King v Chrisis

HIS HONOUR: In this matter, the Court has been asked to approve the settlement of proceedings commenced by Statement of Claim filed on 10 August 2017, in which the Plaintiff, who appears by his tutor, the NSW Trustee and Guardian, sought to set aside the transfer of real property in Queensland (“the Property”) made by him in September 2013 in favour of the third and fourth Defendants. The first and second Defendants are the parents of the third and fourth Defendants. None of the Defendants is in any familial relationship with the Plaintiff.

In the Statement of Claim, the Plaintiff asserted that the transfer had been procured by the undue influence of the first and second Defendants. In the alternative, he asserted that the transfer of the Property was procured by unconscionable conduct of all Defendants. The Plaintiff sought an order that the Property be transferred back to him. He also sought consequential relief.

The four Defendants filed a single Defence on 21 November 2017. They admitted a number of paragraphs of the Statement of Claim (1, 3, 6, 8, 9, 10, 11, 13 and 14, 16 and 17). Importantly, they asserted that the Plaintiff, at the time of the Transfer, was “mentally capable of making his own decisions”, had spoken to the first Defendant on a number of occasions since as early as 2011 about the transfer, and had decided to transfer the Property to the third and fourth Defendants to give effect to his intention already expressed in his Will made on 19 January 2006.

A copy of the Plaintiff’s Will, made in 2006, is in evidence. The Will was duly executed and appears to have been professionally drawn. Indeed, one of the attesting witnesses is a solicitor and the other is a legal secretary. In Clause 2 of the Will, the first and second Defendants are named as the executors and trustees of the Plaintiff’s estate. Clause 4 provides for a right of residence to the Plaintiff’s father “in any home which I may own and [in] which I may be residing at the date of my death” for as long as he wished to reside therein, and following the termination of the right to reside, the “house property and the balance of my estate comprising the residue of my estate” was gifted "to such of my friends [the four Defendants were named] as attain the age of 18 years and survive me by thirty (30) days and if more than one has tenants in common in equal shares".

It can be seen from the terms of the Plaintiff’s Will, that he and the Defendants appear to have had a close relationship for some time prior to the events involving the transfer of the Property.

It is necessary to state, albeit briefly, some background information that is known about the Plaintiff and the Defendants. During 2013, the Plaintiff had been living alone in Queensland, presumably in the Property. After some hospital admissions in Queensland during 2013, he moved to Canterbury, a suburb of Sydney, to stay with the first and second Defendants. Whilst staying there, he was admitted to Royal Prince Alfred Hospital, in November 2013, with confusion, decreased mobility, increased shortness of breath and jaundice. He was also reported to have multiple medical conditions, including chronic liver disease.

An application to the Guardianship Division of NCAT for both guardianship and financial management of orders in respect of the Plaintiff was made in late 2013 or early 2014. In the Reasons for Decision, delivered on 12 February 2014, it was noted that the Plaintiff had appeared by telephone accompanied by a solicitor, and that he had confirmed that, “[H]e had previously owned a home unit in Queensland and that he had inherited that property from his late mother”. He is also said to have told the Tribunal that, in September 2013, he had transferred the title to that property to [the third and fourth Defendants], the children of [the first and second Defendants]. He is said to have outlined the circumstances surrounding that transfer and he confirmed that he had signed the Transfer document himself. He informed the Tribunal that he had not received any payment for the transfer of the Property. He also explained that he had no family members, or friends, other than [the first and second Defendants].

In relation to the execution of the Transfer, I have read a diary note of the Plaintiff’s current solicitor, Mr G V Patterson, who had a conversation with Ms H R Terrace on 10 June 2016. She had witnessed the Plaintiff’s signature on the Deed of Agreement dated 7 September 2013, which set out the terms upon which the Transfer of the Property was to take place.

Ms Terrace, at the time of the conversation with the Plaintiff’s solicitor, identified herself as the Registrar at Southport Courthouse. She stated that she had a detailed recollection of the occasion when she had witnessed the Plaintiff’s signature on the Deed and on an Enduring Power of Attorney. She stated that she was:

Ms Terrace also informed Mr Patterson that she had asked the Plaintiff to explain to her his understanding of the documents to be signed and what he was doing. He referred to the Defendants as “my family” and said that he would be living in the Property until he passed away. He also told Ms Terrace that he had no relatives, or other family, to whom he could leave the Property. He “looked her in the eye” when he was explaining his intentions. Ms Terrace was satisfied that he understood what he was doing.

It is also necessary to note there is evidence that in, or about, October 2013, the Plaintiff had been diagnosed with mild functional and cognitive impairments. There is sufficient evidence to suggest that he had some cognitive deficits.

I should mention that I have read the affidavit of Mr H Alameddine, the Defendants’ solicitor, who points out that when one considers all of the available medical evidence the deceased’s condition in September 2013 is not conclusive, and, in any event, does not “assist the Plaintiff’s case that he lacked capacity to transfer the relevant property”.

In addition, Mr Alameddine states that the Defendants will be able to establish that they have spent approximately $100,000 on renovations to the Property as well as $30,000 on “strata, council and water levies”. (Although not adverted to in his affidavit, there is some evidence that the first and second Defendants had contributed something in the order of $10,000 to assist the Plaintiff in paying expenses that he had been unable to pay).

Finally, I should mention that I have read a very detailed affidavit made by Mr Patterson, who has discussed the proceedings, and conferred with, the legal officer of the tutor, the NSW Trustee and Guardian, in relation to the settlement of the proceedings. In that affidavit, Mr Patterson states:

I should also mention, for completeness, that I have read a further affidavit of Mr Patterson, filed in Court, and sworn on 21 March 2018, which identifies the Plaintiff’s costs and disbursements, inclusive of GST, of $33,000. He states that there has been “a discount of one-third of my unbilled work in progress to date not including any fees for today”. Mr Patterson has indicated that he will cap the Plaintiff’s total exposure for costs and disbursements to that sum. (I am satisfied that the costs and disbursements incurred by the Plaintiff are reasonable and proportionate in all the circumstances.)

With that short background, I turn to the way in which the matter is to be resolved by the parties. The terms of the settlement have altered slightly because the Court expressed some concern about one of the original terms which related to the payment of part ($32,500) of “the Settlement Sum” ($92,500) being paid by instalments of $3,250 per year.

Following the solicitor for the Defendants obtaining instructions, the Court was informed that the Settlement Sum would be paid, as to $60,000 within 21 days of the approval of the settlement, and the balance ($32,500) within 12 months of the date of the approval by the court. Interest on the outstanding amounts, calculated at 3 per cent per annum is to be paid, calculated from the day on which the settlement is approved. The parties are also to sign a Deed of Settlement which will cover other matters upon which agreement has been reached.

If the amount the subject of the proposed settlement is approved by the Court, and if the estimate of the Plaintiff’s costs and disbursements proves accurate, the Plaintiff will receive slightly less than $60,000, albeit that $32,500, plus interest, will not be paid until 21 March 2019.

In Rappard v Williams [2013] NSWSC 1279, I dealt with the principles applicable to approval of a compromise by the Court. At [100] – [102], I wrote:

What was written by Hamill J in Pallier v Solomons (No 1) [2014] NSWSC 1214, at [9], is of some importance also:

I also bear in mind the additional factor identified in Scandolera v State of Victoria (2015) 331 ALR 525; [2015] FCA 1451, in which Mortimer J wrote, at [29]:

Finally, I note what has been written by Lindsay J in AEW v BW [2016] NSWSC 905, at [26]:

After considering the affidavit evidence and the tendered documents, I am prepared to approve the proposed settlement. I am satisfied that it is in the best interests of the Plaintiff to resolve the proceedings on the terms proposed. Relevant matters leading to this conclusion, in the present case, include the likely cost and complexity of the proceedings if they proceed; there is a real dispute about the facts; the value of the Property, even now, is modest and if the Defendants are able to establish what was spent by them, the amount in issue will be reduced even further; the date of any trial is likely to be some months away; and finally, and importantly, the result of the Plaintiff’s case is uncertain, whereas there is certainty in obtaining the settlement sum.

In the circumstances, the Court: