[2012] NSWCA 308
Asset Risk Management v Hyndes [1999] NSWCA 201
Bank of Credit and Commerce International SA v Aboody [1990] 1 QB 923
[1956] HCA 81
Bova v Avati [2009] NSWSC 921
Bridgewater v Leahy (1998) 194 CLR 457
[1974] HCA 22
Collings v Vakas [2006] NSWSC 393
Commercial Bank of Australia Limited v Amadio (1983) 151 CLR 447
[1983] HCA 14
Day v Perisher Blue Pty Ltd (2005) 62 NSWLR 731
Source
Original judgment source is linked above.
Catchwords
[2012] NSWCA 308
Asset Risk Management v Hyndes [1999] NSWCA 201
Bank of Credit and Commerce International SA v Aboody [1990] 1 QB 923[1956] HCA 81
Bova v Avati [2009] NSWSC 921
Bridgewater v Leahy (1998) 194 CLR 457[1974] HCA 22
Collings v Vakas [2006] NSWSC 393
Commercial Bank of Australia Limited v Amadio (1983) 151 CLR 447[1983] HCA 14
Day v Perisher Blue Pty Ltd (2005) 62 NSWLR 731[2005] NSWCA 110
Dimitrovski v Australian Executor Trustees Limited [2014] NSWCA 68
Doss v Doss (1843) 3 Moo Ind App 175[1984] HCA 64
Huguenin v Basely (1807) 14 Ves Jun Supp 273
In re Coomber [1911] 1 Ch 723
In re Everett[1936] HCA 41
Jones v Dunkel (1959) 101 CLR 29832 ER 68
Louth v Diprose (1992) 175 CLR 62137 ER 327
Peninsular and Oriental Steam Navigation Company v Johnson [1937-1938] 60 CLR 189[1938] HCA 16
Perochinsky v Kirschner [2013] NSWSC 400
Plunkett v Bull (1915) 19 CLR 544[2009] NSWSC 43
Sgro v Thompson [2017] NSWCA 326
Singh v Singh [2015] NSWSC 1457
Spong v Spong (1914) 18 CLR 544[1985] HCA 49
Urane v Whipper [2001] NSWSC 796
Warman International Limited v Dwyer (1995) 182 CLR 544 at 577
Judgment (86 paragraphs)
[1]
Introduction
Broadly, by way of introduction, the dispute between the parties is yet another unfortunate example of disputes between siblings over a deceased parent's estate, involving complaint as to events that occurred prior to the deceased's death with allegations (amongst others) of undue influence and unconscionable conduct on the part of the defendant.
The family in question is the Becker family. Mrs Isolde Becker (the deceased) died of pneumonia on 13 July 2019 aged 82. The deceased had survived her husband, Dr Theodore Becker, who had died three years earlier, aged 93. The deceased and her husband had two children, Lara Caroline Torok (the first plaintiff) and David Theodore Becker (the defendant). I will refer to the family members, intending no disrespect, by their first names. I note that Lara is also the second plaintiff in these proceedings in her capacity as the legal representative of the estate of the deceased, Lara having been appointed by Robb J as the estate's representative for that purpose (see Torok v Becker [2019] NSWSC 1662 (Torok v Becker (2019)) (see also the relevant principles in relation to such appointments referred to in Bayside Council v Estate of Goodman [2019] NSWSC 530; and Hewitt v Gardner [2009] NSWSC 705).
By her last Will dated 31 August 2016, the deceased made provision for each of her two children in the form of pecuniary legacies ($1 million to Lara and $2 million to David), with the residue of the estate to be divided equally between them. At the time of making of the Will in August 2016, Lara says that the net value of the deceased's estate (which included a property at Glenhaven) was estimated to be not less than $3,037,800. David appears not to dispute this, since he says that, at the time of the 2016 Will, it was estimated that the deceased's then residence at Glenhaven would sell for between $6 million and $7 million (David's 17 March 2020 affidavit at [97]-[98]). Whatever may have been the market value of the Glenhaven property in August 2016, it is clear that, as at that time, the deceased had not insignificant assets from which she would no doubt have anticipated her testamentary intentions would be satisfied. As it was, however, by the time of her death in July 2019, the deceased held no real estate, only a small number of shares, cash totalling $2,917.57, and (on David's evidence) very little personal items or furniture.
The circumstances in which the deceased's estate was diminished to such an extent, including by way of the purchase of a house in Beaumont Hills in the names of David and his wife (Susan Mary Becker) (using some $1,522,272.03 of the proceeds of sale of the deceased's Glenhaven residence) (the Beaumont Hills Property) and by way of electronic transfers of substantial funds from the deceased's bank account to David's account or, it is alleged, for his benefit) are the subject of the undue influence and unconscionable conduct claims now brought against David. The electronic funds transfers (whether used for the purchase of the Beaumont Hills Property or otherwise for David's benefit) are also the subject of a claim that David is liable, as a fiduciary, to account therefor.
In summary, Lara contends that David received (or had the benefit of) funds totalling some $2,958,525.13 from the deceased following the making of her August 2016 Will and that, from the period after David and his family moved into the deceased's Glenhaven residence in 2014, David benefited by the receipt of amounts (including the abovementioned funds) totalling $3,298,326.13. There is also a claim in relation to the apparent disposal by David of various chattels of the deceased.
In the alternative, in the event that the amounts received or transferred to David or for his benefit are held to have been authorised by the deceased and/or were valid gifts to him, then Lara brings a claim for provision pursuant to s 59 of the Succession Act 2006 (NSW) (Succession Act).
For the reasons set out below, I am of the view that the primary claims brought by Lara are made good and that it is therefore unnecessary to deal with the Succession Act claim (but I will nevertheless set out, in due course, what would have been my findings in relation to that claim had it arise for determination).
[2]
Background
By way of background, as already noted, the deceased and her husband had two children (Lara and David). The deceased's husband (Dr Becker) was a general practitioner who continued to practise as a doctor until he retired in his mid-80's. The deceased had assisted Dr Becker in his medical practice as a secretary until the birth of their children. The deceased was Dr Becker's second wife and Dr Becker had three children from his earlier marriage. Those children do not feature in this dispute (although there was some evidence from Lara that Dr Becker had told her that he had made provision for each of his first three children - see T 62, which may serve to explain his undoubted generosity also to Lara during his lifetime).
In 1988, the deceased and Dr Becker, as joint tenants, purchased a property in Glenhaven, NSW (the Glenhaven Property). At some time thereafter, they demolished the existing house on the property and built a large six-bedroom house on the land, financed by a $500,000 loan from the Commonwealth Bank of Australia (CBA). They lived in the Glenhaven Property (which became the family home) for much of the rest of their respective lives.
On 21 December 1995, Dr Becker and the deceased made mirror Wills (and in March 2007 and April 2008 he and the deceased made mirror codicils). I will refer in due course to the content of the relevant testamentary documents (see [38] below).
Following her schooling, Lara remained living with her parents while she completed degrees at Sydney University in occupational therapy and physiotherapy. David did not pursue a tertiary education. He enrolled in an information technology course and subsequently established a business of carpet overlocking and binding, manufacturing mats, rugs and floor runners from carpet offcuts.
In 2004, David left the Glenhaven Property. He and Susan moved into a home they had built on land they had purchased in Kellyville (the Kellyville Property). Also in 2004, Lara married Adam Torok, who is now a practising solicitor but who was then still a student, studying law and working in various part-time jobs. Following their wedding, Adam moved into the Glenhaven Property with Lara and her parents.
Lara and Adam remained living at the Glenhaven Property until July 2005, when they moved into their own home at Baulkham Hills. Later, for a period of time in 2007, Adam and Lara moved back into the Glenhaven Property while they renovated a residence on land they had purchased at Wallacia (the Wallacia Property).
[3]
Financial accommodation provided to Lara (and Adam)
It is not disputed that, over the course of their lives, Dr Becker and the deceased provided financial accommodation to Lara (and Adam) by way of the provision of guarantees to secure a succession of loans. It is relevant to note that the financial accommodation consisted in the first instance of the provision of guarantees secured over the Glenhaven Property (not loans, as such, as was suggested in some of the evidence). However, in 2007 (when Dr Becker retired) the extant loans which were then secured by way of those guarantees were paid out by way of refinance obtained by Dr Becker and the deceased from a Homesafe "reverse mortgage" (about which I will say more in due course); and later, according to Lara, after Lara and Adam had paid a certain amount towards repayment of the amount referrable to the loans that had been guaranteed for their benefit, Dr Becker (and the deceased) in effect forgave the balance of the amount repayable by Lara in that regard.
Lara accepted in cross-examination that she had approached her parents for financial assistance over the years and that they had been generous (in her words, "amazing") in the provision of that assistance. Both Lara and Adam accepted that they could not have acquired the assets that they did (at those times) without the assistance of the deceased and Dr Becker (see, for example, Lara's evidence at T 62).
Pausing here, it seems that David may have a sense of grievance that similar accommodation was not made to him as it was to Lara (and Adam), at least insofar as the financial accommodation to his sister was a matter on which no little emphasis was placed in submissions in this matter and, according to Adam, David pressed him for information about this. In that regard, Adam's evidence is that (by 2015) David had questioned him a number of times as to the amount of financial accommodation his parents had given Lara and Adam with regular frequency: along the lines, "[s]o how much money have my parents given to you and Lara?" and "[y]ou must know what they gave you" (see Adam's 9 April 2020 affidavit at [20]).
Whether or not David did feel aggrieved at the disconformity in provision made as between he and Lara during their lifetimes, it is evident from the deceased's testamentary instruments and, in particular, the instructions given by her in relation to her ultimate Will (as recorded by her, and David's, solicitor) that the deceased wanted to "even things up" between her two children.
[4]
(a) The Homebush Guarantee
The first of the guarantees (the Homebush Guarantee) was in connection with the purchase by Lara and Adam in November 2004 of an apartment in Homebush. Lara says this was an investment property bought at the suggestion of her father. CBA (with whom the deceased and Dr Becker had their home loan) provided the funding for that purchase (apart from the deposit, which Lara says she and Adam provided out of their savings). The loan secured by the Homebush Guarantee was serviced by Adam and Lara directly with CBA. The Homebush loan was paid out in full when the Homebush Property was subsequently sold in 2006 at around the time of the purchase of the Wallacia Property (see below).
[5]
(b) The Baulkham Hills Guarantee
In July 2005, Adam and Lara purchased a home in Baulkham Hills. Again, the purchase was financed by CBA. In June 2005, the deceased and her husband gave a guarantee in respect of the Baulkham Hills home loan (limited to an amount of approximately $450,000) (the Baulkham Hills Guarantee). The loan secured by the Baulkham Hills Guarantee was again serviced by Adam and Lara directly with CBA. The Baulkham Hills loan was paid out in full when the property was sold in 2006 (at the time that Lara and Adam acquired the Wallacia Property).
[6]
(c) The Physiotherapy Guarantee
In early 2006, Lara, who by that time had worked as a physiotherapist for two years, purchased (through a company incorporated for that purpose - Lara Torok Pty Ltd) her own physiotherapy and hydrotherapy practice in Penrith, Nepean Manipulative Physiotherapy and Hydrotherapy Centre (with, she says, her father's encouragement).
The deceased and Dr Becker guaranteed a bank loan of $160,000 for the purchase (the Physiotherapy Guarantee), and also provided a bank guarantee in the amount of $13,479.98 in relation to the practice (it seems likely that this was by way of a bond for the lease by the company of the business premises from which the physiotherapy practice operated). The Physiotherapy Guarantee was secured over the Glenhaven Property. Lara's company was the principal debtor in respect of the loan secured by the Physiotherapy Guarantee, and serviced the Physiotherapy loan by direct debit payments to the CBA.
[7]
(d) The Wallacia Guarantee
In late 2006, Lara and Adam purchased a property at Wallacia, with the intention of making this their family home. Dr Becker and the deceased again provided a guarantee securing the finance obtained for the acquisition of the Wallacia Property. On settlement of the Wallacia Property purchase, CBA created two facilities - one, in the amount of $722,000, which related to that part of the loan secured over the Wallacia Property itself; the other, in the amount of $180,000, which was secured by way of guarantee given by Dr Becker and the deceased and secured over the Glenhaven Property (the Wallacia Guarantee). Following settlement of the Wallacia purchase, Adam and Lara serviced the loan secured by the Wallacia Guarantee by way of direct debit payments to CBA (see Ex 6).
[8]
2007 codicils
On 21 March 2007, the deceased made a codicil to her 21 December 1995 Will in which she directed her executors to take into account advances (with interest) made to each of Lara and David, when dividing her estate equally between them.
The 2007 codicil refers to an advance to Lara in the amount of $38,000 in May 2005 and an advance to David in the amount of $160,000 at the same date. It is accepted that there was an error in the drafting of the codicil, in that the relevant amounts were transposed (i.e., the amount of $160,000 was referable to the Physiotherapy Guarantee and was for the benefit of Lara, not David, and vice versa). Some time later, on 29 April 2014, Mrs Becker corrected the codicil to note that the advance of $160,000 was to Lara, and the advance of $38,000 was to David.
Pausing here, as already noted, there had not been an advance, as such, to Lara of $160,000 as at the date of the 2007 codicil; rather, Dr Becker and the deceased had provided security by way of guarantee secured by mortgage over the Glenhaven Property for the Physiotherapy loan in the amount of $160,000 (thus putting their assets at risk but without the outlay by them of any funds at that stage).
[9]
Retirement of Dr Becker and refinance of Glenhaven home loan
In 2007, at the age of 84, Dr Becker retired from his medical practice. At the time, Lara and Adam were back living at the Glenhaven Property (while the Wallacia Property was being renovated) and there were still on foot the loan the subject of the Wallacia Guarantee and the loan in respect of the Physiotherapy Guarantee ((see Lara's 26 October 2019 affidavit at [91]; [97]-[98]).
At around the time of Dr Becker's retirement (and, it is said, unbeknownst to Lara or Adam), Dr Becker and the deceased's existing loan with CBA was in the amount of approximately $545,000.
On 31 May 2007, Dr Becker and the deceased sent a facsimile transmission to their solicitor, Mr Ken Austin, in relation to the proposed refinancing of their CBA loan by way of entry into a "reverse mortgage" arrangement with "Homesafe". In that document, the payout figures for the refinance appeared as follows:
$409,000.00 plus
$160,000.00 Guarantee for business for Lara Torok Pty Limited, plus $179,000.00 Guarantee for home loan.
For Lara, it is said that the $409,000 figure noted in the above facsimile transmission was the approximate payout figure of the deceased and Dr Becker's then $545,000 loan, less the offsetting amount of funds in their mortgage interest saver account at the time.
Consistent with the above there is a note by the deceased in June 2007 as follows:
Lara & Adam
$160,000 Business guarantee
$179,000 Home guarantee
$339,000 Total guarantee
Our Mortgage $408,707.
On 22 June 2007, Dr Becker and the deceased settled the refinance of their CBA loan with Homesafe. The total amount of the refinancing was $853,325 (see Lara's 16 October 2019 affidavit at [74]). The refinance encompassed the payout of the Physiotherapy Guarantee ($160,928.26), the Wallacia Guarantee ($177,967.56), and Dr Becker and the deceased's home loan in respect of the Glenhaven Property. After repayment of those amounts, the Homesafe loan made available to Dr Becker and the deceased an amount of approximately $93,000.
David points out that the effect of the above was that the 2007 refinancing (by way of reverse mortgage) of the Glenhaven Property was increased by the sum of $338,895.82 to reflect the payout of the borrowings attributable to Lara and Adam. (This is not disputed.) David's evidence is that this was a matter about which the deceased and Dr Becker were very concerned (see David's 8 November 2019 affidavit at [10]-[11] and [19], and his 17 March 2020 affidavit at [38], [41], [45]-[50], [52] and [96]). (I interpose to note that I treat that evidence with some caution in the absence of any independent corroboration of any such concern at the relevant time i.e., when the Homesafe mortgage was taken out. I also refer in due course to evidence as to the deceased's reported concern, at a later time, about the Homesafe mortgage, in the context of the Glenhaven Property sale; which concern appears to have been prompted to some extent by David at least insofar as it appears he took the deceased to a financial planner for advice about the mortgage - see below.)
[10]
Discharge of Physiotherapy and Wallacia Guarantees
As noted above, at the time of the Homesafe refinance of the CBA loans, Lara and Adam were living at the Glenhaven Property. Lara cannot recall how she came to learn of the refinance of the Glenhaven Property but presumes that it was because she had noticed at least one of the CBA loans "disappear" from her internet banking account. Adam similarly made reference to this.
Lara's evidence is that, after she learnt about the refinance, Dr Becker directed her to start making repayments of the loans which related to the Physiotherapy Guarantee ($160,928.26, including fees) and the Wallacia Guarantee ($177,967.56 at the time of refinance) into Dr Becker and the deceased's joint bank account in the amount of $1,100 per fortnight. That is corroborated by the evidence of such transfers commencing around then and by the codicils executed by the deceased and Dr Becker in April 2008 (see below).
[11]
2008 Codicils
On 1 April 2008, Dr Becker and the deceased executed mirror codicils to their Wills in which each directed their executor to take into account the sum of $338,895.82 (which Lara notes comprised the sum of $177,967.56 (Wallacia Guarantee) and the sum of $160,928.26 (Physiotherapy Guarantee)) refinanced by them, when making an equal distribution between Lara and David. The codicils recorded that the said amount was being repaid by Lara at $2,200 per calendar month, interest free. (The codicils did not, however, record those two separate components of the sum of $338,895.82 but nothing turns on this.)
[12]
Payment to Dr Becker and the deceased of $1,100 per fortnight from July 2007
Between July 2007 and 2009, Lara continued to pay Dr Becker and the deceased the amount of $1,100 per fortnight directly to their nominated bank accounts (as adverted to above, copies of bank transfers were in evidence).
Lara's evidence is that, in 2009, Lara was approached by Dr Becker to change the payment method from direct transfer to cash (to enable he and his wife to claim a part-pension) and that from then Lara started making repayments by cash instead of bank transfer. Lara's evidence is that she and Adam continued making cash repayments to Dr Becker and the deceased up until March 2010. There is no evidence of any complaint by Dr Becker (or the deceased at least at that stage) as to any failure to do so.
[13]
Sale of physiotherapy business and later forgiveness of balance of the loans
Lara's evidence is that, in about February 2010, when she was pregnant with her first child, Lara had discussions with her father in which Dr Becker advised Lara to sell the physiotherapy business to allow her to concentrate on raising a family. (Lara's evidence was that her father thought a mother should stay at home with her family - see T 76.32.)
Lara's evidence is that the decision to sell the physiotherapy practice, which was profitable according to Lara, was made in the context of the arrangement that Lara and Adam would not then need to continue making the monthly repayments to her parents. She said that she would not have sold the practice without knowing that they did not have to meet the $2,200 monthly repayments (T 71). (The practice was not sold for a profit - Lara's evidence is that the market for the sale of such practices at the time was that they were lucky even to be able to sell the physiotherapy practice when they did.)
Lara says that her father told her that he wanted no part of the sale proceeds (approximately $135,000) and directed Lara to stop making all loan repayments to him and the deceased in order to enable Lara and Adam to service their own home loan, and focus on raising a family. Adam similarly gives evidence of a discussion at which he was present in the kitchen at the Glenhaven Property with Lara, Dr Becker and the deceased, at which he says Dr Becker said "You don't have to worry about repaying us as we have made it equal in our wills". Again, this is consistent with the codicils made in 2008.
Lara thus contends for a finding that, while Dr Becker and the deceased provided Adam and her with financial accommodation in the form of forgiveness of the $338,895.82 paid by Dr Becker and the deceased as part of the 2007 Homesafe refinance, that sum had already been noted by Dr Becker and the deceased in their respective Wills to ensure an equal division between their children (as part of a regime in which Lara and Adam had repaid Dr Becker and the deceased upwards of $55,000 following the making of the Homesafe refinance). That accords with the evidence; and I so find.
[14]
Carpet interlocking business joint enterprise
By 2011, David had been operating his own carpet overlocking and binding business for a number of years. In 2011 Lara and Adam went into business with David, trading as "Sydney Overlocking" (Lara says against Dr Becker's advice but with the deceased's support). There was no signed written agreement in relation to the business arrangements between the siblings (and their spouses), though there was some suggestion in Lara's evidence that a draft partnership agreement had been prepared at some time. Lara referred to it in a later letter to her mother as a "partnership" and said in cross-examination there was a verbal partnership agreement (T 80).
Lara's evidence is that the carpet overlocking business in which the siblings and their spouses were jointly involved was an amalgamation of David's business and a business that she and Adam acquired and for which they paid cash out of the proceeds of sale of the physiotherapy business in order to invest in the carpet business (T 73). Lara's evidence is thus that she and Adam had invested their capital at that time in the carpet business.
Whether or not the business arrangement between the siblings was, as a matter of law, a partnership as such (see the definition of partnership in s 1(1) of the Partnership Act 1892 (NSW) (Partnership Act), as being the relation which exists between persons carrying on business in common with a view of profit, and s 2 of the Partnership Act which sets out various rules to which regard shall be had in determining whether a partnership does or does not exist; and see also the discussion of the test of partnership in Bova v Avati [2009] NSWSC 921), there was on any view of things a joint venture (see United Dominions Corporation Limited v Brian Proprietary Limited (1985) 157 CLR 1; [1985] HCA 49 (United Dominions) at 10, per Mason J (as his Honour then was), Brennan and Deane JJ) between the siblings and their spouses in relation to the carpet overlocking business from around 2011 through to February 2016. Lara confirmed in the witness box that all four (she and Adam, David and Susan) were shareholders and directors of the entity carrying on the business. On all accounts, the joint enterprise ended very acrimoniously (see below).
[15]
Deterioration of Dr Becker's health and his move to an aged care facility
In 2014, Dr Becker was admitted to hospital suffering chest pain. It does not appear to be disputed that his health had been slowly deteriorating, and it is said that he was by then exhibiting symptoms of dementia. Lara, however, is adamant that at that stage her father was exhibiting only mild dementia (which I note here not as amounting to any evidence of his actual medical condition at the time but simply because it informs Lara's apparent disagreement at that time as to the necessity for placement of her father into a nursing home - see T 94).
Lara gives evidence that she suggested to David at some stage in 2014 (see her affidavit affirmed 26 October 2019 at [133]) that their parents downsize to a smaller property; and that David rejected any such proposition, telling Lara: "Don't be stupid Lara. We need to make them keep Glenhaven for as long as possible. That is our inheritance. Just imagine, we'd be set for life". David does not refer to this conversation or whether it occurred, but he did say in cross-examination that he did not discuss downsizing with his mother (see at T 276), but in any event, it does not appear to be disputed that the deceased at that stage did not agree to any suggestion that the Glenhaven Property be sold (whether to allow the couple to "downsize", or otherwise).
In any event, in 2014, after his hospitalisation, Dr Becker moved to live in "The Poplars" aged care facility in Epping. He never returned to live in the Glenhaven Property. In connection with his admission to The Poplars, payment of an accommodation bond in the amount of $590,000 was required (the Accommodation Bond).
On David's evidence, he and his wife Susan sold their Kellyville Property at that time in order to be in a position to pay the Accommodation Bond for Dr Becker's admission to The Poplars. (This is of relevance given his evidence as to the deceased's later concern that they had done so "for no reason" in order to pay the Accommodation Bond - see David's 8 November 2019 affidavit at [16], and his 17 March 2020 affidavit at [59] and [88].)
Indeed, prior to the commencement of the proceedings, David's solicitors (Austin Guigni Martin), by letter dated 11 October 2019, made the assertion that part of the proceeds of the sale of the Kellyville Property had been used to pay part of the Accommodation Bond (an assertion that it is here accepted was incorrect). The letter stated that:
In 2014, Theodore's health deteriorated and he moved into Poplars Nursing Home. The deceased and Theodore did not have sufficient funds for the accommodation bond. Our client sold his Kellyville property and used part of the proceeds to pay the shortfall of the bond. The deceased was on her own in the Glenhaven property and our client and his wife gave up full-time work to become the deceased's full-time live-in carers. [Emphasis added]
[16]
Corrective codicil
As adverted to above, on 29 April 2014, the deceased made a codicil correcting the 2009 codicil (Ex D).
[17]
David and Susan relocate their family to the Glenhaven Property
As also adverted to above, in about July 2014, David and Susan sold the Kellyville Property. David and Susan and their two children, then moved into the Glenhaven Property. The Kellyville Property was sold for $821,500.00 (Ex A). Upon the sale of the Kellyville Property, after repayment of the mortgage on that property, David and Susan received the sum of $298,657.73 together with the sum of $62,200, being the balance of the deposit (David's 8 November 2019 affidavit at [14], and 17 March 2020 affidavit at [58]).
[18]
NetBank Saver Account in deceased's name
On 15 January 2015, David was allocated NetBank Access to his CBA account.
On 5 February 2015, a new "NetBank Saver" account was opened with the CBA in the name of the deceased. Lara says that, prior to February 2015, Dr Becker and the deceased's accounts reveal a course of dealing with those accounts in which Dr Becker and the deceased made payments by cheque and withdrawals of cash from the ATM; and contends that the opening of a NetBank account marks a distinct change of banking practice in that regard. There seems little doubt that David assisted the deceased to open that NetBank account. (Indeed, David's evidence is that the deceased did not have a computer when he first moved into the Glenhaven Property and he admitted at T 196 that he taught his mother "NetBanking".)
On 8 February 2015, the first electronic external transfer on any of the deceased's accounts was effected. It was the transfer of the sum of $1,249.00 from the deceased's account into David's CBA account. The transfer contained the description "Pay IPhone" (David says, in his affidavit of 17 March 2020 at [81], that this was a reimbursement to him for the purchase of an iPhone for his mother).
Pausing here, I note that a substantial complaint in the proceedings is that, in the years from 2015, numerous electronic transfers were made from the deceased's accounts (using her NetBank facility) of sums of money into the accounts of: David, David's and Susan's company (S&D Becker Pty Ltd); or Tesla (to purchase a new vehicle for David), in amounts exceeding $1.77 million (see below).
[19]
Breakdown of the "partnership" or joint venture between the siblings
Lara's evidence is that, in 2015, the carpet overlocking business was losing money; and it appears there was concern as to the lack of time David was spending in the company.
In June 2015, David travelled to the United States of America (apparently to pursue a business of importing and selling Tesla after-sale parts) (see David's 17 March 2020 affidavit at [89]). (It seems that part of the discord between the siblings as to the carpet joint venture at around this time was as to David's commitment or lack of commitment to it; that being of some significance since Lara's evidence is that it was David who had the relevant client contacts.)
On 11 November 2015, (consistent with his then business plan being to be involved in the sale of Tesla after-sale parts), David bought a Tesla model S motor vehicle for the sum of $214,636.50.
Lara's evidence is that, by January 2016, the carpet overlocking business had no money to pay its staff and that she arranged a transfer from her home loan offset account to ensure that the business paid the wages (see Lara's 26 October 2019 affidavit at [159]-[161]). There is also evidence that at some stage Lara expressed to the deceased her concerns at David's role in the business but Lara understood that the deceased did not want to become involved in a dispute between the siblings.
On 5 February 2016, David wrote a letter of resignation in relation to the carpet overlocking business (Ex A), stating:
5 February 2016
Adam Torok,
I am informing you as of today the 5 February 2016 I am formally resigning as a Director from Sydney Overlocking PTY LTD due to ongoing unresolvable problems. I will continue to be a 50% shareholder however you can do what you like with the company from this point on.
Phone numbers [xxx] and [xxx] will be removed from Sydney Overlocking today 5 Feb 2015.
In order to keep the company going I am willing to offer services as follows:
If you require contract cutting service for Sydney Overlooking, I am offering three hours or less per day at $80.00 per hour. Cutting service will be invoiced directly to Sydney Overlocking, my payment terms are weekly. No payment no more cutting. Two of us cutting effectively 6 hours work time (I will inform you if I am unavailable at any point well in advance [sic]
I will provide contract technical support for machinery, computer, or other items that can't be resolved by yourself charged at $120.00 per hour or per call out.
If you require holidays I can provide Management service for Sydney Overlocking at a fee.
There is a large debt which I have greatly reduced that needs to be paid to myself to the amount of $20.000. I have investigated bookwork and bank statements beyond 2013 and found various inconsistencies to the excess of way over $35.000.
I am willing to give you one month to pay me the reduced amount of $20.000 or if you are unable to do so I will require evidence to support your inability to pay out your debt. Please note there is approximately $85.000 of outstanding debtors to Sydney Overlocking. I see no reason why you can't pay me promptly.
If you don't want to pay back the debt I will have no option but to relinquish my offer to subcontract to Sydney Overlocking and we can part ways.
What I have set out is NOT NEGOTIABLE it is up to you what you want to do from here.
Please respond to me by midday on Monday 8th February or I will consider no deal and we can part ways.
Regards
David Becker.
[Emphasis in the original]
[20]
Change to deceased's mobile telephone number
Lara's evidence is that on 6 February 2016 (the day after David tendered his "resignation" from the carpet overlocking business), Lara spoke to the deceased who told her that "David is extremely upset and I think it would be best if you and Adam no longer came to the house" (see Lara's 26 October 2019 affidavit at [159]-[165]).
It appears that on the same day the deceased's telephone number was changed. Lara says that in the months which followed she was unable to raise her mother on the telephone. It appears that the deceased's mobile phone number had been changed (see the Amaysim contract; and David's cross-examination at T 210-211), although David says that the landline was unaffected (see David's 17 March 2020 affidavit at [55]). David maintains (but Lara disputes) that Lara was at all times able to contact the deceased. There seems little doubt, however, that it was David who effected the changes to the deceased's telephone numbers although David says "we" changed the mobile phones (he says to obtain a different payment plan) (see T 277).
Relevantly, this is another instance of incomplete or inaccurate statements being made on David's behalf. Through his solicitors, David denied that he had an Amaysim telephone account whereas in fact it seems that there were at least four such accounts (see T 210-211) and David's explanation for this in the witness box was that he forgot about them and he thought the accounts were with Optus. This is another instance where his account is unreliable (and even if he simply forgot about the accounts, this suggests a lack of any real attention to the production of accurate or complete information as and when that was requested in the course of the proceedings). I say more about this in due course.
Lara's account of concern at being unable to contact the deceased in this period is corroborated by the fact that she made a police report at around this time (something one would think an extreme step to take had Lara in fact been able to make contact with the deceased at the time, as David asserted she was). Lara's evidence in the witness box (given in a resigned fashion) was that the deceased was angry that the police had been called; and Lara accepted (at least in hindsight) that the deceased would have found it mortifying for her neighbours to see the police attending at the premises. My impression was that Lara's concern for her mother's welfare was genuine (not least because once that concern was resolved (by the police having checked on her mother) Lara did not pursue it any further though she maintains she was still upset at the lack of contact with her mother).
[21]
Renovation of Glenhaven Property
David says that, in the period from mid-2016 to 24 June 2017, substantial landscaping and renovation works were undertaken to the Glenhaven Property (David's 8 November 2019 affidavit at [19]-[20], and 19 March 2020 at [3]-[19] and [99]). David says that he contributed to the cost of renovations of the Glenhaven Property by using his own money and the net proceeds of sale of the Kellyville Property referred to above (David's 8 November 2019 affidavit at [14] and [25], and 17 March 2020 affidavit at [56]-[58]). A DVD containing video footage (taken from a drone) was in evidence showing the extent of the landscaping works carried out to the Glenhaven Property prior to its sale (the probative force of which was limited by the difficulty in ascertaining precisely what was done to the property, although it was evident that extensive landscaping works had been carried out).
Criticism was made, through David's cross-examination, that there had been no independent advice as to how best to market the property and whether the renovations were necessary (or prudent) to undertake for that purpose. David's evidence was that he had some (seemingly informal) advice from a friend who was a real estate agent friend (but not from the real estate agent ultimately involved in relation to the sale of the Glenhaven Property). (I interpose to note that the prudence or otherwise of making extensive renovations to a property prior to its proposed sale, particularly in light of the prospect that this might amount to over-capitalisation, highlights the vulnerability of the deceased insofar as there is no suggestion that she had any independent advice on this issue - and extensive viewing of home renovation programmes, even assuming that to have been the deceased's interest, would hardly qualify as expert advice on the subject.)
[22]
Death of Dr Becker
Lara's evidence is that between January 2016 and April 2016 she continued to visit her father at The Poplars (see Lara's 26 October 2019 affidavit at [177]). Dr Becker died on 6 May 2016.
Lara's evidence is that she arranged for a private viewing on the day of the funeral to mourn her father's death and, later, at Bondi Beach scattered some her father's ashes (which Adam had collected from the deceased at a pre-arranged place) (see Lara's 26 October 2019 affidavit at [184]-[187]). David's evidence is that the deceased was upset that Lara did not attend her father's funeral. It is not apparent that David (or the deceased) was aware of the private viewing at that time.
There is a dispute as to whether or not David did not permit the deceased to get out of the car when Adam invited her for a coffee on the occasion that the ashes were collected (as Adam says) (see Adam's 9 April 2020 affidavit at [50]), or whether the deceased simply did not like Adam and did not wish to join him for coffee (as David says) (see T 278.16). However, there is no dispute that there was an occasion when some of the ashes were given to Adam for Lara's benefit.
[23]
Contact with the deceased after Dr Becker's funeral
According to Lara, by the time Adam collected Dr Becker's ashes from the deceased, Lara had obtained her mother's new telephone number from Lara and David's cousin, Melita (see Lara's 26 October 2019 affidavit at [188]). (Melita did not give evidence in the proceedings but I was not asked to draw any Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 inference about this; nor do I here do so.)
[24]
Instructions for a new Will for the deceased
On 10 May 2016, David and the deceased together attended the offices of Austin Giugni Martin to give instructions as to the estate of Dr Becker. At that time instructions were provided for a new Will for the deceased. There is nothing in the solicitor's file note to suggest that the deceased gave those instructions in the absence of David (and there was no evidence adduced from the solicitor to elucidate this one way or the other).
On 13 May 2016, David's solicitor in the present proceedings, Mr Giugni, sent David an email with a draft for the deceased's Will, a draft statement of the deceased's intention in relation to her Will, Power of Attorney, and Appointment of Enduring Guardian. The draft Will provided for an unspecified legacy to David with the balance of residue to be divided equally between the siblings. (It is of relevance to note that the communication in relation to the Will was directed to David not the deceased, suggesting that the instructions were being communicated by or at least through David.)
On 18 May 2016, the deceased attended the offices of Austin Giugni Martin and executed a Power of Attorney appointing David as her attorney. David accepted the appointment at the same time. On that occasion the deceased collected her draft Will. Mr Giugni's file note of the 18 May 2016 conference is as follows:
Meeting with Mrs Becker. She took away her will to consider what she wanted to give David [to] even things up with Lara. Lara has paid some of her loan back and she and her Husband did not wish to charge interest.
She wants to even things out with David and compensate him for living with her and not buying his own house. She will get back to me with a figure and then we can finalise her will. She did sign POA and EG forms and will look at the statements as to explaining why she is not leaving everything 50/50 between David and Lara.
[Emphasis added]
Pausing here, the draft statement explaining the differential legacies as between siblings was never finalised and in the absence of any evidence as to the basis on which it was drafted I cannot be confident that it recorded the deceased's then instructions to the solicitor (as opposed, say, to the possibility that it represented David's thoughts or observations as may have been conveyed by him to the solicitor).
On 30 May 2016, Mr Giugni provided written advice as to the Homesafe reverse mortgage. Tellingly, that advice was again addressed to David. In summary, Mr Guigni advised as to the "three triggers that can cause money to be made payable to Homesafe", and that in each scenario, Homesafe would be entitled to 65% of the sale proceeds less any applicable rebates (Ex C). The final paragraph of the letter reads:
Otherwise, we request your advice as to the status of the Wills [sic] and what figures should be inserted into that document so it may be completed and signed.
[25]
Lara's letter to her mother
Lara's evidence is that, shortly after receiving her mother's new telephone number, she spoke with her mother and arranged for her to have lunch at Lara's Wallacia Property, at which time Lara read her mother a letter with her view of the recent events (see Lara's 26 October 2019 affidavit at [190]). Lara's evidence was that this was because the deceased had not heard her "side" of the story. Lara said the letter had taken some time to write and that it took a while to read to her mother.
David contends that this letter contained a number of provable lies or falsehoods (T 371): first, that it referred to a partnership (whereas he says no partnership agreement was ever entered into); second, that it talked about a requirement for six months' notice (again pointing to the lack of a written agreement); third, that it suggested that David would thereafter receive (or expected to receive) 50% of the earnings without doing any work (whereas, it is said that historically only salaries were drawn from the company and no dividends had been paid); fourth, that it said David had demanded the sum of $36,000 (whereas, he had demanded the sum of $20,000); and, fifth, that David had demanded payment of a rate of $360 per hour for future work (whereas the hourly rate suggested in the letter was different).
Pausing here, it was accepted by Lara that some of the above assertions made by her in the letter were incorrect (such as the amount she attributed to the demands by David for payment and as to the stipulated hourly rate for future work); and Lara accepted that there was not a written partnership agreement (though she maintained that there was a verbal partnership agreement - see at T 80). Lara's explanation for the errors in the document she read out to the deceased at this meeting was that she was preparing the letter at a time when she did not have David's resignation letter with her. Further, insofar as Lara had described David's resignation letter as extremely threatening, that seems indeed to have been Lara's perspective of the position adopted by David in the letter and there is some substance to such a complaint even if it might be said to have been somewhat overstated.
I consider that the weight sought to be placed on these matters by David is misplaced. The tenor of the letter (insofar as it related to the end of the siblings' joint venture or joint enterprise into the carpet overlocking business) seems to me to reflect in substance what had happened. David had resigned without notice (leaving aside whether he had any obligation to give such notice, one might have expected some notice of his departure from the business to have been given, if only as a matter of courtesy to his business colleagues); David had indicated that he was leaving the business to Lara and Adam (though, of course, that meant little if, as Lara says, David had all the customer contacts); and David had set out the terms on which he (and his wife would be prepared to continue to work in the business (albeit that those terms were not accurately stated in the letter Lara read to her mother). More relevantly, perhaps, it is apparent from the letter that this was putting Lara's perspective as to the breakdown of the business relationship (and one would assume that the deceased would have understood it as such and that there was or may well have been another side to the story, namely David's side, about which the deceased was clearly capable of speaking to David had she wished).
[26]
"Secret" meetings
Lara's evidence is that over the next few weeks, Lara continued to visit her mother, including taking her to "Disney on Ice" at Olympic Park. Lara says that, at the deceased's request, the visits were kept secret from David, for fear that it may cause upset (see Lara's 26 October 2019 affidavit at [195]). David submits that it is not plausible that any such visits could have taken place secretly (since the deceased was living with him and by then he was home much of the time). I agree that it is difficult to place much weight on the "secret" meetings evidence without independent corroboration.
[27]
Execution of August 2016 Will
On 31 August 2016, the deceased executed her last Will. There is no file note of her attendance at the solicitors' office on that occasion (although I note that Mr Michael Giugni (a solicitor) and Ms Janelle Yong (a law clerk) witnessed the Will). As adverted to above, the 2016 Will provided David with a legacy of $1 million more than that left to Lara under the Will. Lara's position is that this $1 million was the sum that the deceased thought was appropriate recompense for David's time living with her, David not having his own house, and the financial assistance provided to Lara in the form of the forgiveness of the Physiotherapy and Wallacia loans, in order to provide an overall equal treatment of her children. That is certainly a plausibly explanation for the differential legacies (and consistent with the instructions recorded by the deceased's solicitor at the time). It is said by Lara (and I accept) that this equality of treatment had been a hallmark of Dr Becker and the deceased's successive wills and codicils over the years.
[28]
The deceased moves out of Glenhaven Property
In November 2016, while renovation works were undertaken to the Glenhaven Property, the deceased moved out of the Glenhaven Property and into the residence of Ms Natalia McCarthy, a friend of David and Susan (Susan being the godmother of Ms McCarthy's child), who described herself in her affidavit as a friend of the deceased (see [1] of her affidavit sworn 28 May 2020). There was no little uncertainty as to when the renovation work that was carried out actually commenced but there is no dispute that the deceased was living at Ms McCarthy's house for a number of months (from November 2016 until August 2017, apart from a period of hospitalisation in January 2017 during the deceased's knee surgery). Ms McCarthy gave evidence as to David's attendance at her house on an almost daily basis to visit his mother during this time ([8] of her affidavit sworn 28 May 2020).
[29]
The deceased's declining health
It is Lara's evidence that the deceased had had a number of falls around the house between 2012-2014 (see Lara's 26 October 2019 affidavit at [145]-[146]). This is consistent with medical notes that record that the deceased underwent surgery for an "extensive fracture and dislocation" in October 2012, and that the deceased had a number of health conditions which limited her movement, including three spinal fusions, hypertension, wrist and shoulder fractures and dislocations.
According to the medical records, the deceased's conditions required ongoing prescription medication in the form of sleeping tablets "Normison", pain medication "Panadeine Forte" (1-2 tablets four times a day), and anti-inflammatories. David in his defence did not admit that his mother suffered back pain but in cross-examination while he did admit that she had pain (T 280), and that the deceased was on a variety of medications, David would not accept she was in considerable pain (T 280). Indeed, David's evidence is that these medications made his mother forgetful, that she often stayed home the entire day in her dressing gown or comfortable clothes as she was finding it difficult to dress herself, and that, by the end of 2015, or early 2016, the deceased could not look after herself (see David's 17 March 2020 affidavit at [78]-[80]). David also gave evidence that the deceased often had difficulty sleeping and had irregular sleeping hours (see, for example, at T 189) (though fortuitously it appears that David was also awake at such irregular hours, when NetBank transactions and/or log-ins happened to occur almost simultaneously on both his account and that of the deceased - see below).
In January 2017, the deceased attended an orthopaedic surgeon (Dr Muderis) for consultation about her knee. The report records that the deceased had been suffering from a significant disability for some time:
Isolde is an 80 year old lady who has been complaining from pain in both knees, worse on the right side. She has had the pain for many many years and she has left it for a long time and she is getting to the stage where she is almost completely disabled and over the last 12 months she has been hardly able to walk.
Isolde's knee is extremely deformed with significant valgus deformity and looking at the knee there is significant deformity and significant instability. Radiologically she has complete destruction of the joint space in the lateral compartment and in the medial compartment with large bone loss.
Unfortunately Isolde's condition is very severe and a standard knee replacement is going to fail and with her kind of condition, which is also complicated by the rheumatoid arthritis that she has, she would need a constrained knee.
[30]
Glenhaven Property sold and Beaumont Hills Property acquired
The Glenhaven Property was placed on the market in May 2017. By that time the deceased had less than $2,000 in her bank account (the account balance at one point being as low as $2.30 in March 2017). Also by that time it appears that David had already replaced or moved the deceased's furniture into storage. Lara noted that $47,435 worth of furniture was purchased, using the deceased's account, between October and December 2017. As noted above, the deceased had been living with Ms McCarthy both before and after her knee replacement (see Ms McCarthy's 28 May 2020 affidavit at [6]).
On 24 June 2017, the deceased exchanged contracts for the sale of the Glenhaven Property for $4.625 million.
David has put forward a number of reasons for the sale of the Glenhaven Property. In his 17 March 2020 affidavit (at [96]), David deposes as follows in relation to the sale of the Glenhaven Property: "[a]round that time, my mother and I became concerned as to the amount that was needed to repay Homesafe upon the sale of the Glenhaven property". (I note that I did not read the words "my mother and", to which objection was taken (T 143.44), but it is perhaps telling that David had a propensity in his affidavit evidence to attribute intentions and wishes to the deceased in common with his own.)
It is difficult to see why the impact of the reverse sale mortgage would have caused such concern on the part of the deceased as was attributed to her by David. The time at which the property was sold would certainly affect the percentage of proceeds to which the mortgagee was entitled to out of the sale, but for practical purposes while that would obviously affect the size of the deceased's estate, it would not have affected the deceased's position during her lifetime (unless for some reason she had to sell the property). For someone who might be looking at maximising the value of his or her potential inheritance that would, of course, be a different story.
A second reason proffered for the sale, as appears from David's 28 August 2020 affidavit (at [21]), was in the conversation to which David deposes with the deceased in which he says his mother said to him:
The property is too big and there is too much to do if we continue to live here…. We should renovate the property now with our money to get the best price so we can buy a new house.
[31]
Further vehicle purchase
Meanwhile, on 3 July 2017, as adverted to above, David purchased a Tesla model X motor vehicle for $187,425.35. David's evidence is that the deceased was interested in cars and liked the design of the Tesla vehicle. Pausing here, that does not explain why such a purchase was considered necessary or desirable in the deceased's interests at the time; nor why a deposit released ostensibly for the purpose of acquisition of other accommodation might have been used for the acquisition of a motor vehicle.
[32]
Purchase of Beaumont Hills Property
On 20 July 2017, David and Susan exchanged contracts for the purchase of a property at Beaumont Hills (the Beaumont Hills Property) for the sum of $1.525 million (the sale completing on 3 October 2017). The proceeds of sale from the Glenhaven Property were used to purchase the Beaumont Hills Property in David and Susan's name.
David asserts that, at the time of the purchase of the Beaumont Hills Property, the deceased said to him words to the effect: "You looked after me so I will look after you", and "I want you and Susan to be okay, you have done so much for me. I understand how much you have sacrificed so that I can live with you", and "any money left over from the sale we can share so we both have something but I want you and Susan to have a home of your own" (see David's 8 November 2019 affidavit at [32]).
David says that the deceased was "actively involved" in choosing the Beaumont Hills Property and had the "final say" in the purchase (see David's 8 November 2019 affidavit at [32]). It is noted that the property included a "granny flat" which was subsequently used by the deceased (see Susan's 17 March 2020 affidavit at [27]-[29] and affidavit of the real estate agent, Mr Wayne Danckert sworn 18 March 2020 affidavit at [6]). As to Mr William Hampson's evidence (another real estate agent), in it appears that the deceased's so-called "active involvement" amounted to little more than that the deceased inspected the property and gave instructions (no doubt when asked) about the reserve price (which Mr Hampson thought she appeared to understand) (see Mr Hampson's affidavit sworn 21 July 2020 at [6]).
Completion of the sale of the Glenhaven Property occurred on 3 October 2017 (Ex 2). On completion, the sum of $1,522,272.03 from the proceeds of sale from the Glenhaven Property was applied to the purchase of the Beaumont Hills Property and the payment of stamp duty (Lara's 26 October 2019 affidavit at [222], and David's 8 November 2019 affidavit at [32]). The net proceeds of sale were shortly thereafter transferred to David's bank account - see below.
Pausing here, it is noted by Lara that the effect of this transaction (which can hardly be disputed) was that the deceased was then in the position where she had no real estate in her own name, no or very little money in the bank, and was totally dependent on the support of others.
[33]
Christmas Day 2017
Lara was not aware of the sale of the Glenhaven Property until she spoke with her mother on Christmas Day 2017, that being the last time that Lara spoke with her mother (see Lara's 26 October 2019 affidavit at [225]). Lara's evidence is that, during that conversation, the deceased either did not know or would not disclose to Lara the location of her new address and said, in answer to an enquiry as to whether the deceased had purchased David a house, "I need to live somewhere Lara" (see Lara's 26 October 2019 affidavit at [223]). Lara's evidence is that she continued to write to her mother but never received a response (and that the deceased had previously sent Lara and her family cards up until the end of 2017). David and Susan deny that they received any such cards or letters for the deceased.
Lara's evidence is that, in November 2018, Lara received a text message from her mother for her birthday and that she responded to the message (despite being of the opinion that her mother was incapable of sending a text message) (see Lara's 26 October 2019 affidavit at [228]); (her mother's inability to do so being confirmed, it is said, in Susan's evidence (see Susan's 17 March 2020 affidavit at [32])).
[34]
Surplus from Glenhaven Property sale
There was a surplus of $591,212.22 received by the deceased on 3 October 2017 from the sale of the Glenhaven Property after purchasing the Beaumont Hills Property. By the end of the month, however, that amount had been electronically transferred to David (see David's 28 August 2020 affidavit at [138]). (The net sale proceeds plus the deposit of around $55,000 form part of the claimed 1.776 million in NetBank transfers.)
In his affidavit evidence, David deposes that he had initially resisted a transfer of funds to his account, saying "[n]o, it's your money so it should be in your account" (see David's 28 August 2020 affidavit at [141]). However, Lara points out that by January 2018 (after David had received $590,000.00 of the $591,212.22 received by the deceased, and a further amount of $20,000 from the deceased's account in January 2018) the deceased was again left with only a few thousand dollars in her account. Lara says (and I accept) that the deceased was then totally dependent on David; noting that David described the deceased as being able to manage to walk only a few metres at the time, even with her walking frame (see David's 8 November 2019 affidavit at [33]).
Much emphasis was placed by Lara on David's reference to a conversation with the deceased in 2015 in which he says she referred to him being able to "manage the finances". Cross-examined about the concept of managing the deceased's finances, David insisted that he would discuss any "major" expenses (which he put as in the order of $2,000) with the deceased. Lara relies on the assumption by David of a role in "managing the finances" as giving rise to a fiduciary duty of the kind owed by the defendant in Barkley v Barkley Brown [2009] NSWSC 76 (Barkley v Barkley Brown).
[35]
Sale of Beaumont Hills Property
In his affidavit evidence, David deposes that, by the middle of 2019, he "was concerned that my mother would need care that Susan and I could not provide", and "did not believe we had sufficient funds to pay for professional assistance to keep her at home" (see David's 8 November 2019 affidavit at [34], see also Susan's 17 March 2020 affidavit at [33]).
On 24 May 2019, the Beaumont Hills Property was listed for sale. Contracts for sale were exchanged on 13 June 2019 for a purchase price of $1.3 million (see David's 8 September 2019 affidavit at [35]). David's evidence is that he planned to move the deceased into a rented duplex, with David and Susan to live next door (see David's 8 September 2019 affidavit at [36], 14 November 2019 affidavit at [11]). (Pausing here, as adverted to already, this renders somewhat hollow the criticism made by David of Lara's proposal that her mother move to a separate dwelling on the Wallacia Property, although I accept that Lara's proposal itself suffered from practical issues - in particular, the likelihood that an elderly woman in her mid-80's with the deceased's medical issues would readily be contemplating engaging in building renovations that might take some indefinite time.)
The deposit paid for the purchase of the Beaumont Hills Property was released prior to completion, and on 21 June 2019 the sum of $39,680 from the deposit proceeds was used to prepay the bond and rent for six months' rent for the duplex units (David's 8 November 2019 affidavit at [36]; [43], and David's 14 November 2009 affidavit at [11]).
On 19 August 2019, the sale of the Beaumont Hills Property completed and David and Susan received the sum of $1,168,032.80 from the sale proceeds and the sum of $57,263 by way of release of the deposit (David's 8 November 2019 affidavit at [43]).
Pausing here, the deceased was recorded in various assessment reports as being concerned to stay in her own home "with independence". Lara accepts that the deceased may well have regarded the Beaumont Hills Property as living in her own home in a practical sense but points out that the legal situation was very different and says that, by this time, the deceased was financially and economically dependent on David. I agree.
[36]
The deceased's death
The deceased died on 13 July 2019. Lara's evidence is that she did not learn of her mother's death for more than a week later (see Lara's 26 October 2019 affidavit at [230]).
[37]
Correspondence as to gifts/NetBank transfers
On 10 September 2019, Lara's solicitor wrote to David's solicitor, asking:
Please advise whether your client has received any gift or loan from the deceased, in an amount exceeding $1,000, following the making of the 31 August 2016 will? If so please provide us with the particulars of same.
On 25 September 2019, David's solicitor replied:
The only gift received by our client from the Deceased was $1,522,272.03 referred to above. Our client did receive approximately $150,000 as a loan repayment for the renovations carried out to the Glenhaven property by our client.
The $1,522,272.03 clearly related to the purchase of the Beaumont Hills Property; the $150,000 "repayment" figure was subsequently enlarged to a figure of around $250,000 (as per the schedules prepared by David for the hearing).
On 26 September 2019, Lara's solicitor wrote to David's solicitor:
7. Please indicate the date in which your client received the $150,000 loan repayment, and provide us with particulars as to the dates and amounts said to have been advanced/paid by your client to the deceased.
…
10. Please confirm that your client will agree to place the sum of $1,522,272.03……… into an interest bearing account….
On 11 October 2019 David's solicitor replied to the 26 September 2019 correspondence, relevantly:
7. The $150,000.00 was repaid to my client over several years from the renovations and for the ongoing care provided by my client. [it is noted by Lara that part of the reason for the differential legacies in the 2016 Will was said to be this same care]
…
10. This is not agreed as this was a gift from the deceased for the sacrifices that he and his family had made for the ongoing care and future care of the deceased.
For Lara, it is said that this statement (said to be on instructions) is an admission by David that none of the other payments he received from his mother was a gift. It is noted that David has now admitted to receiving $1,637,197.42 in electronic transfers into his accounts or accounts of his company, S&D Becker (see David's 28 August 2020 affidavit). It is said that, in addition to the $1,637,197.42 in admitted receipts, further electronic transfers were made from the deceased's account for the benefit of David (see as itemised in Lara's submissions at [158]).
[38]
Commencement of proceedings
On 28 October 2019, Lara commenced these proceedings seeking urgent interlocutory relief to protect what (on Lara's case) are assets of the estate. An initial interlocutory regime was put in place by Rein J on 31 October 2019, which was then amended following a number of hearings before Robb J (see Torok v Becker (2019)) resulting in orders made on 16 December 2019. There was an application to vary those orders (to which I refer below), and at the conclusion of the hearing (as noted above) an amended regime was put in place by consent between the parties.
Pursuant to the orders of Rein J and Robb J, David was required to deposit certain moneys into a controlled moneys account of his solicitor, and was enjoined from dealing with his assets, including his Tesla motor vehicle.
As part of the interlocutory orders, David was permitted to draw on the funds in the controlled moneys account for the purposes of his legal costs and day-to-day living expenses, and a separate allocation of funds was made (in the amount of $80,000) to permit David to conduct his company's Tesla after-sale parts business (trading as Unplugged Performance Australia).
As at 6 January 2020, the balance of the moneys held in the controlled moneys account was $766,634.91. As at 24 September 2020, the balance held in that account was $496,039.04. Thus, Lara, in her submissions, has noted that, since the date of the orders David has drawn a total of $361,771.70 against the controlled moneys account for his current and future legal costs, day-to day living expenses, and business fund (with an additional $4,897.89 from separate funds prior to the establishment of the controlled moneys account).
Lara points out that the same Tesla after-sale parts business (i.e., the one being financed from the controlled moneys account) had earlier received cash from the deceased's accounts since 2015 and that stock was purchased for that business from mid-2015. Using the information recorded in the company's bank accounts, accounting ledgers and sales notes, Lara's solicitor has compiled a table (which I treat as an aide memoire) identifying that the business has made only 45 sales since 2015, receiving $175,938.21 (excluding GST), and in the corresponding period the business purchased $754,053.31 of stock.
As at the time of the hearing before me it was noted that, since Robb J permitted the use of $80,000 of controlled moneys in November 2019, the Tesla business has made only 8 sales, generating $52,841.31 of revenue; and, in the corresponding period, the business incurred $74,860.69 of expenses, making an overall cash loss of more than $22,000 (despite the Tesla business paying no wages). Thus, Lara's complaint is that it is a business that continues to lose money is being funded from property of the deceased's estate.
[39]
Relief sought
The matter ultimately proceeded by way of pleadings. On 11 February 2020, Lara filed an amended statement of claim seeking the following by way of final relief:
7A. An Order that the administration of the estate of the late Isolde Becker be carried out and executed by and under the direction of this honourable Court and that all necessary declarations be made, and enquiries held, and accounts taken to carry the same into effect. [i.e., a general administration order]
7B. Further, if it be found necessary that an administrator of the said estate be appointed, or in the alternative, an Order that letters of administration of the estate of the late Isolde Becker, annexing the last will and testament of the deceased dated 31 August, 2016 be granted to the plaintiff. [i.e., an order that Lara be appointed as administrator of the estate]
7C. An Order that the first defendant do within 4 business days pay and deliver up to the Court, or alternatively, to the plaintiff all of the funds, assets, books and records of the estate of the deceased.
8. A declaration that the payment in the sum of $1,522,272.03 to the first defendant by or on behalf of the deceased from the sale proceeds of [the Glenhaven Property] was obtained by undue influence.
8A. A declaration that the funds transferred from the NetBank facility of the deceased Isolde Becker that are listed in the Schedule to this Statement of Claim were not authorised by the deceased and/or were transferred by or for the benefit of the first defendant in breach of his fiduciary and equitable duties.
8B. In the alternative to the relief sought in paragraph 8A, a declaration that the funds transferred from the NetBank facility of the deceased Isolde Becker that are listed in the Schedule to this Statement of Claim were obtained by undue influence.
9. In the alternative to the relief sought in paragraph 8, a declaration that payment in the sum of $1,522,272.03 to the first defendant by or on behalf of the deceased from the sale proceeds of [the Glenhaven Property] was obtained by unconscionable conduct of the first defendant.
9A. In the further alternative to the relief sought in paragraphs 8A-B, a declaration that the funds transferred from the NetBank facility of the deceased Isolde Becker that are listed in the Schedule to this Statement of Claim were obtained by unconscionable conduct of the first defendant.
10. A declaration that the first defendant holds or held the net sale proceeds of the sale of the [Beaumont Hills Property] and such assets as he subsequently acquired using same on trust for the estate.
10A. An order that an enquiry be held to ascertain the amount of the said proceeds that are still held by the first defendant, and in respect of any amount no longer held by him, how the said proceeds have been applied, and what assets have been acquired by the first defendant using the same and their value.
11. An order that the first defendant pay and deliver up to the Registrar to be held at the direction of the Court, or alternatively to the plaintiff as administrator of the estate of the deceased, all funds and other assets, documents of title and things which it may be found upon the said enquiry he has acquired using the said sale proceeds or any part thereof.
12. An Order that the first defendant pay into Court, or, alternatively, to the plaintiff as legal representative of the estate of the deceased, equitable compensation in the amount of the difference between sum certified upon the enquiry held pursuant to the Order in paragraph 10A and the sum of $1,522,272.03, together with compound interest thereon at the defaulting trustee rate.
12A. An Order that an enquiry be held into and account taken of the dealings and transactions of the first defendant with the deceased's Personal property as defined by paragraph 78 of the pleadings herein, and the funds transferred from the NetBank facility of the deceased Isolde Becker that are listed in the Schedule to this Statement of Claim, on the basis of wilful default, and that the first defendant pay into Court or alternatively to the plaintiff as administrator of the estate of the late Isolde Becker the amount found due upon the taking of the said account, together with compound interest thereon at the defaulting trustee rate.
12B. An Order that upon the taking of the said enquiry it be determined what are the assets acquired by the first defendant as a result of the said dealings and transactions and a Declaration be made that the same are held by the first defendant on trust for the estate of the deceased or alternatively that they shall stand charged with payment of the amount found due upon the taking of the said account, and an Order that the first defendant do deliver up to the Court or to the plaintiff as administrator of the estate of the deceased the said assets so found upon the taking of the said enquiry with all documents of title appurtenant thereto.
12C. An Order that the interest of the first defendant as legatee and otherwise as beneficiary of the estate of the deceased be impounded and held as security for his liabilities as determined under these orders.
12D. Further, or in the alternative, to the extent that it may be found that any of:
(a) The payment in the sum of $1,522,272.03 to the first defendant by or on behalf of the deceased from the sale proceeds of [the Glenhaven Property]; and
(b) Those of the payments listed in the schedule to this Statement of Claim that were made after the date of the said will;
were otherwise valid actions of the deceased free of any claim on the conscience of the first defendant, then a Declaration that by reason of and to the extent of those payments the legacy and portion of residue given to the first defendant by the said will of the deceased are deemed or satisfied.
12E. An Order that the funds held in controlled money account pursuant to Interlocutory orders made in these proceedings be paid out to the plaintiffs by way of satisfaction of:
(a) First, the costs of these proceedings; and
(b) Next, the legacy provided by the said will for the first plaintiff; and
(c) Next, the first plaintiff's share of residue.
13. In the further alternative to the relief sought in paragraphs 8-12, an Order, pursuant to section 80 of the Succession Act 2006, that the net sale proceeds of [the Beaumont Hills Property] and any assets acquired by the first defendant using those proceeds of sale be designated as notional estate.
13A. In the further alternative to the relief sought in paragraphs 12A and 12B, an Order pursuant to section 80 of the Succession Act 2006, that the amounts listed in the Schedule to this Statement of Claim and any assets acquired by the first defendant using those moneys be designated notional estate.
14. An Order pursuant to section 59 of the Succession Act 2006, that the plaintiff receive further provision from the estate and/or notional estate of the deceased.
[40]
Witnesses
Before turning to the parties' submissions on the issues for determination, it is convenient at this point to set out my observations of the principal witnesses and their evidence.
[41]
David
Unfortunately, there were a number of difficulties with David's evidence, such that I cannot find him a credible witness. The impression I formed was that he was focussed on his own perception of events (i.e., his evidence was highly subjective), and that he had a tendency to make a series of excuses when taken to statements made on his behalf (and purportedly on his instructions) that were proven to be incorrect or otherwise were misleading due to the fact that they did not paint a complete picture of events.
I have adverted above to the statements made by David's solicitor in relation to the proceeds of sale of the Kellyville Property (namely that part of the proceeds of sale of the Kellyville Property had been paid for Dr Backer's Accommodation Bond and that Dr Becker and the deceased did not have sufficient funds to pay the Accommodation Bond). Those statements were simply false. Even if David had sold the Kellyville Property with the intention of using the proceeds to assist with the payment of the Accommodation Bond it was simply untrue to assert that that was what had happened. At the very least, this points to an unreliability on the part of David when giving instructions.
There were a number of other examples of David's unreliability as a witness or in the giving of instructions in the conduct of the proceedings. In no particular order, those include the following.
First, David's conduct (and response through his solicitors) in relation to the sale of the Suzuki Jimny motor vehicle that Robb J directed be sold and the moneys deposited to the defendant's solicitor's controlled moneys account. David's solicitor's correspondence in relation to this sale clearly conveys to Lara's solicitor that the sale price was $25,000 (as does the transfer of registration form signed by the purchaser, Ms Cotrone).
In fact, however, as David admits, the vehicle was sold for $30,000 ($25,000 paid by bank cheque, the balance in cash - some minor part of the cash balance being attributed to reimbursement for registration expenses). David's explanation for this (see the cross-examination at T 241ff) was unconvincing in the extreme. His evidence was unclear as to who (he or the purchaser) requested that there be a part payment in cash.
David suggested in the witness box that he had queried with his solicitor whether he could use the cash to pay some personal accounts (and said that if that had been permissible it would have been easier to effect if the money had not been provided as a bank cheque).
[42]
Susan
Susan engaged in confrontation with the cross-examiner almost from the start of the cross-examination; and was assertive in the witness box and defensive of her own position (such as in relation to the receipt of income). I accept that Susan was (understandably) protective of her husband and family (emphasising the need to put food on the table for her family) but overall it was clear that she was giving evidence as an advocate in her husband's case rather than in an impartial manner. Susan and her husband obviously have a close relationship (as was evident when they were sitting together in court) and clearly there is much underlying emotion as to how events within the family have transpired, as between Susan and her sister-in-law.
I make no adverse findings as to Susan's credibility evidence. I simply note that she was not a particularly co-operative witness and that she clearly has an interest in the outcome of the proceedings. Therefore I would not accept assertions made by her on critical issues in the proceedings without independent and objective evidence to corroborate those assertions.
[43]
Lara
I found Lara to be a genuine and believable witness and her account of events struck me as plausible. Lara did not shy away from issues such as her animosity towards David or as to the fact that she (and Adam) had received considerable financial assistance from the deceased and Dr Becker over a number of years.
It is clear (and Lara to her credit did not attempt to hide this) that there is no love lost between Lara and David (indeed that seems to me to be apparent on both sides). Lara readily accepted that she had attempted to "smear" David's character with the deceased (behaviour that from her mother's perspective would no doubt have been upsetting); and that she wanted to put in place a situation where the deceased was removed from David's influence. I considered her evidence to be believable when she explained that this was because she wanted to put her side of the story to her mother and that she wanted her mother back in her life.
I accept that the dismissive reference to David as potentially being "collateral damage" does not reflect highly on Lara's opinion of, or feelings for, David but, having regard to the evidence that has emerged in relation to the deceased's estate, it is in my opinion understandable that Lara would feel that David has done the wrong thing in relation to the deceased's estate. Certainly, insofar as the deceased's testamentary intentions as discerned from the Will are concerned, what occurred was inconsistent with those intentions.
As adverted to above, Lara's explanation of matters to which she was taken to in the letter written to her mother was credible and her reason for doing so explicable.
Therefore, while I treat with caution such of Lara's account of events as is uncorroborated (such as her account of conversations with the deceased and especially the so-called "secret meetings"), just as I treat with caution such evidence from David, on the whole I accept Lara's account of events as credible.
[44]
Adam
Adam's evidence was not really shaken in cross-examination. He was a co-operative and considered witness. While he clearly has a personal interest in the outcome of the litigation, I accept he gave a truthful account of events according to his recollection of events.
[45]
Other witnesses
It is not really necessary to say much about the other witnesses. Ms McCarthy was clearly a partial witness, being a friend of David and Susan, but her evidence does not take matters much further than to confirm that the deceased stayed at her house for a number of months and that David visited her regularly during that time. (There was also, for no explanation that Ms McCarthy could provide, evidence of a joint account that had been opened in her and David's name - but she denied any knowledge of this.) I do note that one feature of the affidavit evidence of Ms McCarthy and that of the deceased's podiatrist (Ms Ignacz) was the common wording of the paragraphs of their affidavits deposing to their shared cultural heritage with the deceased (which suggests that the affidavits were not wholly in their own words), but nothing here turns on this (cf cases such as those considered in Rosebanner Pty Limited v Energy Australia (2009) 223 FLR 406; [2009] NSWSC 43 from [323]; and Day v Perisher Blue Pty Ltd (2005) 62 NSWLR 731; [2005] NSWCA 110).
It is, however, relevant here to note that the evidence of the real estate agents (Mr Hampson and Mr Dackert) and of the website developer, Mr Kossow, as tested in cross-examination, revealed a tendency to make generalised observations without clear focus on the basis for the observations there made. So, for example, the evidence of the real estate agents as to the deceased's "active" involvement in the sale of the Glenhaven Property and acquisition of the Beaumont Hills Property seemed to boil down to little more than that the deceased had signed various documents and attended various meetings. The evidence that she understood the letter setting the reserve price for the sale, for example, was underwhelming.
As to the website developer, with no disrespect to him, that evidence boiled down to him seeing the deceased watching a video on YouTube and the deceased "chuckling" when he commented on that. Any suggestion based on that evidence that the deceased was computer literate (and therefore likely to have been effecting her own NetBank transactions) is extraordinary. I will come back to that in due course.
[46]
Submissions
I turn now to the parties' submissions on the issues in the proceedings.
[47]
Accounting for the NetBank transfers
Lara notes, that, unlike the application of the deceased's funds for the purchase of the Beaumont Hills Property, David does not give evidence that the $1.77 million of NetBank transfers were gifts made by the deceased to David, his family, and company. Rather, David explains the receipts totalling $1.77 million as: loans advanced by the deceased to his business; reimbursement for expenses paid by David for the deceased's benefit; or advance payment for likely future expenses of the deceased.
By these proceedings, Lara has sought an account be ordered as to what was done with the money David so received from the deceased's NetBank account (prayer 12A). Lara contends that, having received $1.77 million of the deceased's funds (leaving to one side for the moment the Beaumont Hills Property purchase), David has a duty to account to Lara (as the representative of the estate for the purpose of these proceedings) for a number of reasons.
First, that the transfers were not gifts and that the deceased is a person who placed considerable trust and confidence in David. David accepted that he understood his mother trusted him with her finances (T 265.80). Lara points to David's affidavit evidence as revealing that this trust and confidence extended to management of the deceased's finances in that David has deposed to a conversation in early 2015 that: "It will be easier to manage or finances if our money is in one account so I will transfer you money. You pay the bills and pay off your credit card" (see David's 28 August 2020 affidavit at [21]). Lara points out that a manager is accountable to the principal, and that this is a position of trust and confidence which gives rise to a fiduciary relationship, and as a result a duty to keep proper accounts (citing Hospital Products Limited v United Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64 (Hospital Products)).
Second, Lara contends that if it is established that David gained operational access to the deceased's NetBank facility, and did himself transact on that facility, then David's dealings with the deceased's money, if made with authority constitute a dealing of an agent for the principal (citing Barkley v Barkley Brown); and if made without authority his position is so much the worse.
Third, that, by May 2016, David had been expressly authorised to act as the deceased's attorney. It is said that, so far as he transacted the transfers, he was not authorised by the Power of Attorney to confer benefits upon himself (see Perochinsky v Kirschner [2013] NSWSC 400; and consider also Dimitrovski v Australian Executor Trustees Limited [2014] NSWCA 68 at [68], per Emmett JA, with whom Bergin CJ in Eq agreed). (It is said that the Power of Attorney has also a secondary significance in the alternative case of undue influence, as a circumstance supporting the relation of trust and confidence.)
[48]
Personal property
Lara points out that the deceased's contents were insured for $247,900, and that on David's own evidence the Glenhaven Property was furnished with new furniture following the deceased's move to Ms McCarthy's property; and prior to its sale, and that transfers were made from the deceased's account to pay for the purchase of furniture of some $47,000. However, on her death, the deceased's personal items, furniture, and chattels on death were said by David to have consisted only of: jewellery, three to four figurines and one Persian rug. It is said that this limited admission cannot be accepted as a complete statement.
Lara seeks an order that David deliver up furniture and personal items in his possession or control that are property of the estate, or were otherwise acquired with use of funds of the deceased.
[49]
Undue Influence & Unconscionable Conduct
To the extent that any of the NetBank transactions is found to have been a gift, Lara asserts that such a transfer, together with the $1.522 million of the deceased's funds applied for the purchase of the Beaumont Hills Property, are vitiated by presumed or actual undue influence, and/or unconscionable conduct.
[50]
Undue Influence
As to the allegation of undue influence, this is both on the basis of alleged presumed undue influence (arising from the relationship of trust and confidence between the deceased and her son); alternatively, Lara alleges actual undue influence.
As to the claim based on presumed undue influence, it is noted that in Johnson v Buttress (1936) 56 CLR 113 (Johnson v Buttress) at 119; [1936] HCA 41, Latham CJ said:
The jurisdiction of a court of equity to set aside gifts inter vivos which have been procured by undue influence is exercised where undue influence is proved as a fact, or where, undue influence being presumed from the relations existing between the parties, the presumption has not been rebutted. Where certain special relations exist undue influence is presumed in the case of such gifts. These relations include those of parent and child, guardian and ward, trustee and cestui que trust, solicitor and client, physician and patient and cases of religious influence. The relations mentioned, however, do not constitute an exhaustive list of the cases in which undue influence will be presumed from personal relations. Wherever the relation between donor and donee is such that the latter is in a position to exercise dominion over the former by reason of the trust and confidence reposed in the latter, the presumption of undue influence is raised.
[Emphasis added; citations omitted]
Lara points to the deceased's medical conditions and notes that David's own evidence describes him as her primary carer; and that he took appointment as her attorney under the Power of Attorney.
It is said that by 2015, or early 2016, the deceased could not look after herself, (her surgeon describing her as almost completely disabled); and that, on David's own evidence, the deceased entrusted David with significant sums of money (her life savings) leaving her without sufficient funds for her future in the event that her relationship with David "turned sour", or she were otherwise in need of funds (for, say, accommodation or medical care).
It is noted that there need not be a finding that David did exercise dominion over the deceased, only that he was in a position to exercise dominion. In this regard, Lara contends that the deceased was an 80 year old lady, beset with significant ailments, and dependent on David to provide her with meals, clothing, and, importantly for the deceased, accommodation outside of an aged care facility. It is said that, not only was the deceased dependent on David from the outset of his move to the Glenhaven Property, but that the more money he received from her the more dependent on him she became, as she lost the financial independence to exercise any control of her place or residence or finance for her future needs. Further, it is said that the deceased's isolation from Lara in the final years of her life left her extremely dependent on, and vulnerable to, David. It is said that the deceased's tentative and secretive arrangements to make contact with Lara demonstrate how reluctant and even fearful she was of been seen by David to take a course of which, in her perception, she might be disappointing his wishes. (Pausing here, I do not rely on these alleged secret meetings or arrangements for a finding of dependence, bearing in mind the lack of independent corroboration of such meetings and the caution to be exercised when considering accounts of conversations with persons who are now deceased.)
[51]
Unconscionable conduct
Lara accepts that, whereas undue influence looks at the circumstances and free will of the donor, a claim for unconscionable conduct focuses on the action, or inaction, of the donee. For Lara, reliance was placed on the well-known passage from Commercial Bank of Australia Limited v Amadio (1983) 151 CLR 477; [1983] HCA 14 (Amadio). It is said that in the present case, the deceased was under a special disability by reason of a combination of her age, health, and dependence on David for her day-to-day living and financial needs.
It is contended that, if there is a finding that the NetBank transfers were authorised by the deceased, and were intended as gifts, and can be taken as being transactions of the true free will of the deceased, then the transactions should nevertheless be set aside on the basis that it is not consistent with equity or good conscience to allow David to have received the benefit of those transactions because he took advantage of the deceased when she was labouring under special disabilities (her age, infirmity, failing health, dependence, isolation from effective access to her daughter, and lack of independent recourse to advice and assistance at the end of her life).
It is said that the NetBank transfers resulted in the deceased losing her financial independence at a point in time where she was most vulnerable. Lara maintains that the transactions were improvident, not in the deceased's interests, and would not have reflected her wishes had she not suffered under her special disabilities. It is said that this can be seen from the testamentary provision that the deceased actually made in a succession of wills and codicils up to and including the 2016 Will. It is said that it is not likely that, if free of the disabilities, the deceased would have set out to defeat her own long-standing testamentary policy.
Lara says that David acknowledged it was not right that he should receive hundreds of thousands of dollars of the deceased's savings when he said to the deceased "[n]o, it's your money so it should be in your account", but notes that David then went on to receive additional funds without further objection, (i.e., it is said, understanding that it was not right that he receive them). It is said that the same is true for the funds used to purchase the Beaumont Hills Property. Lara argues that the purchase of the Beaumont Hills Property in David's and Susan's names not only removed a significant financial resource available to the deceased, but meant that she had no legal right to occupy the property, (absent declaratory relief obtained in proceedings of this kind).
[52]
Presumed Ademption
To the extent that there is a finding that any of the NetBank transactions was authorised by the deceased, for her benefit, or a valid gift free of presumed or actual undue influence and made in good conscience, Lara submits that any such transfer made after 31 August 2016 should be taken as an ademption or satisfaction of the gifts to David under the Will (in full or in part). The same is also said of the $1.522 million in funds used to purchase the Beaumont Hills Property, that transaction happening after the date of the Will.
The basis of the presumption of ademption is the maxim that equity leans against double portions - see Reynolds v Bonnici [2017] NSWSC 828 at [45], where Lindsay J quoted Murray CJ in In re Everett; Executor Trustee and Agency Company of South Australia Limited v Everett [1917] SALR 52 at 65-66 to explain the presumption of ademption as follows.
Ademption depends on the intention of the donor. In some cases the intention is presumed. …
An intention to adeem is presumed in only two classes of cases: (1) where a father or person in loco parentis gives a legacy to a child of his own or to a person towards whom he stands in loco parentis, and subsequently makes a gift or advance of substantially the same quality as the legacy to the same child or person during his lifetime; and (2) where a person gives a legacy for a particular purpose and subsequently makes a gift or advance to the legatee for the same purpose. In these cases it is presumed that the donor did not intend that both benefits should be taken, but meant the gift to be in satisfaction of the legacy either wholly or pro tanto according to the amount of the gift is equal to or less than the amount of the legacy. The presumption, however, may be rebutted by evidence shewing that the donor intended both gift and legacy to have effect, and this in its turn may be met by evidence in confirmation of the presumption.
In the present case it is said that the presumption applies, noting that: the deceased is David's mother, and the amounts received by David are of the same quality of the $2 million legacy in the Will. It is said that the history of testamentary dispositions made by Dr Becker and the deceased shows the one constant - an equal division between their children after adjustment for inter vivos advancements. It is noted that this equal division is expressly provided for in the form of codicils to ensure that inter vivos gifts made to their children after the date of their Wills had been taken into account by the executor when dividing up the estate.
[53]
Family Provision
Finally, if the net effect of the findings is that Lara receives less than $1 million, then it is submitted that an order should be made pursuant to s 80 of the Succession Act designating sufficient funds traced to the NetBank transactions within the last three years of death, or the Beaumont Hills Property proceeds of sale, as notional estate for the purpose of meeting a family provision order under s 59 of the Succession Act to meet a legacy of $1 million plus costs. It is said that there should be a further enquiry for the purpose of tracing the funds.
Lara notes that determination of her family provision claim will only become necessary if there are findings that the impugned transactions were valid dispositions. Lara's position is that if that is so, it should be found that the disposition were entered wholly or partly by the deceased for the purpose denying or limiting provision being made out of the deceased's estate to Lara.
If it becomes necessary to make a family provision order, it is said that an order should be made in Lara's favour in the amount of $1 million plus costs out of the notional estate having regard to: the benefits conferred on David in the last few years of the deceased's life; the financial and other material circumstances of Lara and her young family; the significant legal costs Lara has been forced to incur in prosecuting these proceedings; and the conduct of David after the date of death of his mother in the context of these proceedings. It is said that the history of testamentary instruments up to and including the 2016 Will demonstrates what the testator would have done had her scheme not miscarried by reason of the transactions that have occurred.
[54]
Letters of Administration c.t.a.
Finally, Lara says that David is not a fit person to administer the estate of the deceased and that an administrator should be appointed to complete the tasks necessary.
The evidence relied upon in support of this submission includes: the funds received by David during his mother's lifetime for purposes other than his mother's benefit; David's failure to keep and provide proper accounts during and after the death of the deceased; and David's lack of candour and untruthfulness in dealing with the estate, and the evidence put before the Court.
It is said that there is no need to burden the estate with the appointment of a third-party administrator; that Lara is the person next most interested in the estate and therefore the proper applicant for letters of administration; and that Lara is already familiar with the details of the estate, David's accounts, and the matters required to administer the estate. Further, Lara says that (the estate having already been considerably wasted), the estate ought not be subjected to further unnecessary burdens.
[55]
David's submissions
David relies on a number of affidavits sworn by him in the proceedings as well as affidavit evidence from his wife (Susan), his mother-in-law (Ms Margaret Ann Hart (see her affidavit of 17 March 2020, two real estate agents (Mr Wayne Danckert - see his affidavit of 18 March 2020; and Mr William Angus Hampson - see his affidavit of 19 March 2020); a website developer, Mr Daniel Kossow (see his affidavit of 18 March 2020), Ms Natalia McCarthy (see her affidavit of 28 May 2020); and Ms Phillipa Joan Ignacz (the deceased's podiatrist, to whom David gave the deceased's grand piano after her death - see her affidavit of 14 May 2020).
David says that, when he and his family moved into the Glenhaven Property, he undertook repairs including: fixing leaking bathrooms, works to the lounge room, renovating the downstairs area, installing hand rails on the stairs, maintaining the backyard and pool, renovating the pool, removing the horse stables and dangerous trees, and undertaking plumbing and electrical work (David's 8 November 2019 affidavit at [18], and 17 March 2020 affidavit at [60] and [69], and Susan's 17 March 2020 affidavit at [13]). David says that he paid for these works from his own funds from the sale of the Kellyville Property (David's affidavit 17 February 2020 affidavit at [60]).
David says that, after he moved into the Glenhaven Property, he purchased a Ford Focus Titanium for the deceased (see David's 17 February 2020 affidavit at [70] and 28 August 2020 affidavit at [41]).
David's evidence is that in the period after July 2014 when he and his family moved into the Glenhaven Property, he usually paid for the household shopping, and also commenced paying the utility bills (David's 17 March 2020 affidavit at [62]).
As to the list of payments in schedule A to the amended statement of claim (Schedule A), David gives evidence that, in the period from 8 February 2015 to 19 June 2019, the deceased paid to him directly the sum of $1,637,197.42, being certain of the payments referred to in Schedule A (David's 28 August 2020 affidavit at [190]). In relation to the balance of the payments referred to in Schedule A, being payments in the sum of $191,847.83 ($1,829,045.25 less $1,637,197.42), David says that payments in the sum of $183,741.76 were made to bank accounts to which David does not have access, and alleged payments in the sum of $8,106.07 were made to unknown recipients for unknown purposes (David's 28 August 2020 affidavit at [18]-[19] and [191]). I discuss below how David groups these sums into categories of payments that he says were: for the sole benefit of the deceased; made at the deceased's request for the benefit of David and his family as well as for the deceased; or made for general living expenses of the household (inclusive of the deceased and David's family).
[56]
Schedule A payments said to be made for the sole benefit of the deceased
David says that payments in the sum of $508,465.49 (being payments in the sum $464,020.41 from the payments received by David referred to at David's 28 August 2020 affidavit at [190] and the payments in the sum of $44,445.08 from the payments made to bank accounts to which David does not have access being the five payments referred to at David's 28 August 2020 affidavit at [90], [94], [96], [98] and [126]) were either for, or were in reimbursement of, expenditure on items solely for the deceased's benefit (although I interpose to note that those payments are at least in part referable to home interior design expenses). It is submitted that there can no basis for equity setting aside the payments made to David in reimbursement of those payments.
[57]
Schedule A payments in respect of which the deceased accepts he received a benefit
David says the following in respect of payments in the sum of $1,320,579.76 comprised within the Schedule A payments.
First, that payments in the sum of $232,823.17 from the payments received by David were either for, or were in reimbursement of, expenditure on items purchase at the deceased's request for the benefit of the deceased as well as for the benefit of David, his wife and/or their children (David's 28 August 2020 affidavit at [190]).
Second, that payments in the sum of $18,132.00 from the payments made to the bank accounts to which David does not have access were for the benefit of the deceased as well as for the benefit of David and his wife (being the six payments referred to at David's 28 August 2020 affidavit at [86], [95] and [125]).
Third, that payments in the sum of $361,836.93 from the payments received by David were either for, or were in reimbursement of, expenditure in respect of general living expenses for the household which comprised the deceased, David, his wife and their children (David's 28 August 2020 affidavit at [190]).
Fourth, that payments in the sum of $578,516.91 from the payments received by David which were payments which were not for the direct benefit of the deceased (David's 28 August 2020 affidavit at [190]), although were substantially payments made in respect of David's businesses.
Fifth, that payments in the sum of $121,164.68 from the payments made to bank accounts to which David does not have access were not for the direct benefit of the deceased (being the three payments referred to at David's 18 February 2020 affidavit at [108], [128] and [142]).
Sixth, that payments in the sum of $8,106.07 alleged to be made to bank account to which David does not have access which were made to unknown recipients for unknown purposes (being the payments referred to at David's 28 August 2020 affidavit at [19]. It is said that these are payments which cannot properly be the subject of a claim against David on any basis.
David contends that, to the extent to which he and his family received a benefit from the Schedule A payments, it should be concluded that the deceased voluntarily intended to make a gift to David in exercise of her free will and independent judgment and were in all the circumstances fair, just, and reasonable. It is said that this is especially so in circumstances where David and his wife were caring for the deceased and had a close relationship with her. In contrast, it is noted that Lara had had a falling out with the deceased on 6 February 2016 and had limited contact with the deceased in the period after that date.
[58]
Beaumont Hills Property purchase moneys
In respect of the Beaumont Hills Property purchase moneys, David contends that it should be concluded that the deceased intended to make the purchase moneys a gift to David in exercise of her free will and independent judgment. It is said that this is especially so where: the deceased benefited from the purchase of the Beaumont Hills Property in that it had a granny flat "which provided her with somewhere to live"; the deceased was closely involved in the purchase of the Beaumont Hills Property and approved its purchase; and where the deceased also benefited from the sale of the Beaumont Hills Property in that part of the sale proceeds were used to pay 6 months' rent for a duplex unit in which in which it was intended she would live (this amount also being referred to as a payment made solely for the benefit of the deceased by David in his 28 August 2020 affidavit at [187]).
Further, emphasis is again placed on the fact that David and Susan had previously sold the Kellyville Property with the (stated) intention of funding Dr Becker's nursing home bond, and the deceased had expressed concern that David and his wife had sold their house for no reason (David's 8 November 2019 affidavit at [16], and 17 March 2020 affidavit at [59] and [88]).
[59]
Appropriate intervention if relief granted
David says that if, contrary to his contentions, it is concluded that he should not receive the benefit of all the payments made to him by the deceased, then any relief granted to Lara should be such as to achieve practical justice and to ensure that Lara does not receive an unwarranted benefit at David's expense (referring by way of example to Bridgewater v Leahy at [125]-[127], per Gaudron, Gummow and Kirby JJ).
In this regard, David submits that any relief granted to Lara should take into account the benefit received by the deceased from the payments, the assistance given by David to the deceased, and the desire of the deceased to benefit David. It is said that any relief granted should also take into account the loss made on the sale of the Beaumont Hills Property in the sum of $225,000.00; and also the payment of the sum of $19,840.00 for rental paid in advance for the unit in which the deceased was to live.
Further, if, contrary to David's contentions, it is concluded that any of the payments made to David are liable to be set aside at equity, then it is submitted that such payments should be considered to adeem or satisfy in whole or in part David's legacy and portion of residue given to him by the Will of the deceased, and be set-off against the said legacy and portion of residue. It is said that the valuation of the benefit received by David for the purpose of any ademption claim should take into account the matters referred to above.
[60]
Costs
David has sought the opportunity to make submissions as to costs after the substantive judgment.
[61]
Determination
I turn now to the issues for determination. I propose to deal first with the NetBank transactions because there is an additional claim in relation to those (i.e., additional to the claims of undue influence and the like that relate both to the NetBank transactions and to the proceeds of sale that were applied to the Beaumont Hills Property).
[62]
NetBank transfers
The first issue in this context is who it was that effected the NetBank transfers out of the deceased's account over the period from 2015.
David has sworn a number of affidavits in these proceedings in which he deposes that it was the deceased who effected the $1.77 million worth of NetBank transfers from her account over the relevant period. So, for example, David has deposed that:
Since I commenced living with my mother at the Glenhaven property, my mother kept her own bank accounts and was the only person who had access to them. I did not have her passwords until after she passed away. While looking for documents relating to this matter, after her death, I discovered where she had written down the passwords [see David's 14 November 2019 affidavit at [6]]
…
All monies provided to me, my wife or our business were transferred to us by way of internet transfers authorised and made by my mother. At no stage prior to her death did she not make her own financial decisions. [see David's 14 November 2019 affidavit at [7]]
…
The money was transferred by her to my accounts. [see David's 14 November 2019 affidavit at [21]]
…
Since I commenced living with my mother at the Glenhaven property, my mother kept her own bank accounts and was the only person who had access to them. In order to login into [sic] her Netbank online banking, there was a two-factor authentication process where the code would be sent to her Commonwealth Bank app on her phone which she then inserted online. I did not have any of her passwords until she passed away. When my mother passed away, her belongings were stored in a box and whilst looking for documents relating to this matter, I discovered a notebook where she had written down the passwords which included the Netbank password. [see David's 17 March 2020 affidavit at [64]]
…
All monies provided to me, Susan or our business were transferred to us by way of internet transfers authorised and made by my mother from my mother. [see David's 17 March 2020 affidavit at [66]]
…
My mother would transfer the monies to my bank account and I would arrange for the cash to be withdrawn from the bank [see David's 17 March 2020 affidavit at [99]].
On 28 August 2020, David swore a further affidavit in which (at [2]) he confirmed the above statements and gave further evidence to the effect that it was the deceased who effected the transfers (see at [20]-[21], [23]-[26]). In the witness box, David adhered to this evidence.
[63]
Undue influence
I turn now to the claims of undue influence (presumed undue influence and, in the alternative, actual undue influence), which cover both the NetBank transfers (including the deposit and that portion of the proceeds of sale from the Glenhaven Property that were deposited to the deceased's account), and the proceeds of sale from the Glenhaven Property to the extent that they were used to acquire the Beaumont Hills Property, as well as the sum expended for the new furniture acquired at the time of the marketing of the Glenhaven Property.
I have extracted above the well-known passage from Johnson v Buttress in this regard. It is also relevant to extract again what was said by Sir Anthony Mason (writing extra-curially about the doctrines of undue influence and unconscionable dealing in "The Impact of Equitable Doctrine on the Law of Contract" (1998) 27 Anglo-American Law Review 1) of what he referred to as a class 2B relationship (at 6-7) (using the terminology adopted by the English Court of Appeal in Bank of Credit and Commerce International SA v Aboody [1990] 1 QB 923; [1992] 4 All ER 955):
My understanding of undue influence, not altogether fashionable in the light of modern English decisions, is that it denotes an ascendancy by the stronger party over the weaker party such that the relevant transaction is not the free, voluntary and independent act of the weaker party (Commercial Bank of Australia Ltd v. Amadio (1983) 151 CLR 447 at 461,474). In other words, it is the actual or presumed impairment of the judgment of the weaker party that is the critical element in the grant of relief on the ground of undue influence (See Peter Birks and Chin Nyuk Yin, On the Nature of Undue Influence, Ed. J. Beatson and D. Friedmann, "Good Faith and Fault in Contract Law" 57 et seq.). The list of the old relationships of influence from which undue influence was presumed supports this view: solicitor and client, doctor and patient, spiritual adviser and novice or parishioner, parent and child, guardian and ward and possibly express trustee and beneficiary (See Meagher, Gummow and Lehane, Equity, Doctrines and Remedies, 3rd edn (1992) s 1519). In these relationships, called class 2A relationships in Barclays Bank plc v. O'Brien ([1994] 1 AC 180 at 189), the weaker party, dependent on the stronger party, is not likely to bring to bear a free, voluntary and independent judgment to a transaction involving the parties to the relationship, whether it is a contract or a gift. Class 2A relationships are to be distinguished from class 2B cases where a de facto relationship of trust and confidence will raise a presumption of undue influence.
[Emphasis added]
[64]
Catching Bargain/Unconscionable conduct
In the alternative, Lara claims that the relevant transactions amounted to a catching and unconscientious bargain, i.e., that they were procured by unconscionable conduct. It is strictly not necessary to determine this given my findings in relation to the previous issues. However, for completeness I note as follows in relation to the alternative claims based on a catching bargain or unconscionable conduct by David.
In Amadio, Deane J noted (at 474) that:
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 (see Union Bank of Australia Ltd. v. Whitelaw, at p. 720; Watkins v. Combes, at pp. 193-194; Morrison v. Coast Finance Ltd., at p. 713). Unconscionable dealing looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity or good conscience that he should do so.
In Morrison v Coast Finance Ltd (1965) 55 DLR (2d) 710 at 713, to which Deane J referred in the above passage, the elements of an unconscionable bargain were set out as follows by Davey JA.
On such a claim the material ingredients [of an unconscionable bargain] are proof of inequality in the position of the parties arising out of the ignorance, need or distress of the weaker, which left him in the power of the stronger, and proof of substantial unfairness of the bargain obtained by the stronger. On proof of these circumstances, it creates a presumption of fraud which the stronger must repel by proving that the bargain was fair, just and reasonable…
See also Turner v Windever [2003] NSWSC 1147 (Turner v Windever) at [105], where Austin J adopted the following summary of the elements of unconscionable dealing (based on cases such as Blomley v Ryan (1956) 99 CLR 362 at 415 per Kitto J; [1956] HCA 81; Amadio; Louth v Diprose (1992) 175 CLR 621; [1992] HCA 61; and Bridgewater v Leahy): first, that the weaker party must, at the time of entering into the transaction, suffer from a special disadvantage vis-a-vis the stronger party; second, that the special disadvantage must seriously affect the weaker party's capacity to judge or protect his or her own interests; third, that the stronger party must know of the special disadvantage (or know of facts which would raise that possibility in the mind of any reasonable person); fourth, that the stronger party must take advantage of the opportunity presented by the disadvantage; and, fifth, that the taking of advantage must have been unconscientious. His Honour observed that once the first three of those elements were established and the improvidence of the transaction was shown, the plaintiff's task was "made easier by an equitable presumption to the effect that the improvident transaction was a consequence of the special disadvantage, and that the defendant has unconscientiously taken advantage of the opportunity presented by the disadvantage" (see at [106]).
[65]
Claim for further provision
The claim for further provision out of the estate or notional estate of the deceased does not arise in light of the findings I have made on Lara's principal claims. However, in the event that the conclusions I have reached above be incorrect, I will briefly deal with the alternative claim for a family provision order. This must be approached on the assumption (contrary to the above findings) that the NetBank transfers were authorised by the deceased (or were valid gifts), and that the gift of the proceeds of sale of the Glenhaven Property survived the other challenges made by Lara on her primary claims. In those circumstances, there is (in practical terms) almost no actual estate, and the only way in which an order for provision (if otherwise warranted) could be made would be from the designation of some property as notional estate (see below).
[66]
Relevant Principles
Section 59 of the Succession Act empowers the making of a family provision order in relation to the estate of a deceased person if the Court is satisfied of the matters set out in s 59(1) of the Succession Act (see the principles articulated by Hallen J in Page v Hull-Moody [2020] NSWSC 411 from [120]). A determination as to whether a claimant has been left without adequate provision for his or her proper maintenance and advancement in life involves an evaluative judgment.
The question, relevantly, is whether the Court is satisfied that "adequate provision for the proper maintenance, education or advancement in life" has not been made for the claimant (i.e., here, Lara). The time at which the adequacy of provision is to be tested is the time the application is considered (s 59(1)(c) of the Succession Act). If, at that time, it is found that the deceased did not make adequate provision for the plaintiff's proper maintenance, education, and advancement in life, then there must be a determination as to whether, and what, provision the Court ought to make for the claimant.
In Sgro v Thompson [2017] NSWCA 326, White JA (McColl and Payne JJA agreeing) said (at [86]):
86. … The most important word in s 59(1)(c) is "proper". Until the court has identified what is proper maintenance, education and advancement in life for an applicant, it cannot assess whether the provision made, if any, is adequate. What is proper requires an evaluative judgment that has regard to all relevant circumstances, not merely the parties' financial circumstances. Whilst the court will know the latter, it will only have an incomplete picture of the former. Of course, the court's assessment of what is proper maintenance, education and advancement in life must be made when the court is considering the application. That does not mean that considerable weight should not be given to the assessment of a capable testator or testatrix who has given due consideration to the claims on his or her estate.
Pursuant to s 60(1) of the Succession Act, regard may be had (on a non-exhaustive basis) to the matters set out in s 60(2) of the Succession Act for the purpose of determining whether to make a family provision order, and the nature of any such order. Those matters may be relevant both to the question of any inadequacy of provision and, if the provision is found to be inadequate, to the question whether, and if so what, order for provision should be made.
[67]
Section 60(2)(a) - any family or other relationship between the applicant and the deceased person, including the nature and duration of the relationship
As noted above, Lara and David are the only children of the deceased and Dr Becker. They both appear to have had a close relationship with the deceased during their childhood and early adulthood. Lara's relationship with her mother became more distant (and for a time non-existent) in the last few years of the deceased's life. David, on the other hand, was the primary carer for the deceased with whom she lived for the last years of her life. The evidence supports the conclusion that the deceased loved both her children and sought to provide for each of them (and that she was distressed at the breakdown of the relationship between her children; and upset at her lack of contact with Lara at the end of her life).
There are competing versions as to why the deceased's relationship with Lara did not continue up until the deceased's death. Lara obviously considers that David poisoned their mother's mind towards her - and says David made it impossible for her to visit her mother during the last years of her life. David denies this. Suffice it to say that there was obvious antipathy between the siblings and it is likely that the deceased was placed in an invidious position in that regard.
I accept that Lara was genuine in her expression of upset at being excluded (as she perceived it) from her mother's life; and that she genuinely felt that David was responsible for the breakdown in her relationship with her mother. I also accept that David was genuinely caring of his mother and that she was happy living with David and his family.
[68]
Section 60(2)(b) - nature and extent of any obligations or responsibilities owed by the deceased person to the applicant, to any other person in respect of whom an application has been made for a family provision order or to any beneficiary of the deceased person's estate
The deceased's obligations, as such, to Lara and David did not go beyond the kind of moral obligation to consider the application of her testamentary bounty to her adult children (and I bear in mind in this regard the caution that has been expressed as to expressions of this kind).
[69]
Section 60(2)(c) - nature and extent of the deceased person's estate (including any property that is, or could be, designated as notional estate of the deceased person) and of any liabilities or charges to which the estate is subject, as in existence when the application is being considered
When the deceased died, she had no real property in her own name and very little in the way of assets. On the assumption (which as noted above is the assumption on which this alternative claim is predicated) that the transactions challenged by Lara's primary claims are not set aside, then as noted above there is virtually no estate for distribution, and any order for provision could only be made if there is a designation of notional estate. What Lara seeks to have designated as "notional estate" (see prayers 13 and 14) are the proceeds of sale used to acquire the Beaumont Hills Property (and any assets acquired from the proceeds of sale of that property), and such of the NetBank transfers as were made during the period of three years before the deceased's death.
I have set out above what must be established in order for there to be a notional estate order in the present case. Relevantly, it must be established that the deceased entered into the relevant property transactions with the intention, wholly or in part, of denying or limiting the estate that otherwise would have been available to meet a claim for provision by Lara.
It is obvious that, when the proceeds of sale of the Glenhaven Property were used to acquire the Beaumont Hills Property, and again when the balance of the proceeds were transferred electronically out of the deceased's account and into David's account, or were used otherwise for his benefit, this had the inevitable effect of depleting the deceased's estate that otherwise would have been available for distribution to the beneficiaries under her Will. However, I cannot conclude that the deceased understood that in so doing (particularly in relation to the proceeds of sale used to acquire the Beaumont Hills Property), this would have the effect of depleting her estate to the extent that it would exclude Lara from benefiting under the Will (so as to enable me to conclude on the balance of probabilities that the deceased intended to deny or limit a claim by Lara for provision out of the estate).
I consider that it is more likely that the gift of proceeds for use in the acquisition of the Beaumont Hills Property was the product of the deceased's concern that David and his wife had sold their own home ("for no reason"), and were living with and caring for her. The intention to benefit David (and his wife) does not of itself amount to an intention to deny or limit a claim by Lara. As to the balance of the proceeds of sale, then even on the assumption that the impugned NetBank transfers were in fact dispositions by the deceased of her property, although these are more problematic, I am still not persuaded on the balance of probabilities that they were with the intent of denying a claim by Lara (although they certainly had that effect). In that regard, the fact that the NetBank transfers were in incremental amounts, and (on the hypothesis that they were intentional transfers) that some at least were for investment in David's business which would be consistent with a desire by the deceased to support that business, supports the conclusion that the payments were to benefit David but not intentionally to deprive Lara of an entitlement to share in the estate.
[70]
Section 60(2)(d) - financial resources (including earning capacity) and financial needs, both present and future, of the applicant, of any other person in respect of whom an application has been made for a family provision order or of any beneficiary of the deceased person's estate
The evidence of the financial resources and needs (or claimed needs) of Lara (and the circumstances of David) may be summarised as follows.
Lara has disclosed her financial resources and needs in her affidavit affirmed 8 November 2019. She and Adam live with their children in rental accommodation and plan to rent until they can afford to build a residence on land they have purchased at Werombi (after the sale of the Wallacia Property). They carry on a conveyancing practice. They have assets totalling $1,214,844.85 and liabilities of $844,358.01. The business had a trading account balance of $56,445.62 and profits in the years ending 2017 and 2018 of $150,217 and $96,254 respectively. The family's sole source of income is the amount received from the business. Lara's needs are said to be the provision of a fund to enable the construction of a dwelling on the Werombi land, to pay off the business loan, and provide a capital sum to provide for exigencies of life, and/or an investment in superannuation for her retirement.
David has sworn an affidavit on 14 November 2019 in which he sets out his assets and liabilities. It is said that from the proceeds of sale of the Beaumont Hills Property, he invested $700,000 in digital assets for the purposes of trading. (It appears only $385,068.87 was left by the time they were converted and returned to Australia.) David deposes that neither he nor Susan is employed, and that they receive fortnightly Centrelink benefits. He lists his assets at $1,467,586.89, and his liabilities as $148,756.64.
David and his family live in rental accommodation. He estimates the family's living expenses on a monthly basis as $7,634.84. He has given evidence of the Tesla business investment (paid for out of the proceeds of sale of the Beaumont Hills Property), and the estimated costs of the business.
I should note that complaint is made by David as to the level of disclosure by Lara about her financial circumstances; in particular as to the position of the conveyancing business now operated by Adam (Conveyancing Solutions and Legal) which commenced in about 2016. Lara's evidence was that this was, in effect, a sole solicitor practice with the assistance of a conveyancing or other clerk. For Lara, it is said that the value of the business is comprised in the personal exertions of Adam, and therefore the complaint as to non-disclosure is not sustainable.
[71]
Section 60(2)(e) - financial circumstances of any person with whom the applicant is cohabiting
Adam's financial circumstances were not disclosed in any detail, save that he is a solicitor operating his own conveyancing practice. It must be assumed that Adam is in a position to help support his wife and children; and that he intends to do so consistent with his responsibilities as a husband and father.
[72]
Section 60(2)(f) - any physical, intellectual or mental disability of the applicant, any other person in respect of whom an application has been made for a family provision order or any beneficiary of the deceased person's estate that is in existence when the application is being considered or that may reasonably be anticipated
Not applicable.
[73]
Section 60(2)(g) - age of the applicant when the application is being considered
Lara is nearly 45 years of age. David is currently 43 years of age.
[74]
Section 60(2)(h) - any contribution (whether financial or otherwise) by the applicant to the acquisition, conservation and improvement of the estate of the deceased person or to the welfare of the deceased person or the deceased person's family, whether made before or after the deceased person's death, for which adequate consideration (not including any pension or other benefit) was not received, by the applicant
Lara's contribution to the deceased's welfare was mainly in the period prior to her father's death. I accept that Lara had a strong relationship with her father during his lifetime. After the breakdown in her relationship with David, there is no suggestion that Lara made any contribution to the deceased's welfare. She does not appear to have made any contribution to the deceased's estate as such.
[75]
Section 60(2)(i) - any provision made for the applicant by the deceased person, either during the deceased person's lifetime or made from the deceased person's estate
There is no doubt that substantial provision was made for Lara during the deceased's lifetime (as outlined above) including the payment of Lara's university fees (see Lara's 26 October 2019 affidavit at [182(a)] and [25]) and, more significantly in financial terms the forgiving of the debts that were discharged at the time of the reverse mortgage. (This was, however, recognised in effect by the differential pecuniary legacies given to Lara and David under the Will.)
[76]
Section 60(2)(j) - any evidence of the testamentary intentions of the deceased person, including evidence of statements made by the deceased person
Evidence of the deceased's testamentary intentions can be gleaned to an extent from her prior testamentary documents, but more relevantly from the instructions recorded by the solicitor who drafted her last Will - namely, that she was seeking to "even things up" between Lara and David.
[77]
Section 60(2)(k) - whether the applicant was being maintained, either wholly or partly, by the deceased person before the deceased person's death and, if the Court considers it relevant, the extent to which and the basis on which the deceased person did so
Not applicable.
[78]
Section 60(2)(l) - whether any other person is liable to support the applicant
As noted above, Adam would have the usual obligation of a spouse in relation to the maintenance and support of his spouse, Lara.
[79]
Section 60(2)(m) - character and conduct of the applicant before and after the date of the death of the deceased person
There was no doubt a period (albeit relatively small) of estrangement or distance in the relationship between Lara and the deceased in the last years of the deceased's life. At best, it appears that Lara had a limited number of phone calls to her mother during the last two years of her life (although she says that she continued to send cards or letters). I have already noted the competing versions as to the cause of the limited contact. Suffice it to note that it does not appear to have led the deceased to change her testamentary intentions. (As to estrangement in the context of family provision cases generally, see what was said by Basten JA in Andrew v Andrew (2012) 81 NSWLR 656; [2012] NSWCA 308 at [40], [49]; and see also the discussion by Hallen J in Nielsen v Kongspark [2019] NSWSC 1821 at [233]-[237], and Page v Page [2016] NSWSC 1218 at [59]-[60]).
I do not consider that this is a disentitling factor in the present case, in circumstances where the deceased clearly was on notice of the tension between Lara and David (and it may be assumed that she was therefore aware of the difficulty that Lara might experience in visiting the home when David was living there).
[80]
Section 60(2)(n) - conduct of any other person before and after the date of the death of the deceased person
David's evidence is (and I accept) that, during his life, including in the period from 2014 to the date of the deceased's death, he and Susan had a very close and loving relationship with the deceased (see for example David's 8 November 2019 affidavit at [16], and 17 March 2020 at [24] and [26], and Susan's 17 March 2020 affidavit at [15] and [75]). They say that in the period from 2014 until the deceased's death, they provided extensive assistance to the deceased, and did the deceased's laundry, cooked and provided her meals, drove her to appointments and cleaned the house (Susan's 17 March 2020 affidavit at [16], and David's 8 November 2019 affidavit at [33). I accept that they provided day to day care and assistance over this period.
[81]
Section 60(2)(o) - any relevant Aboriginal or Torres Strait Islander customary law
None is here applicable.
[82]
Section 60(2)(p) - any other matter the Court considers relevant, including matters in existence at the time of the deceased person's death or at the time the application is being considered
No particular matters were relied upon in relation to this factor.
[83]
Determination as to alternative family provision claim
Taking into account all the circumstances set out above, I consider that the fact that Lara (on the assumptions on which the alternative claim has been predicated) has been left with no provision at all out of the deceased's estate means that she has been left without adequate or proper provision. I accept that at the end of the deceased's life the relationship between the two was distant, and I accept that there was substantial provision made for Lara during the deceased's life, but it is clear that the deceased still felt that Lara had a claim on her testamentary bounty.
While Lara has assets in terms of her home and an interest in what appears to be a profitable business, and has the support of her husband, she has two young children and her home is encumbered, such that to make no provision for her under the Will is not in my opinion proper or adequate.
That said, when comparing Lara's needs with those of David (even accepting that David's needs are no doubt contributed to by his seemingly poor track record in business investments and his foray into digital currency trading), David is in a position of greater need (and he also has a young family to support); and David provided the day to day care and support for the deceased during the last years of her life. I also consider that Lara's prospects of advancement in life through her own efforts (and those of her husband) are greater than those of David.
In those circumstances, were I to have made an order for provision for Lara out of the estate I would have limited it to a lump sum of $100,000 as a buffer for the vicissitudes and contingencies of life. As it is, I am not persuaded that there are relevant property transactions out of which a notional estate order can be made, and therefore had the matter fallen to be determined on the alternative claim, I would have concluded that it should be dismissed even though I accept that there had not been adequate or proper provision made for Lara by the deceased under the Will, having regard to the extent of the deceased's assets at the time that the application was determined.
[84]
Conclusion
For the reasons above, I have concluded that David is liable to account to the estate for the amount of the NetBank transfers (less the sum of $9,531.41 for transactions that, on balance, I accept were most probably solely for the deceased's benefit - being pharmaceutical disbursements of $8,975.41; Fournez Hair for $61; and OPSM from $495), I have reached that conclusion on the basis that these were effected by David (and not authorised by the deceased) as the deceased's agent and/or as her fiduciary (he having been entrusted by her, on his own case, to manage his finances). Having not satisfactorily accounted to the estate for those amounts, I have concluded that David should reimburse the estate for the sum of $1,819,513.84.
Further, I find that there was a sufficient relationship of dominion and ascendancy of David in respect of the deceased so as to give rise to a presumption of undue influence in relation to: the NetBank transfers; the proceeds of sale of the Glenhaven Property that were applied to the Beaumont Hills Property; and the acquisition of the new furniture for the Glenhaven Property at the time that it was marketed for sale. I have concluded that the presumption of undue influence has not been rebutted and (had it been necessary to determine) I would have concluded that this was a case where actual undue influence and unconscionable conduct were made out. Accordingly, David should account to the estate and is liable for equitable compensation in favour of the estate for those amounts. Taken together, the proceeds of the sale of Glenhaven Property that were applied for the purchase of the Beaumont Hills Property ($1,522,272.03), and the amount of NetBank transfers that I have concluded should be reimbursed to the estate ($1,819,513.84), comes to a total of $3,341,785.87.
As to the personal property that appears to have been disposed of by David, it is difficult to put a value on that and I am not persuaded that it is in the interests of the estate for further costs to be expended in proceeding to order an account in respect of that issue.
To the extent that David is unable to reimburse the estate for the full amount so ordered, then the shortfall should be treated as an ademption of the legacy provided for him under the Will, since he has in effect had the benefit of that legacy already. I note that as at the final day of the hearing (9 October 2020), there remained only $474,794 in the controlled moneys account, and a further $57,000 in a business account (resulting in the funds available to satisfy any judgment on David's evidence being a cumulative total of $531,794). Since there seems no basis (having regard to David's evidence as to his financial circumstances) to believe that he will be in a position to reimburse the estate sufficiently to permit the payment out of both his legacy and that for which provision was made for Lara, there should be an order that the amounts presently held in the controlled moneys account be paid out to Lara in partial satisfaction of her legacy under the Will. Therefore (unless the parties persuade me otherwise in relation to the form of the orders to be made - see below), the sum $531,794 held in the controlled moneys account and the business account should be transferred to Lara, as well as any proceeds from the sale of Tesla parts as may later be made to liquidate stock, up to the amount of $1 million in satisfaction of her legacy under the Will. I consider that David has already had the benefit of the legacy provided for him under the Will, and, accordingly, that any amounts owing to the estate that cannot be repaid should be considered the satisfaction of his share of the estate, in accordance with the principles of ademption.
[85]
Orders
I therefore propose to make the following orders, but before finalising those orders I will invite the parties to make any (brief) submissions as to the terms of the orders if the parties consider that the orders do not adequately reflect the above reasons, or if there are further orders required in order to implement the above reasons. I will also (as requested by David) give the parties an opportunity to make submissions as to costs with a view to finalising all orders on the papers.
The orders I propose to make (leaving aside the question of costs) are as follows:
1. Order that the administration of the estate of the late Isolde Becker be carried out and executed by and under the direction of this Court and that all necessary declarations be made, and enquiries held, and accounts taken to carry the same into effect.
2. Further to Order 1, order that letters of administration of the estate of the late Isolde Becker (the deceased), annexing the last Will and testament of the deceased dated 31 August 2016 be granted to the plaintiff (Lara Caroline Torok).
3. Order that the first defendant do, within 4 business days, pay and deliver up to the plaintiff, as administrator of the estate of the deceased all of the funds, assets, books and records of the estate of the deceased.
4. Declare that the payment in the sum of $1,522,272.03 to the first defendant by or on behalf of the deceased from the sale proceeds of the property referred to in these reasons as the Glenhaven Property was obtained by undue influence.
5. Declare that funds totalling ($1,829,045.25) transferred from the NetBank facility of the deceased Isolde Becker were not authorised by the deceased and were transferred by or for the benefit of the first defendant in breach of his fiduciary and equitable duties as the deceased's agent (and were obtained by the first defendant by undue influence).
6. Declare that the first defendant holds or held the net sale proceeds of the sale of the property referred to in these reasons as the Beaumont Hills Property, and such assets as he subsequently acquired using the same, on trust for the estate.
7. Order that the first defendant pay and deliver up to the plaintiff as administrator of the estate of the deceased, all funds and other assets, documents of title and things which he has acquired using the said sale proceeds or any part thereof.
8. Order that the first defendant pay to the plaintiff as legal representative of the estate of the deceased, equitable compensation in the sums of $1,522,272.03 and $1,819,513.84 (totalling $3,341,785.87), together with compound interest thereon at the defaulting trustee rate.
9. Order that the interest of the first defendant, as legatee and otherwise as beneficiary of the estate of the deceased, be impounded and held as security for his liabilities as determined under these orders.
10. Order that the funds held in the controlled moneys account pursuant to Interlocutory orders made in these proceedings be paid out to the plaintiffs by way of satisfaction of the legacy provided by the deceased's Will for the first plaintiff.
[86]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 09 November 2020
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Morrison v Coast Finance Ltd (1965) 55 DLR (2d) 710
Nicholas v Tubb [2016] TASSC 53
Nielsen v Kongspark [2019] NSWSC 1821
Page v Hull-Moody [2020] NSWSC 411
Page v Page [2016] NSWSC 1218
Pearse v Green (1819) 1 Jac & W 135 at 140; 37 ER 327
Peninsular and Oriental Steam Navigation Company v Johnson [1937-1938] 60 CLR 189; [1938] HCA 16
Perochinsky v Kirschner [2013] NSWSC 400
Plunkett v Bull (1915) 19 CLR 544; [1915] HCA 14
Poosathurai v Kannappa Chettiar (1919) LR 47 Ind App 1
Reynolds v Bonnici [2017] NSWSC 828
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Texts Cited: Ford and Lee, Principles of the Law of Trusts (1st ed, 1983, Law Book Co)
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Category: Principal judgment
Parties: Lara Caroline Torok (First Plaintiff)
Lara Caroline Torok as legal representative of the estate of the late Isolde Becker (Second Plaintiff)
David Theodore Becker (Defendant)
Representation: Counsel:
D Smallbone (Plaintiffs)
P Russell (Defendant)
The guarantees provided by Dr Becker and the deceased (secured over the Homebush Property) in relation to borrowings by or for Lara's benefit were as follows.
David relies on the discharge of Lara and Adam's loans, via the reverse mortgage, as amounting to financial accommodation in favour of Lara (as it plainly was).
However, it is clear from documents produced on subpoena in these proceedings (and it is not here disputed) that it was simply incorrect for David's solicitors to assert that David had paid any part of the Accommodation Bond (what in fact happened was that it was paid in two tranches from the deceased's and Dr Becker's own funds); just as it was incorrect for them to assert that the deceased and Dr Becker did not have sufficient funds for the Accommodation Bond. As at 2014, Dr Becker and the deceased had sums totalling $720,000 on term deposit with the Commonwealth Bank (being term deposits #6319 ($80,000); #2828 ($500,000); #6217 ($90,000); #2836 ($50,000)). (I hasten to add that I make no criticism of David's solicitors in this regard, since it is not suggested that they knew those statements were incorrect at the time they were made on behalf of their client.)
In David's first affidavit in these proceedings sworn 8 November 2019 (made after the documents establishing the incorrectness of above propositions had been produced on subpoena), David deposes that he had intended to pay the Accommodation Bond, until such time as it was discovered that his parents had adequate funds to do so (and he referred to advice from an unidentified financial planner that it was in his mother's interests for the bond to be paid from the deceased and Dr Becker's funds) (see David's 8 November 2019 affidavit at [13]-[15], and 17 March 2020 affidavit at [54]; [56]-[59]).
Pausing here, this is by no means the only statement contained in correspondence from David's solicitors (which correspondence one can only assume was on instructions from David) that has turned out to be incorrect (or perhaps, viewed more charitably, to be incomplete). For example, the "Bitcoin" correspondence, and the early correspondence as to the extent of any gifts or loans by the deceased, to which I refer below, are but two more topics on which responses by David's solicitors were later shown to be incorrect or incomplete. Again, no doubt, that was primarily a product of the solicitors' instructions. However, as I address in due course, this reinforces the serious doubts I have as to the reliability of much of David's evidence in general.
I also note that there was some suggestion in cross-examination of David that the sale of the Kellyville Property may have been due to financial difficulties on David and Susan's part but this was denied by David (and seemed to be based a misreading of his affidavit evidence as to the disposition of the proceeds of sale (i.e., where he deposed to an amount paid to discharge the couple's personal debts, it appears from his evidence in cross-examination that by this he meant the mortgage debt on the property itself). Be that as it may, as I understand it, after the sale of the Kellyville Property, David and Susan had around $290,000 in net proceeds of sale (see below) but they chose not to purchase another property - instead they remained living rent-free with the deceased for whom (they say) they were the full-time live-in carers from 2014. That latter assertion also seems likely to be a somewhat exaggerated claim since David was working on various business ventures (the carpet business and a proposed Tesla business) during at least some of the period from 2014 (and, he says, he was supervising the renovations of the Glenhaven Property). Nevertheless, I accept that David and Susan lived with, and provided day-to-day care for, the deceased from 2014 (and for most of the rest of the deceased's life).
I will return in due course to the question of the reverse mortgage (see below).
Lara's evidence is that she and Adam then had no choice but to close the business (since David had all the client contacts) (see Lara's 26 October 2019 affidavit at [162]-[163]).
Lara readily accepted in the witness box that the last time she spoke to David was at this time (she says when she asked him to assist in the payment of staff wages and, as I understand it, David refused to do so).
Significantly, whoever was to blame for the clearly acrimonious end to the joint venture or partnership between the siblings and their spouses, the consequence of this (one way or another), was that communications between the deceased and Lara were impaired. In effect, David says this was Lara's fault (and that Lara at all times was able to contact the deceased); Lara says, in effect, that David isolated her from their mother and, by inference at least, suggests that David 'poisoned' the deceased's mind against Lara. Wherever the truth lies in that regard, it is apparent that as a result of the breakdown in the relationship between David and Lara, the deceased was then clearly more susceptible to influence by David on whom she was by then increasingly dependent for her physical and emotional needs.
Relevantly, when one refers to the mortgage there was no time specified within which the Glenhaven Property had to be sold in order to repay the mortgage. Rather, the significance of the advice received by David was that there would be a rebate (early sale rebate) of the percentage otherwise payable to the lender out of the proceeds of sale depending on when the property was sold. It was thus in the interests of those who might inherit the deceased's estate for the Homesafe mortgage to be repaid sooner rather than later but there was no imperative from the perspective of someone in the position of the deceased that the Homesafe mortgage be discharged sooner rather than later (at least unless there came a point where, on the sale of the secured property there would not be sufficient funds to meet, say, an accommodation bond for aged care or nursing home accommodation were that to be necessary - and there is no suggestion there this was the case here).
As to the issue whether there was a partnership (and the emphasis sought to be placed on this as a "provable lie"), as adverted to above, I do not consider that anything turns on this. In both United Dominions and Industrial Equity Ltd v Lyons (Supreme Court (NSW), Cohen J, 15 October 1991, unrep), it was recognised that there may be a joint venture which does not constitute a partnership; what is important is the substance of the transaction (see Canny Gabriel Castle Jackson Advertising Pty Limited v Volume Sales (Finance) Pty Limited (1974) 131 CLR 321 at 327;[1974] HCA 22).
Clearly, in the present case there was a business or commercial venture being undertaken jointly in relation to the carpet overlocking business between, on the one hand, David and Susan and, on the other hand, Lara and Adam. Therefore, whether this was in truth a partnership, as a matter of law, is not material. What is relevant is that the joint enterprise clearly ended acrimoniously (Lara's evidence is that she never spoke to David again). It is not necessary to determine where the fault for that breakdown lies (indeed, there may well have been fault on both sides). What is clear, however, is that once the relationship between Lara and David broke down (at around the time of the 5 February 2016 letter), this was followed by a strain in the relationship between Lara and the deceased (again, as to whose fault that was is not relevant to the primary claims brought by Lara - although it would be of relevance to the alternative family provision claim). The relevance of this is that it means that the deceased became increasingly dependent on her relationship with David for care and assistance.
Lara quite readily admitted that the letter she read to her mother (over a lengthy period of time) was an attempt by her to "smear" David's character (see T 79), but she denied that she wanted David "out of" her mother's life "altogether". Instead, in effect, Lara says that she wanted David's influence removed (i.e., that the deceased and David did not continue to live together), so that Lara would be able to visit her mother again (saying, with obvious emotion in the witness box, "I wanted her back in my life" - see at T 84), which was something that Lara obviously considered was not possible while David was living with the deceased (though David does not accept this). Lara accepted that her plan (at this stage) was to make David leave the Glenhaven Property (see T 85) and, tellingly, insofar as it reinforces the evident animosity between them, she regarded David as "collateral damage" (se T 83). Lara accepted that she thought her mother was under David's control (T 98) and that she blamed David for the breakdown in her relationship with her mother ("absolutely" - see T 77) (though as to the latter Lara said that this was her view in hindsight (T 77), and that she did not know what was going on at the time).
David made much of the fact that the options that Lara put before her mother in the letter read out by Lara at the Wallacia lunch all involved the deceased living alone or in accommodation separate from both Lara and her family and David and his family, those options being: that the deceased remain at the Glenhaven Property with ACAT assistance (but that David and his family leave the Glenhaven Property); that the deceased build separate accommodation on the Wallacia Property (at the deceased's expense); and that the deceased move into a "luxury" retirement village in the Cobbity area. (Ironically, given the criticism made by David of those options, the final accommodation proposed by David for the deceased was in a rental duplex separate but next door to David's family; i.e., he seems to have had no difficulty with the motion of the deceased living in separate premises at that stage albeit close by - a not dissimilar arrangement to the second of the options Lara had proposed; and, as I understand it, the deceased was living in a "granny flat' in the Beaumont Hills Property, not the main residence, as such.)
Lara's evidence is that, at the Wallacia meeting in about June 2016, the deceased said words to the effect "[a]fter your father died David told me that you wanted to sell Glenhaven so you could get your hands on your share of your inheritance and put me in a nursing home" and "David has been making me feel guilty" and "I don't know how to make him leave". In answer to a query as to why the phone was disconnected, Lara says that the deceased said "David told me I had to stop the sales people from calling" (see Lara's 26 October 2019 affidavit at [191]).
Pausing here, I accept the caution required to be exercised in accepting one party's version of conversations with a deceased person, as urged upon me by David's Counsel (see, for example, the caution expressed in Plunkett v Bull (1915) 19 CLR 544 at 548-9, per Isaacs J; [1915] HCA 14 and the authorities referred to in Moore v Aubusson [2020] NSWSC 1466. However, that caution applies equally to both parties' evidence.
The deceased underwent a total knee replacement on 23 January 2017 at Norwest Private Hospital, and was then a patient at Hills Private Hospital from 29 January 2017 to 16 February 2017. The medical notes of 23 January 2017 (record that the deceased was "very stressed due to selling of home", which must be a reference to the Glenhaven Property which was placed on the market in May 2017 (see below). This is consistent with the fact that when the deceased was discharged from hospital the deceased moved back into Ms McCarthy's residence, and David's evidence is that there would have been no furniture at the Glenhaven Property by then. (The deceased moved out of Ms McCarthy's residence in April 2017 - see Ms McCarthy's affidavit sworn 28 May 2020 at [6].)
Lara's evidence is that from about late 2015 she noticed a change in her mother's demeanour, describing the deceased as appearing depressed, withdrawn, quieter, having less interest in her appearance, and being less engaged with Lara and her children (see Lara's 26 October 2019 affidavit at [149]). It is Lara's evidence that, by the time of their "secret" meetings in 2016, her mother was not the same happy woman she had known prior to 2015, as she was guarded, withdrawn, and would go quiet if David's name was mentioned (see Lara's 26 October 2019 affidavit at [199]).
Pausing here, David emphasises (and I agree) that there is no evidence that the deceased's cognitive ability was impaired.
That is, of course, inconsistent with the position the deceased appears previously to have taken in relation to downsizing (according to Lara), and it attributes to the deceased the suggestion of renovation where there is no independent corroboration of this. What seems to be suggested was that the deceased liked watching home renovation shows on television and that this prompted her suggestion about renovation of either the Glenhaven Property or some other investment property (see below).
A third reason proffered for the sale was that the deceased spoke about buying an investment property to renovate and sell (again noting that the deceased was said to be interested in home renovation properties on television) but David said in cross-examination that this idea "went out the window" - T 271).
It also seems to be suggested that the sale proceeds were paid to David as repayment of a loan for renovations (T 18). However, Lara points out that there was no independent advice obtained about the renovations (nor any contracts entered into for the renovation works).
Lara argues (and I accept the force of this) that the reverse mortgage was no reason (or at least was not necessarily of itself the reason) for the sale of the Glenhaven Property. Lara notes that David was aware that the mortgage need not be paid until after the death of his mother because he had personally received advice on the reverse mortgage from the solicitor who drafted the deceased's Will.
Interposing here, the evidence of the real estate agent (Mr Hampson), that the deceased told him she "had to sell" because of the reverse mortgage, suggests that, if the deceased indeed had such a (mis)apprehension, it was likely to be attributable to something David had said to her since David, on his own evidence, had a concern about the reverse mortgage and had taken his mother to obtain advice about it. As adverted to above, Lara also says that David's evidence that his mother contemplated selling the Glenhaven Property as early as 2015 is at odds with the deceased's wish to remain in her own home, when Lara says she suggested that the property be sold and downsized at the time of Dr Becker's admission to The Poplars.
It is noted by Lara that, as at early 2015 (despite the deceased having paid Dr Becker's Accommodation Bond of $590,000 in 2015), the deceased still had access to $130,000 on term deposit (comprised of #6217 ($50,000) and #6319 ($80,000)); that the deceased received a further $117,000 in March 2015 from the ATO being for unclaimed superannuation; and that, following the death of Dr Becker, the deceased received the proceeds of her late husband's estate amounting to $531,963.71.
Lara also points to the fact that bank documents produced on subpoena reveal that, by early 2015, David had started to receive very substantial sums of money from the deceased's account via NetBank transfers, including the receipt of $150,000 in June 2015 (which David deposes was used to buy stock for his Tesla after-sale parts business (see David's 17 March 2020 affidavit at [89])). The payout figure of the reverse mortgage was $2,045,209 as at 3 October 2017 upon the sale of the Glenhaven Property (Susan's 26 October 2019 affidavit at [222], and David's 8 November 2019 affidavit at [30]). The initial advance made by the reverse mortgage lender was $853,325 of which the loans in respect of the Wallacia Guarantee and the Physiotherapy Guarantee in the total sum of $338,895.82 represented approximately 40%. David says that, applying this percentage to the payout figures gives a sum of approximately $818,000, although it is noted that Lara also gives evidence that she made some further repayments to her parents in the period to March 2010 (see Lara's 14 November 2019 affidavit at [82], [90] and [97]).
On 4 July 2017, the deposit paid for the purchase was released (prior to completion), following a request that it be available to acquire other accommodation (see T 265). David's affidavit evidence was that this was in order to pay outstanding costs associated with the renovation of the Glenhaven Property (see David's 8 November 2019 affidavit at [29]). Lara contends, and David appeared in cross-examination to accept, that in fact the amount went substantially to the acquisition of a Tesla car (see below) - T 271.
For David, it is put that he always intended to look after his mother (and that he in fact did so); and that his mother was happy with the arrangement and wanted to live with David and his family. Accepting that this was David's intention (and that his mother was happy to live with David and his family), it does not change the reality of the situation, which was that, had David simply changed his mind or had circumstances changed (such as, for example, a failure of David's (then in its infancy) "Tesla" business, or a loss on David's digital currency trading, or a breakdown in David's marriage) necessitating a sale of the Beaumont Hills Property, the deceased was in an extremely vulnerable position. Pausing here, the improvidence of the transaction in relation to the sale of the Glenhaven Property and the use of a large part of the proceeds of sale for the acquisition of the Beaumont Hills Property in David's and Susan's names (at the very least without any binding contractual arrangement to protect the deceased's future needs for care and accommodation) is to me staggeringly obvious; although this was staunchly resisted by David and denied in his defence - see [36]ff.)
Instead, David's complaint seems to be that the increase in the amount of refinancing in 2007 in the sum of $338,895.82 caused by the two loans to Lara in turn significantly reduced the amount received by the deceased upon the sale of the Glenhaven Property on 3 October 2017 (Ex 2) (and, one might speculate, the amount which otherwise would have been available for use by David in the acquisition of the Beaumont Hills Property, or otherwise for David's benefit, as the bulk of the proceeds of sale ultimately were used).
In summary, it is said that David has now admitted to the direct receipt of $1,637,197.42 in bank transfers from the deceased's NetBank facility, with a further $138,856.68 being paid to third parties for David's direct benefit, at a total of $1,776,054.10; that amount being in addition to the funds received by David for the purchase of the Beaumont Hills Property, and not including $47,436.00 of transfers from the deceased's account for the purchase of new furniture in David's possession.
In August 2020, various issues arose between the parties, including the discovery of a $30,000 asset in David's name (a "Cub Camper" vehicle) not disclosed to Robb J at the time the interlocutory injunction was contested. I understand that Lara sought to have the matter relisted before Robb J to have the injunction varied (pursuant to the liberty that had been granted by his Honour) but that it was agreed between the parties (due to Robb J's inability to allocate time to hear that application and the proximity of the final hearing date) that any motion for amendment to the orders would be determined during the trial. Accordingly, at the outset of the hearing Lara filed a notice of motion seeking such a variation, which motion was dealt with at the conclusion of the hearing by way of a consent regime that limited the amount of expenditure from the controlled moneys account and included a requirement for notification in relation to expenditure for business purposes. Therefore, it was not necessary for me to determine that motion. However, given the exigencies of David's position, particularly in relation to the business, I have endeavoured to deliver judgment as soon as possible.
Prayers 15-16A seek interest and costs on the indemnity basis.
David's defence, filed on 24 February 2020, does not raise any plea of justification or other affirmative case supporting any of the impugned transactions. David admitted that the deceased required assistance for day to day needs (35). David denied that he was in a position of dominance or ascendency ([35]), but alleged not only that the deceased did not want to move into an aged care facility but also that the deceased had trust and confidence in him. (For Lara it is said that the admission that the deceased reposed trust and confidence in David establishes a presumptive relationship of undue influence and that there is no pleading of any facts rebutting the presumed influence.)
David denied that he had attempted not to disclose the full purchase price to Lara (saying that he knew that Lara's solicitor would talk to the purchaser and that he had alerted the purchaser to this). David suggested that Lara's solicitor had sent an "extremely threatening" communication to the purchaser (Ms Cotrone). I interpose to note that when a copy of the actual communication was produced it was my view that a less threatening request for information would be hard to imagine.
The upshot is that there was some delay in the balance of the purchase price for the Suzuki vehicle being deposited in the controlled moneys account (and, tellingly, that this did not occur until after Lara's solicitor had pressed the issue as to the actual purchase price).
Second, and not dissimilar to the above, there was delay in the deposit into the controlled moneys account of the whole of the digital currency as required by Robb J's orders. The background to this was that David initially converted to cash and deposited in the controlled moneys account of $340,000 from his digital currency accounts, and deposes to there being further digital currency worth approximately $385,000, which he was required to convert to cash and deposit into the controlled moneys account. The amount that was subsequently deposited was $344,191.43 (see Ex G). There were communications back and forth between the respective solicitors as to this discrepancy, in which Lara's solicitor pressed for further information as to what had happened and David's solicitor conveyed what were presumably his various instructions - first, that there seemed to be a "glitch"; that his client was making enquiries; and then (incorrectly) that the whole of the amount had been converted into cash. Nowhere in the later correspondence was it suggested that David was still making enquiries about this, or that the money (around $36,000) was inexplicably "missing".
David's evidence in the witness box in relation to this (see cross-examination from T 163ff) was confused. Moreover, David seemed remarkably sanguine as to the risks of currency fluctuations (or simply the seemingly ever-present risk that currency would go "missing" in the course of conversion from digital currency (through international exchange facilities) to actual currency).
Again, the response from David's solicitor, insofar as it went, was incomplete and it is difficult to have any confidence that, but for Lara's solicitor's diligence in pursuing the issue, the missing $36,000 would not simply have remained "missing". David's explanation for what happened (that he transcribed the wrong address in the transfer documents and that he did not realise the money was in a particular Bitcoin "wallet" he had suggests a remarkable lack of concern for the accuracy of his own currency transactions. Indeed, David's explanation of the digital currency in general suggests that even if the deceased was, as he insisted, very interested in Bitcoin, there should have been a proper explanation to her of the risks in such trading before she expended substantial sums therein).
Third, there was no disclosure by David in his affidavit evidence setting out his assets and liabilities of a Cub camper vehicle that he owns (seat T 280). His explanation for this was that it was of no value (having suffered water damage after being left outside for some time), although it had been used not long before that on a family trip in Queensland and it appears that David was keen to retain the vehicle. David said he thought it was worth little and might not have been able to be repaired, but that he then made enquiries and found out that he was able to have it repaired under warranty, which then occurred (T 247). His explanation for non-disclosure of this asset is not readily explicable other than as an attempt not to disclose all his assets (since other assets listed by him were or little or nominal stated value). (There was similarly non-disclosure of the deceased's grand piano or other items of personal property disposed of by David - see below.)
Fourth, there is the assertion in early correspondence from David's solicitor (before the commencement of proceedings) that the only gift David had received from the deceased was the proceeds of sale from the Glenhaven Property that were used to acquire the Beaumont Hills Property and as to the sum of $150,000 that it is said was received (first, as repayment for the renovations carried out to the Glenhaven Property and, second, as repayment "over several years" of loans for renovations and for the ongoing care provided by David to the deceased). That account of events is belied by the evidence now put forward as to the NetBank transactions (see below) and, even on David's own evidence, the suggestion that all he had received (other than part of the proceeds of sale of the Glenhaven Property) was the amount of $150,000 was a significant understatement.
Fifth, there is the correspondence from David's solicitor responding to a query (after the freezing orders had been made) as to the receipt by David and Susan of any income for the period after the interlocutory regime was in place. It may be noted that Susan was not precluded from earning income during this period (and nor was David) but the enquiry went to the question of whether income had been received. The answer (again presumably on instructions - and it would seem on Susan's evidence that this could only have been instructions from David) was none. In fact, however, as David and Susan each admitted in cross-examination, work had been carried on in relation to the carpet overlocking business (for former clients of David) for which it is said only a small amount had been received over the year ($1,000 or $1,500).
It was unclear precisely who was carrying out the work (Susan's evidence was that she was trying to restart the business but the communications seem to be on company letterhead and the contact details included David's), but it seems not coincidental that David disclaimed earning any money in circumstances where, had he done so, the receipt of that income would have needed to be taken into account in determining how much could be withdrawn on a monthly basis under the interlocutory regime that was in place. At the very least, this might be said to be contrary to the regime of the orders (if business that otherwise would have come to David or the company, and been accountable under the regime, were diverted to Susan and therefore not accountable) but it is not necessary to come to any view about this. The real issue is that this is another instance of an incorrect response in correspondence from David's solicitor, again casting doubt on the reliability of David's instructions. Moreover, David's answer in cross-examination as to evidence on which reliance was placed in an affidavit used on an interlocutory application in his matter, was to say it "wasn't quite accurate" - T 229 (which bespeaks either an inattention to detail on his part or a lack of concern to put forward an accurate picture of events).
Finally, David's account of the assets of the estate at the time of the deceased's death was incomplete at least insofar as it did not include the grand piano (which he said was sun-damaged and worthless, and which he gave away for no consideration to the deceased's podiatrist), and any items that remained in storage after the move from the Glenhaven Property (although I accept that it is not clear precisely when those goods were disposed of or given away). Some goods, David said, he gave away to contractors. Some, he or Susan may have sold on e-Bay. David's account of what happened to the $47,000 odd of new household furniture acquired from HomeValet for the purposes of the Glenhaven Property sale is wholly unclear. All of this is redolent of a lack of understanding of David's responsibilities as executor at best (or, to the extent that goods were disposed of prior to the deceased's death, to an attitude on this part that the deceased's property was his to deal with as he wished).
Regrettably, I cannot place weight on David's assertions where those are uncorroborated by independent or objective evidence. His account of events was in many instances confused and defensive; and his account was in a number of respects inherently implausible (particularly in relation to the NetBank transactions). Moreover, he clearly bears a degree of animosity towards Lara (though that may well be as a result of the litigation itself). His answer to one question was "Lara managed to do that all on her own with her threatening calls") (T 284).
Other evidence of his was also inherently implausible (such as the suggestion that total knee replacement surgery would not be painful - particularly given the pain relief medication that it appears was prescribed for the deceased).
Fourth, that on David's own evidence much of the money being received was not by way of reimbursement, but for future expenses, living costs and care (see David's 14 November 2019 table p 11). In these circumstances, and on his own evidence, it is said that David was holding money as agent or trustee.
Thus Lara submits that David is liable to account. It is noted that David was put on notice of what was required when the matter first came before Robb J - see Torok v Becker (2019) at [119]:
119. … Mr Becker must be required to serve his evidence in response expeditiously. He will be required to explain in detail the factual justification for his claim to be entitled to all of the monies paid to him to the exclusion of Ms Torok. He will also be required to explain in detail what happened to all of the money, and in particular how it was applied in repayment of monies owed by the deceased to him or for her benefit.
Lara points out that if an enquiry is ordered into what was done with the deceased's $1.77 million transferred from the deceased's accounts this proceeds upon an assumption that the party calling for the account is entitled to the sum found due after such an accounting (see Barkley v Barkley Brown at [10], citing Doss v Doss (1843) 3 Moo Ind App 175 at 196-7; 18 ER 464 at 472).
Lara says that David has had seven months since the filing of the amended statement of claim to provide his explanation of his transactions; and has done so in the form of his 110 page affidavit sworn 28 August 2020, as well his affidavits sworn 14 November 2019 and 17 March 2020. It is noted that in the time since Robb J gave judgment, David has not produced a single invoice substantiating funds which were alleged to have been spent by David for the deceased's benefit; instead, David has analysed his bank statements particularising those transactions said to have been for the deceased's sole benefit (marked "A"), those transactions made at the request of Mrs Becker but which also benefitted David and his family (marked "B"), and those which can be categorised as general living expenses benefiting all members of the household (marked "C") (see David's 28 August 2020 affidavit at [5]). Lara accepts that this evidence is admissible in order to identify how David claims to account for the money, but says that it is not admissible to prove the truth of the justifications offered.
Lara notes that examples of transactions said to have been effected for the deceased's sole benefit include: cash withdrawals from David's accounts, money spent on clothing or department stores such as Myer or David Jones, a Christmas present purchased for the deceased, and $19,840.00 of "rent" for the duplex into which the deceased never moved because she had died. It is said that the Christmas present (whilst a small item) is indicative of David's "complete lack of objectivity in approaching the task of justifying his transactions and his utter lack of any proper moral sense". It is said that it quite obviously can only have been a private expense of David to buy a present for his mother at Christmas (otherwise it was not a present at all); and that to represent himself to his mother at Christmas as making a gift for her, which he was in fact paying for with her money, was a "mean and petty deception".
Examples of transactions said to have been effected at the request of the deceased but for the benefit of the whole family include the payment of $97,076.30 by David to purchase a Model S Tesla vehicle, valued at $214,636.50, and $8,102.74 of airfares to fly Susan's sister and her husband to Australia from the United States.
Examples of transactions said to have been effected for the benefit of all family members are: David's $14,300.00 purchase of solar panels for the Beaumont Hills Property, sound equipment and television for the family, and veterinarian costs relating to David's dog, Jax.
To the extent that the relevant NetBank transactions are found to have been authorised by the deceased, it is said that David's failure to produce a single receipt for any purchases said to have been made by him for the deceased's benefit (including for purported renovations which are disputed by Lara), should lead to a finding that David has not adequately accounted for any of the admitted receipts, and judgment should be entered in favour of the estate for that sum (about $1.77 million) plus interest to run from the several dates of the transfers from the deceased's account.
It is said that, even if David were to produce satisfactory accounts for all of the transactions asserted by him to be for the deceased's benefit, those amounts, on David's own evidence, account for a mere $464,020.41 of the $1.77 million received by him (directly or indirectly).
Furthermore, it is said that, assuming that the deceased knew and approved of various of the transfers (see submissions at [185]), there should be a findings that these were loans to David, given that: David himself does not suggest they were gifts and says they were advances for the benefit of the deceased; the evidence does not support a case that David had made payments for the deceased's benefit at the times of the respective payments for which she ought to reimburse him; and many of the transfers are described in the bank records themselves as loans (although it is said for Lara that it is more likely that David simply "took the money and labelled it that way").
Lara contends for a finding that, due to her health, age, lack of social and other support systems, financial circumstances, and trust in her son, David was in a position to exercise dominion over the deceased, leading to a presumption that all of the NetBank transactions, and the $1.522 million of funds applied for the purchase of the Beaumont Hills Property, were obtained by the undue influence of David.
It is clear that, where a presumption of undue influence exists, the donee must positively justify the retention of the benefit conferred (see Winefield v Clarke [2008] NSWSC 882 (Winefield v Clarke) at [44], per Barrett J, as his Honour then was). Lara submits that there is virtually no evidence in this case capable of rebutting the presumed influence. Lara submits that such explanations as are provided by David tend only to reinforce the conclusion that the deceased was in fact highly dependent on, and susceptible to, the influence of David. (Further it is said that much of David's own evidential case supports Lara's alternative case of actual undue influence.) Lara maintains that the deceased's desire to "even things" up presented an opportunity for advantage to be taken as the deceased's abilities were diminishing.
Lara argues that the grossly improvident dispositions and the manifest partiality to a person who volunteered (and, she says, even insisted on) being her primary or sole carer, to the exclusion of the normal family relations hitherto enjoyed, are circumstances strongly probative of influence and of the probability that the dispositions were produced by that influence.
Lara contends that, even without any calculated manipulation, the relation of influence, whether presumed or actual, was productive of the dispositions; and that it follows that they cannot stand, even if could be shown that David's actions showed him to be no more than a passive recipient.
Emphasis is placed by Lara on the fact that the donor is deceased, and to the need carefully to scrutinise the evidence to ascertain whether what the living donee puts forward as a probable and credible account of what really happened (referring to Barkley v Barkley Brown at [151], quoting Huguenin v Basely (1807) 14 Ves Jun Supp 273 at 299-300) (Huguenin v Basely).
Lara points to the fact that there is no evidence that the deceased obtained financial advice from a qualified adviser as to any of the NetBank transfers, or the application of $1.522 million of her funds used to purchase the Beaumont Hills Property in David's and Susan's names. It is noted that David's evidence is that he had taken his mother to receive financial advice regarding the payment of the Accommodation Bond (see David's 17 March 2020 affidavit at [57]), but that there is no reference to an adviser being called in to assist the deceased thereafter, or in reference to any other transaction. Lara submits that the absence of records or of contemporaneous arrangements to ensure that the transactions in question could be seen as objectively justified, is telling against David, because he understood the importance of his mother being competently and independently advised. It is noted that the deceased received no legal advice as to any of the NetBank transfers; nor did she receive any advice (free of David's participation), on the sale of the Glenhaven Property and use of its proceeds for the purchase of Beaumont Hills Property, nor on the investment or other disposition of any of the balance of the proceeds of sale. It is said that no protective arrangements at all were made and carried through to secure the deceased's interest and provide for her needs.
Lara argues that the fact that the deceased proceeded with the purchase of Beaumont Hills in David's and Susan's name is not evidence of a free and voluntary transfer. Lara maintains that its gross improvidence suggests the contrary and, taken with the other matters to which she has referred, strongly points to a conclusion that the deceased was no longer capable of making any worthwhile judgment as to her own interest. It is noted that David entered into the contract to purchase the Beaumont Hills Property in July 2017 (the deposit was paid on 20 July 2017) and that, in the period when application of the deceased's funds for that purpose was being determined, the deceased had only recently had extensive knee surgery and had already exchanged contracts to sell her own home (the Glenhaven Property). It is said that the deceased was hardly in a position to create any discord with the person on whom she was likely to depend for the rest of her life. Lara points to the medical notes that record that the deceased was "very stressed due to selling of home".
Lara thus submits that the evidence does not permit a finding that, in all the circumstances, the Beaumont Hills purchase in David's and Susan's names, and the various NetBank transfers, occurred in circumstances that enabled the deceased to exercise her own free will; noting (because the focus is on the donor's circumstances and state of mind), that such a finding can be made without having to find that David acted improperly.
It is said that the improvidence of the Beaumont Hills transaction, and all the other NetBank transactions, "came home to roost" in the last few weeks of the deceased's life when it was necessary for the Beaumont Hills Property to be sold (converting the deceased to a potential tenant to an unknown landlord and subject to David's capacity to pay the rent).
Tellingly, it is said that the deceased died without enough funds to pay even for her own funeral expenses. It is said that a dutiful son in the position of the defendant could not in good conscience let these transactions occur or let them stand.
It is noted that the terms of the 2016 Will followed contemplation by the deceased of figures in an effort to "even things up with Lara", and to "compensate [David] for living with her" and "not buying his own house". It is said that the funds received following the date of the Will were enough to redress the imbalance which existed in 2016 (and more). It is further said that there is no evidence that the deceased intended to confer the benefit of the whole of her estate on David to the exception of Lara so as to rebut the presumption of ademption.
Reference is made to the birthday card sent to Lara after completion of the purchase of the Beaumont Hills Property that it is said contains words that do not evidence a mother wanting to cut her daughter out of her estate. It is said that the relevant time to assess whether the deceased intended to confer a double portion on David is at the time of the inter vivos disposition in question.
David's evidence is that in the period from when David and his family commenced living with the deceased at the Glenhaven Property in July 2014 until her death, the deceased kept her own bank accounts. He says that all moneys provided to him or his business were transferred by way of internet transfers authorised by the deceased (David's 14 November 2019 affidavit at [6]-[7], and 17 March 2020 affidavit at [66], and Susan's 17 March 2020 affidavit at [17] and [36]-[41]).
David's evidence is that in the period from the end of 2015 or early 2016, the defendant and his wife were the deceased's primary carers (David's 8 November 2019 affidavit at [17], and 17 March 2020 affidavit at [78]). David says that in the period from October 2017, David and his wife were full time carers of the deceased. David and his wife assisted the deceased by taking her to medical appointments and hairdressers, cooking and bringing meals to her, cleaning, entertaining her, dressing her, washing clothes, and as she became older assisting her in her dressing and personal care (David's affidavit 8 November 2019 affidavit at [33]). In the period from October 2017, David says he continued to pay all the deceased's living expenses (David's 17 March 2020 affidavit at [156]).
David says that in the period after 6 February 2016, Lara had limited contact with the deceased (referring to Lara's 26 October 2019 affidavit at [203], [215], [223] and [224], and David's 8 November 2019 affidavit at [11], [13], [16]); and her relationship with the deceased was strained (David's 8 November 2020 affidavit at [11] and [47]).
It is submitted that it is also relevant that Lara had previously received substantially greater benefits from the deceased and Dr Becker than David (including the Wallacia and Physiotherapy loans). It is said (and Lara accepts) that those loans were not fully repaid by Lara and (which Lara does not accept) that this was a matter about which the deceased and Dr Becker were very concerned.
David says that the statements made by the deceased to him also support the conclusion that the payments were made voluntarily in repayment of all the assistance provided to the deceased by David and his wife (David's 8 November 2019 affidavit at [32], and Susan's 17 March 2020 affidavit at [27]-[28], and David's 28 August 2020 affidavit at [20]-[25] and [141]-[142]).
It is said that, after selling the Kellyville Property in July 2014 (with the intention of funding Dr Becker's Accommodation Bond), David and his wife and children lived with the deceased and cared for her until she died on 13 July 2019. David says that in or about 2016, he and the deceased decided to pool their funds to renovate and landscape the Glenhaven Property to maximise its sales value (David's 8 November 2019 affidavit at [20] and [29], 14 November 2019 affidavit at [18], 17 March 2020 affidavit at [150], and 28 August 2020 affidavit at [17] and [21]). It is said that in June 2019, David again sold his house, being the Beaumont Hills Property, in order to obtain sufficient money to care for the deceased.
David says that, in these circumstances, it should be inferred that at the time of making the Schedule A payments, the deceased considered that she would be living with David for the rest of her life and that he would continue to care for her and ensure that all her expenses were paid until she died. It is said that David did this "even to the extent to selling Beaumont Hills Property to obtain the necessary funds", and to ensure that they had sufficient funds to pay for in-home care for the deceased if and when needed (David's 8 November 2019 affidavit at [34]-[35]).
Further, it is said that, to the extent to which the payments made by the deceased were in respect of David's Tesla after-sale and Bitcoin trading businesses, it is relevant that the deceased was interested in both businesses and discussed the businesses with David (David's 17 March 2020 affidavit at [93] and [151], and his 28 August 2020 affidavit at [20]; Ms Hart's 17 March 2020 affidavit at [5], and Mr Kossow's 18 March 2020 affidavit at [3]-[4]) (and see his evidence in cross-examination at T 281 that the deceased encouraged the Tesla business).
Reliance is also placed on the fact that the last payment made by the deceased to David in excess of $5,000 was made on 15 January 2018, approximately one and a half years prior to the deceased's death on 13 July 2019; and that David and Susan still continued to care for the deceased and maintain her level of comfort and lifestyle until the date of her death.
It is submitted that it was completely rational for the deceased to make the Schedule A payments to David, notwithstanding that in respect of some of the payments David and his family also received a benefit as well as the deceased, and that in respect of some of the payment payments the deceased received no direct benefit, although (allegedly) was interested in, and discussed with David, the businesses to which the funds were applied. It is submitted that in all the circumstances, it should be inferred that the deceased voluntarily made the Schedule A payments in recognition of her close relationship with her son, and the care and assistance which he had provided and would continue to provide.
David says that it is also relevant that the Schedule A payments comprised 94 individual payments made over a period of four years and four months (in contrast to cases such as Mentick v Olsen [2020] NSWCA 182; Bridgewater v Leahy (1998) 194 CLR 457; [1998] HCA 66 (Bridgewater v Leahy); and Amadio where it was a single, or small number of, transaction(s) under scrutiny).
David says that the multiplicity of payments, where a large number of those payments were for the sole benefit or partial benefit of the deceased, made over an extended period supports the conclusion that all the payments comprised within Schedule A payments were made voluntarily by the deceased in exercise of her free will and independent judgment.
Lara's position, as noted above, is that the NetBank transfers were not made by the deceased but, rather, were effected by David. Lara contends that David accessed the deceased's NetBank facility and "set about transferring sums as and when he pleased" for the benefit of David, Susan, and David's business.
I have referred above to the implausibility of the evidence as to how the internet transactions occurred. On David's own case, the deceased did not have a computer when he moved into the Glenhaven Property. He says that he gave the deceased an old MacBook or iPad of his own. The deceased's NetBank facility was opened shortly after David's NetBank account was opened, and David's evidence was that he taught the deceased how to do NetBank transactions (see at T 196). Despite the very generalised evidence given by witnesses of observing the deceased on the computer, Susan's own evidence indicated the deceased's inability to send text messages on her mobile phone. David also seems to have been responsible for setting up contracts in relation to the deceased's mobile phones over that period (see the Amaysim contracts).
I accept (as was stressed more than once for David in oral submissions) that there is no evidence to suggest that the deceased was suffering from any cognitive impairment in the last few years of her life. I also accept that various witnesses saw her watching YouTube or current affairs (or home renovation) programmes on the television or computer, and depose to the deceased's interest in current affairs, reading books and the like.
I heard much in submissions as to the deceased being an organised person (by reference to the fact that she had told one or more people she had worked as a legal secretary many years before - and indeed this must have been some time before her marriage since she was working as a secretary in her husband's medical practice at that time). However, even assuming that the deceased worked for a time as a legal secretary (and leaving aside the perhaps debatable question as to whether qualification as a legal secretary makes it more likely or not that a person is organised), what I do not accept from this or the above evidence as to the deceased's television or other interests is that it makes it more likely that it was the deceased who was effecting the substantial transfers of money out of her accounts (at odd hours of the day and night; almost simultaneously with someone, presumably David, accessing David's own accounts; and, on David's own account, in close physical proximity to David and in discussion with him). Indeed, the almost contemporaneous log-ins to David's account when various transactions were effected on the deceased's account would suggest that David was confirming that the transfer(s) had been duly effected and that the moneys in question had been received in his account, since otherwise it is hard to see any explanation for the contemporaneity of log-ins. (It is not, however, necessary to make any concluded finding on that aspect of the evidence.)
On David's own evidence, the deceased asked him to "manage" her finances. If so, and whatever David understood the deceased to mean by such a request, there logically would have been no need (and no logical explanation) for the deceased herself to continue to effect the relevant electronic transactions (as David insists she did) if the deceased understood that David was doing so on her behalf.
Moreover, there is an inconsistency between the deceased having her own debit or credit card (and apparently using it on a particular day) and at the same time there being credit purchases or payments on-line for the same shops by way of NetBank transfer on the same day (for which David had no explanation in cross-examination). There is also room for doubt as to whether all of the expenses in question related to the deceased, in that some might seem more likely to have been expenses referable to Susan (having regard to the fashion outlets in respect of which some of the purchases were made, and to the age differential between Susan and the deceased which would suggest it is more likely that the clothing items were for a younger woman) but again there is no need to make any findings on this aspect of the evidence. Nor is it necessary to do anything other than observe that it seems incongruous that an elderly woman having a regular weekly $25 haircut at the same local hairdresser would also be having a much more expensive haircut at another hairdressing salon at around the same time (although David's evidence was that it was nonetheless his mother, and not his wife, who had undergone the champagne and hair treatment at the Lattouf Hair Salon in question).
Significant, to my mind, is the contemporaneity of the access to the deceased's NetBank account and access to David's NetBank account on many of those occasions, to which I have referred above. David's account of this is that he and the deceased would be sitting together (in the home office, or in the kitchen, or sometimes at a café or in the hospital) and would be separately logging into their computers to access the accounts. This is inherently implausible when one considers that some of the transactions were in the middle of the night (and at least one was on a Boxing Day afternoon when the deceased was staying with Ms McCarthy and David and his family were at Ms McCarthy's house - see at T 217). Even accepting that the deceased may have had difficulty in sleeping and kept irregular sleeping hours, on David's account of events he must (fortuitously it would seem) not only also have been awake at the same time, but sitting with the deceased when she logged into her computer. This, together with the unreliability and self-serving nature of much of David's evidence, means that I simply cannot accept David's account of these events without any independent corroboration, and I can find no such independent corroboration in the evidence.
Therefore, I find, on the balance of probabilities, that it was David (not the deceased) who was effecting the NetBank transfers from the deceased's account over the period from 2015. I interpose to note that even if (which I consider most improbable) David's version of events is correct, and it was the deceased who (in collaboration with David) was physically effecting the transfers, the ultimate outcome would be the same - because on that version of events it would be accepted that the transfers were all, or mostly, done when David was together with the deceased (albeit each on his or her separate computer devices) working together on the accounts. I consider that this (taken with the findings in relation to the deceased's overall and increasing dependence on David in this period) supports the finding of presumed or actual undue influence in relation to those transactions (see further below).
Given my finding that the transfers were effected by David, a liability to account therefor will arise in circumstances where the electronic transfers were made by David at a time when he was at least acting as agent for the deceased (and, on balance, I find in a fiduciary capacity on behalf of the deceased) (see the discussion of principles in this regard in Barkley v Barkley-Brown, though I note that there, unlike the present case, there was no pleading of any separate cause of action based on any alleged undue influence or unconscionable dealing).
In Hospital Products, Mason J (as his Honour then was), noting that the categories of fiduciary relationships are infinitely varied and that the duties of the fiduciary vary with the circumstances which govern the relationship, commented (at 102) that fiduciary relationships range from the trustee to the errand boy (citing the example given by Fletcher Moulton LJ in In re Coomber [1911] 1 Ch 723). In the present case, even if the electronic transfers were made by the deceased (and as noted above, I consider that on the balance of probabilities this is not what happened) it is clear (on David's own evidence) that the transfers took place in collaboration with him. Certainly it appears that the electronic transfers were done at the same, or around the same, time (and on his account in his presence) as his own log-ins. Furthermore, there is no doubt that the deceased reposed considerable trust and confidence in David.
While I accept that in particular cases agents may not necessarily owe fiduciary duties to the principal (though I note that Meagher Gummow & Lehane have opined as to the general rule being that agency is a fiduciary relationship - see Meagher Gummow & Lehane, Equity: Doctrines and Remedies (5th ed, 2015, Lexis Nexis) from [5-210]), in Asset Risk Management v Hyndes [1999] NSWCA 201 (Asset Risk Management v Hyndes), Meagher JA (at [9]) held that an employee to whom money was entrusted owed a fiduciary duty to his master, relying upon Hospital Products.
Accepting for present purposes that the deceased did ask David to manage her finances, then I consider David had a fiduciary duty in so doing. Moreover, as the deceased's agent in making the electronic transfers (absent any attenuation by the deceased of such a duty), the first duty of David was to keep and (at least when requested) communicate a clear account of the moneys passing through his account (see Pearse v Green (1819) 1 Jac & W 135 at 140; 37 ER 327, as discussed in Barkley v Barkley Brown), and failure to do so (when called upon) amounts to breach of that duty. As I noted in Barkley v Barkley Brown (at [101]), the obligation to provide an account (absent express agreement to the contrary) survives the termination of the agency (see Yasuda Fire & Marine Insurance Co of Europe Ltd v Orion Marine Insurance Underwriting Ltd [1995] QB 174 at 185-186, per Colman J; [1995] 3 All ER 211), and the failure of the principal to ask for an account, even over a long period, does not diminish the duty of the agent to keep proper accounts (see Lord Chedworth v Edwards (1802) 8 Ves Jun 46; 32 ER 68).
As it is impossible to ascertain any particular transfers for which the deceased may have orally dispensed with the need to account, David would remain under an obligation as agent to account to the deceased for all the sums received into his accounts; and that obligation would enure for the benefit of the deceased's estate. An agent can be ordered to account when in breach of no duty other than the duty to provide an account (see, for example, what was said by Meagher JA in Asset Risk Management v Hyndes at [5], [8]; his Honour there citing Snells, Principles of Equity (28th ed)) (see also Peninsular and Oriental Steam Navigation Company v Johnson [1937-1938] 60 CLR 189 at 218, per Latham CJ; [1938] HCA 16).
In my opinion, therefore, David was obliged to account for the electronic transfers. At best, he has here provided an explanation for them (without much more, it would seem, than reference to whatever was disclosed on any narration made at the time of the transfer, or the recipient of the funds to the extent that the recipient was a third party). I do not consider that this complies with his duty to account to the deceased for the moneys that were transferred out of her account.
However, insofar as Lara calls for an order for a more complete accounting to be made, I note that in Warman International Limited v Dwyer (1995) 182 CLR 544 at 559; [1995] HCA 18 (where the Court was considering an application for an account of profits), the Court referred to the "cardinal principle of equity that the remedy must be fashioned to fit the nature of the case and the particular facts". It seems to me unlikely given the nature of the account made to date that much will be gained by requiring David to carry out a further exercise in accounting for the NetBank transfers. Rather, I consider that the most appropriate course is to order David to refund to the estate the amounts withdrawn from the deceased's account (with the exception of those amounts that I am satisfied, from the description given by David and the nature of the third party payee, are most likely to have been for the benefit of the deceased - those being the pharmaceutical amounts, payments to Fournez Hair, and to OPSM). I appreciate that this is a relatively arbitrary process but I consider that it errs on the side of the estate (and I note that David is also a beneficiary of the estate). I have calculated that amount as being $1,819,573.84.
In so finding, I am conscious that David's evidence was, in effect, that the family finances were pooled and that some expenses for the deceased (such as the provision of food or telephone bills and the like) would be necessarily shared expenses. However, the difficulty is that it is impossible on the material before me to separate out those expenses (and the blame for that must rest at David's feet).
The question is whether there was a sufficient relationship of dependency upon or ascendancy exercised by the donee. See, for example, Tulloch (deceased) v Braybon (No 2) [2010] NSWSC 650, where Brereton J, as his Honour then was, referred to the question as to whether the relationship was one of "dominion or influence" (see at [80]).
This is not a case where there is presumption of undue influence merely by reference to the parent/child relationship (since that operates where it is the child who confers a benefit upon the parent, not vice versa - see Urane v Whipper [2001] NSWSC 796; and Whereat v Duff [1972] 2 NSWLR 147 (Whereat v Duff).
In my opinion, it is beyond doubt that there was a sufficient relationship of dependency by the deceased upon David (or ascendancy over the deceased exercised by David) to give rise to the presumption of undue influence; i.e., that David "stood in a position of undue influence towards" the deceased (much as was the case in Winefield v Clarke).
It is clear that, from the time that David and his family moved into the Glenhaven Property, the deceased was in a position of increasing dependence on him. Thus was particularly so after the breakdown of the relationship between David and Lara (after which Lara did not visit the deceased at the Glenhaven Property), which meant that (whoever was to blame for this) the deceased was isolated from her daughter and presumably increasingly emotionally dependent on her son and his family.
The deceased was elderly. She was in deteriorating physical health. She was on medication for pain relief and, even on David's evidence, she had pain (though he refused to accept it was considerable pain), and was experiencing increasing difficulty in caring for herself. On David's own case, the deceased felt beholden to him (and Susan) on the basis that they had sold their Kellyville Property "for no reason" in connection with the Accommodation Bond (whether that was an idea encouraged by David is not to the point - it is tolerably clear that the deceased had that perception, by reference to the instructions recorded by the solicitor in respect of her draft Will).
There can be little doubt that the deceased reposed trust and confidence in David (and this is admitted in his defence, as it was by him in his cross-examination). Once the estrangement occurred with Lara, it is obvious that the deceased's dependence on David must have become more acute. Moreover, once the Glenhaven Property was sold and the proceeds of sale distributed as they were, the deceased was totally dependent on David for financial support and for her accommodation (in the sense that she had little or no assets from which she could have supported herself if there had been a withdrawal of support by David).
In those circumstances, I am satisfied that there was a clear relationship of dependence such as to place David in a position where undue influence would be presumed over the deceased; and it falls on David positively to justify the retention of the benefit conferred on him. Where the presumption is not rebutted, equity will intervene and set aside the transaction (Johnson v Buttress at 119-120, per Latham CJ; and at 134-135, Dixon J, as his Honour then was; Winefield v Clarke at [27], per Barrett J, as his Honour then was).
It is not necessary for there to have been an actual use of influence for the purpose of obtaining the benefit; i.e., that undue influence be proved as a fact. Moreover, as Asprey JA said in Whereat v Duff at 167, in those circumstances:
… The court does not act on the ground that any wrongful act has been committed by the donee, but on the ground of public policy and to prevent the relations which existed between the parties and the influence arising therefrom being abused: Allcard v. Skinner (1887) 36 Ch D 145 at 171.
What David was required to show in order to justify the retention of the benefits conferred on him (given that on no view of things could it be said that these were trifling benefits - see Rhodes v Bate (1866) LR 1 Ch App 252; Spong v Spong (1914) 18 CLR 544; [1914] HCA 52 (Spong v Spong)) was that the amounts he received, or from which he benefited, were the independent and well understood acts of the deceased made when she was in a position to exercise a free judgment based on information as full as was David.
In Allcard v Skinner (1887) 36 Ch D 145, to which reference was made in the passage cited above from Whereat v Duff, it was said that once the facts are established (as they are here) from which the court will infer that a situation exists where undue influence may have been exerted, then the presumption arises and the onus then falls upon the donee to rebut the presumption by proving that "in fact the gift was the spontaneous act of the donor acting under circumstances which enabled him to exercise an independent will and which justifies the Court in holding that the gift was the result of a free exercise of the donor's will" (at 171, per Cotton LJ).
It is clear that, when undue influence is raised, one looks to the quality of the consent or assent by the weaker party (see Deane J at 474 in Amadio). The fact that the deceased may have expressed the intention to make a gift is not sufficient (see Whereat v Duff at 168-169, per Asprey JA). The question is how that intention was produced; and it is relevant to bear in mind the caution expressed in Huguenin v Basely at 531-532 that:
… where a gift is immoderate, bears no proportion to the circumstances of the giver, where no reason appears, or the reason given is falsified, and the giver is a weak man, liable to be imposed upon, this Court will look upon such a gift with a very jealous eye; and very strictly examine the conduct of the persons, in whose favour it is made; and if it sees, that any arts or stratagems, or any undue means, have been used, if it sees the least speck of imposition at the bottom, or that the donor is in such a situation with respect to the donee as may naturally give an undue influence over him ….
See also the recognition in Poosathurai v Kannappa Chettiar (1919) LR 47 Ind App 1 that the burden thrown on the person in "a position to use his dominating power" is a heavy burden "of establishing affirmatively that no domination was practised so as to bring about the transaction …".
One way of rebutting the presumption of undue influence would of course be to point to the receipt of independent competent and sufficient legal or other advice, but the lack of such advice (though a relevant factor) is not determinative (see Johnson v Buttress; Stivactas v Michaletos (No 2) [1994] ANZ ConvR 252; and see the review of authorities in Riz v Perpetual Trustee Australia Ltd [2007] NSWSC 1153 at [116]-[128], per Brereton J, as his Honour then was).
Here, to maintain the impugned transactions David must show affirmatively that the deceased knew what she was doing at the time of the transaction, in the sense that she understood its effect and the significance of that transaction in relation to herself; and that it was done at the incidence of the deceased's own free and independent will (Spong v Spong).
The principal evidence adduced by David to rebut the presumption of undue influence was his own account of the conversations in which it was said that the deceased told him she was making gifts to him, or otherwise that she was giving him the money was to reimburse him, or that it was an advance for future payments. As already noted, I have difficulty accepting David's account of those conversations.
It is also relevant to bear in mind (see Whereat v Duff) that, where the presumption is not rebutted, the Court is does not proceed on the basis that the donee has committed a wrongful act, but is acting on the basis of public policy and to prevent the relations which existed between the parties, and the influence arising therefrom, being abused.
I find that the presumption of undue influence is established and has not been rebutted in relation to the proceeds of sale used to acquire the Beaumont Hills Property and the NetBank transfers, as well as the new furniture payments.
It is not necessary therefore to consider the actual undue influence claim, although had it been necessary to do so, I would have found that it was also made good, for the same reasons.
The requisite disadvantage or disability must be one which seriously affects the ability of the weaker party to make a judgment as to his or her own best interests (see Amadio at 462, per Mason J (as his Honour then was); Turner v Windever at [105], per Austin J).
In the present case, I consider that the deceased was in a position of special disadvantage at the very least after the breakdown of the relationship between David and Lara (which had the result that the deceased had less contact with Lara) and the subsequent sale of the Glenhaven Property, because the deceased was then not only elderly and suffering from physical ailments (as well as being dependent on David for emotional support and care), but she was also vulnerable because she was dependent on David for her future accommodation. Even before that time (and indeed from at least 2015 when the NetBank facility was set up by David), there is a reasonable basis to conclude that the deceased was at a special disadvantage vis a vis David by reason of her age and emotional and physical dependence upon David, though this is not as stark as the position was in this respect from 2016.
I consider that the special disadvantage under which the deceased was placed was of the kind that must seriously have affected the deceased's ability to judge or protect her own interests (as evidenced by the gross improvidence of what she did in relation to the proceeds of sale of the Glenhaven Property), and that David must have appreciated that the deceased was under that special disadvantage (but even if he did not appreciate this, he certainly knew of the facts which would raise that possibility in the mind of any reasonable person).
Thus, I consider that the elements of a catching bargain or unconscionable conduct are established, at least in relation to the dealings from early 2016, and that David unconscientiously took advantage of that opportunity. Had it been necessary to determine, I would have found these claims made out for the NetBank transactions from February 2016 and in relation to the proceeds of sale that were applied to the purchase of the Beaumont Hills Property and the acquisition of the new furniture for the Glenhaven Property at the time of its marketing for sale.
There are no special rules or principles applicable to claims of adult children (nor is there any presumption for or against there being a moral obligation to make provision for an adult child) (see for example, Towson v Francis [2017] NSWSC 1034 (Towson v Francis) at [78]-[80], per Hallen J; his Honour there citing Burke v Burke (No 2) [2015] NSWCA 195; Nicholas v Tubb [2016] TASSC 53; Toscano v Toscano [2017] NSWSC 419 (Toscano v Toscano); and Underwood v Gaudron [2014] NSWSC 1055) (see also the summary of principles in Camernik v Reholc [2012] NSWSC 1537 at [159], per Hallen J). Each case must be considered by reference to its particular facts and circumstances.
As to the question of notional estate, pursuant to s 80 of the Succession Act, a notional estate order designating property specified in the order as notional estate of the deceased may be made if the Court is satisfied that the deceased entered into a relevant property transaction before the deceased's death, being a transaction to which the section applies (see the types of transactions set out in ss 75 and 76 of the Succession Act).
The disposition of the proceeds of sale of the Glenhaven Property (by gift for the acquisition of the Beaumont Hills Property, and then by way of electronic transfer of the balance) occurred within three years (but not within one year) of the deceased's death. Therefore, what must be established is that the transaction was entered into "with the intention, wholly or partly, of denying or limiting provision being made out of the estate for the maintenance, education or advancement in life of any person entitled to apply for a family provision order" (see s 80(2)(a) of the Succession Act).
The Court can designate property as notional estate not only to make provision for an applicant but also, if making an order for provision for an applicant, for costs (see s 78 of the Succession Act).
A notional estate order must not be made without consideration of the importance of not interfering with reasonable expectations in relation to property, and of the substantial justice and merits involved in making or refusing to make the order (see s 87 of the Succession Act).
As to the question of intention (for the purposes of a transaction within s 80(2)(a) of the Succession Act), see Kastrounis v Foundouradakis [2012] NSWSC 264 at [108]-[112], per Hallen AsJ, as his Honour then was; Toscano v Toscano at [229], per Robb J; and, more recently, McDonald v O'Connor [2019] NSWSC 261 (McDonald v O'Connor) at [98]ff, per Hallen J. Whether the relevant intention (i.e., an intention, wholly or partly, of denying or limiting provision being made out of the decease's estate for the maintenance or advancement in life of an eligible applicant for a family provision order) is established is a question of fact.
In Toscano v Toscano, Robb J (in an observation adopted by Hallen J in McDonald v O'Connor at [107]) said (at [234]) that "while the intention to prevent the property transferred being available to meet a claim for a family provision order does not follow from the transfer having that effect, the consequence may be one factor that may assist in the court in drawing the inference that the intention existed". At [108] in McDonald v O'Connor, Hallen J said:
108. A person is ordinarily understood to intend a result by her, or his, action if she, or he, means to produce that result. Thus, evidence that the deceased understood that a particular result was an inevitable consequence may assist in proving the relevant intention.
However, it is also to be noted that, as recognised by Macready AsJ in Hildebrandt v Soncini [2007] NSWSC 1227 at [25]-[26], the mere intention to benefit one eligible person does not necessarily amount to an intention to deny or limit provision being made for another.
With the above principles in mind, I turn first to a summary of the evidence going to the factors to which account may be taken pursuant to s 60(2) of the Succession Act, those being relevant both to whether there has been adequate and proper provision for Lara, and, if not, as to whether an order for provision should be made, and if so what order.
Thus I would have had difficulty in concluding that any of those transactions fell within the definition of a relevant property transaction for the purposes of s 80(2)(a) of Succession Act, such that those transactions would not be available to be the subject of an order designating them as notional estate (which would render of no utility Lara's alternative claim in the present proceedings as there effectively would be nothing from which to make any order for further provision).
Complaint is likewise made by Lara as to the reliability of the figures provided by David (which was tested to an extent when the current freezing order regime was debated at the outset of the hearing and again when judgment was reserved). I accept that there is a large element of uncertainty as to what has happened with the moneys that David received from the proceeds of sale of the Glenhaven and Beaumont Hills Properties and from the NetBank transfers. Moreover, it is unclear to me why it is that the Tesla business assets could not be sold or utilised to make a profit (which does not seem to have occurred to date).
There has been consideration in various cases as to the requirement for an applicant for a family provision order to disclose as fully and as frankly as possible all details of his or her financial and material circumstances (see Leary v NSW Trustee and Guardian [2017] NSWSC 1113 (Leary) at [53], citing Collings v Vakas [2006] NSWSC 393 at [66]-[67] per Campbell J, as his Honour then was; Foye v Foye [2008] NSWSC 1305 at [14]-[15], per McLaughlin AsJ; In the Estate of the late Anthony Marras [2014] NSWSC 915 at [238], per Bergin CJ in Eq); and Singh v Singh [2015] NSWSC 1457 at [154], per Black J) (and see also what was said in Stone v Stone [2019] NSWSC 233, at [161]ff, per Hammerschlag J).
Here, however, I consider that sufficient information has been provided for me to make an informed assessment of Lara's financial circumstances. Just as I considered to be the case in Watton v MacTaggart [2020] NSWSC 1233, I consider the present case to be distinguishable from those in which false evidence is given throughout the proceedings (see for example Ahmad v Ahmad [2002] NSWSC 579), or where there has been a deliberate expenditure of funds shortly prior to the application without offering any adequate explanation or documentary evidence as to what had been done with that money (see for example Mayfield v Public Trustee [2009] NSWSC 330; and as was the case in Leary).
Finally, I accept that David has shown himself unfit to carry out the duties as executor of the deceased's estate and I consider that it is appropriate that an order should be made for Lara to be appointed as administrator of the deceased's estate. Lara has sought a general administration order in that regard (see in this regard the discussion by Young J, as his Honour then was, of general administration orders in McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623 from p 633ff; his Honour there referring to the position as summarised in Underhill and Hayton, Underhill's Law of Trusts and Trustees (13th ed, 1979, Butterworths) at 699 as to the three categories of case in which a general administration order would be made, one of which being where a prima facie doubt is thrown on the bona fides or discretion of one or more of the trustees. Young J (at p 635) opined that in such a category of case the court "takes a relatively benign view and might act on relatively weak evidence" because of the heavy potential burden of costs that his Honour considered to have been "a prime weapon for controlling administration suits and keeping them within proper bounds". His Honour also noted that there were useful passages on administration proceedings in New South Wales in Jordan, Administration of the Estates of Deceased Persons (3rd ed, 1948, Government Printer) at 42-43, and Ford and Lee, Principles of the Law of Trusts (1st ed, 1983, Law Book Co) at 766).
In the present case, on David's evidence, his co-executor (his and Lara's cousin Melita) has renounced probate and it had not been his intention to apply for a Grant of Probate of the deceased's estate as there were insufficient funds in the estate to pay the specific legacies set out in the deceased's last Will (see his 8 November 2019 affidavit at [38], [42]). Moreover, even leaving aside the impugned transactions that have been the subject of my findings as to undue influence and unauthorised transactions, David has not shown a proper understanding of his duties as executor (and I have serious doubts as to his ability or willingness properly to administer the deceased's estate). I therefore consider that it is in order for the relief sought by Lara in relation to the administration of the deceased's estate to be made and (mindful of the desirability to minimise further costs that would deplete the estate) that Lara should be appointed as administrator of the estate and should administer the estate on the basis (as indicated above) that David's legacy is treated as having been adeemed to the extent of the shortfall in the amount for which he is required to account to the estate. (It may be that it is sufficient for the purposes of the administration of the estate for there not to be a general administration order, as such, but simply for Lara to be appointed as administrator of the deceased's estate - but that is a matter on which Lara may wish to make submissions.)
At this stage, however, the only order I will make is that the parties provide written submissions within seven days as to the form of the orders to be made to reflect these reasons and as to costs.