Okno sent a letter to George attaching a draft will. A further draft was sent on 4 July 2018.
348 The new will was signed on 17 July 2018 (the 'July 2018 Will'). Mr Okno prepared a file note which records that:
(1) Nick was present but remained substantially silent during the process of execution;
(2) George read the draft will himself and then the draft will was read over to him in English and translated by an Ukrainian interpreter;
(3) George was then asked if he understood the will and approved of it: he said that he did.
349 On the evidence before me, the July 2018 will is George's current will.
350 The July 2018 Will is complicated but it reflects the instructions given on 16 May 2018. Clause 3 is headed 'Statement of Intention'. It records that it was always George's intention that Nick and Victor would benefit equally in relation to the distribution of the family assets whether such distribution is or has been made during his lifetime or following his death.
351 Clause 5 is headed 'Current Circumstances'. It records that:
(1) the bulk of George's assets should comprise $2,250,000, being George's share of money from the sale of the family trust assets, and $2,489,075.04, being the net proceeds of the sale of the family home; and
(2) George agreed to make a gift to Victor of $1 million following the receipt of the proceeds of sale of the family home and his intention to give the same amount to Nick but this had never happened.
352 I note that that gift of $1 million was made in August 2016 and it is not challenged in this proceeding.
(1) the money paid to George was deposited into the ANZ bank and that it came 'as a severe shock' to him to find out that there was less than $900,000 in it;
(2) it would appear that Victor who was authorised to operate the account as George's attorney had taken far more than he should have;
(3) George 'had agreed that Victor could have his share of what he was to inherit from [George] before [George's] death but what he had taken was much more than this'; and
(4) as a result, George revoked Victor's power of attorney and appointed Nick and agreed that Nick could go to court in George's name to recover whatever Victor had taken.
354 The second last point in important. It is to the effect that George did agree that Victor could have his share of what Victor was to inherit from George before George's death. I will return to this further below.
355 Clause 6 contains the dispositions under the July 2018 Will.
356 Clause 6A provides that, if the proceeding against Victor is successful and Victor refunds all of the money he has taken other than the $1 million referred to above (i.e. the 26 August 2016 payment), George gives $1 million to Nick and gives the balance to be shared between Nick and Victor absolutely.
357 Clause 6B provides that, if the proceeding against Victor is not successful, George gives the entirety of his assets to Nick.
358 Clause 6C provides that, if the proceeding is partially successful, that is if the amount recovered from Victor is $1 million or less, George gives the entirety of that amount plus the balance of the residue of his estate to Nick. However, it provides that, if the amount recovered from Victor exceeds $1 million, George gives: (1) the sum of $1 million to Nick; (2) the amount recovered from Victor in excess of that to Nick and Victor in equal shares; and (3) the balance of the estate to Nick.
359 Mr Okno was asked about this will. Mr Okno confirmed that George did not have any concern about the $1 million gift to Victor from the proceeds of the family home but he was concerned that the same amount had not been given to Nick. Mr Okno also said that, notwithstanding his file note, he had a clear recollection that Nick was not present when Mr Okno and the interpreter went through the new will with George.
360 As is evident from the list of issues for determination, there are three principal areas of law relevant to this proceeding: the law relating to powers of attorney, the law of undue influence and the law of unconscionable conduct. There is overlap between these three areas. As a result, I will deal with the relevant legal principles before determining the issues in this proceeding.
361 As noted above, George granted an enduring power of attorney to Victor on 30 July 2015. The Powers of Attorney Act came into force on 1 September 2015. Pursuant to s 142 of that Act, the power of attorney granted by George to Victor remained valid and subject to the law in force under the Instruments Act 1958 (Vic) (the 'Instruments Act') immediately prior to 1 September 2015.
362 Relevantly, Division 1 of Part 6 of the Powers of Attorney Act (which includes s 65 entitled 'Permitted conflict transactions') consolidated and modified the law both in terms of obligations owed by donees and permitted transactions. Those provisions do not apply in this case. As a result, it is necessary to apply the law in force immediately before the introduction of the Powers of Attorney Act.
363 As an attorney, Victor owed fiduciary obligations to George, namely:[49]
(1) not to take advantage of an actual or potential conflict between his personal interests and George's interests; and
(2) not to obtain or gain improperly a profit by reason of or by use of his fiduciary position.
364 These proscriptions are reflected in the statement of acceptance that forms part of the power of attorney. Consistent with s 125B of the Instruments Act, Victor undertook
(1) to exercise the powers conferred with reasonable diligence to protect the interests of the donor; and
(2) to avoid acting where there is any conflict of interest between the interests of the donor or and his interests; and
(3) to exercise the powers conferred in accordance with Part XIA of the Instruments Act.
365 Further, when acting pursuant to the power of attorney, Victor had a duty to keep accurate accounts of all transactions made in his capacity as power of attorney for his father. The duty arises under the general law and pursuant to s 125D of the Instruments Act, which provides:
An attorney under an enduring power of attorney must keep and preserve accurate records and accounts of all dealings and transactions made under the power.
366 As a consequence, there is an obligation on Victor to establish that his use of the power of attorney was for George's benefit. In Ross River Ltd v Waverley Commercial Ltd,[50] Lloyd LJ (with whom Fulford and Mummery LLJ agreed) said:
In general, where a person is subject to a fiduciary obligation as regards his or its dealings with assets, then it is up to that person to establish the justification for his or its dealings, if there is any contest, rather than it being for the beneficiary (i.e. the person to whom the obligation is owed) to prove that the payment was not justified.[51]
367 In accounting, the fiduciary must identify each payment supported by receipts or documentary evidence: however, oral evidence of disbursements may be allowed in the absence of receipts. As Brereton J said in Hancock v Rinehart:
A trustee's accounts must show, individually, each receipt and payment, supported by vouchers (although oral evidence of disbursements may be allowed in the absence of vouchers). Annual financial statements are a summary of receipts and payments and do not disclose each individual receipt and payment. Neither a statement showing each receipt and payment, nor the underlying primary records, have been produced.[52]
Prima facie, a power, however widely its general words may be expressed, should not be construed as authorising the attorney to deal with the property of his principal for the attorney's own benefit. ... "The primary object of a power of attorney is to enable the attorney to act in the management of his principal's affairs. An attorney cannot, in the absence of a clear power to do so, make presents to himself or to others of his principal's property".[53]
369 However, those proscriptions can be overcome with fully informed consent.[54]
370 As to the nature of that consent, it depends upon the nature of the fiduciary relationship and the circumstances in which it arose: but it involves at least full disclosure of all relevant facts known to the fiduciary.[55]
371 As noted by Brennan CJ, Gaudron, McHugh and Gummow JJ in Maguire v Makaronis:
What is required for a fully informed consent is a question of fact in all the circumstances of each case and there is no precise formula which will determine in all cases if fully informed consent has been given.[56]
372 Deane J in Commercial Bank of Australia Ltd v Amadio[57] ('Amadio') described the distinction between undue influence and unconscionable dealing as follows:
The equitable principles relating to relief against unconscionable dealing and the principles relating to undue influence are closely related. The two doctrines are, however, distinct. Undue influence, like common law duress, looks to the quality of the consent or assent of the weaker party...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.[58]
Although undue influence and unconscionable conduct will overlap, they have distinct spheres of operation. One difference is that although one way in which the element of special disadvantage for a finding of unconscionable conduct can be established is by a finding of undue influence, there are many circumstances that can amount to a special disadvantage which would not establish undue influence. A further difference between the doctrines is that although undue influence cases will often arise from the assertion of pressure by the other party which might amount to victimisation or exploitation, this is not always required.[61]
374 However, in relation to both undue influence and unconscionable conduct, the Court noted that:
(1) it is necessary for the trial judge to conduct a 'close consideration of the facts ... in order to determine whether a claim to relief has been established';[62] and
(2) the 'proof of the interplay of a dominant and subordinate position in a personal relationship depends, "in large part, on inferences drawn from other facts and on an assessment of the character of each of the parties"'.[63]
375 The Court concluded that there will be questions of evaluative judgement involving the determination of claims for undue influence and unconscionable conduct, noting each claim:
calls for a precise examination of the particular facts, a scrutiny of the exact relations established between the parties and a consideration of the mental capacities, processes and idiosyncrasies of the [other party]. ... Indeed no better illustration could be found of Lord Stowell's generalisation concerning the administration of equity: 'A court of law works its way to short issues, and confines its views to them. A court of equity takes a more comprehensive view, and looks to every connected circumstance that ought to influence its determination upon the real justice of the case'.[64]
376 Thorne involved consideration of whether a pre-nuptial agreement should be set aside for undue influence or unconscionable conduct. The majority concluded that, while the relationship of fiancé and fiancée did not give rise to a presumption of undue influence, there was actual undue influence and the prenuptial agreement was procured as a result of conduct on the part of the fiancé. While the facts of Thorne are very different to this case, the principles set out by the High Court are of general application.
377 The majority in Thorne reaffirmed the principle set out by Mason J in Amadio, that undue influence will be found to exist where 'the will of the innocent party is not independent and voluntary because it is overborne'.[65]
378 The majority referred to a long line of cases which emphasised that undue influence will be found where the will or relevant act of the person is not 'free'. As to the question of whether a person's act is 'free', the majority said as follows:
The question whether person's act is "free" requires consideration of the extent to which the person was constrained in assessing alternatives and deciding between them. Pressure can deprive a person of free choice in this sense where it causes the person substantially to subordinate his or her will to that of the other party. It is not necessary for a conclusion that a person's free will has been substantially subordinated to find that the party seeking relief was reduced entirely to an automaton or that the person became a 'mere channel through which the will of the defendant operated'. Questions of degree are involved. But, at the very least, the judgmental capacity of the party seeking relief must be 'markedly sub-standard' as result of the effect upon the person's mind of the will of another.[66]
379 The majority in Thorne acknowledged that the existence of undue influence can be proved in different ways. One method is by direct evidence of the circumstances of the particular transaction. Another way is by presumption. In relation to the presumption the majority stated:
A presumption, in the sense used here, arises where common experience is that the existence of one fact means that another fact also exists. Common experience gives rise to a presumption that a transaction was not the exercise of a person's free will if (i) the person is proved to be in a particular relationship, and (ii) the transaction is one, commonly involving a "substantial benefit" to another, which cannot be explained by "ordinary motives", or "is not readily explicable by the relationship of the parties".[67]
380 The majority noted that, outside the recognised categories of relationship, the presumption can also be raised by proof that a history of a particular relationship involved one party occupying a similar position of ascendancy or influence and the other a corresponding position of dependency or trust.[68]
381 Finally, the majority noted the presumption is rebuttable by the other party proving that the particular transaction or transfer, in its particular circumstances, was nevertheless the result of the weaker party's free will.[69]
382 What must be proved to rebut the presumption is relevant in this case given that Victor conceded the presumption has arisen. In Thorne, the majority relied upon the statements of Latham CJ in Johnson v Buttress[70] ('Johnson') where his Honour said:
... in order to maintain the transaction, it was necessary for the defendant to show affirmatively that the deceased knew what he was doing when he made the transfer, in the sense that he understood its effect and significance in relation to himself, and further to show that the transfer was the result of his own will.[71]
383 These principles are echoed in the earlier statement of Latham CJ in Johnson:
It must be affirmatively shown by the donee that the gift was (to use the words of Eldon L.C. in the leading case of Huguenin v. Baseley) "the pure, voluntary, well understood act of the mind" of the donor.[72]
384 The majority also relied upon the statement of Griffith CJ in Spong v Spong,[73] quoting Sir John Leach VC in Griffiths v Robins,[74] to the effect that a person who induces a donor to execute a deed of gift in circumstances of undue influence 'can maintain no deed of gift from [the donor] unless they can establish that it was the result of [the donor's] own free will, and effected by the intervention of some indifferent person'.
385 In Johnson, Latham CJ considered the understanding of the donor and the role of independent advice for the purpose of rebutting the presumption:
It may not be necessary in all cases to show that the donor received competent independent advice; the law as to this matter is still a subject of discussion. But evidence that such advice has been given is one means, and the most obvious means, of helping to establish that the gift was the result of the free exercise of independent will; and the absence of such advice, even if not sufficient in itself to invalidate the transaction, would plainly be a most important factor in determining whether the gift was in fact the result of a free and genuine exercise of the will of the donor.[75]
386 Latham CJ, in concluding that the onus on the defendant had not been satisfied, stated:
The learned judge accepted the evidence of the managing clerk, which showed that the deceased understood at the time he was dealing with his property and that he was parting with his property. But nothing was said to direct his attention to the fact that he was in effect denuding himself of the whole of his property without obtaining any equivalent, and of course it was not suggested that the advice which he received in the office of the defendant's solicitor was independent advice".[76]
387 Dixon J in Johnson also considered the nature of and reason for the onus on the stronger party to establish that a gift was the result of a free and well understood act of the weaker party in circumstances where the presumption has arisen. He stated:
When they stand in such a relation, the party in the position of influence cannot maintain his beneficial title to property of substantial value made over to him by the other as a gift, unless he satisfies the court that he took no advantage of the donor, but that the gift was the independent and well-understood act of a man in a position to exercise a free judgement based on information as full as that of the donee. ... It applies whenever one party occupies or assumes towards another a position naturally involving an ascendancy or influence over that other, or a dependence or trust on his part. One occupying such a position falls under a duty in which fiduciary characteristics may be seen. It is his duty to use his position of influence in the interest of no one but the man who is governed by his judgement, gives him his dependence and entrusts him with his welfare. When he takes from that man a substantial gift of property, it is incumbent upon him to show that it cannot be ascribed to the inequality between them which must arise from his special position. He may be taken to possess a peculiar knowledge not only of the disposition itself but of the circumstances which should affect its validity; he has chosen to accept a benefit which may well proceed from an abuse of the authority conceded to him, or the confidence reposed in him; and the relations between him and the donor are so close as to make it difficult to disentangle the inducements which led to the transaction. These considerations combine with reasons of policy to supply a firm foundation for the presumption against a voluntary disposition in his favour.[77]
389 Gillard J made statements in relation to the significance of independent legal advice in circumstances where the presumption of undue influence is raised. He observed that, while there is no rule of law that independent legal advice should be obtained at the time of making a gift in order to rebut the presumption, it is an important factor in determining whether the gift is the pure voluntary and well-understood act of the donor, 'particularly so if the gift should be of a large sum of money'.[80]
390 As noted above, the law of unconscionable conduct was recently considered by the High Court in Thorne.[81] The relevant principles were restated by the High Court in Kakavas.
391 Unconscionable conduct involves situations where the will of the innocent party, even if independent and voluntary, is the result of the disadvantageous position in which he or she is placed and the other party unconscientiously takes advantage of that position.[82]
392 In Thorne, the majority stated that it was necessary to establish that:[83]
(1) the innocent party was subject to a special disadvantage 'which seriously affects the ability of the innocent party to make a judgment as to [the innocent party's] own best interests'; and
(2) the other party must unconscientiously take advantage of that special disadvantage: this has been variously described as requiring 'victimisation', 'unconscientious conduct' or 'exploitation'.
393 It is also generally necessary to establish that the other party knew or ought to have known of the existence and effect of the special disadvantage.[84]
394 The nature of the special disadvantage will depend upon the facts of each case. In Amadio, the special disadvantage was of elderly migrant parents with limited education who trusted their son: the Court concluded the special disadvantage was the 'outcome of their reliance on and their confidence in their son'.[85] In other cases, factors such as sickness, age, infirmity and lack of assistance where assistance is necessary have also been held to constitute a special disability.[86]
395 As to the requirement not to unconscientiously take advantage of a plaintiff's special disadvantage, Deane J in Amadio (with whom Mason and Wilson JJ agreed) noted that, where it was evident to the defendant bank in that case that the transaction was prima facie unfair and 'unconscientious' for the defendant to proceed with it, the onus was cast upon the defendant to show that the transaction was 'in point of fact fair, just and reasonable'.[87] Deane J reiterated this in Louth v Diprose[88] ('Louth') where he said:
It has long been established that the jurisdiction of courts of equity to relieve against unconscionable dealing extends generally to circumstances in which (i) a party to a transaction was under a special disability in dealing with the other party to the transaction with the consequence that there was an absence of any reasonable degree of equality between them and (ii) that special disability was sufficiently evident to the other party to make it prima face unfair or "unconscionable" that that other party procure, accept or retain the benefit of, the disadvantaged party's assent to the impugned transaction in the circumstances in which he or she procured or accepted it. Where such circumstances are shown to have existed, an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable: "the burthen of shewing the fairness of the transaction is thrown on the person who seeks to obtain" or retain the benefit of it.[89]
396 Issues 1 to 5 relate to the power of attorney granted by George to Victor. Those issues are:
(a) where he obtained a benefit from any of them; and/or
(b) where he was in a position of conflict?
398 As noted above, counsel for Victor conceded that Victor made the withdrawals in Schedule A. As a result the answer to question 1 is 'yes'.
399 Issues 2 and 3 relate to the nature of the payments made and who bears the onus of proof. On reflection, issue 3 could be more clearly expressed. The substance of the question is: who bears the burden of establishing that an attorney's dealing with the donor's assets was justified (in the sense that it was for the benefit of the donor) where the attorney is unable to account for the relevant dealing: is it for the attorney to prove that the dealing was justified or is it for the donor to prove that the dealing was not justified?
400 As noted in section 1.3 the payments in Schedule A fall into a number of categories:
(1) the alleged personal expenses totalling approximately $57,000;
(2) the Stanton Grant legal fees totalling approximately $22,000;
(3) the alleged loans totalling $29,000 of which $4000 has been repaid;
401 As to the second, fourth and fifth categories, it is clear from the nature of these categories that each of these payments was made in circumstances where Victor received a benefit when he was in a position of conflict given that he was acting with George's power of attorney. As to the third category, Victor asserts that it was a loan to him. While I have rejected that evidence in section 10, on Victor's own case, Victor received a benefit when he was in a position of conflict given that he was acting with George's power of attorney. It was not otherwise suggested this payment was for George's benefit. Thus, in respect of these categories of payments, the answer to question 2 is 'yes' and question 3 does not arise.
402 The first category is different. Victor asserted that these payments were for George's personal expenses. It is in this context that question 3 arises. Based on the authorities referred to in section 16.1, the answer is that the onus is on Victor to establish the first category of payments were justified in the sense that they were for the benefit of George.
403 As to the evidence called to meet that onus, Victor did not produce any objective evidence to support his assertion that these payments were for the personal expenses of George. Counsel for Victor submitted that that I should accept Victor's oral evidence that these payments were for the benefit of Victor, forming part of a large number of payments paid for the benefit of Victor during the relevant period. I do not accept that submission.
404 First, it is important to note that, in failing to produce any objective evidence to support this assertion, Victor is in breach of his duty to account as George's attorney. Second, Victor gave general evidence that these payments were for the benefit of George. In an ordinary case where there were no other issues relating to the payments made by the attorney, I might have been able to accept or infer that these expenses in the order of $56,000 were for the benefit of the donor of the power.
405 However, the second to fifth categories above are clear examples of where payments were made not for the benefit George but for the benefit of Victor. Further, the evidence of Victor was that George's expenses were estimated at $70,000 - $75,000 per year. However, in this 6 month period between June and December 2016, Victor would have the Court accept that he paid $56,000 of alleged personal expenses which he is unable to account for. In these circumstances, I am unwilling to accept general evidence from Victor that these payments were made for the benefit of George.
406 As a result of this conclusion and the fact that the other categories of payments were made for the benefit of Victor, I consider that it is more likely than not that the first category of payments were made in circumstances where Victor obtained a benefit from them and/or where he was in a position of conflict given that he was acting as George's power of attorney.
407 As a result, the answer to question 3 (as reformulated) is 'Victor'. The answer to question 2 in relation to the first category of payments is also 'yes'.
408 Issue 4 relates to the whether the payments in Schedule A were made with the knowledge, authorisation and/or consent of George.
409 As noted in section 16.1, what is required for a fully informed consent depends upon all the circumstances of each case. One of the circumstances in this case is that the relationship between George and Victor during the relevant period gave rise to a presumption of undue influence, as counsel for Victor conceded. I have considered whether the effect of this concession is that Victor bears an onus to rebut the presumption of undue influence in respect of the Schedule A payments. This is in effect what counsel for George submitted in his written closing submissions.
410 I do not consider that is appropriate given George has not pleaded a claim in respect of the Schedule A payments on the basis of actual or presumed undue influence. However, given that what is required for fully informed consent depends on all the circumstances, I consider that the facts which gave rise to that concession and the findings I have made about the relationship between George and Victor in these reasons are relevant in determining the nature of the informed consent required in this case. I refer to the factors in [471(1)-‑‑(5)] below.
411 At the heart of fully informed consent is the need for Victor to establish that he fully informed George of the nature of the benefit Victor was to receive from each payment and that George consented to it. For the reasons that follow, I have concluded that Victor has not done so.
412 As noted in section 6.2, I do not accept Victor's evidence that on every occasion he informed George of each withdrawal from his account.
413 In relation to the first category (i.e. the alleged personal expenses), as set out in section 17.3, Victor has not established that that these payments were for George's personal expenses. The result is that I have concluded Victor obtained a benefit from these payments. In these circumstances, there was no evidence before me on which I could conclude that these payments were made with George's informed consent.
414 In relation to the third category (i.e. the alleged loans) (of which the $25,000 payment on 23 December remains outstanding), I have not accepted Victor's evidence that these sums were withdrawn as loans. Indeed, as noted in section 10.2, in cross examination, Victor said he was not really sure if he borrowed the $25,000 from George in December 2016. In these circumstances, there was no evidence before me on which I could conclude that the payment of $25,000 was made with George's informed consent.
415 In relation to the second category (i.e. the Stanton Grant legal fees), counsel for Victor submitted that George's 'informed consent' was because George directed Victor to pay his own legal costs out of George's bank account. However, I have concluded that the evidence relied upon does not make good that submission.
416 First, counsel relied upon the evidence of Mr Bourandanis to the effect that George would often 'pick up the tab for both sons throughout a lot of litigation'. However that evidence was given in the context of a specific email from Victor to Mr Bourandanis dated 26 August 2016 which stated that:
(1) following a meeting with Mr Okno on 25 August 2016 (which Mr Bourandanis did not attend) 'we' decided to keep all the payments together; and
(2) Mr Bourandanis was requested to pay an invoice from Stanton Grant in the order of $21,000 directly from Frenkels.
417 I note that that payment is not claimed in this proceeding. In any event, the evidence of Mr Bourandanis does not support a conclusion that George directed Victor to pay his Stanton Grant fees from George's funds.
418 Second, counsel for Victor relied upon Victor's evidence that George was always saying 'Because Nick initiated the court proceeding, anything to do with this is going to come out of Nick's inheritance'.[90] In my view, that does not support a contention that George directed Victor to pay his Stanton Grant fees from George's funds. Rather, it is consistent with the December 2015 Will and the 5 April 2017 Will where provision was made for an amount equivalent to half of George's legal costs to be paid to Victor.
419 Third, counsel for Victor relied upon Victor's evidence that:
(1) George said when there was anything to do with the proceedings brought by Nick 'whoever brings it on can pay for it';[91] and
(2) Victor then said that even when they attended meetings with their solicitors relating to those proceedings George insisted that he would pay for parking and petrol: 'Dad insisted, "I pay. Put in on the card"'.[92]
420 The first of these statements does not give rise to agreement by George to pay for Victor's legal costs: it conveys only that Nick, who brought the proceeding, should pay for them. As to the second of these statements, I accept that George may have agreed to pay for incidentals relating to the proceeding, like the costs of car parking and petrol. However, I do not consider this is sufficient evidence for me to conclude that Victor fully informed George about each of the payments for Victor's legal fees.
421 In relation to the fourth category of Schedule A payments (i.e. the family trust reimbursement), Victor gave evidence that George agreed to reimburse the sums that Victor had to pay to Nick in relation to the payments from the family trust which Victor could not justify. George's evidence about this was not clear.
422 It is important in this context that Mr Okno was involved in investigating these expenses and did not satisfy himself that these payments by Victor (including the payment of Stanton Grant's fees of $2500) were justifiable family trust expenses. There is no evidence that Mr Okno was informed at that time that George had agreed to pay Victor any amount either for the Stanton Grant fees he incurred or as a reimbursement for the amount advanced to Nick in relation to the unexplained expenses of the family trust. As a result, Mr Okno was not given the opportunity to give any advice about this payment to George at the time.
423 Counsel for George submitted that it was a ludicrous suggestion that George would have agreed to reimburse Victor for the family trust monies that Victor had been forced to repay because he could not justify them as proper expenses to Mr Okno. He submitted that if George had really intended to reimburse these amounts, the obvious step would have been to make an appropriate adjustments to the distributions agreed in the resolution of Aniva in April 2007. In any event, he submitted this matter was not raised with Mr Okno.
424 While I do not accept that the suggestion that such an agreement by George was 'ludicrous', there is considerable force in the submissions by counsel for George. At least if the issue had been raised at that time, Mr Okno would have been aware of it and given advice to George. In the circumstances of this case, Victor has not established on the evidence before me that George gave fully informed consent to the amount withdrawn at the time.
425 In relation to the fifth category of payments (i.e. the gift of $290,000 on 2 June 2016), there is some evidence from George that he was aware that money was being withdraw in order for Victor to pay a deposit. However as set out in section 8.3, there is no evidence from George that he was aware of the amount withdrawn but Victor gave evidence that he informed George of both the amount and the purpose of the payment. As set out in that section, I have concluded that Victor's evidence about this is unconvincing.
426 Further, this gift was a substantial sum of money. For the reasons set out in section 6.2, I have concluded that George had little appreciation of what his actual financial position was at the time of this payment. The gift of $290,000 was a substantial gift. In addition, George did not receive independent legal advice in relation to it. I refer to my comments in [449]‑-[451]. In the circumstances of this case, I consider these are relevant factor in determining whether Victor has established that George gave fully informed consent.
427 In all of the circumstances, I am not satisfied that Victor has established that George gave fully informed consent to this payment of $290,000.
428 For the reasons set out above, the answer to question 4 is 'no'.
429 Issue 5 relates to the remedy to which George is entitled. Given the answers to questions 1 to 4 and the concession by counsel for Victor referred to in [17] above, George is entitled to repayment of the Schedule A payments that have not already been repaid.
430 Issues 6 to 9 relate to the allegations of undue influence. Those issues are:
(a) by reason of the relationship of attorney and donor alone; and/or
(b) in the circumstances particularised under paragraph 10 of the plaintiff's further amended statement of claim?
431 As noted above, counsel for Victor conceded that the presumption of undue influence arises from the relationship between Victor and George during the relevant period. As a result, the answer to question 6 is 'yes'.
432 Consequently, the primary issue for determination is question 7: whether Victor has rebutted the presumption of undue influence in respect of the Schedule B payments. Further, as a result of the concession that the presumption of undue influence arises from the relationship between Victor and George during the relevant period, it is unnecessary to decide question 8. However, I consider that it is appropriate that I do so later in these reasons.
433 Counsel for George submitted that Victor had not rebutted the presumption of undue influence. Counsel noted that, consistent with the authorities referred to in section 16.2, the burden of discharging the onus is significant. It is not enough to prove that George was aware of each particular transaction that took place: it must be established affirmatively that George understood the effect of each of those transactions in context, including, in this case, the effect on his own finances, what was going to each of his sons and what they would ultimately receive.
434 Counsel for George submitted that George did not understand the effect of any of the major withdrawals on his own financial circumstances.[93] This is in a context where Victor, and not George, was receiving bank statements for George's accounts.
435 Counsel for George highlighted that George received no independent legal advice about the major withdrawals. This is notwithstanding that George met with Mr Okno at or about the time of the major withdrawals, but Mr Okno's file notes do not record that any of the major withdrawals were discussed.
436 Further, counsel for George submitted that Victor's evidence about the circumstances in which the major withdrawals were made lacked credibility and, to the extent that it was relevant to rebutting the presumption of undue influence, should be rejected. By contrast, he submitted that, notwithstanding the limitations in George's evidence, on a number of matters, George was clear and consistent, including that he:
(2) never lent money, but gave money, when his sons asked him;
(3) wanted to treat his sons are equally so that his wealth would be divided 50/50 between them; and
(4) trusted Victor as his attorney and did not check up on him.
437 By contrast, counsel for Victor submitted that the presumption of undue influence had been rebutted. He submitted that George conceived a plan to distribute assets to Victor during George's lifetime which reflected a 50/50 split subject to adjustments for additional benefits Nick had received. That plan arose, in part, out of George's anger and disappointment following the first proceeding and the second proceeding.
438 In final submissions, counsel for Victor submitted that George's plan or wishes involved four components:
(1) recognition that Nick had received benefits in excess of $1 million that had not been given to Victor, as a result of which George determined to transfer the Richardson Street unit to Victor: the $1 million paid on 10 August 2017 was in substitution for this;
(2) the proceeds of the sale of the family trust would be split 50% to George, 25% to Victor and 25% to Nick and his family;
(3) George determined that Nick should pay for the legal costs and Victor should not be out of pocket;
(4) George did not want there to be any further litigation after his death such that he paid:
(a) 950,000 to Victor on 1 February 2017 (being half of George's share of the family trust less $75,000 George had loaned to Victor); and
(b) 300,000 on October 2017 being for a share in the houseboat, rent that was not paid on the Richardson Street unit and the unequal value of the Tasman Avenue development units between Nick and Victor.
439 Counsel for Victor submitted that, from the instructions given for the 10 October 2017 Will, George well understood the import of his action and the reasons why he took these actions.
440 Victor relied upon Schedule 1 to his third amended defence which sought to demonstrate George's wishes of the approximately equal treatment between Nick and Victor, which includes the additional benefits that Nick received throughout George's life. It provides as follows:
$1.025m from the sale of the Williamstown shops (less legal and other fees paid in the Previous Legal Litigation)
$1.82m from the sale of the Williamstown shops ($876,734.20 + $950,000)
Approximately $1.2m throughout George's life (between June 1983 and today)
$1m in recognition of the Essendon Unit [(i.e. the Richardson Street unit)] being willed to Nicholas (or his children)
$300,000 in recognition of the Houseboat and rent of the Essendon Unit [(i.e. the Richardson Street unit)]
The Essendon Unit [(i.e. the Richardson Street unit)] left to Nicholas and his children (estimate $1m)
441 For the reasons that follow, I am of the view that Victor has not rebutted the presumption of undue influence in relation to the Schedule B payments. This is because I am not satisfied that Victor has affirmatively established, consistent with the authorities, that George knew what he was doing when he made these payments in the sense that he understood their effect and significance on his own finances (what was going to each of his sons and what they would ultimately receive) and that these payments were the result of the exercise of George's free will.
442 As noted above, approximately $3.5 million was transferred from George to Victor between June 2016 and October 2017 of which $2,250,000 comprises the Schedule B payments claimed in this proceeding. The effect of these payments was that George was left with the Richardson Street unit and approximately $800,000 in a bank account but subject to a tax liability of approximately $400,000 and George's ongoing living expenses.
443 As to the circumstances in which each of the Schedule B payments was made, George's evidence at trial (accepting the limitations of his evidence) did not disclose that he was aware of each amount that was taken in February 2017, in August 2017 and October 2017. As set out in detail in sections 11.3 and 13, I have concluded that Victor's evidence about the circumstances in which each of the Schedule B payments took place is not convincing. Much of his oral evidence was inconsistent with his defences and affidavit evidence. It certainly did not establish affirmatively that George was aware of each amount withdrawn and the nature and purpose of each payment.
444 I note that there is some evidence that George may have been aware of the major withdrawal of $1 million on 10 August 2017. I refer to the 13 November 2017 file note of Mr Okno which records that the payment was to 'apparently be in exchange for Nick and his family getting the [Richardson Street unit]'. However, I do not consider that this file note and the evidence of Victor is sufficient for Victor to establish 'affirmatively' that George was aware of this payment at the time it was made.
445 This is because, as noted in section 13, I have not accepted Victor's evidence about the events between August and October 2017 as it was unconvincing. In particular, I rejected Victor's evidence that he informed Mr Okno of the $1 million payment or that that payment was in lieu of Victor getting the Richardson Street unit. Based upon the matters set out in [303], I am also unable to accept his evidence that Mr Okno obtained a valuation of the Richardson Street unit in about August 2017. In light of these findings, the 13 November 2017 file note of Mr Okno is not sufficiently clear for Victor to affirmatively establish that George was aware of the 10 August 2017 payment of $1 million. Nor do I consider that all of this evidence is sufficient for Victor to affirmatively establish that George was aware that the $1 million was paid in lieu of giving Victor the Richardson Street unit.
446 Further, for the reasons set out in section 6.2, George had little appreciation of his actual financial position during the relevant period. This is confirmed by the response of George and of Mr Okno when each of them discovered his true financial position in November 2017 as set out in section 14. It is important to note that there was not one major payment to Victor, but five of them, over a period of 16 months, with the final three Schedule B payments (totalling over $2,250,000) made over 10 months. In light of my findings that Victor was in control of George's finances without any meaningful scrutiny and George had little understanding of his actual financial position during the relevant period, I am not satisfied that George was aware of the effect of each of the Schedule B payments on his financial position, let alone of their cumulative effect.
447 Even on Victor's own evidence, on 10 October 2017, after the sum of $300,000 had been withdrawn to pay to Victor:
(1) George asked the bank manager how much money he had left in the account; and
(2) George then expressed concern whether he still had sufficient funds to meet his living expenses.
448 On Victor's evidence, there was discussion at that time of the possibility of selling assets or the need for Victor to contribute his own funds because George's assets may not be sufficient to support the rest of his life. This suggests that George was not aware of the effect of this or the other major withdrawals on his asset position. By contrast, Victor was aware of their effect as he was in control of all of George's financial affairs.
449 It is important to bear in mind that each of the Schedule B payments was a gift to Victor. These gifts were made in a context where, contrary to the case alleged by Victor, George did not receive independent legal advice in relation to each of the major withdrawals. While I accept that it is not necessary to show that the donor received legal advice in every case where the presumption of undue influence arises, in this case, George was elderly at the time of the major withdrawals and was frequently in contact with Mr Okno as his personal solicitor during the relevant period.
450 Contrary to Victor's submissions, as set out above, the evidence of Mr Okno, which I accept, is that:
(1) these major withdrawals[94] were not discussed with him in the course of a series of meetings in 2016 and 2017 prior to November 2017; and
(2) if he was aware of these major withdrawals, he would have raised them with George to ensure that he was adequately protected.
451 It is significant that most of the major withdrawals occurred at around the same time as Mr Okno met with George and/or Victor to discuss changes to George's then current will. Indeed, it was not put to Mr Okno that he was told of any of the transactions prior to August and October 2017: even then, it was put that he was only informed of the $1 million paid on 10 August 2017 and the $300,000 paid on 10 October 2017. In this context, I note that Victor regularly contacted Mr Okno to inform him of George's instructions. There is no suggestion he informed Mr Okno about the 2 June 2016 and the 1 February 2017 payments. I do not accept his evidence that he informed Mr Okno of the August 2017 and October 2017 payments.
452 Further, I am unable to accept Victor's evidence and submission that George conceived a plan to distribute assets to Victor during George's lifetime which reflected a 50/50 split subject to adjustments for additional benefits Victor asserts Nick had received. As I have set out above, Victor's evidence of the genesis of that plan and the way in which it was put into action is not consistent. Indeed the suggestion that the plan was authorised or implemented in mid-2016 by Mr Bourandanis and Mr Okno was not even put to them in the course of their evidence.
453 Further, the evidence from Mr Okno is contrary to Victor's position. None of his file notes prior to his 10 October 2017 file note refer to any intention on the part of George to distribute his assets to Victor during his lifetime, let alone a distribution to Victor to compensate him for substantial additional benefits Nick had received during his lifetime. Indeed, the 19 January 2017 file note records:
Generally he [i.e. George] wants his assets after he dies to go 50-50 between Nick and Victor. I raised the issue of the provision in the current will leaving the Richardson Street unit to Victor. I spoke to him about the issue of the houseboat which is a very sore point. There is also the question of the fact that his granddaughter Cassie is occupying the unit rent-free and has done so for a substantial period. He felt these matters caused an inequality in favour of Nick and agreed with the suggestion that I made for a bequest to Victor to remedy the position. The amount agreed was $300,000.
454 It appears that $300,000 was the adjustment which George considered appropriate based upon the advice received from Mr Okno. It is unclear from the file note whether it relates to the removal of the Richardson Street unit from the will, the houseboat issue and/or the non-payment of rent. It seems more likely it was the latter two only.
455 Three things are clear from this 19 January 2017 file note: first, it did not refer to any plan by George to give Victor his inheritance before George died; second, there is no suggestion of George's intention to divide his assets subject to adjustments for additional benefits Nick had received save for the gift of $300,000; third, the Richardson Street unit was no longer gifted to Victor but formed but of George's general estate.
456 It appears that, in or about August 2017, George agreed to give Victor his inheritance in advance, consistent with Victor's evidence. For example, Mr Okno's 10 October 2017 file note and the 10 October 2017 Will refer to, and are consistent with, an intention or plan by George to give Victor his inheritance during George's lifetime. But, significantly, there is no suggestion in either of them of George's intention to divide his assets subject to adjustments for additional benefits Nick had received. In this regard I note, as set out in section 15, clause 5 of the July 2018 Will records that George 'had agreed that Victor could have his share of what he was to inherit before [George's] death'. However, cl 5 then also records that what Victor had taken 'was much more than this'.
457 As to any alleged adjustments for additional benefits Nick had received, in Schedule 1 to the third amended defence, the additional benefits are estimated at approximately $1.2 million excluding the houseboat. Other than by reference to the 18 May 2016 affidavit and Victor's evidence, there was no attempt to quantify these additional benefits at trial or in final submissions.
458 For the reasons set out in section 7.4, while I accept it is likely that Nick received financial assistance or benefits above those received by Victor, I am unable to conclude the extent of those benefits or to place a value on them. In these circumstances, Victor has not established that Nick received benefits in excess of $1 million over those received by Victor.
459 Further, Victor has not established that George believed that Nick had received benefits in excess of $1 million over those received by Victor. Victor relied upon the 18 May 2016 affidavit to support this submission. In oral evidence, George disputed Nick received many of the benefits deposed to in the 18 May 2016 affidavit. For the reasons set out in section 7.3, I have concluded that Victor was primarily responsible for defending the first and second proceeding and provided much of the detail in the affidavits in the first proceeding, including the 18 May 2016 affidavit. I also concluded that, if I am wrong about that, then Victor very much influenced George in how those proceedings were conducted and in preparing the affidavits.
460 As a result, I am unable to place much weight on the 18 May 2016 affidavit. Further, as I noted in section 7.4, many of those benefits were of the kind I consider that George would not want to take into account in balancing how his estate was to be distributed, for example, the gift of a car to each of Nick's children.
461 In all of these circumstances, Victor has not established that Nick received additional benefits to the value of $1.2 million or that George held this belief, with the result that he has not established that Schedule 1 of the third amended defence represented George's intention or wishes.
462 I wish to say something further about Schedule 1. The third amended defence alleged that 'George's view of the approximately equal distribution of his wealth' to Victor and Nick was set out in Schedule 1. Other than by reference to the 18 May 2016 affidavit, there was no evidence before me that George accepted or agreed that this was so. Rather, in my view, it reflected the distribution which Victor and/or his lawyers wished to pursue a trial.
(1) other than the particular payments between June 2016 and October 2017, which were the subject of this proceeding, Schedule 1 did not seek to quantify in any way the benefits which Victor otherwise obtained from his parents during his lifetime;
(2) Schedule 1 valued the houseboat at $700,000. There was no evidence the houseboat was ever valued at this sum. Victor's highest estimate referred to in the file notes of Mr Okno was $480,000; and
(3) Schedule 1 ignores the negative adjustment made to Nick's distribution from the sale of the Williamstown shops in early 2017 but does not ignore Victor's negative adjustments.
464 Finally, when assessing the remainder of George's estate at $900,000, it ignores George's capital gains tax liabilities and does not account for the money he is yet to spend in his lifetime.
465 As set out above, I have formed the view that George generally wanted his assets to be distributed equally between his sons at his death. It is consistent with the 2000 Will, the 2000 Deed of Appointment, the proposed settlement in early 2015 and the 11 November 2015 Will. It is also consistent with the evidence of Mr Okno and of Mr Herman.
466 It is true that, particularly during the legal proceedings, George's wills provided for Victor to receive more than Nick e.g. the gift of the Richardson Street unit to Victor, for Victor to receive some compensation for the houseboat and the unpaid rent and for Nick to reimburse the legal costs paid by George relating to the legal proceedings he instituted. This is first reflected in one or more of the 19 November 2015 Will, the 23 December 2016 Will, the 5 April 2016 Will and the 25 August 2016 Will.
467 However, from the time of the 19 January 2017 Will, the assets of George were to be split for the most part equally between Nick and Victor. The gift of the Richardson Street unit to Victor was also removed in the 19 January 2017 Will. I refer to the 19 January 2017 file note set out above. All of this is consistent with George's intention that his assets were generally to be distributed equally between his sons at his death. I note the 19 January 2017 Will was made notwithstanding the legal proceedings which caused George such distress and all of the alleged additional benefits had been received by Nick well before that time.
468 It is in this context that it is again important to focus on the consequences of the Schedule B payments. Victor received these payments, together with gifts of $290,000 and a further $1 million, from George between June 2016 and October 2017. The effect of these payments was that George was left with the Richardson Street unit and approximately $800,000 in a bank account but subject to a tax liability of approximately $400,000 and the payment of his living expenses. The balance would be available to Nick under the 10 October 2017 Will upon George's death. That is far from George's intention that he generally wanted his assets to be distributed equally between his sons.
469 For these reasons, I have concluded that Victor has not rebutted the presumption of undue influence in relation to the Schedule B payments. As a result, the answer to question 7 is 'no'.
470 For completeness, although it is unnecessary to decide, I have formed the view that Victor unduly influenced George into making the Schedule B payments. As noted in the authorities on undue influence, it is necessary to consider carefully all relevant facts, including the nature of relationships and mental capacities and idiosyncrasies of the parties: questions of degree and evaluative judgments are involved.
471 I have reached the conclusion that Victor unduly influenced George into making the Schedule B payments during the relevant period in light of the following circumstances:
(1) the relationship of father and son between George and Victor;
(2) the age and physical and mental condition of George during the relevant period;
(3) the degree of emotional reliance on and trust in Victor by George during the relevant period, as set out in section 6.1, including in light of George's practical isolation from Nick;
(4) the degree of reliance and trust which George placed on Victor in respect of his financial affairs (and Victor's control of them) during the relevant period, as set out in section 6.2;
(5) the degree of reliance and trust which George placed on Victor in respect of the legal proceedings as set out in section 7.3;
(6) the fact that George always wanted to help his sons when one of them asked for help, and was susceptible to the influence of each of his sons at different times, depending on the nature of his relationship with each of them at those times, as set out in sections 2.1 and 3.3;
(7) the amount of each of the Schedule B payments and the substantial benefit they provided to Victor;
(8) the significance of the impact of them on George's financial position;
(9) given George's limited appreciation of his actual financial position, his inability to appreciate the impact of these payments on his financial position as set out in sections 6.2, 13.2 and 14; and
(10) Victor's knowledge and appreciation of the impact of them on George's financial position given that he was in control of George's financial affairs.
472 In light of these circumstances, I have formed the view that the judgment capacity of George in respect of the transactions was significantly impaired or substandard vis-à-vis Victor during the relevant period.
473 I have had careful regard to the fact that these were purportedly gifts to George's son in circumstances where Victor was caring for him. But I have also considered the effect of these withdrawals on George's financial position and the likely assets available to be distributed on his death to Nick. Based on the evidence before me, that result does not accord with George's intention to generally achieve a 50/50 split of his assets.
474 I have also had careful regard to the fact that during the relevant period George gave instructions about new wills to Mr Okno's satisfaction and that, at times, George did not always agree with and adopt Mr Okno's suggestions. However, in my view, it is significant that Mr Okno was not informed by George about any of the Schedule B payments at or about the time they were made.
475 In my view, the nature of the relationship between George and Victor during the relevant period was such that George became dependent upon Victor, and Victor influenced the decisions George made. By way of example, I refer to my comments and conclusions in section 11.2 relating to the instructions George gave to Mr Okno on 19 January 2017 that George would like to move back to the Essendon area and would like his share of the family trust to be deposited into a separate account which he, not Victor, controlled.
476 As a result, the answer to question 8 is 'yes'.
477 Issue 9 relates to the remedy George is entitled to by reason of my finding in relation to undue influence. Given the answers to questions 6 to 8 and the concession by counsel for Victor referred to in [17] above, George is entitled to repayment of the Schedule B payments.
478 Issues 10 to 13 relate to the allegations of unconscionable conduct. Those issues are:
479 Given the conclusions that I have reached in relation to issues of undue influence, including the relief to which George is entitled, it is unnecessary for me to consider the issues relating to unconscionable conduct. However, for completeness, it is appropriate that I do so shortly.
480 In summary, counsel for George submitted that George was under a special disadvantage in relation to Victor. Counsel relied upon the same factors which gave rise to actual undue influence, namely, George's age, his infirmity, the degree of reliance, confidence and trust which George placed in Victor and the lack of independent advice or assistance where assistance was necessary. Counsel for George submitted that George placed unqualified trust in Victor which allowed Victor to act without scrutiny or oversight.
481 Counsel for Victor disputed that George suffered from any special disadvantage. In summary, he submitted that each of the factors relied upon by counsel for George was not in and of itself a special disadvantage, namely:
(3) George's relationship with Victor during the relevant period; and
(4) George's estrangement from Nick during the relevant period.
482 Further, counsel for Victor submitted that these matters, even when considered together, did not create a special disadvantage. He submitted that, during the relevant period, George was still capable of dealing with and handling his own affairs but found it useful, helpful and easier to have the assistance of Victor. He submitted that it was not the case that George was incapable without the help of Victor, but that he was glad for the help from Victor.
483 I have concluded that George was under a special disadvantage in relation to Victor. In summary, this is based upon the same circumstances as those upon which I formed the view that Victor unduly influenced George in respect of the Schedule B payments during the relevant period, namely:
(1) the age, and physical and mental condition of George during the relevant period;
(2) the degree of emotional reliance on and trust in Victor by George during the relevant period, as set out in section 6.1, including in light of George's practical isolation from Nick;
(3) the degree of reliance and trust which George placed on Victor in respect of his financial affairs (and Victor's control of them) during the relevant period, as set out in section 6.2;
(4) the degree of reliance and trust which George placed on Victor in respect of the legal proceedings as set out in section 7.3;
(5) the fact that George always wanted to help his sons when one of them asked for help, and was susceptible to the influence of each of his sons at different times, depending on the nature of his relationship with each of them at those times, as set out in sections 2.1 and 3.3;
(6) given George's limited appreciation of his actual financial position, his inability to appreciate the impact of these payments on his financial position as set out in sections 6.2, 13.2 and 14;
(7) the absence of legal advice from Mr Okno on these payments where such advice was called for.
484 In relation to the absence of legal advice, it is true that Victor may not have been aware whether George raised the Schedule B payments and obtained legal advice about them from Mr Okno when Victor was not present. However, Victor was aware George had access to legal advice and in fact often provided instructions on behalf of George to Mr Okno. I have concluded Victor did not inform Mr Okno of these payments at the time they were made in order for George to obtain independent legal advice, as set out in section 18.2.2.
485 In reaching this conclusion, I have had particular regard to the degree of George's reliance on, and confidence and trust in, Victor during the relevant period. I have carefully considered the nature of that relationship and the mental capacity and idiosyncrasies of George, in particular, his desire and need to get on with Victor given his practical estrangement from Nick during the relevant period. I have also considered George's evidence to the effect that, if one of his sons asked for financial assistance and he could give it, he did.
486 For these reasons, the answer to question 10 is 'yes'.
487 I have concluded that Victor knew or ought to have known of the existence and effect of George's special disadvantage. I have concluded that Victor knew of the matters referred to in [483(1)-‑(5)] above. Indeed, much of that knowledge arises because of the relationship that existed between Victor and George during the relevant period, which counsel for Victor conceded during the relevant period.
488 I have also concluded, contrary to Victor's evidence, that Victor knew or ought to have known that George had little appreciation of his actual financial position during the relevant period with the result that he did not appreciate the impact of the Schedule B payments. This is in circumstances where Victor was in control of George's financial affairs and all bank statements were sent to Victor. I refer to my comments in section 6.2. Of course, by reason of his control of George's financial affairs, Victor was aware of their impact on George's financial position. I will deal with this further below.
489 As a result, the answer to question 11 is 'yes'.
490 Counsel for George submitted that Victor took advantage of George's special disability to procure each of the Schedule B payments. He submitted that, during the relevant period, Victor obtained each of them knowing that he needed to give little, if any, explanation to George, in circumstances where George was not tracking amounts of money that were being withdrawn because Victor was in control of George's financial accounts and received his bank statements. He submitted that Victor unconscionably took advantage of George's special disadvantage by 'taking surreptitious advantage of the weakness, ignorance or necessity of another', the essence of such weakness being George's inability to judge for himself his own best interests.
491 By contrast, counsel for Victor submitted that Victor did not procure any of the Schedule B withdrawals unconscientiously or otherwise unlawfully. Counsel for Victor submitted that the payments were made by George because he formed and executed the plan referred to above by giving Victor his share of his inheritance while George was alive. Counsel for Victor maintained as a result the Schedule B payments were planned and executed by George and were not procured by Victor.
492 I have concluded that these payments were procured by Victor unconscientiously taking advantage of George's special disability. This is because:
(1) these payments were asserted by Victor to be gifts for which Victor gave no consideration;
(2) Victor has not established that there was any plan to the effect he alleged, as set out in section 18.2.2;
(3) of the amount of each of the payments and the substantial benefit they provided to Victor;
(4) of the significance of the impact of the payments on the financial position of George;
(5) given George's limited appreciation of his actual financial position, George was unable to appreciate the impact of these payments on his financial position as set out in sections 6.2, 13.2 and 14;
(6) Victor had both knowledge and an appreciation of the impact of these payments on the financial position of George given that he was in control of George's financial affairs and information, as set out in section 6.2; and
(7) although Victor was aware George had access to legal advice and in fact often provided instructions on behalf of George to Mr Okno, Victor did not inform Mr Okno of these payments at the time they were made in order for George to obtain independent legal advice, as set out in section 18.2.2.
493 Each of these matters is significant. However, most significant is the practical effect of these payments during the relevant period, with the result that George was left with only the Richardson Street unit and approximately $800,000 to meet his tax liability and ongoing living expenses. Of course, because Victor was in control of George's financial affairs, he knew the effect of these payments on George's financial position.
494 Further I have concluded that Victor's knowledge of George's special disadvantage and of the circumstances of the payments made each of them prima facie unfair and unconscientious so as to cast upon Victor an onus to show that they were in fact 'fair, just and reasonable'. For the reasons set out in [483]-[484], [487]‑-[488] and [492] Victor has failed to establish this was so.
495 For these reasons, the answer to question 12 is 'yes'.
496 Issue 13 relates to the remedy that the plaintiff is entitled to by reason of the unconscionable conduct. Given the answers to questions 10 to 12 and the concession by counsel for Victor referred to in [17] above, George is entitled to repayment of the Schedule B payments.
If the Schedule A payments and/or the Schedule B payments were effected or procured as a result of breach of fiduciary duty, unconscionable conduct or undue influence:
(a) did the plaintiff ratify those transactions;
(b) did the plaintiff waive any such breach of fiduciary duty, unconscionable conduct or undue influence;
(c) did the plaintiff elect between inconsistent rights; and/or
(d) is the plaintiff now estopped by conduct from denying the legal efficacy of the transactions
by reason of the plaintiff obtaining legal advice on 10 October 2017?
498 Counsel for Victor contended that, as all of the payments in Schedule A and Schedule B were made with the contemporaneous knowledge and authority of George, then George ratified them or has waived any breach of duty, any unconscionable conduct or any undue influence in relation to them. In final submissions, counsel for Victor did not rely upon election.
499 For the reasons set out in section 18.2.2, I have concluded that these payments were made in circumstances where Victor has not rebutted the presumption of undue influence and/or has not established that George gave his informed consent to them. As a result, I cannot conclude that they were made with the contemporaneous knowledge and authority of George for the purposes of a defence of ratification or waiver, as advanced by Counsel for Victor.
500 Counsel for Victor submitted that George is estopped from denying the efficacy of the Schedule B payments by virtue of the advice received on 10 October 2017 and, in particular, the 10 October 2017 Will, which Mr Okno prepared at that time after George told him that Victor had received his full inheritance and no further provision would be made for him in the new will. Limited submissions were advanced on this issue and no authorities were relied upon to support this estoppel.
501 For the reasons set out in sections 13.2 and 18.2, I have concluded that:
(1) the Schedule B payments were not discussed with Mr Okno in the course of a series of meetings in 2016 and 2017 including, in particular, at the meeting on 10 October 2017;
(2) Mr Okno was not told before or during the meeting on 10 October 2017 what 'inheritance' Victor had received in advance; and
(3) Mr Okno did not discuss with George what assets he had left to gift to Nick in his will at the meeting on 10 October 2017.
502 In these circumstances, contrary to the submission of counsel for Victor, George never received any independent legal advice in relation to the Schedule B payments. As a result, I can see no basis for the estoppel relied upon to apply to deny George the ability to pursue now the claims made against Victor in respect of the Schedule B payments.
503 For these reasons, the answer to question 14 is 'no'.
In the circumstances alleged in paragraphs 17-19 of the third amended defence, will equity deny the plaintiff a remedy in respect of the payment made to the defendant of $1 million on 10 August 2017?
505 Paragraphs 17 to 19 of the third amended defence allege in substance that: [95]
(1) on 9 March 2018 George transferred the Richardson Street unit to Cassie;
(2) George seeks repayment of the $1 million paid to Victor on 10 August 2017;
(3) that payment was made by George for the purpose of giving effect to George's wishes to distribute Victor's share of his inheritance during George's lifetime. Specifically, George decided to give the Richardson Street unit to Nick through his will and the $1 million payment was made to Victor for the purpose of providing him with an approximately equivalent benefit; and
(4) equity should deny George an order for the repayment of that $1 million.
506 This issue is premised on the basis that George made a payment to Victor of $1 million on 10 August 2017 in lieu of giving Victor the Richardson Street unit. Counsel for Victor submitted equity would prevent George recovering damages for $1 million paid to Victor in circumstances where George has now disposed of the Richardson Street unit. Further, in final submissions, counsel for Victor submitted that Victor accepted this gift because George advised he wanted to compensate Victor for the fact that he had given Nick in excess of $1 million more than the defendant during George's lifetime.
507 No authorities were relied upon by counsel for Victor in support of this defence.
508 Counsel for George submitted that, while equity has a wide discretion to grant or refuse equitable relief, that discretion must be exercised in a principled way 'when warranted by established equitable principles or by the legitimate processes of legal reasoning, by analogy, induction and deduction, from the starting point of a proper understanding of the conceptual foundation of such principles'.[96] He submitted that there was no legitimate process of legal reasoning, by analogy, deduction or otherwise, which would deprive George of the equitable compensation to which he was otherwise entitled.
509 At the time Victor's application to amend his defence to include paragraphs 17 to 19 was made, senior counsel for Victor relied upon Adenan v Buise[97] ('Adenan'). In that case, the deceased had issued proceedings seeking to set aside a deed procured by undue influence. After his death, his son, as executor, prosecuted the claim. The son and the son's wife would have benefitted from it as sole beneficiaries of the deceased's estate. However, the Court concluded that the son played a significant part in the conduct which led to the finding of undue influence.
510 Burt CJ and Kennedy J held that, in these circumstances, equity should not come to the son's aid to set aside the deed. Further, they held that the fact the son sued in his representative capacity should not prevent the maxim of clean hands applying: in reality the action was now for the benefit of the son and his wife.
511 By contrast, there is no suggestion or allegation that George came to court with unclean hands or was a party to such conduct. Further, I have concluded that the payment of $1 million on 10 August 2017 was made in circumstances where Victor has not rebutted the presumption of undue influence. Indeed, I have concluded that the payment was made in circumstances where there was actual undue influence and unconscionable conduct.
512 Further, as noted above, Victor's argument is premised upon the Court accepting not only that the $1 million was paid to Victor in lieu of him receiving the Richardson Street unit, but that Victor originally accepted the Richardson Street unit because George wanted to compensate him for the fact that Nick had been given additional benefits in excess of $1.2 million during his lifetime. For the reasons set out in 18.2.2, I am unable to conclude that Nick received additional benefits of that sum or that George believed this. Further, while there is evidence from both Victor and George that George wanted Victor to receive the Richardson Street unit at least for a period of time, the only evidence that this was as compensation for the additional benefits given to Nick was the evidence of Victor himself. I refer to my comments section 5.4.
513 In all of these circumstances, I do not consider that it is appropriate for equity to impose any conditions on the form of relief granted to George to deprive him of recovering the full amount of the claim that has been established in this proceeding. As a result, the answer to question 15 is 'no'.
514 For completeness, while the fact of the transfer of the Richardson Street unit to Cassie was relevant to this defence, the circumstances in which that transfer took place were not an issue before me. In my view, any challenge to this transfer ought be made in accordance with recognised legal principles.
515 As a result of the reasons set out above, I have concluded that George is entitled to full repayment of the Schedule A and Schedule B payments that have not already been repaid. I will hear from the parties on consequential orders, including in respect of interest and costs.
[1] The sum of $1.7 million is also claimed in Schedule A. For the reasons set out below, it was paid from Victor's account into George's account by mistake and then withdrawn from that account by Victor on 16 November 2017. A further payment in Schedule A of $4,000 withdrawn from George's account on 17 October 2016 has since been repaid by Victor. As a result, these payments are not now claimed in this proceeding.
[2] The original form of this question referred to question 3 in error.
[3] Victor gave evidence that the payment on 11 August 2016 was used to pay advertising costs for the sale of the Williamstown shops which were part of the family trust, but I have included this sum in payments that were allegedly for George's benefit.
[4] See, eg, Transcript of Proceedings, Hrycenko (by his Litigation Guardian Michael Kornitschuk) v Hrycenko (Supreme Court of Victoria, S CI 2017 04965, Lyons J, 1, 3-5, 8-11 October 2018; 12, 13, 20, 21, 25 February 2019 and 19 March 2019) ('Transcript') 123:11-21 and George's closing submissions: 'Closing Submissions', Submissions in Hrycenko (by his Litigation Guardian Michael Kornitschuk) v Hrycenko, S CI 2017 04965, 7 March 2019, 18‑9.
[10] Although headed 'Enduring Power of Attorney (Financial)' the document is not limited to George's financial affairs.
[27] Hrycenko v Hrycenko [2016] VSC 112.
[28] Hrycenko v Hrycenko (2016) 50 VR 726.
[38] See, eg, Transcript 270:25‑-271:14.
[49] Chan v Zacharia [1984] HCA 36; (1984) 154 CLR 178 ('Chan') 198. See also in the context of a power of attorney Ash v Ash [2016] VSC 577 ('Ash') [102] (McMillan J).
[50] [2013] EWCA (Civ) 910 ('Ross River').
[52] [2015] NSWSC 646; (2015) 106 ACSR 207 [353].
[53] (1947) 75 CLR 378, 401.
[56] [1997] HCA 23; (1997) 188 CLR 449, 466.
[57] [1983] HCA 14; (1983) 151 CLR 447 ('Amadio').
[59] See, eg, Bridgewater v Leahy [1998] HCA 66; (1998) 194 CLR 457, 493 [124].
[60] [2017] HCA 49; (2017) 263 CLR 85 ('Thorne') 99-102 [30]-[36] (Kiefel CJ, Bell, Gageler, Keane and Edelman JJ).
[62] Thorne (n 60) 104 [41] quoting Kakavas v Crown Melbourne Ltd [2013] HCA 25; (2013) 250 CLR 392 ('Kakavas') 400 [14].
[70] [1936] HCA 41; (1936) 56 CLR 113 ('Johnson') 123. See also the comments at 119 that the defendant must affirmatively show that the gift was '"the pure, voluntary, well-understood act of the mind" of the donor' (quoting Huguenin v Baseley [1764] EngR 89; (1807) 33 ER 526 (Eldon LC)).
[72] Johnson (n 70) 119 quoting Huguenin v Baseley [1764] EngR 89; (1807) 33 ER 526 (Eldon LC) (citations omitted).
[73] [1914] HCA 52; (1914) 18 CLR 544, 549.
[78] [1971] VicRp 69; [1971] VR 573 ('Union Fidelity Trustee Co').
[86] Blomley v Ryan (1956) 99 CLR 58, 363 (Fullagar J), 415 (Kitto J).
[88] [1992] HCA 61; (1992) 175 CLR 621 ('Louth'), 637.
[93] See [27] above. Further, I note that in [10] of the third amended defence, Victor alleges that George received independent legal advice in relation to both the Schedule A and the Schedule B payments on 10 October 2017.
[94] I have included the gift of $290,000 in this analysis, given that Victor alleges that George also received independent legal advice in relation to the Schedule A payments in [10(c)] of the third amended defence.
[95] Paragraph 19 of the third amended defence refers to [9(b)(ii)] of that defence. Consequently, I have had regard to it in summarising these allegations.
[96] _Muschinski v Do_dds [1985] HCA 78; (1985) 160 CLR 583, 615 (Deane J) ('Muschinski').
[97] [1984] WAR 61 ('Adenan').
Hrycenko (by his Litigation Guardian Michael Kornitschuk)
Hrycenko [2019] VSC 700
(2016) 50 VR 726
(1984) 154 CLR 178
(1947) 75 CLR 378
(1997) 188 CLR 449
(1983) 151 CLR 447
(1998) 194 CLR 457
(2017) 263 CLR 85
(2013) 250 CLR 392
(1936) 56 CLR 113
(1914) 18 CLR 544
(1956) 99 CLR 58
(1992) 175 CLR 621
(1985) 160 CLR 583