ORDER
1. Appeal allowed.
2. The second respondents pay the appellants' costs of the appeal.
3. Set aside the orders of the Court of Appeal of Queensland made on 14 March 1997. In place of those orders:
(i) allow the appeal to that Court;
(ii) set aside the orders made by de Jersey J on 23 August 1995 dismissing the plaintiffs' claims;
(iii) set aside the orders as to costs made by de Jersey J on 15 September 1995;
(iv) declare that the deed of forgiveness of debt made between William York of the one part and Neil William York and Beryl Elizabeth
York of the other part, executed on 19 July 1988 ("the Deed"), has no effect as to the forgiveness of the amount to be declared in
accordance with par 4(i) of these Orders;
2.
(v) order the second respondents to pay the appellants' costs of the appeal to the Court of Appeal of Queensland and half the appellants'
costs of all proceedings before de Jersey J.
4. Remit the matter to a Judge of the Supreme Court of Queensland for:
(i) the determination, in accordance with the reasons for judgment of this Court, of the amount as to the forgiveness of which the
Deed has no effect, and the making of an appropriate declaration;
(ii) subject to any determination by the Supreme Court of Queensland, which is made by that Court after exercise of the liberty to
apply provided in par 5 of these Orders and in accordance with the reasons for judgment of this Court, the making of a declaration
that the estate of William York has a vendor's lien on each of:
(a) the property comprising the Perpetual Lease Selection at "Wonga Park", Wallumbilla and described in the transfer from William
York to Neil William York and Beryl Elizabeth York executed on 19 July 1988;
(b) the property comprising the fee simple in "Wonga Park", Wallumbilla and described in the transfer from William York and Samuel
York to Neil William York executed on 19 July 1988; and
(c) the property comprising the fee simple in "Risby", Wallumbilla and described in the transfer from William York and Neil William
York to Neil William York executed on 19 July 1988,
to secure the amount the subject of the declaration made in accordance with par 4(i) of these Orders and interest at commercial rates
allowed on that amount from time to time by the Supreme Court of Queensland from 28 November 1988.
5. There be liberty to apply to the Supreme Court of Queensland.
6. Reserve to the Supreme Court of Queensland the determination of the costs of any further proceedings in that Court.
3.
On appeal from the Supreme Court of Queensland
Representation:
D B Fraser QC with T W Quinn for the appellants (instructed by Morrow & Associates)
No appearance for the first respondent
S C Williams QC with R T Whiteford for the second respondents (instructed by Heiser Bayly & Mortensen)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law
Reports.
CATCHWORDS
Desley Fay Bridgewater & Ors v Kevin Leahy & Ors
Equity - Unconscionable conduct - Inter vivos dispositions of land - Deed of forgiveness of debt - Overall improvident transaction - Existence of special disadvantage - Emotional
dependence - Unconscionable retention of benefit.
Equity - Unconscionable conduct - Comparison with undue influence - Relevance of independent advice.
Equity - Undue influence - Comparison with undue influence in probate jurisdiction - Relevance of capacity.
Equity - Relief - Practical justice - Principle that those who seek equity must do equity - Setting aside of deed of forgiveness
of debt - Allowance as condition of setting aside deed - Vendor's lien.
- GLEESON CJ AND CALLINAN J. At first instance, in the Supreme Court of Queensland, the appellants made an unsuccessful challenge
to the validity of certain provisions of the will of the late William York (known as Bill York), who died in April 1989 at the age
of 85. The will was made in April 1985. The appellants also made an unsuccessful challenge to a transaction entered into between
Bill York, his nephew Neil York, and Neil York's wife Beryl York, during 1988.
- In the Court of Appeal, the appellants abandoned their attack upon the will, but pursued their claim to relief in relation to the
1988 transaction. By majority (Macrossan CJ and Davies JA, Fitzgerald P dissenting) the appeal was dismissed.
- The 1988 transaction can only be understood in a wider context. The provisions of the 1985 will formed an important part of that
context.
The background to the 1988 transaction
- Bill York, a grazier, was born in Wallumbilla, and lived there all his life. When he died, he was survived by his wife and his four
daughters, all married women. The widow and daughters are the appellants.
- Bill York had a younger brother, Sam. The two brothers had substantial rural interests, including interests which they held in common.
They carried on a grazing partnership on land, some of which had been passed down to them by their father. Bill York had no sons.
The respondent, Neil York, was Sam's youngest son. Neil York worked on the properties for substantially the whole of his working
life, and formed a close relationship with his uncle. In 1981 a new partnership was formed between Bill York, Sam York and Neil
York. Neil was made a one-third partner, without any capital contribution. Some years earlier, Bill and Sam York had purchased
a grazing property for Neil's two older brothers. Neil took over responsibility for the day to day management of the partnership
business. de Jersey J found that "[t]here is no doubt that Bill greatly admired Neil, and fully trusted him. For his part, Neil
appreciated the high regard his uncle felt for him."
- In April 1985, Bill York made his last will. He gave his house at Wallumbilla, his car, and his money in the bank (about $150,000)
to his widow. The residue of his estate was left to his four daughters in equal shares. That provision, however, was subject to
an important qualification. The testator gave Neil York an option to purchase all his pastoral holdings, together with his interest
in the current grazing partnership, and livestock and machinery, for the sum of $200,000. In due course, Neil York exercised that
option, and the four daughters each received $50,000 under the will. At the time of the making of the will the value of the land
the subject of the option was $694,922. Thus, the will gave Neil York an option to purchase the whole of the testator's rural interests
at a substantial undervalue.
- Bill York appointed Kevin Leahy, his son-in-law, as executor of his will. Kevin Leahy's wife is one of the appellants. He is a respondent,
but has taken no active part in the proceedings.
- The will was made on the initiative of Bill York. It was prepared by a solicitor, Mr Pack of Taylor and Pack. Mr Taylor had previously
acted for both Bill and Sam York. He was busy on the day Bill went to make his will, so the will was prepared by Mr Pack. Neil
was not present when instructions were given by Bill to Mr Pack. He did not accompany his uncle when he later returned to sign the
will.
- Bill York never discussed his business affairs with his wife or daughters. However, they became aware of the general nature of his
will.
- At first instance, before de Jersey J, the appellants sought to challenge the validity of the option contained in the will on the
grounds of undue influence and unconscionability. That claim was unsuccessful. It was not pursued on appeal. At the time he made
his will in 1985, Bill York had full testamentary capacity. de Jersey J held that he was not acting under any pressure or any influence
from Neil York; that, on the contrary, he had himself initiated the proposal reflected in the will; and that the manner in which
he disposed of the estate reflected, and was entirely consistent with, his strongly felt personal wishes. He was fond of, and grateful
to, his nephew, whom he regarded and treated as a son. The nephew had, over a long period, assisted in the development of his rural
holdings and had devoted a major part of his working life to the York brothers' grazing business. Bill did not want the holdings
to be broken up upon his death, but intended that they would pass, intact, to his nephew. Rightly or wrongly, he regarded the provision
he was making for his widow, and his adult married daughters, as adequate. Whilst it was theoretically possible that Bill York might,
at some time after April 1985, change his will, the circumstances were such that this was very unlikely.
- The position was summed up by de Jersey J as follows:
"In light of Bill's enormous affection for Neil, Neil's life-long dedication to those particular properties, and Bill's determination
to keep Neil in the partnership, it is hardly surprising that Bill would wish to pass the properties to Neil - especially regarding
him, as he did, as the 'son' he always wanted but never had".
The 1988 transaction
- In late 1987 or early 1988, Neil York approached Bill York and put to him a suggestion that Bill should sell to Neil certain land,
being part of the land which was the subject of the option granted by the will, for the price of $150,000. Neil York had that amount
of cash available as a result of a sale of certain other land. The property which Neil had sold was called Injune. It appeared
that Neil's approach was in line with Bill's wishes. Bill York had wanted Neil to sell Injune, and had requested him to put it on
the market. He knew of its sale, and was pleased. He knew how much money Neil had available as a result of the sale. A neighbour
gave evidence that Bill York had said to him that he hoped Neil would sell Injune and "buy (Bill) out". The land which Neil York
suggested should be the subject of the transfer represented a substantial part, but not the whole, of the land the subject of the
option in the will. Its value in July 1988 was $696,811. Bill York agreed to Neil's proposal. Neil York's father, Sam, also had
an interest in part of the subject land as co-owner, and he agreed to transfer his interest to Neil for no consideration.
- The involvement of Sam York appears to have received insufficient attention in some aspects of the appellants' submissions. He was
not joined in these proceedings, even though there is a claim to set aside a transfer to which he was a party.
- There was a deal of evidence as to Bill York's physical and mental condition in 1988. As would be expected of a person of his age,
his capacities deteriorated. de Jersey J concluded that his condition probably waxed and waned. His eyesight was failing. His
driver's licence was cancelled. The evidence of witnesses as to his mental acuity varied. His wife, although one of the plaintiffs
in the action, gave no evidence.
- The transaction proposed by Neil York did not proceed with any haste. The solicitor who had prepared the will in 1985, Mr Pack, was
consulted by Bill and Neil, and on 19 July 1988 the contractual documents necessary to give effect to their agreement were signed.
Mr Pack did not suggest that Bill York should seek independent advice, but he had him examined by a doctor who confirmed that he
was of sound mind and capable of making decisions about his personal affairs. The form of the transaction was decided by the solicitor.
The relevant land was valued at, and sold to, Neil and Beryl York for $696,811. The difference between that and the amount of $150,000
which Neil York had agreed to pay, and Bill York had agreed to accept ($546,811), was to be forgiven under a deed. Bill York had
a further meeting with Mr Pack on 28 July 1988. On that occasion he discussed whether he should request Neil to pay for the balance
of his interest in the partnership or simply give it to him. Although the contracts were entered into in July 1988, the transfers
were not completed, and the $150,000 was not paid, until November.
- It is to be noted that, although the legal form of the 1988 transaction as arranged by the solicitor was a sale of the subject land
at full value, coupled with a forgiveness of so much of the sale price as exceeded $150,000, the substance of the transaction, as
agreed between Sam, Bill and Neil York, was a sale of Bill's land for $150,000, and a gift of Sam's land. In the background stood
the provisions of the 1985 will.
- It was submitted for the appellants that it ought to be inferred that Bill York did not, in 1988, know the true value of the property
he was selling to Neil York for $150,000. This submission should be rejected. No such finding was made in the courts below, and
it is not justified by the evidence. On the contrary, the evidence indicates that Bill York took a close and well-informed interest
in the value of his pastoral properties.
- In late November 1988 one of Bill York's daughters, Mrs Leahy, took her father to see Mr Pack, together with her husband, the executor
of the will. She remonstrated with her father about his generosity, in the will, to Neil York. The 1988 transaction was revealed
to her. Bill York justified his conduct, saying that he had made provision for his daughters in past years, giving details, and
that he regarded the provision in the will as adequate. He also explained his generosity towards Neil, saying that Neil was a capable
manager of the land and that he had worked, and was still working, to help Bill. Notes taken by the solicitor record Bill York as
saying "I think he (Neil) is entitled to it. Neil has stuck with me through thick and thin." The notes also record that Bill York
discussed the value of the land, and spoke in terms which showed that he was aware that market values had risen.
- de Jersey J found that Bill York "had the capacity then to know what he was doing and to make informed decisions about the disposition
of his property". Mr Pack was criticised at the trial for not arranging for Bill York to seek independent advice. The form in which
the transaction was documented was also criticised for its artificiality. de Jersey J was not prepared to find dishonesty or impropriety
against Mr Pack. He considered that the solicitor had not applied his mind with great care to the form of the transaction. As to
the lack of independent advice, de Jersey J was satisfied that had Bill been independently advised that the end result would likely
have been the same. This conclusion is to be understood in the light of Bill York's continuing determination to do what appeared
to be necessary or appropriate to ensure that, subject to his ideas as to what constituted sufficient provision for his wife and
daughters, his pastoral lands and interests should pass to his nephew, Neil.
The relief sought
- The primary claim of the appellants, and that which Fitzgerald P would have granted, was simply to set aside that part of the 1988
transaction which involved the forgiveness of the debt for the difference between the market value of the property in question and
the sum of $150,000. Assuming, in accordance with the unchallenged finding by de Jersey J, the validity of the option in the will,
setting aside the whole of the 1988 transaction would have left the appellants in a worse position than that in which the transaction
left them, unless they could obtain an order varying the provisions of the will including the option provisions, under the Succession Act 1981 (Q) ("the Succession Act"). Neil York's option, which he ultimately exercised, entitled him to acquire for $200,000 the whole of Bill York's pastoral interests.
One effect of the 1988 transaction was that he was agreeing to pay a further $150,000 for part of the same land.
- The relief primarily sought by the appellants would involve leaving intact the transfer of the land the subject of the 1988 transaction
from Bill to Neil and Beryl York in consideration for $696,811, (a price which Neil never agreed to pay and Bill never intended to
seek), together with the payment of $150,000, but cancelling the deed by which the balance of $546,811 was forgiven. The result
would be to defeat the intentions of all the parties to the transaction. The appellants, however, would be substantially better off
than they would have been had the transaction never been entered into. Neil would be compelled to pay for the land transferred in
1988, not only an amount over and above that for which he was entitled to acquire that and other land under his option, (which he
exercised), but also an amount over and above that which he offered to Bill York and which Bill York accepted.
- There were other problems about setting aside the whole of the 1988 transaction. One of the persons involved in the transaction,
Sam York, was not made a party to these proceedings. Furthermore, the rights of third parties, such as mortgagees, had intervened.
However, since the practical effect of setting aside the whole transaction would be to leave the appellants worse off, because of
their failure to have the option in the will set aside, they showed little enthusiasm for this form of relief.
The Succession Act 1981
- Part 4 of this Act deals with the matter of family provision. Section 41 provides that if adequate provision is not made from a deceased's estate for the proper maintenance and support of the deceased's
spouse, child or dependent, the court may, in its discretion, make an order for provision out of the estate. The principles according
to which relief of that nature is granted are well settled. They involve, amongst other things, paying regard to the needs of an
applicant.
- Each of the appellants made such an application following the death of Bill York, but their applications were dismissed for want of
prosecution. We know little about the circumstances in which that occurred. Nor are we aware of the financial position of the daughters
of Bill York, or their husbands. The matter of their potential entitlements under s 41 of the Succession Act has never been litigated. This Court is in no position to make an informed judgment as to those entitlements, and has not been asked
to do so. We do not have the necessary information, and we have heard no argument on the matter. We do not know why the applications
under the Succession Act were not diligently pursued.
- A judge dealing with an application under the Succession Act would have had to form a view, on the basis of proper evidence, as to the adequacy of the provision by Bill York for the appellants.
It is not for this Court, without such evidence, and without hearing argument, to decide that question, or to conclude that it is
self-evident that it should be given an answer favourable to the appellants. Insofar as the appellants had any rights under Pt 4 of the Succession Act they lost them, some seven years ago, through their failure to prosecute their claims.
- There is a different aspect of the Succession Act, which is of some importance to the nature of these proceedings, and which may conveniently be mentioned at this point.
- The standing of the appellants to bring these proceedings depends upon s 49 of the Act. This is an action which, so far as is presently relevant, is brought to vindicate an equity of the late Bill York.
Prima facie, it is the executor of his will (Kevin Leahy) who would have had standing to bring the proceedings. Section 49(2) permits another person, or other persons, to bring actions in the exercise of the powers of a personal representative, with the consent
of the court. It was held in the courts below that, if the appellants otherwise succeeded, this would be a proper case for such
consent. However, the fact that it is the appellants who have sued should not be permitted to obscure the position that what is
at issue is an equity claimed on behalf of the late Bill York and, because of his death, his estate. It is not a personal equity
of any of the appellants which is involved. They cannot, for example, claim any relief superior to that which would be appropriate
if the action had been commenced by Kevin Leahy in his capacity as personal representative of the estate of Bill York. Furthermore,
in relation to the primary claim for relief advanced on behalf of the appellants, it is instructive to consider the response the
late Bill York would have received if, during his lifetime, he had approached a court of equity seeking to set aside only that part
of the 1988 transaction which involved the forgiveness of debt.
Undue influence
- Although at first instance it was argued that the 1988 transaction resulted from undue influence, there are concurrent findings of
fact by de Jersey J and the Court of Appeal adverse to the appellants, and undue influence has not been relied upon in this Court.
It is not mentioned in the grounds of appeal.
- The reasons given for refuting the claim of undue influence are not unrelated to the claim of unconscionability, to be considered
below. We are unable to accept the appellants' argument that the findings of fact made by de Jersey J, and the majority in the Court
of Appeal, were either irrelevant to, or reflected a lack of appreciation of, the principles governing the claim of unconscionability.
Naturally, de Jersey J addressed all the arguments that were pressed on him, and, in the forefront of those, was the challenge to
the option in the will. That challenge is not pursued, but, whilst it accounts for some of the language used by his Honour in expressing
his findings of fact, many of the findings were of significance for all the issues in the case. The will was part of the background
to the 1988 transaction. As Macrossan CJ observed, the plan enshrined in the will, which was not kept secret from the appellants,
was adhered to by the deceased during the remaining few years of his life. The later suggestion that the deceased should sell to
Neil some of the lands covered by the option in the will came from Neil, but it coincided with Bill's expressed wish, and while it
involved an acceleration of part of the plan which would come into effect under the will, it also provided for the payment of an
additional sum.
- The evidence did not show, and the judges below did not find, that Neil exercised influence over his uncle in relation to his private
affairs. To the limited extent to which Bill York discussed his personal financial affairs with anyone, it appears to have been with
his son-in-law, the executor of his will.
- The widow of Bill York, herself one of the appellants, gave no evidence, and her absence from the witness box was not explained.
If her late husband had been a man susceptible to influence by others, and in particular by Neil York, or a person lacking independence
of mind, or the capacity to exercise judgment, she might have been expected to know that, and to say so. It ought to be inferred
that her evidence on that subject would not have assisted her case.
- Bill York's independence of mind, and capacity to exercise judgment, are matters that were relevant to all aspects of the case which
the appellants sought to make at first instance. They did not lose their significance once the claim of undue influence was rejected.
Unconscionability
- The appellants claim equitable relief in relation to the 1988 transaction, (or part of it), contending in their Statement of Claim
that at the time of the death of Bill York he had a right to such relief.
- That Neil and Beryl York acquired property from Bill York at a substantial undervalue is not in doubt. Both Bill York and Neil York
were well aware of that. As part of the same transaction, Neil York acquired property from Sam York for no consideration.
- The essence of the appellants' claim is that, in 1988, Neil York took unfair advantage of Bill York. His conduct, it is said, involved
an unconscientious use of power arising out of the circumstances and condition of the parties to the transaction, of the kind considered
in Blomley v Ryan[1]. On this approach, Bill York was a "victimised party"[2].
- It would not be to the point had Bill York entered into a transaction which was unfair to his wife and daughters, if there were nothing
more to it. The appellants based their argument upon what they said was a special disability on the part of Bill York, and an unconscientious
taking advantage of such disability by Neil. That is the way their case was put, and it was to that proposition that the judgments
in the courts below responded.
- What was the special disability? The trial judge, and the majority in the Court of Appeal, found there was none. They found that
Bill York knew and understood what he was doing in 1988, and that the transaction into which he entered gave effect to his long standing
and firmly held wishes. They also pointed out that it is impossible to separate the 1988 transaction from the 1985 will, and that
any characterisation of the dealings between Bill and Neil York in 1988 must take account of their common understanding of what was
to take place on the death of Bill in relation to the subject lands. There is no evidence, and no finding in the courts below, that
the 1988 transaction resulted from any apprehension on the part of Neil York, either that his uncle would alter his will to Neil's
disadvantage, or that a successful challenge to the will might be made after Bill York's death. As was noted above, almost a year
elapsed between the time when the 1988 transaction was first proposed and the time when it was completed; and this was when Bill
York was aged about 84. The transaction can scarcely be regarded as some kind of pre-emptive strike.
- In Blomley v Ryan[3] Fullagar J said:
"The circumstances adversely affecting a party, which may induce a court of equity either to refuse its aid or to set a transaction
aside, are of great variety and can hardly be satisfactorily classified. Among them are poverty or need of any kind, sickness, age,
sex, infirmity of body or mind, drunkenness, illiteracy, or lack of education, lack of assistance or explanation where assistance
or explanation is necessary. The common characteristic seems to be that they have the effect of placing one party at a serious disadvantage
vis-à-vis the other."
- The nature of the relevant disadvantage concerns the ability of the weaker, or victimised, party, to make an informed judgment as
to his or her interests. This is made clear in Commercial Bank of Australia Ltd v Amadio[4]. Mason J, after referring to Fullagar J in Blomley v Ryan said[5]:
"It is made plain enough ... that the situations mentioned are no more than particular exemplifications of an underlying general principle
which may be invoked whenever one party by reason of some condition or circumstance is placed at a special disadvantage vis-à-vis
another and unfair or unconscientious advantage is then taken of the opportunity thereby created. I qualify the word 'disadvantage'
by the adjective 'special' in order to disavow any suggestion that the principle applies whenever there is some difference in the
bargaining power of the parties and in order to emphasise that the disabling condition or circumstance is one which seriously affects
the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of
the existence of that condition or circumstance and of its effect on the innocent party."
- In the same case Deane J[6], identifying the weakness which attracts the jurisdiction, referred to the statement of McTiernan J in Blomley v Ryan[7] that the "essence of such weakness is that the party is unable to judge for himself".
- Absence of independent legal advice, like age, or infirmity, or some other condition or circumstance of the kind referred to may,
in a given case, be of factual importance in determining whether special disability or weakness, of the relevant kind, exists, but
it is important to bear in mind the essence of the supposed disability or weakness.
- Here there are concurrent findings of fact in the courts below, based upon ample evidence, to the effect that Bill York was not under
any special disability, in the sense in which that expression was explained in Amadio. It may be acknowledged that the requisite
capacity for judgment goes beyond an understanding of the salient features of the transaction. However, it is relevant to observe
that it cannot properly be concluded that Bill York was unaware of any of those features; much less that they were concealed from
him. It was argued for the appellants that Bill York may not have appreciated the value of the land in question. This is most unlikely.
That was a subject of close and abiding interest to him, and the argument has no foundation in the evidence. Nor is there any reason
to doubt that he appreciated the significance of the transaction, both for himself and for his family. His justification of his
conduct, when he was challenged by his daughter in November 1988, indicates both independence of mind and determination.
- In Louth v Diprose[8] Deane J explained the significance of concurrent findings of fact when this Court is invited to address an issue such as that presently
in question. This Court "should not, in the absence of special reasons such as plain injustice or clear error, disturb such concurrent
findings". It is irrelevant that there has been a dissentient in the first appellate court.
- The present is not a case in which the trial judge had the benefit of assessing the person now said to have had an equity to set the
1988 transaction aside. However, the judge had evidence as to how that person, not long before he died, set out to explain and justify
his apparent generosity to Neil York. In the context of a charge of unconscientious conduct, the trial judge had an opportunity to
assess Neil York, and Mr Pack, and others involved in the matter.
- The appellants have not demonstrated plain injustice or clear error of the kind referred to by Deane J. Rather, the findings of fact
made in the courts below appear to be correct.
- It is of interest to note the findings of fact at first instance in some of the leading cases on this topic. In Wilton v Farnworth[9] a person who was "markedly dull-witted and stupid"[10] was persuaded to sign over to another his interest in his wife's estate without having any idea of what he was doing. In Blomley v Ryan[11] the defendant took advantage of the plaintiff's alcoholism to induce him to enter a transaction when his judgment was seriously affected
by drink[12]. In Amadio[13] the special disability of the guarantors included a limited understanding of English, pressure to enter in haste into a transaction
they did not understand, and reliance upon their son[14]. In Louth v Diprose[15] the primary judge found that the donee, with whom the donor was "utterly infatuated", had threatened suicide, manufactured a false
atmosphere of personal crisis, and engaged in a process of manipulation to which the donor was vulnerable. The judge found that
the donee's conduct "smacked of fraud"[16].
- Of course, it is the principles enunciated in those cases, and not their particular facts, which are of importance. The facts, however,
illustrate the practical content of the principles; and they are a long way removed from the facts of the present case. As to the
principles expounded in the cases, the findings in the court below establish Bill York's independence of mind and capacity for judgment
when he entered into the 1988 transaction; a transaction which can only be understood in a wider context, including the provisions
of the 1985 will, and Bill York's long and firmly held intention that Neil York should succeed to his pastoral interests. The findings
deny the existence of any special disability in Bill York, and they acquit Neil York of unconscientious conduct. It is not a sufficient
answer to these concurrent findings of fact to suggest that the members of the courts below failed to address the correct issues.
The issues were squarely before them and, in particular, the principles in Amadio were considered.
- We do not accept that de Jersey J failed to give separate and independent consideration to the claim which is presently in issue,
and treated its failure as a necessary consequence of the failure of the challenges to the will. Rather, his Honour treated the will
as an important part of the factual background to the 1988 transaction. In that he was correct. The reasoning of the majority in
the Court of Appeal reflected an accurate appreciation and application of the relevant principles.
- The claim based on unconscionability should fail.
Remedy
- It is desirable to add some observations on this question, even though, upon the view expressed above, it does not arise.
- In the Court of Appeal, Davies JA said that the only relief then sought by the appellants was "setting aside the Deed of Gift thereby
requiring the respondents to complete the purchase for full consideration". This was a reference to the forgiveness of the debt
for the balance of the purchase price under the 1988 sales and transfers. This identification of the relief sought is consistent
with the approach taken by Fitzgerald P, who dissented, and would have granted relief in the form of simply setting aside the deed
of forgiveness, and with the observation of Macrossan CJ that the appellants were attempting, for tactical reasons, to separate the
two aspects of the 1988 transaction, that is to say, the transfers for full value and the forgiveness of part of the consideration.
- In Vadasz v Pioneer Concrete (SA) Pty Ltd[17] this Court examined the principles underlying equitable relief of the kind now in question. "He who seeks equity must do equity".
The objective is to do "what is practically just".
- There would be no practical justice as between the estate of the late Bill York, on the one hand, and Neil and Beryl York on the other,
in severing the 1988 transaction and simply setting aside the forgiveness of debts. That would produce practical, and substantial,
injustice. In this connection, the nature of the proceedings is to be emphasised. It is impossible to accept that, if Bill York
had commenced proceedings during his lifetime, and succeeded, a court of equity would have granted such relief.
- The proper relief would have been to set aside the entire transaction and make an order for accounts. The fact that it is far from
clear that such relief would have been to the benefit of the appellants (bearing in mind the terms of the will) no doubt explains
the manner in which the claim for relief was formulated, but it cannot alter the principles to be applied, especially when it is
remembered that the equity which the appellants assert is that of the late Bill York.
- The course now proposed by the majority in this Court involves sending the matter back to the Supreme Court of Queensland to determine
an appropriate allowance, against the debt of $546,811 which would result from setting aside the deed of forgiveness, which ought
to be made on a basis related to the rights the appellants would have had under the Succession Act. This proposal was not advanced by either side in argument in this Court, or in the courts below. Its implications have not been
the subject of submissions, and they are unclear to us.
- This action was commenced in 1991, after the appellants' proceedings under the Succession Act were dismissed for want of prosecution. It was for the appellants to bring such evidence at first instance as was necessary to enable
the court to grant appropriate relief. No reason has been shown why the appellants could not have led the evidence necessary for
a determination of the appropriate relief, assuming an allowance of the kind now proposed to be a necessary condition of relief.
There is no occasion for a fresh round of litigation. If the evidence necessary to enable this Court to grant appropriate equitable
relief is missing, that is an additional reason for dismissing the appeal.
Conclusion
- The appeal should be dismissed with costs.
- GAUDRON, GUMMOW AND KIRBY JJ. This appeal from the Queensland Court of Appeal (Macrossan CJ, Davies JA; Fitzgerald P dissenting)
involves the application of principles with respect to the setting aside in equity of inter vivos dispositions tainted by unconscionable
conduct. The principles are expounded and developed in the decisions of this Court in Wilton v Farnworth[18], Blomley v Ryan[19], Commercial Bank of Australia Ltd v Amadio[20] and Louth v Diprose[21].
- Mr William York ("Bill") was a grazier who owned substantial landholdings. He was born on 1 February 1904 and died, aged 85, in Roma
Hospital on 22 April 1989, having made his last will and testament on 12 April 1985 ("the Will"). The Will provided for his residuary
estate to pass to his daughters, subject to an option to purchase in favour of his nephew, Mr Neil York ("Neil").
- The primary judge (de Jersey J) accepted evidence that Bill provided only very basic accommodation for his wife and daughters and
that he was remarkably frugal. His Honour added:
"There is no doubt in my mind that in view of the size of his estate, Bill could have treated [his wife] and his daughters more generously.
That he did not do so is consistent, however, with the fairly ungenerous way he treated them throughout his life."
- The primary judge ordered a grant of probate of the Will in solemn form. His Honour dismissed a claim that the execution of the
Will was procured by the exercise upon the testator of undue influence by Neil. This attack upon the Will was not renewed in the
Court of Appeal but some reference to it assists an understanding of the issues before this Court.
The issues
- The position taken by courts of probate has been that to show that a testator did not, by reason of undue influence, know and approve
of the contents of the instrument propounded as a testamentary instrument, "there must be - to sum it up in a word - coercion"[22]. The traditional view, repeated by Sir Frederick Jordan[23], has been that a court of equity will not, on the ground of undue influence as developed by the Court of Chancery, set aside a grant
made by a court of probate[24].
- The approach taken in the probate jurisdiction appears to be concerned with the existence of a testamentary intention rather than
the quality of that intention or the means by which it was produced. It is a concern of this latter nature which finds expression
in the treatment by equity of dispositions inter vivos. In the present litigation, with respect to the dispositions made by the Will, no party submitted that equity might apply or extend
its principles respecting undue influence and dispositions inter vivos, not to attack a grant of probate itself, but to subject property passing under a will to a trust in favour of the residuary beneficiaries
or the next of kin.
- The principal issues which remained in the Court of Appeal (and now in this Court) concerned the dismissal by the primary judge of
claims to have set aside, as procured by unconscionable conduct, three transfers dated 19 July 1988 of certain of Bill's interests
in land ("the Transfers") and a deed bearing the same date ("the Deed") which forgave a debt of $546,811. The appellants also rely
in this Court upon breach of alleged fiduciary duty owed by Neil to Bill. In Jenyns v Public Curator (Q)[25], Dixon CJ, McTiernan and Kitto JJ observed that whilst the expressions "relation of influence", "relation of confidence" and "fiduciary
relation" are often used as interchangeable, they are not necessarily the same or co-extensive in their application. It will be
possible to dispose of the present appeal without any separate treatment of the fiduciary duty point. The appellants do not press
in this Court an argument that the Transfers and the Deed were tainted by undue influence of Neil upon his uncle. Nor do the appellants
dispute the failure of their case in the Supreme Court that these inter vivos transactions adeemed the gift made to Neil by the Will. However, it will become apparent in the course of these reasons, particularly
in dealing with the appropriate measure of equitable relief to the appellants, that there are significant links between the two types
of disposition made by Bill in favour of Neil.
- The appellants do not submit that the Transfers and the Deed are voidable by Bill's estate on the ground that, when they were executed,
Bill was incapable of understanding their effect, in the sense of their general purport[26]. Further, this is not a case where the instruments are said to be void at law on the footing of non est factum. It is not alleged that Bill's faculties were so defective that "he [did] not really know what he [was] doing - that his mind [did]
not go with his deed"[27]. The case with respect to the Transfers and the Deed is, like that identified by Fullagar J in Blomley v Ryan[28], one "in which relief [can] be obtained by the [appellants], if at all, only in equity".
- The point requires emphasis due to the structure of the reasons of the primary judge and the continuing focus upon and significance
attached to questions of intention and mental capacity. In this area, however, equity does not confine itself to such questions.
The primary judge found that there was not a great deal of difference between the witnesses and that any differences related more
to questions of emphasis. That may readily be acknowledged. However, this appeal turns upon what the appellants contend is the misconception
in the reasons of the primary judge (uncorrected in the Court of Appeal) of the determinative equitable doctrine and the consequent
misapplication of principle to the primary facts.
- In Watkins v Combes[29], Isaacs J remarked upon:
"the circumstance that conclusions of fact sometimes become intermingled with what are properly directions in law by the tribunal
which has to determine both".
The strength of the appellants' case in this Court is that, whilst there is little disagreement as to the primary facts, neither
de Jersey J nor the majority in the Court of Appeal correctly applied the relevant principles to those facts and, upon that false
basis, drew inferences which are either irrelevant or incorrectly focused.
- The challenge in this Court is not to concurrent findings of fact but to concurrent misapplication of principle to uncontentious primary
facts. The situation thus differs from that in cases such as Louth v Diprose[30]. There, as Deane J put it, the primary facts and the proper inferences to be drawn from those facts "turned largely on conclusions
about the credibility of the evidence of the donor and the donee of the impugned gift"[31].
The judgment of the primary judge
- The primary judge had begun his analysis of the doctrine of undue influence with respect to the Will by referring to the statement
as to coercion of testators in Wingrove v Wingrove[32] and to the proposition, attributed to the speech of Lord Cranworth LC in Boyse v Rossborough[33], that the will of the testator "must have been overborne". His Honour posed the question "was Bill's will overborne?" and answered
it by concluding that, when Bill executed the Will, "he understood what he was doing and was acting voluntarily, not subject to the
influence of any other person".
- After dismissing the undue influence submissions with respect to the execution of the Will, his Honour went on to hold that Bill's
fondness for his nephew had not "degenerated into utter, [un]questioning reliance or dependence" and that "there was no undue influence
exerted by Neil upon Bill to induce [the Transfers and the Deed]". Such "degeneration" would have a greater affinity with the doctrine
of undue influence as expounded in Wingrove than with undue influence as understood in equity. The primary judge also emphasised that on 19 July 1988 Bill had had "the capacity
then to know what he was doing and to make informed decisions about the disposition of his property". In the Court of Appeal, Fitzgerald
P would have allowed the appeal and set aside both the Transfers and the Deed on the footing that Neil had acted unconscionably in
taking advantage of Bill. Davies JA (who, with Macrossan CJ, comprised the majority) held that on the facts the primary judge had
been justified in concluding both that no undue influence was exerted and that Bill had not been under a special disability in dealing
with Neil. The evidence was "[f]ar from showing that [Bill] was unable to make a judgment as to what was in his own interests".
- However, in dealing with the case as to undue influence with respect to the Transfers and the Deed, capacity in this sense was not
determinative. The "critical question", to adopt remarks of Burt CJ and Kennedy J in Adenan v Buise[34], was not whether Bill "understood the nature of the document[s]" but whether he executed them "as the result of the free exercise
of his independent will".
- With respect to the ground now pressed, that of unconscionable dealing, de Jersey J said:
"From what I have said already, it will be apparent that I do not regard Bill as having been in a position of 'special disability' vis-a-vis Neil, in July, 1988,
and so that doctrine does not apply." (emphasis added)
It is apparent from the reasons of the primary judge that his Honour treated the fate of the case with respect to unconscionable
dealing in a real sense as consequent upon the failure of the claim with respect to undue influence and that the failure of that
claim in turn was linked with the initial holding with respect to the execution of the Will.
- In addition to the distinction between the doctrine of undue influence as understood in courts of probate and courts of equity, it
is appropriate to emphasise the distinction between the equitable doctrines concerned with undue influence and unconscionable dealings
or conduct. On occasion, both doctrines may apply in the one case[35]. Each doctrine may be seen as a species of that genus of equitable intervention to refuse enforcement of or to set aside transactions
which, if allowed to stand, would offend equity and good conscience. However, there are conceptual and practical distinctions between
them and these were insufficiently expressed by the primary judge.
- In Commercial Bank of Australia Ltd v Amadio[36], Deane J said that the two doctrines are distinct, undue influence looking to "the quality of the consent or assent of the weaker
party", whilst unconscionable conduct looks to the attempted enforcement or retention of the benefit of a dealing with a person under
a special disability. Further, the recognition of certain special relations, the existence of any of which would itself support a
presumption of undue influence[37], could provide a particular forensic advantage to plaintiffs.
- Sir Anthony Mason, with reference to the well developed Australian body of authority on the subject, has contrasted the two doctrines
as follows[38]:
"My understanding of undue influence ... 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[39]. 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[40].
...
Unconscionable conduct, as the term suggests, focuses more on the unconscientious conduct of the defendant. As a ground of relief
in England unconscionable conduct has been confined largely to 'catching bargains' with expectant heirs and others in particular
categories of disadvantage eg those who are illiterate. ... In Australia, it has been recognized that unconscionable conduct is
a ground of relief which will be available 'whenever one party by reason of some condition or circumstance is placed at a special
disadvantage vis-à-vis another and unfair or unconscientious advantage is taken of the opportunity thereby created'[41]. Unconscionable conduct is also recognized in New Zealand as a ground of relief in these circumstances[42]."
- In Commercial Bank of Australia Ltd v Amadio[43], Deane J spoke of unconscionable conduct as occurring where, in the circumstances, it is unconscientious to "procure, or accept,
the weaker party's assent to the impugned transaction". It also should be noted that in Hart v O'Connor[44], an appeal from New Zealand, the Privy Council described unconscionable conduct which provided a basis for equitable relief as "victimisation,
which can consist either of the active extortion of a benefit or the passive acceptance of a benefit in unconscionable circumstances"[45]. In so giving the judgment of the Privy Council, Lord Brightman was reflecting a general proposition put by James LJ in Torrance v Bolton[46]. This was that it was the "ordinary jurisdiction" of the Court of Chancery to deal with instruments and transactions "in which the
Court is of opinion that it is unconscientious for a person to avail himself of the legal advantage which he has obtained". In any
event, it will become apparent from the facts of this case that more was involved than passive acceptance by Neil of Bill's bounty
and that, at a crucial juncture, the initiative came from Neil.
The parties
- The second respondents are Neil and his wife, Beryl. They married in 1968 and have two children. The litigation has been conducted
on the footing that no distinction is to be made in the position of these respondents and any relief against Neil should lie against
Beryl as well.
- Neil was born in 1946 and is the youngest of three brothers. His elder brothers are Philip and Kenny. Norma is their sister. Neil's
father, Mr Samuel York ("Sam"), was born in 1910, some six years after his brother, Bill. Bill and Sam had a brother, Alf. It appears
that on their father's death in 1943, Bill and Sam received their father's property and Alf received nothing. Alf had a son, Noel,
who lived locally and now and then would have a beer with Neil.
- The fifth appellant, Mrs Stella York ("Stella"), is the widow of Bill. At the time of his death in 1989 they had been married for
53 years. There were four children of the marriage. They are the first four appellants, Mrs Desley Bridgewater ("Desley"), Mrs Joan
O'Neill ("Joan"), Mrs June Ashton ("June") and Mrs Shirley Leahy ("Shirley"). At the time of their father's death, Joan was aged
50, June 47, Desley 45 and Shirley 44.
- By the Will, Bill appointed his son-in-law, Mr Kevin Leahy ("Kevin"), the husband of Shirley, his executor. The appellants claimed
standing, on behalf of the estate of their father, to seek relief in respect of the Transfers and the Deed. They asserted that Kevin
had failed and refused to do so himself. Section 49(2) of the Succession Act (Q) ("the Succession Act") states:
"Upon the making of a grant and subject thereto, the powers of personal representatives may be exercised from time to time only by
those personal representatives to whom the grant is made; and no other person shall have power to bring actions or otherwise act
as personal representative without the consent of the court."
In the Court of Appeal, Davies JA pointed out that, prior to the enactment of s 49, the authorities referred to in Ramage v Waclaw[47] indicated that, upon establishing special circumstances, a beneficiary might sue to recover assets where the executor declined to
take action. All members of the Court of Appeal were of the view that consent under s 49(2) should be granted nunc pro tunc. In this Court, there is no issue as to the standing of the appellants to pursue the matter as if an order had been made in their
favour under s 49(2). Further, Kevin, the executor, is the first respondent and submits to any order the Court makes, save as to costs.
- It also should be noted that on 11 January 1990 the appellants applied to the Supreme Court of Queensland for an order under Pt 4 of the Succession Act for provision out of Bill's estate ("the Family Provision Application"). Part 4 (ss 40-44) is headed "FAMILY PROVISION". Section 41(1), in certain circumstances, empowers the Supreme Court, "in its discretion"[48] and on application by or on behalf of persons including the spouse or child of a deceased person, to order the making of such provision
as it thinks fit out of the deceased's estate.
- By order of the Supreme Court made on 17 May 1991, the Family Provision Application was struck out for want of prosecution. This
order was made on Neil's application. On 14 May 1991, the solicitors for the executor, Kevin, had informed Neil's solicitor that
the present appellants were considering an action for proof of the Will in solemn form. The action giving rise to this appeal was
instituted on 6 June 1991. In those circumstances, a more prudent course may have been to stand over the Family Provision Application
until the status of the Will, the Transfers and the Deed had been determined but this was not done. For the appellants in the meantime
to have pressed on with the Family Provision Application at best would have led to an order in their favour out of a testamentary
estate, the assets of which had been seriously depleted by the forgiveness by the Deed of a debt of $546,811. This debt would have
formed part of the residue passing to Bill's daughters under the Will.
The Will, the Transfers and the Deed
- Although no issue remains as to the admission of the Will to probate, its terms are important for an understanding of the significance
of the execution by Bill of the Transfers and the Deed more than three years after he made the Will.
- The Will was drawn by a solicitor, Mr Alan Pack, upon instructions provided by Bill, with, in one respect[49], the assistance of Neil. Mr Pack was a member of the firm which was Neil's solicitors and he carried on a practice in Roma. The
Will provided for the appointment of Bill's son-in-law, Kevin, to be sole executor and trustee. Clause 3 gave to his wife the matrimonial
home at May Street, Wallumbilla, together with any motor vehicle owned by Bill at the time of his death and all moneys invested in
his name in any bank or building society. Clause 4 is the provision of principal importance. It dealt with the residuary estate
and provided Neil with an option to purchase, exercisable within 12 months of Bill's death. Clause 4 stated:
"I GIVE DEVISE AND BEQUEATH the rest and residue of my estate both real and personal of whatsoever nature and kind soever and wheresoever situated of which I
may die seized possessed or entitled unto and to the use of my Trustee UPON TRUST to sell call in and convert into money the same or such part or parts thereof as shall not consist of money to pay my just debts
funeral and testamentary expenses and my Trustee shall stand possessed of the balance of such monies for such of them my children
in the following proportions or shares:
JOAN MARGARET TWENTY-FIVE PER
O'NEILL CENT (25%)
JUNE LORRAINE TWENTY-FIVE PER
ASHTON CENT (25%)
DESLEY FAY TWENTY-FIVE PER
BRIDGEWATER CENT (25%)
SHIRLEY JOY TWENTY-FIVE PER
LEAHY CENT (25%)
PROVIDED HOWEVER that I give my nephew NEIL WILLIAM YORK the option to purchase for the sum of TWO HUNDRED THOUSAND DOLLARS ($200,000.00) all my interest in the partnership known as 'Mt Leigh Pastoral Company' together with livestock and machinery and my
interest in the following lands all in the County of Waldegrave Parish of Wallumbilla SUBJECT to any Mortgages which may be in existence at the time of my death: (a) Portions 8V, 9V, 39V, 40V, 41V, 42V, 43V, 44V, 45V, 46V, 94V, 96V, 100V, 102V, 108V, 120V, 121V, 138AV, 140V, 162, 399V, 400V,
401V, 427V and Road License 876, 480V, 481V, 482V (held as tenant in common with my brother SAMUEL YORK)
(b) Portions 294V, 295V, 296V and 691 (held as tenant in common with my said nephew NEIL WILLIAM YORK)
(c) Portions 13, 653 and Road License 875 (held in my name alone)
I DIRECT that such option to purchase is to be exercised within twelve (12) months of the date of my death by notice in writing to that effect
to my Executor BUT IN THE EVENT of the said NEIL WILLIAM YORK failing to exercise the said option I DIRECT my Trustee to sell my interest in the said lands livestock and machinery in such manner as he in his absolute discretion may think
fit AND I DECLARE that all monies from the sale of my interest in the said lands livestock and machinery are to form part of my residual estate."
- The significance of cl 4 appears from an understanding of the business interests which Bill and Sam had amassed to augment the inheritance
from their father after his death in 1943. Their father had been a butcher in Ipswich who had moved into the Wallumbilla area and
taken up a selection, probably at about the turn of the century. In partnership with Sam, Bill had carried on a cattle grazing and
wheat growing business under the name "York Brothers" on four properties in the Wallumbilla area. The first property, which consisted
in part of an area known as "Wonga Park", was owned in fee simple by Bill and Sam as tenants in common in equal shares ("the Wonga
Park Fee Simple").
- The second property, comprising the balance of the area of "Wonga Park", was held by Bill solely under a perpetual lease selection
("the Wonga Park Perpetual Lease Selection"). This "perpetual" lease had been issued on 27 September 1934 under s 104 of the Land Act 1910 (Q), and transferred in 1948 to Bill and Sam as joint tenants and then to Bill in 1966. Section 104, in providing for a "perpetual"
lease, went beyond the common law characteristics of a lease[50]. Section 104 was replaced in its operation with respect to the Wonga Park Perpetual Lease Selection by ss 4(2) and 127 of the Land Act 1962 (Q) and, in turn, the Selection was protected by the savings provisions in Pt 1 of Ch 9 (ss 508-522) of the Land Act 1994 (Q).
- The third property, known as "Tooks", was owned in fee simple by Bill and Sam as tenants in common in equal shares ("the Tooks Land").
It appears to have been inherited by Bill and Sam from their father. A fourth property, known as "Mt Leigh", also was owned in
fee simple by Bill and Sam as tenants in common in equal shares ("the Mt Leigh Land").
- Sam's three sons, Neil and his elder brothers, had commenced working for York Brothers on the properties after they left school.
Philip worked from 1952 to 1962 and Kenny from 1955 to 1968. Neil had commenced to work for York Brothers in 1962 after he left
school. Initially all three received low wages in return for their work. In 1955 or 1956, York Brothers provided money for Philip
and Kenny to purchase the fee simple in a grazing property, "Halden Park". Subsequently, York Brothers supplied money for the purchase
by Bill and Neil, as tenants in common in equal shares, of land known as "Risby" ("the Risby Land").
- In 1981, the York Brothers partnership had been dissolved. A new partnership, consisting of Bill, Sam and Neil, was formed under
the name "Mt Leigh Pastoral Company". Bill was then aged about 77. Clause 4 of the Will is concerned with this partnership. It
was Bill who had suggested that Neil be admitted to the new partnership. The assets of the York Brothers' partnership, valued at
$229,500, were transferred to the Mt Leigh Pastoral Company partnership. Neil did not provide any capital contribution.
- Neil took over from Bill the responsibility for preparing the books of the new partnership. In the years after 1981, Neil became
the day-to-day manager of the partnership. Bill lived in the matrimonial home at May Street, Wallumbilla, later the subject of the
gift in cl 3 of the Will, and he travelled less frequently to the properties. However, Bill remained a participant in the financial
affairs of the partnership and was involved in discussions with the bank manager concerning its business.
- In 1983, the Mt Leigh Pastoral Company provided money for Neil and his wife, Beryl, to purchase land known as "Injune" ("the Injune
Land"). This was situated at a distance of approximately 1 hour and 40 minutes drive from the other properties upon which the partnership
conducted its operations. Bill depended upon Neil and feared that Neil would cease working for the partnership and would concentrate
his efforts instead on the Injune Land. He encouraged Neil to sell it. Neil knew of this dependency upon him.
- The lands referred to in par (a) of the option in cl 4 of the Will comprised the Wonga Park Fee Simple, the Tooks Land and the Mt
Leigh Land. The lands identified in par (b) comprised the Risby Land and the lands specified in par (c) was the Wonga Park Perpetual
Lease Selection. The interest in the partnership comprised the cattle, plant and equipment owned by the Mt Leigh Pastoral Company.
- The effect of cl 4 was to provide Neil with the option of acquiring for $200,000 the above interests in the nominated lands and the
partnership interests. At the time Bill executed the Will, the value of his interests in the lands was $694,922 and the value of
his partnership interests was between $76,000 and $95,000. In accordance with general principle, the Will was liable to revocation.
There was no case made that Bill undertook any legal or equitable obligation (of the nature discussed in the authorities[51]) not to revoke cl 4. Moreover, cl 4 would operate only to the extent that an order was not made under the Succession Act for provision out of the residuary estate.
- In late 1987 or early 1988, whilst at Bill's house, Neil proposed to Bill that he acquire Bill's interests in the Wonga Park Fee Simple,
the Wonga Park Perpetual Lease Selection and the Risby Land for a price of $150,000. Neil's evidence was that Bill said he would
take the $150,000 "and that was that". At that time, Neil was living, rent free, on the Wonga Park Fee Simple. Neil and Beryl by
this time had sold the Injune Land and the suggested price of $150,000 was based upon the net proceeds received from that sale.
Neil told Bill that this was the basis of his proposal. Neil was aware that the value of the three properties had increased and
he sought to offer a price which was "getting more equitable".
- It would appear that, by using the phrase "getting more equitable", Neil recognised that the value of the land he would be acquiring
and obtaining under the option had risen since 1985 and was continuing to do so. Neil retained the intention to exercise the option
with respect to the remaining parcels of land. The price of $150,000 when combined with the option price of $200,000 would be more
equitable to Bill's four daughters. On the other hand, the effect of the contemplated inter vivos transaction would be to put beyond recall by Bill the disposition in favour of Neil of his interests in the Wonga Park Fee Simple,
the Wonga Park Perpetual Lease Selection and the Risby Land, together valued at $696,811, for a seriously inadequate consideration
of $150,000. Neil would retain the option under cl 4 of the Will in respect of the other lands for a consideration of $200,000.
- Further, the inter vivos transaction would remove from Bill's testamentary estate substantial assets which would otherwise have been available to be brought
into account in the formulation of an order in favour of the appellants upon the Family Provision Application[52]. Whilst it was plainly the case that Bill's goal was substantially to benefit his nephew, his scope to do so by testamentary provision
was qualified by the possibility of such an order for provision out of his estate being made in favour of his widow and children.
- The Wonga Park Fee Simple, which was included in Neil's proposal, was in part owned by Sam. At the time that Bill agreed to transfer
the lands to Neil, Sam agreed to provide Neil with his interest in the property by way of gift.
- Neil approached Mr Pack to draw up the relevant documents to implement the proposal. Mr Pack acted as solicitor for both Bill and
Sam as vendors, and Neil and (in one case) Beryl as purchasers. He made no suggestion or recommendation that any party obtain independent
legal advice. Later, Mr Pack acted on behalf of Neil to resist the Family Provision Application. He withdrew after suggestions
were made of a conflict of interest.
- The primary judge dealt with the absence of independent advice with respect to the steps taken by Bill on 19 July 1988 in a passage
which included the following:
"On the one hand, Neil's interest was to secure a very substantial block of property for what was, on any view, a very low consideration.
Bill's differing interest, on a purely rational level, was to secure adequate return for that property. Bill was in my view content
to take the $150,000 because of other considerations. But a rational analysis does plainly point up that conflict.
Adding in other objectively discernible factors - Bill's age (then 84), Bill's obvious physical debility, Bill's probable mental
decline (ordinarily associated with such advancing years), and the high likelihood of dismay in Bill's immediate family at his being
prepared to part with such valuable property for such disproportionately small return - a prudent solicitor should actively have
canvassed with Bill the issue of his taking independent advice from another solicitor who was not also acting for Neil."
However, his Honour concluded that he was "satisfied that had Bill been independently advised by another lawyer, the end result would
likely have been the same". Such an approach to the matter is supported by some authority in this Court with respect to alleged
undue influence[53]. There the focus is upon the quality of the assent of the disponor to the transaction.
- Where the complaint is of unconscionable dealing, the point is rather different. As Manning J put it in Re Levey; Ex parte Official Assignee[54], "the Court does not allow any person to take advantage of any known weakness of the vendor" and the Court asks whether that party
had "the opportunity" of professional advice as to "the effect of what he [was] doing". This denial of the opportunity to have "the
assistance of a disinterested legal adviser"[55], rather than speculation as to what might have followed had it been pursued, is an element in the unconscientious conduct in respect
of which equity intervenes to deny the entitlement of the disponee to retain the property in question, unless the disponee shows
the disposition to have been "fair, just and reasonable"[56].
- On the advice of Mr Pack, Neil arranged for the lands to be valued for stamp duty purposes. The Wonga Park Fee Simple was valued
at $175,752, the Wonga Park Perpetual Lease Selection at $521,735 and the Risby Land at $174,400. On 19 July 1988, Bill and Sam executed
a contract of sale to dispose of their interests in the Wonga Park Fee Simple to Neil. Bill also entered into a second contract
of sale to dispose of the Wonga Park Perpetual Lease Selection to Neil and Beryl. Furthermore, Bill executed a third contract of
sale to sell his half-interest in the Risby Land to Neil. Settlement under the contracts was stated to occur on 9 September 1988.
- The subject-matter of the dispositions by Bill in favour of Neil (and Beryl) and the prices attributable to them were Bill's half-interest
in the Wonga Park Fee Simple ($87,876), his half-interest in the Risby Land ($87,200) and his complete interest in the Wonga Park
Perpetual Lease Selection ($521,735). The total value of the consideration to be provided to Bill was stipulated in the three contracts
as $696,811. However, it should be remembered that there were two vendors in the contract for the Wonga Park Fee Simple, Bill and
Sam, the total price being $175,752. The total consideration payable by Neil and Beryl to Bill was $696,811.
- The respective contracts for sale disclosed the existence of various registered mortgages in favour of Westpac Banking Corporation.
In the case of each of the Wonga Park Fee Simple and the Risby Land, there were two such mortgages and there was one mortgage upon
the Wonga Park Perpetual Lease Selection. The contracts stipulated for completion free from encumbrances other than these securities.
- On the same day as the contracts of sale were executed, 19 July 1988, Bill, Neil and Beryl entered into the Deed. This provided:
"The Donor [Bill] hereby forgives the Donees [Neil and Beryl] payment of part of the purchase price of the Donor's interest in the
following lands in the County of Waldegrave Parish of Wallumbilla in the amount of FIVE HUNDRED AND FORTY SIX THOUSAND EIGHT HUNDRED AND ELEVEN DOLLARS ($546,811.00):- [the Lot and Plan Numbers for the Wonga Park Fee Simple, the Wonga Park Perpetual Lease Selection and the Risby Land were then set
out]."
The effect of the forgiveness by the Deed of the obligation with respect to payment of $546,811 was that Neil and Beryl would be
required to pay only $150,000 to acquire the interests the subject of the Transfers. Sam and Neil also entered into a deed of similar
effect by which Sam forgave Neil the payment of $286,036 for the acquisition of Sam's interest in the Wonga Park Fee Simple.
- Later, on 28 November 1988, Mr Pack wrote a diary note in which he attributed $43,600 as the contract price for Bill's half-interest
in the Risby Land. That was an error. The price was in fact double that sum ($87,200). This had represented one half of the valuation
of the whole property, $174,000. The Risby Land was held by Bill and Neil as tenants in common in equal shares. The form of the
contract was expressed as a sale by Bill and Neil to Neil alone for a consideration representing half the value of the Risby Land.
The position was accurately reflected in the computation of the sum forgiven by the Deed and the respective rights of the parties
thereunder. In his cross-examination upon the diary note, Mr Pack agreed, in error, that the note was accurate and that this meant
he had, when drafting the Deed in July, overstated the $150,000 which remained unforgiven by the Deed, by $43,600, thereby later
leading to an overpayment by Neil. There was no such overpayment and submissions that there was are not well founded.
- The Transfers relating to the three contracts of sale also were executed on 19 July 1988. The Transfers were not presented for registration
until after completion had occurred and the purchase price had been paid. The net purchase price of $150,000 was not paid on the
stipulated settlement date of 9 September 1988. Apparently, the settlement date was extended until 28 November 1988. The proceeds
from the sale of the Injune Land which was to provide the $150,000 had been invested on an interest bearing deposit. On 28 November
1988, Mr Pack instructed a bank to transfer the $150,000 to an account held by Bill. It follows from what has been indicated above
with respect to Mr Pack's diary note of 28 November that, notwithstanding what it showed, the $150,000 reflected the remaining indebtedness
and was not an overpayment by Neil to Bill. The Transfers were then lodged and registered. On 12 October 1988, Mr Pack had been
placed by Neil and Beryl in funds to meet the stamp duty liability.
- On 28 July 1988, Bill returned to see Mr Pack, in the absence of Neil. However, Bill could not decide whether to give Neil the balance
of the properties still the subject of the option in cl 4 of the Will or to retain the option price of $200,000. The Will was not
altered.
- On 24 May 1989, a little more than a month after Bill's death, Neil exercised the option conferred by cl 4 of the Will. On 28 August
1989, the Will was admitted to probate in common form and, on 1 April 1990, Neil paid $200,000 to the executor.
- The result of the dispositions in 1988 was that, at the time of Bill's death, he no longer held any of the interests identified in
pars (b) and (c) of cl 4 of the Will. Further, all that remained of the interests identified in par (a) were the Tooks Land and
the Mt Leigh Land. It was for the acquisition of this property, together with the interests in the partnership, livestock and machinery,
that Neil paid $200,000 in exercising the option. There was no clear finding as to the value of the partnership interest, the Tooks
Land and the Mt Leigh Land at the time that the option was exercised. It appears that the interest in land was worth about $153,000
and the partnership value about $95,000, giving a total of about $248,000 value in exchange for the payment of $200,000. It was
this sum which was the significant element in the residuary estate to be divided equally between Bill's four daughters. The moneys
invested in Bill's name, which passed to his widow under cl 3 of the Will, were in an amount probably in excess of $150,000.
- Had it not been for the forgiveness of payment contained in the Deed, the completion of the contracts for sale in November 1988 with
full payment would have attracted the operation of a vendor's lien over the subject lands. The vendor's lien is created by equity
as part of a scheme of equitable adjustment of mutual rights and obligations applying, unless negatived, to every ordinary contract
for the sale of land[57]. The doctrine has been treated as based upon the principle that equity regards that as done which ought to be done[58] and upon the apprehended unconscientious behaviour of the purchaser in disposing of the property to a third party without the liability
to the vendor having been discharged[59]. As Gibbs CJ explained in Hewett v Court[60], "the lien is the security for the money which is justly due".
- The principal relief which the appellants have sought in this litigation is an order setting aside the Deed. Whilst it stands, the
Deed would negative the operation of the vendor's lien otherwise available to the estate of Bill against Neil and Beryl. The amount
secured by the lien would be the sum forgiven by the Deed, together with interest at a commercial rate as allowed from time to time
by the Supreme Court of Queensland[61] and any costs of enforcing the lien[62]. The amount so secured to the estate would fall into the residue divisible under cl 4 equally between Bill's four daughters[63].
Factual findings
- At the trial, the appellants in several respects unsuccessfully sought to obtain the particular findings which would have presented
the conduct of Neil in a harsh light. Neil denied the conversation, after Bill's death, with his cousin, Noel (whose father, Alf,
had received nothing under the will of their grandfather), to the effect:
"We've made sure that what happened to your father won't happen again because we fixed up Bill's land."
Neil also resisted the suggestion put in cross-examination that the termination of the delay in completing the contracts, by the
payment of $150,000 eventually made on 28 November 1988, was triggered by a response to the news that on 24 November Bill, in the
company of his daughter, Shirley, and son-in-law, Kevin, had been in to see Mr Pack in Roma and that Shirley was upset when told
of the arrangements made by Bill on 19 July 1988.
- Mr Pack had assumed that Bill was attending on 24 November 1988 to give instructions to revise the Will. That was not the case.
Shirley and her husband were interested in securing a power of attorney from Bill. Before they left the room, Bill indicated that
he understood that his daughters were unhappy about the arrangements he had made to favour Neil. When alone with Mr Pack, Bill said:
"They don't give me a tremendous lot of help",
and
"I don't think my son-in-laws would be capable."
He said that he had often helped his daughters, buying a hairdressing salon in Chinchilla for June, land for Kevin and Shirley at
Dulacca and a house for Desley in Cairns. Dealing with the reasons why Neil had been given the land, Bill said that Neil "has worked
hard", that Neil had stuck with him "through thick and thin" and that he thought Neil was "entitled to it". Of his daughters, he
said that they "married blokes and they never helped me", that they had "never worked on the place", "never picked up sticks", had
"got their own jobs" and that he had "never asked them to do anything for [him]". He also said to Mr Pack that he was "very disappointed
I never had a boy" and, after signing a written record of his conversation, he concluded by saying to Mr Pack, "I hope I haven't
got to walk home."
- The closeness of the relationship between Neil and Bill, and the tendency of the older man to fall in with the wishes of the younger,
is illustrated by the following passages from Neil's cross-examination:
"Bill York respected your opinions, didn't he? -- Yes.
And he respected your judgment about matters? -- I would have thought so.
And you knew that, didn't you? -- Yes, I got on very well with Bill.
You knew that Bill York trusted you implicitly, didn't you? -- Yeah, I think he did, yes.
And treated you as though you were his son effectively, didn't he? -- Yes.
And you knew that he was bitterly disappointed that he had never had a son of his own? -- He said he would have liked to have had
a son, yes.
And so all the affection he would have given to his own son he gave to you, didn't he? -- Possibly, yes.
You have no doubt about that, do you? -- Not really, no.
In fact, your counsel opened your case to His Honour as saying that you would give evidence that you had a special and close relationship
with this man. You haven't said that, but that's an accurate statement, isn't it? -- Yes."
In the context of the provision by Bill of security over the Risby Land for Neil to obtain a farm development loan and personal borrowings,
Neil added:
"So, notwithstanding that your uncle got no benefit out of this he was quite happy for you to put up his land as security for your
borrowings? -- Yeah, that's right, yeah.
That's the way he reacted to you all the time, wasn't it? -- Most of the time, yes.
Whatever you wanted you could have? -- Not all the time.
Well, can you give me one instance of when you wanted something and he wouldn't give it to you? -- Well, early in the piece I know
when I wanted to buy a new tractor he wouldn't let me do that.
How many years ago was that? -- Probably 1980 and that."
- The position of disadvantage which renders one party subject to exploitation by another such that the benefit of an improvident disposition
by the disadvantaged party may not in good conscience be retained may stem from a strong emotional dependence or attachment[64]. Louth v Diprose[65] was such a case. In his judgment in the South Australian Full Court, a decision which was upheld in this Court, Jacobs ACJ said[66]:
"It is an oversimplification to say that because the respondent acted as he did with his eyes open, and with a full understanding
of what he was doing, he was not in a position of disadvantage, and therefore not the victim of unconscionable conduct."
- There are passages in the reasons of the primary judge which appear to suggest that the existence of such a position of disadvantage
necessarily involves physical frailty and enfeeblement with diminished knowledge by the party in question of that party's property
and affairs generally. That will not necessarily be the case. In any event, the primary judge did find that, probably from the
time of his 84th birthday in February 1988, when his driving licence was not renewed, Bill's condition deteriorated and that thereafter
he had "good days" and "bad days". His Honour said that Bill's condition "did probably wax and wane, leaving open the possibility
that 19 July, 1988 was a 'good' day".
- Before Bill executed the Transfers and the Deed on 19 July 1988, Bill (and his brother, Sam) were briefly examined, for a period of
some 10 minutes, by a practitioner in Roma, Dr Hatcher. This was the only occasion on which Dr Hatcher had seen Bill. He found
evident in Bill no signs of senile dementia and found his physical condition appropriate for his age, saying, "[h]e was a fragile
elderly man." The primary judge found to be of "considerable significance" Dr Hatcher's contemporaneous report that Bill was of
sound mind and capable of making decisions about his personal affairs.
- We have referred to the primary judge's conclusion that Bill had "the capacity then to know what he was doing and to make informed
decisions about the disposition of his property". That however is not an answer to the question whether, on the primary facts, the
conclusion should have been reached that advantage was taken of Bill's disadvantaged position. Even with respect to the doctrine
of undue influence, as distinct from that dealing with unconscionable conduct, equitable principles may be invoked to set aside a
gift where a donor is perfectly competent to understand and intend what he or she did. In Huguenin v Baseley[67], Lord Eldon LC said, in a well-known passage[68]:
"Take it, that she intended to give it to him: it is by no means out of the reach of the principle. The question is, not, whether
she knew what she was doing, had done, or proposed to do, but how the intention was produced".
Thus, as Turner LJ put it of the disponor in Rhodes v Bate[69], the case was not determined by deciding that she had been "perfectly competent to understand what she did" and had not been "of
weak mind". Further, as Lindley LJ observed in Allcard v Skinner[70], enthusiasm itself may be the result of the exercise of undue influence.
- The questions with which the primary judge was here concerned, those as to undue influence of Neil upon Bill and of unconscionable
conduct of Neil, involved more than issues of contractual capacity or those which arise upon a defence of non est factum[71]. The initiative leading to the execution of the Transfers and the Deed had been taken by Neil. The primary judge found that, having
the proceeds of sale of the Injune Land available to him, Neil approached Bill in late 1987 or early 1988 and asked whether Bill
would be interested in selling to him Bill's interests in certain lands for a suggested price of $150,000. His Honour concluded
that, in the end, it was unnecessary to decide between the contentions that, by not offering more, Neil deceived Bill or whether,
by offering only a sum much less than the value of the land in question, Neil was merely "floating" a possibility which Bill might
or might not have accepted. His Honour went on:
"Bill did however agree to the proposal, saying that he had better do it 'before someone causes bloody trouble' ... or as [Neil]
put it during cross-examination: 'I had better do that just in case them bastards cause trouble.'"
Conclusions
- Bill had been born in Wallumbilla and lived there all his life. We have referred to the evidence which showed the amassing by him
of considerable land and interests. He was a quiet, reserved man of limited education. He travelled only infrequently away from
his home. The primary judge found:
"He had a reasonable relationship with his daughters, although he really excluded both them, and Stella his wife, from his business
affairs, and rather stolidly considered their true place to be 'in the home'. Bill's life revolved substantially about his interest
in cattle, and the recreations of shooting and football.
...
Bill provided only very basic accommodation for his wife and daughters. He was remarkable [sic] frugal. He did not even give birthday
presents. His treatment of his wife and daughters in this will was therefore consistent with that general approach ...
...
Bill felt that the place for Stella and his daughters was in the home, not on the land or engaged in business affairs".
On the other hand, he had an "enormous affection" for Neil, "fully trusted him" and, for his part, Neil appreciated the high regard
his uncle felt for him.
- Bill had the goal of retaining the properties as an integrated farming enterprise under reliable and experienced management. His
Honour found that this goal was important to him. The Transfers and the Deed, as a means to attain that goal, involved an improvident
transaction which was neither fair nor just and reasonable. The effect of the Transfers and the Deed was to dispose of a significant
portion of Bill's assets not for their value of $696,811 but for $150,000. This transaction put it out of Bill's power to change
his testamentary arrangements with respect to that portion of its assets. Further, for all his deep concerns that all his properties
be kept together under the one manager, even at the expense of the interests of his children, the form of the transaction was such
as to provide no certainty that this necessarily would follow for the remainder of Bill's life or after his death. Nor is it any
sufficient response that, were Bill to retain the $150,000 or assets representing such sum, this would augment the $200,000 which
would fall into the residue under cl 4 of the Will upon exercise of the option after his death.
- Bill's goal to preserve his rural interests intact and his perception that Neil was the candidate to provide reliable and experienced
management thereof were significant elements in his emotional attachment to and dependency upon Neil. The initiative to utilise
the circumstance of the sale of the Injune Land (to the retention of which Bill had been opposed) for the irreversible implementation
of Bill's wishes during his lifetime came from Neil. It is not an answer that there was no finding that Neil had pursued the initiative
to its implemention in July and November 1988 with the motive or purpose of forestalling any change in Bill's testamentary intentions.
The equity to set aside the Deed may be enlivened not only by the active pursuit of the benefit it conferred but by the passive
acceptance of that benefit.
Relief
- The relationship between Bill and Neil meant that, when Neil raised the question of using the proceeds of sale of the Injune Land,
they were meeting on unequal terms. Neil took advantage of this position to obtain a benefit through a grossly improvident transaction
on the part of his uncle.
- In some cases, the equity that arises by reason of an unconscientious or unconscionable dealing of the nature with which this appeal
is concerned may be satisfied only by setting aside that dealing in its entirety. The dealing may be embodied in the one instrument
which contains several provisions or in several instruments. In other circumstances, of which this case is an example, the equity
may be satisfied by orders setting aside some but not all of these instruments or some but not all of the provisions thereof[72].
- It is unconscionable for Neil and his wife to retain the benefit of the improvident transaction by asserting the forgiveness of the
whole of the debt which would otherwise be owing to Bill's estate. On the findings of fact made by and available to him, the primary
judge should have held that the Deed should not be allowed to stand and be given its full effect; the Court of Appeal also should
have intervened. A similar conclusion would have followed with respect to the Transfers but for the complexities that would arise
in the disentanglement of the transactions involved, including the absence of Sam and the mortgagee as parties to this litigation.
In the circumstances of this case and consistently with the framing of relief which, in Lord Blackburn's phrase, is "practically
just"[73], the appellants, as representatives of Bill's estate, properly may elect that only the Deed itself be set aside. However, in seeking
equity, the estate must be prepared to do equity[74]. In particular, weight has to be given to the testator's wish significantly to benefit his nephew which was expressed in cl 4 of
the Will.
- In the course of argument on this appeal, there was discussion as to the appropriate form of equitable relief if the appeal was successful.
In accordance with the authority referred to above, counsel for the respondents stressed the requirements of "practical justice".
Reference was made to Vadasz v Pioneer Concrete (SA) Pty Ltd[75] to emphasise the importance of the consideration that in the particular circumstances of a case the equity may be satisfied by orders
having the effect of setting aside no more than so much of a disposition as prevents the moving party "obtaining an unwarranted benefit
at the expense of the other"[76]. Attention also was drawn to the significance in framing relief of the personal rights of the appellants against the estate under
Pt 4 of the Succession Act.
- Once a court has determined upon the existence of a necessary equity to attract relief, the framing, or, as it is often expressed,
the moulding, of relief may produce a final result not exactly representing what either side would have wished. However, that is
a consequence of the balancing of competing interests to which, in the particular circumstances, weight is to be given.
- Further, the implementation of that relief may require additional factual inquiries. Leave to adduce evidence in that respect may
be appropriate. When the point arises in an appellate court the orders may be so drawn as to give liberty to apply and to provide
for pursuit of such a course in the court of first instance. As will appear, the present appeal is such a case.
- Although the present action was differently cast, the ultimate question it presents may be appreciated by considering what would be
the outcome of an action by the estate to recover from Neil and Beryl the amount forgiven. In that situation and having regard to
all the circumstances, would it be consistent with equity and good conscience for Neil and Beryl to plead the Deed as to the full
amount of the forgiveness?[77] Would a response by the estate seeking rescission of the Deed as to the whole of the forgiveness succeed?
- Had the Transfers been implemented and the Will taken effect according to its terms before the Deed was executed, the residuary estate,
dealt with in cl 4 of the Will, would have been augmented by recoupment from Neil and Beryl of the amount forgiven by the Deed.
The option in Neil's favour still would have operated but only in respect of the remaining interests of the estate in the Tooks Land
and the Mt Leigh Land, together with the partnership interest and the interest in personal property.
- As we have indicated earlier in these reasons, the consequence of an order setting aside the Deed as to the whole of the forgiveness
would be that the substantial amount so retrieved by the estate would fall wholly into the residue divisible under cl 4 equally between
Bill's daughters. The option provision would not apply to it. The interests of Bill's widow under cl 3 of the Will would be unaffected.
What would Neil's position be under the Will? The Transfers withdrew from the estate what had been the testator's interests in the
Wonga Park Fee Simple, the Wonga Park Perpetual Lease Selection and the Risby Land. The Transfers are not set aside. The testator
benefited to the extent of the $150,000 paid by Neil on the revised settlement date of 28 November 1988. Upon the present thesis,
the exercise of the option in cl 4, in its remaining operation, would have yielded to Neil (as was in fact the case) assets valued
at some $248,000 in exchange for the payment of $200,000. That would not reflect any significant level of benefaction to Neil by
his uncle.
- Had the Transfers not been made and cl 4 had been left to operate in its terms at Bill's death, then, in exchange for the $200,000
he later paid on exercise of the option, Neil would have received value in a sum greatly exceeding $248,000 which, as we have indicated,
represented that which Neil acquired when he exercised the option after Bill's death. That further value would have been represented
by the value at that time of the total consideration of $696,811 payable in accordance with the Transfers for the acquisition of
Bill's interests in the Wonga Park Fee Simple, the Wonga Park Perpetual Lease Selection and the Risby Land. However, as we indicated
earlier, Neil had been prepared to pay and had paid $150,000 towards that $696,811. This payment by him should not now be left out
of account.
- The status quo with respect both to the Deed and the Transfers cannot be restored. The issue then is whether, in the situation presented
by the setting aside of the Deed but not the Transfers, an allowance should be made by the estate in favour of Neil which qualifies
what otherwise would be the full recoupment to the estate of the amount forgiven by the Deed. This was $546,811 of the purchase
price under the Transfers of $696,811. Should the estate, as a term of the restoration of its rights to recover the debt, be required
to make a provision in Neil's favour? Before an answer is given, regard must be paid to the subjection of the estate to claims under
Pt 4 of the Succession Act.
- If cl 4 had operated in Neil's favour, fully in accordance with its terms in respect of the whole of the testator's lands there indicated,
the testator's daughters as well as his widow would have had their rights against the estate under Pt 4 of the Succession Act, asserting that adequate provision had not been made from the estate for their proper maintenance and support. They might reasonably
have expected substantial provision to be made by order in their favour[78]. Nevertheless, if the widow and daughters had pursued the Family Provision Application, regard would have to have been had to such
evidence and submissions as were properly presented in opposition to their claims. In particular, some significant weight would
have to have been given to Bill's wish to benefit his nephew by the means adopted in cl 4 of the Will. The result would have been
to retain some provision in Neil's favour after the orders were made on the Family Provision Application. This provision should
be reflected in the terms now imposed upon the estate in setting aside the Deed. There should be an allowance in favour of Neil
and Beryl from the indebtedness which may be recouped from them by the estate as a consequence of the setting aside of the Deed.
- The matter should be returned to the Supreme Court to determine, in the absence of agreement in this respect between the parties and
after hearing such further evidence (if any) as is allowed, the amount of such allowance. This requires a finding of the present
value of the provisions in favour of Bill's widow and daughters which properly would have been made out of the estate upon the Family
Provision Application. This valuation is to be made on the footing that, at Bill's death, the estate included, in addition to the
assets actually devised and bequeathed by the Will, the interests of the testator in the lands identified in the option provision
in cl 4 but which had been the subject of the Transfers. Those lands so transferred should have attributed to them for this purpose
a value represented by the purchase price of $696,811 (less the $150,000 paid by Neil) and interest at commercial rates allowed from
time to time by the Supreme Court of Queensland from the revised settlement date of 28 November 1988.
- It will then be for the Supreme Court to determine, taking this valuation and as a matter of practical justice, that sum, being the
sum stipulated in the Deed as forgiven (ie, $546,811) or a lesser amount, in respect of which it declares the Deed is of no effect.
The amount representing the valuation of the deemed provision under the Family Provision Application in favour of Bill's widow and
daughters will be of great significance. It will indicate the benefit under the Will which would have been retained by Neil, freed
from the impugned dealings, and after effect had been given to the operation of Pt 4 of the Succession Act upon Bill's testamentary dispositions. The estate must make provision for this element of benefaction to Neil by the testator if
it is to have the assistance of equity by declaring the Deed to be of no effect. As we have indicated, the provision is made by
an allowance in favour of Neil and Beryl against the disallowance of the forgiveness of their indebtedness to the estate.
- In submissions, reference was made to the striking out of the Family Provision Application on 17 May 1991, shortly before the institution
of the action giving rise to this appeal. That circumstance does not debar the Court, when working out the appropriate relief in
that action, from taking into account, in the manner indicated above, the subjection of the estate to the claims made in the Family
Provision Application.
- In any event, the step on 17 May 1991 was taken at the instance of Neil after the solicitor for the appellants had notified his solicitor
that they were contemplating the institution of the action, and in circumstances linked to those on which that action was founded.
It would have been inexpedient for the appellants to have pressed on with the Family Provision Application whilst the validity of
the Will and the quantum of Bill's estate were undecided. The suggestion that the fate of the Family Provision Application is indicative
of an acceptance by the appellants of the limited provision made for them by Bill lacks any firm foundation.
- Further, even if the principles expounded in Port of Melbourne Authority v Anshun Pty Ltd[79] apply to the appellants in their representative capacity, and not merely to them in their individual interests as applicants in the
Family Provision Application, it should be noted that those principles are equitable in nature. They do not foreclose the framing
of relief in the manner now proposed with respect to the consequences of Neil's conduct.
- The appeal to this Court should be allowed with costs against the second respondents. The order of the Court of Appeal dismissing
with costs the appeal to that Court should be set aside. In place thereof, there should be an order allowing the appeal from so
much of the orders of de Jersey J as dismissed the claim of the present appellants and a declaration that the deed of forgiveness
of debt executed on 19 July 1988 is of no effect as to an amount to be fixed and declared by the Supreme Court.
- There should also then be a declaration by the Supreme Court to the effect that Bill's estate has a vendor's lien upon the properties
the subject of the Transfers to secure so much of that sum of $546,811 as, in accordance with the above declaration, is to be treated
as due and owing but unpaid, together with interest at commercial rates allowed from time to time by the Supreme Court of Queensland
from 28 November 1988. Upon the formulation of this declaration with respect to the vendor's lien, the respondents may, if they
be so advised, have leave to seek a determination that the lien should not extend to the Wonga Park Perpetual Lease Selection on
the ground that, as a matter of law and by analogy to the reasoning in Davies v Littlejohn[80] (if it be a true analogy), the applicable legislation does not admit of such a remedy.
- There should be liberty to apply to the Supreme Court.
- In place of the costs orders made in the Court of Appeal and by the primary judge, the appellants should have, against the second
respondents, their costs in the Court of Appeal and one-half of their costs of the trial. It will be recalled that the attack upon
the admission of the Will to probate in solemn form failed and was not renewed in the Court of Appeal.
- Costs of further proceedings in the Supreme Court should be for that Court to determine.
[1] [1956] HCA 81; (1956) 99 CLR 362 at 386.
[2] [1956] HCA 81; (1956) 99 CLR 362 at 386.
[3] [1956] HCA 81; (1956) 99 CLR 362 at 405.
[4] [1983] HCA 14; (1983) 151 CLR 447.
[5] [1983] HCA 14; (1983) 151 CLR 447 at 462.
[6] [1983] HCA 14; (1983) 151 CLR 447 at 476-477.
[7] [1956] HCA 81; (1956) 99 CLR 362 at 392.
[8] [1992] HCA 61; (1992) 175 CLR 621 at 633-634.
[9] [1948] HCA 20; (1948) 76 CLR 646.
[10] [1948] HCA 20; (1948) 76 CLR 646 at 649.
[11] [1956] HCA 81; (1956) 99 CLR 362.
[12] [1956] HCA 81; (1956) 99 CLR 362 at 405.
[13] [1983] HCA 14; (1983) 151 CLR 447.
[14] [1983] HCA 14; (1983) 151 CLR 447 at 476.
[15] [1992] HCA 61; (1992) 175 CLR 621.
[16] [1992] HCA 61; (1992) 175 CLR 621 at 637.
[17] [1995] HCA 14; (1995) 184 CLR 102.
[18] [1948] HCA 20; (1948) 76 CLR 646.
[19] [1956] HCA 81; (1956) 99 CLR 362.
[20] [1983] HCA 14; (1983) 151 CLR 447.
[21] [1992] HCA 61; (1992) 175 CLR 621.
[22] Wingrove v Wingrove (1885) 11 PD 81 at 82-83. See also Baudains v Richardson [1906] AC 169 at 184-185; Craig v Lamoureux [1920] AC 349 at 357; Winter v Crichton (1991) 23 NSWLR 116 at 121-122.
[23] In his "Chapters on Equity in New South Wales", reprinted in Jordan, Select Legal Papers, (1983) at 137.
[24] Allen v M'Pherson (1847) 1 HLC 191 [9 ER 727]; cf Birmingham v Renfrew [1937] HCA 52; (1937) 57 CLR 666 at 674, 676, 683, 690.
[25] [1953] HCA 2; (1953) 90 CLR 113 at 132.
[26] Gibbons v Wright [1954] HCA 17; (1954) 91 CLR 423 at 449.
[27] Blomley v Ryan [1956] HCA 81; (1956) 99 CLR 362 at 401.
[28] [1956] HCA 81; (1956) 99 CLR 362 at 401.
[29] [1922] HCA 3; (1922) 30 CLR 180 at 193.
[30] [1992] HCA 61; (1992) 175 CLR 621.
[31] [1992] HCA 61; (1992) 175 CLR 621 at 634.
[32] (1885) 11 PD 81 at 82-83.
[33] (1857) 6 HLC 2 at 47-50 [1854] EngR 252; [10 ER 1192 at 1211].
[34] [1984] WAR 61 at 68.
[35] Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 at 461.
[36] [1983] HCA 14; (1983) 151 CLR 447 at 474.
[37] The examples of such relations given by Latham CJ in Johnson v Buttress [1936] HCA 41; (1936) 56 CLR 113 at 119 included parent and child, guardian and ward, solicitor and client, physician and patient, "and cases of
religious influence". Cf as to presumptions of advancement, Nelson v Nelson [1995] HCA 25; (1995) 184 CLR 538 at 574-576, 583-586, 600-603.
[38] Mason, "The Impact of Equitable Doctrine on the Law of Contract", (1998) 27 Anglo-American Law Review 1 at 6-8.
[39] Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 at 461, 474.
[40] See Peter Birks and Chin Nyuk Yin, "On the Nature of Undue Influence" in Beatson and Friedmann (eds), Good Faith and Fault in Contract Law, 57 et seq.
[41] [1983] HCA 14; (1983) 151 CLR 447 [at 462].
[42] Hart v O'Connor [1985] UKPC 1; [1985] AC 1000; Bowkett v Action Finance Ltd [1992] 1 NZLR 449.
[43] [1983] HCA 14; (1983) 151 CLR 447 at 474.
[44] [1985] UKPC 1; [1985] AC 1000.
[45] [1985] UKPC 1; [1985] AC 1000 at 1024 (emphasis added).
[46] (1872) LR 8 Ch App 118 at 124. See also observations to the same effect by Lord Selborne LC in Earl of Aylesford v Morris (1873) LR 8 Ch App 484 at 490-491, by Sir George Jessel MR in Redgrave v Hurd (1881) 20 Ch D 1 at 12-13 and by Mason J, Deane J and Dawson J in Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 at 462, 474, 489 respectively.
[47] (1988) 12 NSWLR 84 at 89-93.
[48] See, as to the significance of this phrase, Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 at 218-219.
[49] The inclusion of all the lots forming part of what is later identified herein as the Wonga Park Fee Simple.
[50] Wik Peoples v Queensland (1996) 187 CLR 1 at 153, 198-199.
[51] Such as Horton v Jones [1935] HCA 7; (1935) 53 CLR 475; Schaefer v Schuhmann [1972] AC 572; Palmer v Bank of New South Wales [1975] HCA 51; (1975) 133 CLR 150.
[52] The Queensland legislation does not include a counterpart of the "notional estate" provisions in s 22 of the Family Provision Act 1982 (NSW).
[53] Linderstam v Barnett [1915] HCA 5; (1915) 19 CLR 528 at 530-531; Watkins v Combes [1922] HCA 3; (1922) 30 CLR 180 at 197.
[54] (1894) 15 NSWR (B&P) 30 at 36.
[55] Longmate v Ledger [1860] EngR 610; (1860) 2 Giff 157 at 163 [66 ER 67 at 69].
[56] Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 at 474.
[57] Davies v Littlejohn [1923] HCA 64; (1923) 34 CLR 174 at 185.
[58] Wossidlo v Catt [1934] HCA 52; (1934) 52 CLR 301 at 307; Ashburner's Principles of Equity, 2nd ed (1933) at 250.
[59] Hewett v Court [1983] HCA 7; (1983) 149 CLR 639 at 668.
[60] [1983] HCA 7; (1983) 149 CLR 639 at 645.
[61] See Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449 at 477, 500.
[62] See the decrees set out in Seton's Judgments and Orders, 7th ed (1912), vol 3 at 2220-2221.
[63] There may be a question, upon the answer to which we express no opinion, as to whether, upon its true construction, the legislation
which presently governs the Wonga Park Perpetual Lease Selection permits the operation of the equitable doctrine of the vendor's
lien; cf Davies v Littlejohn [1923] HCA 64; (1923) 34 CLR 174; Minister for Lands and Forests v McPherson (1991) 22 NSWLR 687; State of Queensland v Litz [1993] 1 Qd R 343; Wik Peoples v Queensland (1996) 187 CLR 1 at 197-198.
[64] Louth v Diprose [1992] HCA 61; (1992) 175 CLR 621 at 626, 629-630, 637-638, 643.
[65] [1992] HCA 61; (1992) 175 CLR 621.
[66] Diprose v Louth (No 2) (1990) 54 SASR 450 at 453.
[67] (1807) 14 Ves Jun 273 at 299-300 [33 ER 526 at 536].
[68] See also Union Fidelity Trustee Co of Australia Limited v Gibson [1971] VicRp 69; [1971] VR 573 at 576 and, in Canada, Geffen v Goodman Estate [1991] 2 SCR 353 at 376. See further Cope, Duress, Undue Influence and Unconscientious Bargains, (1985) at [201].
[69] (1866) LR 1 Ch App 252 at 256.
[70] (1887) 36 Ch D 145 at 183.
[71] See Petelin v Cullen [1975] HCA 24; (1975) 132 CLR 355 at 359-360.
[72] See Willis v Barron [1902] AC 271 at 272-273; Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449 at 474-475.
[73] Erlanger v New Sombrero Phosphate Company (1878) 3 App Cas 1218 at 1278-1279. See also Vadasz v Pioneer Concrete (SA) Pty Ltd [1995] HCA 14; (1995) 184 CLR 102 at 113-114.
[74] Vadasz v Pioneer Concrete (SA) Pty Ltd [1995] HCA 14; (1995) 184 CLR 102 at 115; Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449 at 474-475, 496-499.
[75] [1995] HCA 14; (1995) 184 CLR 102.
[76] Vadasz v Pioneer Concrete (SA) Pty Ltd [1995] HCA 14; (1995) 184 CLR 102 at 114.
[77] cf Blomley v Ryan [1956] HCA 81; (1956) 99 CLR 362 at 401-402.
[78] The applicable principles are expounded in White v Barron [1980] HCA 14; (1980) 144 CLR 431; Goodman v Windeyer [1980] HCA 31; (1980) 144 CLR 490; Official Receiver in Bankruptcy v Schultz [1990] HCA 45; (1990) 170 CLR 306 and, most recently, in Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 at 208-212, 218-220, 224-227. In the last-mentioned case, Toohey J (at 218-219) drew attention to the significance
of those statutes (and s 41 of the Queensland statute is one of them) which employ phrases to identify the task undertaken by the
court such as "at its discretion" or "in its discretion".
[79] [1981] HCA 45; (1981) 147 CLR 589.
[80] [1923] HCA 64; (1923) 34 CLR 174. The Court there held that the doctrine did not apply to conditional purchases under the Crown Lands Consolidation Act 1913 (NSW).