Baker v Affoo[2014] QSC 46

SUPREME COURT OF QUEENSLAND

1. Jackson J: There was bound to be trouble when Edward Blair (“Ted”) transferred his beloved rural residence (“the farm”) to Shaune and Christopher Affoo as trustees of the Somerset View Trust.  Ted was 89.  The purpose of the transfer was to benefit his neighbour and close friend, William Affoo (“Bill”), the male first respondent.  Shaune and Christopher Affoo, the second respondents, are Bill’s sons.  About the time of the transfer, Ted made a new will leaving the residue of his estate to Bill.  The strategy of transferring the farm to Bill’s sons as trustees of the trust was prophylactic.  Ted and Bill intended that the farm would be removed from Ted’s estate.  That would protect it from any challenge made by Ted’s children to the $200 each that he left them under the will.  The reason why the farm was transferred to the trust, rather than to Bill directly, was to protect Bill’s age pension.  The transfer to Bill’s sons, as trustees of the trust, was intended to avoid that risk. 

2. Why was there bound to be trouble? By this process, Ted further disinherited his five children. They were of mature age, surely. However, Ted and Bill did it without telling them, deliberately. And as will appear, Ted had no reason to disinherit his children. His relationships with them were distant but reasonable. Some of them had need of the bounty he might provide. The intention he had previously expressed, and embodied in a will he had previously made, was that he would leave his property to his eldest son on behalf of all of them.

3. The transfer was made in two steps. First, by a memorandum of transfer dated 2 March 2004, Ted transferred a 1/100^th interest in the farm to Bill’s sons as joint tenants.  The strategy was that they would take the other 99/100^th by survivorship.  Presumably someone realised that meant 99/100^th of the property would be part of Ted’s estate on his death.  The Affoos had lawyers acting for them.  Secondly, by memorandum of transfer dated 24 June 2004, Ted transferred the remaining 99/100^th to Bill’s sons. 

4. At the time of the transfer, Bill held an enduring power of attorney granted by Ted. Each of those transfer transactions was made between Ted as principal and a relation of Bill. Accordingly, s 87 of the Powers of Attorney Act 1998 (Qld) gives rise to a presumption in Ted’s favour that he was induced to enter the transaction by Bill’s undue influence.  The applicants are three of Ted’s children.  Their ultimate claims are for provision to be made out of Ted’s estate under s 41 of the Succession Act 1981 (Qld).  In substance, that is a challenge to Ted’s last will giving the benefit of the residue of his estate to Bill.  However, the estate is not worth much.  So the applicants also make a claim on behalf of the estate.  That claim challenges Ted’s gifts of the interests in the farm to Bill’s sons as trustees as having been induced by Bill’s undue influence. They claim a consequential declaration of constructive trust against Bill’s sons as trustees and an order for transfer of the farm to the executors of Ted’s estate.

5. Bill and his wife Rhonda, the female first respondent, are the executors under Ted’s will. In their capacity as executors, they defend the applicants’ claims for provision out of Ted’s estate. Bill’s sons as trustees defend the claim to avoid the gifts of the interests in the farm for undue influence. Bill and Rhonda also defended that claim. That part of their defence can only have been as beneficiaries of the Somerset View Trust.

Ted’s family

6. On 28 August 1915, Ted was born as Eric Baker. He was known by that name until at least 1962. After that, he adopted the name Edward Blair. At the time, that was probably to hide his identity.

7. On 24 November 2008, Ted died. He is survived by five children: Lynette Maree Lawnton born 16 December 1937, Susanne Carol Sweeting born 30 January 1943, Charles Eric Baker born 30 July 1947, Marguerite Joanne Baker born 5 August 1950 and Roger Stanley Baker born 19 October 1952.

8. Charles, Marguerite and Roger are the applicants. Lynette and Susanne have notice of this proceeding but no interest in it.

9. Until about 1962, Ted was a member of the New South Wales Police Force. As his children were growing up he was posted in rural areas for the most part. In about 1960, he was transferred to Darlinghurst. The family lived at Bowral. The applicants recall a happy childhood and up until then enjoyed a good relationship with their father.

10. One day Ted left. It was about 1962. Charles was about 15, Marguerite about 11 and Roger about 9. The reasons for Ted’s disappearance were not clear, but appeared to have had something to do with his employment. Charles alluded to Ted being involved in nefarious activity.

11. However that may be, Ted’s children later found out that he was in New Guinea.  In 1971, Charles was asked to go to a trial in Port Moresby.  Ted was being prosecuted for bigamy.  Charles went to identify him as his father.  Ted and the children’s mother were not divorced.  Ted had remarried Irene who was known as Irene Blair.  Perhaps fortunately, the bigamy charge was dropped.  In the early 1970s Ted and Irene returned to Australia and settled in Brisbane at Ferny Hills. 

Rebuilding

12. At that time, Charles was living in Sydney. He drove to Queensland to visit Ted from Sydney or later from Melbourne when he moved there. 

13. Charles married in 1973. He and his wife would visit from Sydney at least every second year.  Ted would also visit them. 

14. During the 1970s, Ted brought the property at Kilcoy which he called the farm. The address of the farm was 4148 D’Aguilar Highway. He built a shed on the property. He stayed there at weekends. Charles visited him at the farm four or five times.  Ted progressively built further improvements on the farm. Over time, there were three sheds and a house. 

15. During the early 1980s, Charles was working in Melbourne.  He flew to Brisbane about three times a year.  If Ted was available, they would have breakfast together.  That pattern continued for many years.  However, it ceased in or about 2003, when Charles employment changed.  Charles and Ted still spoke regularly on the phone thereafter.

16. In 1971 and 1972, Marguerite was living in Sydney. Ted visited her with Irene.  After that, their contact was mostly by telephone.  Over time it increased. 

17. Although Ted had returned from New Guinea in about 1971, he did not see Roger until about 1982.  Roger was then living at Southport.  After that, Ted invited Roger and his first wife to the farm.  Roger also visited Ted in Brisbane a couple of times. 

18. In 1985, Roger remarried. Ted attended the wedding. Roger and his second wife lived in Mt Tamborine. Roger kept in contact with Ted thereafter, with his family.

19. In 1988, Marguerite came to Queensland for Expo 88 with one of her elder sisters.  Ted was living at Ferny Hills.  They stayed at the farm for a week to 10 days.  Ted went there on the weekends. 

20. In 1989, Marguerite moved to Burpengary. She was able to spend more time with Ted. She saw him about weekly. He would call in on his way from Ferny Hills to the farm or vice versa.

21. In 2002, Marguerite moved to Moree. She remained in contact with Ted by phone. However, she did not see him again until October 2004.

22. In the first half of 2002, Roger went to the farm to see Ted. For a reason which is not clear, Roger asked Ted about the contents of his will. Ted told Roger that he should talk to Bill who was his executor. Ted went to get Bill who came to Ted’s place. Bill declined to talk to Roger about the contents of the will. Bill’s account of this meeting is inconsistent with Roger’s account. Bill also puts it in 2001. He says at the time of the discussion, Ted’s will was his 1999 will. That seems unlikely to me, because Charles was the executor under Ted’s 1999 will. Bill became executor under Ted’s 2002 will. In my view, it is likely that was the will about which Roger was asking Ted. It also seems likely that discussion took place in or after May 2002.

23. At Christmas 2003, Ted had Christmas lunch with Roger’s family in Brisbane.  Ted was anxious and said that Bill would be upset with him for being there.

24. In early 2005, Marguerite moved back to Queensland. She was then intending stay with Ted, at least initially.  However he cancelled the arrangement at the last moment. Instead, she rented a house in D’Aguilar not far away. 

25. However, she did not see Ted much. According to Marguerite, Ted told her to stay away. Further, she says that was because Bill did not want her near the farm.

26. On 28 May 2006, Marguerite together with Lynette saw Ted. They took him to the D’Aguilar Pub for lunch.

27. After 2006, Marguerite’s contact with Ted was by phone. She said she had the impression she was not allowed anywhere near the farm.

28. She saw Ted in 2007 at a birthday party for Ted at the Affoo’s property.

29. From late 2007, Ted lived in a retirement village for a period. Marguerite saw him there on weekends. He returned to the farm for a short period. By early in 2008, he was so incapacitated that he could no longer live at the farm. In 2008, Ted spent the last months of his life in a retirement village and in hospital. The last few months were at the Caloundra Retirement Village. Marguerite visited him there two or three times. 

30. Ted died on 24 November 2008.

The Affoos

31. In 1988, Bill and Rhonda Affoo purchased the property adjoining the farm, 4150 D’Aguilar Highway.  At that time, Ted lived in Brisbane during the week and stayed at the farm on weekends. 

32. Bill and Rhonda developed an instant rapport with Ted as neighbours. In time, Ted’s relationship with them grew firmer and fonder. They had similar interests and over the years there followed a very strong friendship. Ted would work in their strawberry stall at the front of their property.

33. Over the years, Ted made a number of arrangements with Bill with respect to the use of the farm. Ted let Bill store an old caravan and tractor, a motor-mower, home brew kit, bee-hive equipment and other incidental items. Bill and Rhonda parked one of their vehicles in the carport at Ted’s property. Bill and Rhonda’s cattle and sheep grazed on Ted’s farm. On one occasion, Bill and Rhonda utilised a small paddock to grow crops.

34. Some years, Ted would rent his house on the farm during the Woodford Folk Festival. On other occasions, he rented the house to the police service as accommodation for relieving police. Bill and Rhonda helped him during those periods.

35. Bill and Rhonda had open house morning tea with their neighbours most Saturdays. Ted was one of those. From 2001, Joe and Wendy McKeown who purchased 4139 D’Aguilar Highway were others.

36. Irene was not included in these relationships. She did not visit or stay at the farm.

Irene’s death and consequential change

37. In August 2003, Irene died. Ted relocated permanently to the farm. From then, his relationship with the Affoos became even closer.

38. Irene’s death had a number of other effects. Both Bill and Rhonda say that Ted missed her greatly.

39. Further, the applicants say that from Irene’s death the relationship between the applicants and Ted’s other children, on the one hand, and Bill and Rhonda on the other hand, became strained.

40. However, there was a problem of some kind even before then. On 6 March 1999, Ted had made a will leaving his interest in the Ferny Hills residence to Irene and the residue of his estate to Charles “for him to use according to his conscience”. Charles understood this to be for him to hold on behalf of himself and his siblings, as Ted has expressed that wish. Roger recalled Ted referring to the will and to his children’s entitlement under it to the farm, on numerous occasions.

41. However, on 25 May 2002, Ted made a new will. He appointed Bill as his executor instead of Charles. He left a car that he owned to Rhonda, $200 each to his surviving children and the residue of his estate to Irene. He provided that should a beneficiary under his will contest it they were to be excluded from any bequest. Plainly, he meant his surviving children.

42. What were the cause and circumstances of this change in Ted’s testamentary intention? The witnesses to the will were Audrey Colby and TA Berrecloth, neighbours of Ted. Bill says he had nothing to do with it, except that Ted produced the will at a Saturday morning tea at Bill and Rhonda’s house and asked two other neighbours who were present to help him execute the document. It appears that Ted had a stroke in about 1998. In October 2004, he told Dr Glenys Berry, a medical practitioner examining him for mental capacity that he made the 2002 will because his children were going to have him committed.  He wanted to give all his assets to his wife.  Ted’s version in 2004 may have been mistaken.  It is only evidence of Ted’s belief or reasons at the relevant time.  There was no evidence to suggest that any of Ted’s children were in fact planning to have him committed or saying so. But something made Ted attempt to disinherit his children in 2002, before Irene died or he had moved to live at the farm full time.  The reasons why do not otherwise emerge from the evidence. 

43. Returning to 2003, Ted was disappointed by Irene’s will. He had thought that he owned some assets with Irene jointly, including the Ferny Hills residence. As it turned out, they were in Irene’s name. Under her will, they were given to charity.

44. Ted contested his lack of entitlement under Irene’s will. In late 2003, he brought an application under s 41 of the Succession Act 1981 (Qld).  In late November 2004, a settlement was reached with the Public Trustee as executor.  At that time, Ted lacked capacity to agree to the settlement.  The settlement therefore required court sanction but that did not occur.  No order of sanction or order disposing of Ted’s claim against Irene’s estate was made before Ted’s death in late 2008.  The settlement agreement and Ted’s claim against Irene’s estate both failed because of that.^[1]   Ted’s estate then made a claim against Ted’s lawyers.  That claim has now been settled and the settlement sum is now part of Ted’s estate.

45. Following Irene’s death, one day Joe and Wendy McKeown were sitting on Ted’s verandah. Ted said he wanted to give his property to Bill. He said Irene did not leave him anything and he was not leaving his children anything and that he was giving it all to Bill because he was the only one that had looked after him.

46. On another day, which appears to have been before Irene’s death, Ted had a conversation with Kevin Thornton who then kept bees on Bill’s property. Ted told Mr Thornton that he wanted to give his property to Bill but he did not want any repercussions from his family and asked how Mr Thornton thought he could manage that.

47. It is of some significance that on 6 November 2003, Ted executed a form of enduring power of attorney under the Powers of Attorney Act 1988 (Qld) appointing Bill as his attorney for financial and personal/health matters beginning immediately.  Ted signed the enduring power of attorney in the presence of a lawyer, Anthony Michael Kingston, who executed the witnesses’ certificate.  Bill signed the power of attorney taking on the responsibility of executing the power, also on 6 November 2003. 

The second last will

48. Bill says that in late 2003 Ted appeared to become concerned about his long term care. He was then 88. Bill says Ted told him that Ted feared his family placing him in a care facility while he was still able to live in his own home. This is only evidence of Ted’s state of mind or belief. I also bear in mind that Bill is not a disinterested witness, in giving evidence of Ted saying so. However, Ted made other not dissimilar statements to both the McKeowns, as set out above, and to Dr Berry in late 2004, as set out below.

49. On 4 December 2003, Bill drove Ted to an appointment at the Caboolture Legal Centre. By this time, Ted was dealing with them in relation to his claim against Irene’s estate. But on 4 December 2003, Ted made a will prepared for him by the Caboolture Legal Centre. The will was witnessed by a legal secretary and receptionist at the Caboolture Legal Centre.

50. The will appointed Bill and Rhonda as executors. It left Ted’s motor vehicle to Rhonda and it left $200 to each of his surviving children. It left any shares held in his name to his surviving grandchildren. It left the farm to Bill “as trustee of the Somerset View Trust” and it left the residue to Bill.

51. The will recorded as well as follows:

“I HAVE SPECIFICALLY EXCLUDED my children from any substantial provision out of my estate due to the fact that I do not have a normal father/child relationship with them as I have had very limited sporadic contact with them for many years.” (emphasis in original)

52. At common law, this statement operates as a contemporaneous statement of Ted’s reasons or intention. It would not be evidence of the truth of the facts of his relationships with his children or of the extent of their contact,^[2] except for the effect of statute.^[3]

53. Charles thought his relationship with Ted was normal. Clearly, their meetings were infrequent. Charles said they spoke regularly on the phone.

54. Recognising the distance caused by the separation from the time Ted deserted his family, Roger would perhaps hold a more reserved view of his relationship with Ted.

55. Marguerite regarded her relationship with Ted as relatively normal. For the period from 1988 to 2002, they seem to have had regular meetings. However, it is true that their face to face contact from 2002 was infrequent, until Ted died.

56. Curiously, Ted told Dr Berry in November 2004 that Irene had written to his children telling them never to contact Ted and that was why he saw them only infrequently after the marriage. He told Dr Berry that he did not find this out until after Irene died.  There was no evidence whether those were true facts.  But they were apparently Ted’s belief at the time.  Such a belief would seem inconsistent with Ted’s denunciation of his relationship with his children as not “normal” in his will made on 4 December 2003.  Perhaps this is an instance of Ted fashioning his view or response according to the needs or advantages of the circumstances as he saw them from time to time. 

57. However that may be, it is plain that Ted’s dependence on Bill and Rhonda was increasing. It was in that context that he moved in 2004 to ensure that Bill received the farm and whatever benefit by way of bounty he could leave under his will.

The 2004 transfers and last will

58. One puzzling feature of the will dated 4 December 2003 is that Ted left the farm to Bill “as trustee for the Somerset View Trust”. In fact, the Somerset View Trust was settled on 23 February 2004. The settlor was Paul Williams Scales who was an accountant and financial planner for the Affoos. The trustees were Bill’s sons. The initial sum settled was $10.00.

59. Mr Scales was consulted by Bill and Ted. Mr Scales was unable to say the date of the consultation. However, he placed it in 2004. At the time of the consultation, it is clear that Ted and Bill must have discussed Ted leaving or transferring the farm to Bill. Mr Scales advised Bill that his pension entitlement would be negatively affected if Ted gave him the farm. The way around that was for Ted to transfer the farm to a trust. That is why the Somerset View Trust was constituted.

60. It seems likely that whoever completed the details of the beneficiaries under the Somerset View Trust deed made a mistake. The definition of “eligible beneficiaries” is intended to operate by reference to seven classes of beneficiary. The first class is intended to be the primary beneficiaries or beneficiary. Instead of inserting the names of Bill’s sons in the provision for primary beneficiaries it appears that whoever completed the trust deed form put their name in the wrong place two lines above. In any event, assuming that the intention was to provide that Bill’s sons would be the primary beneficiaries the second class of beneficiaries includes the parent’s of the primary beneficiaries. It thereby includes Bill and Rhonda. One wonders whether that was how Ted thought of the transfer that was to be made.

61. Thus, the description of Bill in Ted’s will dated 4 December 2003 as trustee of the Somerset View Trust was an error. First, there was no trust of that name constituted on 4 December 2003. Secondly, when the Somerset View Trust was settled, Bill was not the trustee. Bill claimed no knowledge of how Ted’s will dated 4 December 2003 came to refer to him as “trustee for the Somerset View Trust”. But the answer must be that Ted and Bill had discussed Bill receiving the farm as a gift and that it should be transferred to a trust to protect Bill’s pension. So, the most likely inference is that they had consulted Mr Scales or someone else who told them that before Ted made his will dated 4 December 2003.

62. On 11 March 2004, Ted made his last will. It was prepared by JM Parker & Co Solicitors. They were the Affoos’ solicitors. Bill and Rhonda were made executors. Bill left his motor vehicle to Rhonda. He left $200 to each of his children absolutely. He left his shares to his grandchildren. He left the residue to Bill. The substance of the last will was the same as the will dated 4 December 2003, except that the gift of the farm to Bill as trustee for the Somerset View Trust was deleted. In my view, that was done because Ted’s intention was to transfer the farm to Bill by way of gift during his life in a way that it would not pass under his will.

63. On 2 March 2004, consistently with that view in part, Ted executed a transfer of a 1/100^ths interest in the farm to Bill’s sons as trustees for a stated consideration of $4,500.  The transfer was executed on behalf of Bill’s sons as transferees by Joseph Michael Parker, a solicitor.  He was not called to explain the transaction.  I infer that the intention may have been to transfer that proportion of the farm to Bill’s sons as co-owners so that on Ted’s death the other 99/100^ths would pass on survivorship. However, the transfer was not made to them as joint tenants with Ted.^[4] By June 2004, it appears that someone had decided that was not good enough to transfer the farm to the trust.  It is unnecessary to speculate further about some of the obvious legal reasons why that was so.

64. On 24 June 2004, Ted transferred the other 99/100^ths interest to Bill’s sons.  The consideration was stated to be $247,500.  The effect of the registration of both instruments of transfer was that Bill’s sons became registered proprietors or owners of the indefeasible title to the farm. 

65. Also on 24 June 2004, Bill’s sons transferred a life estate in the farm to Ted. The consideration was expressed to be $250,000. The effect of the registration of the instrument of transfer was the Ted became the registered proprietor of a life estate for the farm.

66. There was never any intention that Ted contract to sell the farm to Bill’s sons or that Bill’s sons contract to sell a life estate back to Ted. The statements of consideration were done for stamp duty purposes only. It is unnecessary to detail the amounts or manner in which the instruments were ultimately assessed to duty. Only two further points need to be mentioned. First, throughout these dealings the solicitors involved, JM Parker & Co, were acting for the Affoos. Second, the Affoos paid the relevant duty. In 2004, JM Parker & Co was situated at an address in Margate.  This proceeding was conducted on behalf of Bill and Rhonda as first respondents by Parker Family Law situated at an address in Redcliffe. 

67. As a result of these transactions, on the face of it, Ted had achieved an outcome where he had confirmed the disinheritance of all of his children. Also, he had confirmed his decision to substitute Bill or Bill’s family as the recipient of the farm consequent upon Irene’s death. Third, he had entrenched that outcome by transferring the farm to Bill’s sons as trustees of the Somerset View Trust so that it would not be available to meet any claim made on Ted’s estate by his children.

68. In 2004, Ted was a patient of Mark Weller, a medical practitioner in general practice in Kilcoy. Ted had ongoing medical needs for which he was regularly prescribed Warfarin. He consulted Dr Weller monthly.

69. On 8 June 2004, Ted consulted Dr Weller. On that day, he advised Dr Weller of his intention to transfer the farm to Bill and Rhonda. In fact, by then, he had already transferred a 1/100^th interest to Bill’s sons as trustees.  Bill was also the principal beneficiary under his will.  Ted was also about to transfer the remaining 99/100^ths interest to Bill.  No evidence was given at the trial about what legal advice either Ted or Bill were receiving at the time.  But there must have been a lawyer in the background somewhere.

70. Dr Blair advised Ted to undergo assessment regarding his capacity to make the transfer. Dr Blair referred Ted to Dr Glenise Berry, a geriatrician.  Dr Berry anticipated conflict over Ted’s will or any transfer he made. 

71. Ted saw Dr Berry on 25 October 2004.  She noted that his medical history included mild cognitive impairment with mild memory impairment. Ted informed her that the reason for his attendance was to ensure that his will would not be challenged.  Dr Berry recorded that on interview Ted told her that since he had moved to the farm after Irene’s death Bill and Rhonda had been very supportive of him, taking him everywhere he needs to go, such as shopping and business affairs.  They also provided meals for the evening and arranged house keeping for him in June 2004.  He referred to the claim he was making against the Public Trustee as executor of his wife’s will but was unable to say what solicitor was involved at Caboolture. He told her that he had “gifted the property to Mr Affoo on the condition that they look after me for the rest of my life”.  Dr Berry was of the opinion that in all probability Ted had sufficient capacity for the validity of his will dated 11 March 2004 and sufficient business acumen to transfer his property to Bill.  She noted that he had a pervasive and expressed desire to do so.  Presciently, she opined that she was sure that the issue of undue influence would arise.  But she was of the view that his mild cognitive impairment did not affect his consistent and persistent wishes.  Her view was that those wishes were based on a lack of relationship with his children for the last 35 years. 

72. I note that on Dr Berry’s assessment, Ted had no idea about what an enduring power of attorney was or understanding of how an enduring power of attorney would come into effect when he lost capacity.

73. By these steps, Ted and Bill did what they could both to carry out Ted’s wish to disinherit his children and to protect his estate against any claim they may make after Ted’s death. Surprisingly, given the involvement of lawyers, no one appears to have taken account of the effect of s 87 of the Powers of Attorney Act 1998 (Qld). 

From November 2004 to Ted’s death

74. In November 2004, Ted’s claim against Irene’s estate was compromised. On 29 November 2004, Ted saw Dr Berry again with a view to her reporting on his capacity to understand the terms of settlement.  Ted knew the purpose of the visit but did not have any memory of any of the details of the settlement.  Ted’s memory and understanding of the events was so poor that Dr Berry doubted his capacity to adequately comprehend the terms of the settlement or any discussions which may have been held at that time.  Medically, at that time, he fulfilled the criteria of mild cognitive impairment, not dementia.  But in probability he would not have had sufficient executive functioning to understand the legal nature of the settlement.  She recommended that an administrator be appointed, presumably for Ted’s financial matters.^[5]  That advice was not followed. 

75. In March 2005, Marguerite was planning to relocate from Moree to Queensland.  She arranged to go and live with Ted.  At the last minute, Ted backed out of the arrangement.  He told Marguerite on the telephone that he had signed the property over to the neighbours (meaning the Affoos) and the neighbours did not want her anywhere near the place.  Marguerite reminded Ted that she had arranged to go to live with him beforehand consequent upon her visiting him in October 2004.  He said that he was sorry but he could not help. 

76. Marguerite called both Charles and Roger. Charles telephoned Ted. He asked Ted if he would reconsider his refusal to have Marguerite stay. Ted said that the new owners will not allow it and there was nothing he could do about it and that he was sorry. Charles called him again. He asked Ted whether he had sold the property to the Affoos. Ted said yes. Charles said this is the second time you have let your kids down. Ted said he had not thought about that. He was sorry. Ted said to Charles: “…you better fix it”.

77. On the evidence, this was the first time that Ted told any of his children that he had transferred his property to Bill or Bill’s family. It does not appear from the evidence that he ever told them that he had made Bill the principal beneficiary under his will.

78. In 2005 and onwards, Ted’s condition continued to deteriorate. His short term memory and cognitive impairment was such that Bill and Rhonda put signs around his kitchen to remind him that his lunch was in the fridge and to eat it and how to warm up instant porridge in the microwave.

79. As Bill described it, from the time Ted went to live at the farm, his reliance on Bill and Rhonda was heavy and increased. Almost all his social contact was with or through them. His physical needs in terms of transport, shopping, meal preparation and the like depended on them. He went to their family gatherings, on outings with them and he holidayed with them. Ted was 24 years older than Bill. At times people mistook Bill for Ted’s son. They laughed about it. But the description of Bill and Rhonda’s care for Ted as the sort of care that loving children would give to an aged and failing parent who lives next door is not inapt. In truth, whether or not Ted had a strong and independent spirit, he was dependant on Bill and Rhonda and he must have known it.

80. From 2005, if not before, Ted’s contact with his children was extremely infrequent. Marguerite lived not far away but felt unwelcome, with some justification. It seems clear that Bill did not like her much. It also seems clear that she and Ted were not getting along all that well.

81. This is not surprising. Ted had cut himself off by deliberately disinheriting his children and doing it secretly. The relationship between Ted and his children was naturally strained. The Affoos did not see the conflict in their position. There was a spiteful exchange of emails between Lynette and Rhonda. The Affoos saw no reason why Ted should have an obligation of any kind to his children. They were close to Ted and hearing his side of things. They were not there in 1962 and for the following nine or ten years when Ted completely deserted his children and his responsibilities as they grew up. Perhaps they also did not know about Ted’s view that Irene had deliberately tried to keep Ted’s children at a distance. Perhaps Ted did not tell them that side of things.

82. Bill and Rhonda continued to care for Ted through 2006 to 2008 as his health failed. Eventually, at the end of 2007, Ted went into respite care while Bill was ill. Early in 2008, Ted was transferred into fulltime care which continued until he died.

83. It will be recalled that Bill and Rhonda are Ted’s executors. Except for the $200 bequests to each of Ted’s children and the bequest to Ted’s grandchildren of shares valued at about $45,000, they are entitled to all of Ted’s assets under his will. As well, they are beneficiaries of the Somerset View Trust to which ted transferred the farm.

84. At the trial of the proceeding, they sought to make something of the contention that Ted’s children did not show enough interest in his funeral arrangements or in attending his funeral. Given the circumstances under which Ted had effectively excluded his children with Bill and Rhonda’s support and Bill’s direct involvement, it seemed odd to me that Bill and Rhonda sought to make a forensic advantage of the children’s distance at that time. In my view, this reflected their determination to hang onto what they had received from Ted.

Undue influence

85. Bill and Rhonda and Bill’s sons as trustees of the Somerset View Trust all accept that s 87 of the Powers of Attorney Act 1998 (Qld) applies to the transfer of the interests in the farm that Ted made to the sons as trustees.  The consequence is that there is a presumption in favour of Ted’s estate that he was induced to enter into the transaction by Bill’s undue influence.  Section 87 operates to create a statutory category of presumptive relationship of undue influence in the case of a gift by a principal to an attorney.  The consequence of the presumption of undue influence is left to the operation of the rules of equity.

86. Both parties relied on Smith v Glegg.^[6]  That was a case of the statutory presumption of undue influence under s 87.  In particular Philip McMurdo J said:

“The defendant must show that this transaction ‘cannot be ascribed to the inequality between them which must arise from (her) stronger position’ and that ‘the gift was the independent and well-understood act of a (woman) in a position to exercise a free judgment based on information as full as that of the donee’: Johnson v Buttress (1936) 56 C.L.R. 113, 134-5.”^[7]

87. Of course, there are many cases in equity dealing with circumstances in which a donee under a presumption of undue influence seeks to rebut the presumption on the facts of the case. A useful analysis of a number of the cases appears in Union Fidelity Trustee Co. of Australia Limited v Gibson.^[8]  In that case Gillard J said, perhaps colourfully, that where the donor is dead and the donee alone is giving evidence of the gift the law requires that as evidence it should be thoroughly and carefully sifted in a state of suspicion. 

88. A troubling feature of the present case is that, throughout the relevant time, it appears that the Affoos had the benefit of the advice of their lawyers and financial advisors. Not only that, it seems that Ted dealt with those lawyers and financial advisors as well. No one seems to have thought that it would be necessary for Ted to get independent advice. The most that was done was to take Ted to doctors to assess his mental health and to record his determination. That was not the relevant question when it comes to undue influence.

89. Bill and Rhonda’s defence specifically alleges that Ted made the transactions of his own volition “after his having received advice from Mr Scales an accountant and Mr Oakley a solicitor”. As the findings above demonstrate, Mr Scales was the Affoo’s accountant and financial advisor. He could not give Ted independent advice. Mr Oakley was not called. No effort was made to identify in evidence who he was, except a statement in Bill’s affidavit that he was a solicitor. There is just no evidence that independent advice was given to Ted, notwithstanding that the Affoos received legal and accounting advice throughout the relevant period to protect their interests. Bill says he urged Ted to get his own advice but Ted refused to do so. I do not accept that evidence. It is not otherwise supported.

90. Further, in my view, the transfers of Ted’s interests in the farm were made deliberately without telling Ted’s children. Bill knew this. The point for present purposes is not whether Ted wished to keep it secret. It seems quite likely to me that he did, so that he could benefit Bill at the children’s expense without having them confront him about it. This is notwithstanding that he had earlier told them that he was leaving the farm to them.

91. I do not infer, however, that Ted failing to tell his children or Bill’s complicity in that were the product of Bill and Rhonda overbearing Ted. No doubt that is how some of Ted’s children, particularly Marguerite, would like to think of it. To some extent, any view on this point must be a matter of broad inference. However, even the short account of Ted’s life given in evidence at the trial showed that on more than one occasion he avoided his responsibilities without much thought about the consequences for others. Charles challenge to Ted on the telephone in March 2005 had the ring of truth. It was the second occasion when Ted had let his children down. Perhaps a difference between Charles and Ted was that Charles had the character to discuss it directly. It seems to me that Ted may have preferred to avoid facing up to things which might put him in a bad light. I do not make those observations gratuitously, so as to blacken Ted’s name after his death. I only make them because in my view it would be wrong to saddle Bill and Rhonda with the responsibility for Ted’s weaknesses of character.

92. Returning to the question whether the defendant’s have discharged the onus of proving that the transfers where not made under the inducement of undue influence: “…it is undoubtedly true that in many authorities the presence or absence of independent advice has had a great influence on the court’s decision on this vital question”.^[9]

93. As the majority of the High Court of Australia said in Bridgewater v Leahy:

“…his Honour concluded that he was ‘satisfied that had [the disponor] 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.  There the focus is upon the quality of the assent of the disponor to the transaction.”^[10] (footnotes omitted)

94. In Hunter v Atkins,^[11] Lord Brougham LC said:

“…where the only relation between the parties is that of friendly habits or habitual reliance on advice and assistance, accompanied with partial employment in doing some act of business, care must be taken that no undue advantage be made of the influence thus acquired.  The limits of natural and often unavoidable kindness with its effects, and of undue influence exercised or unfair advantage taken, cannot be more rigorously defined.  Nor is it, perhaps, advisable that any strict rule should be laid down – any precise line drawn.” (footnotes omitted)

95. Another factor identified in the cases is that: “[i]t will be found that in none of those relations [of presumed undue influence] is it natural to expect the one party to give property to the other. That is to say, the character of relation itself is never enough to explain the transaction and to account for it without suspicion of confidence abused.”^[12]

96. It can be unhelpful to multiply examples of cases in a context like this. The question whether the presumption is rebutted is one of fact, based on the circumstances of the case at hand. However, a useful comparison might be attempted with the decision of the High Court of Australia in Watkins v Combes.^[13] In that case, the elderly donor transferred her house property to friends who were living with her, in exchange for her expectation and their promises that they would care and provided for her during the remainder of her life.  The plurality said:

“…we think it cannot be said that at the time when she executed the transfer now in question she was incompetent to transact business. But, assuming that she was competent to transact business, we have to consider whether, in view of the relation which existed between her and the defendants, this transfer or the gift of £100 should be allowed to stand. We have come to the conclusion that during her residence with the defendants after her return from Western Australia Mrs. Reynolds's mind was entirely under the dominion of the defendants, and that she was therefore, as they well knew, incapable of dealing with them on a footing of equality. A disposition of property by her to either of them, whether voluntary or for valuable consideration, made while this relation continued and without the benefit of independent advice, cannot stand.

The defendants have failed to prove either that Mrs. Reynolds was removed from their influence at the time of the transaction impeached or that she had independent advice in connection with that transaction. Mr. Ife acted for both Mrs. Reynolds and the defendants in the transaction, and obtained his instructions originally from the defendant Daniel Watkins, and, although he discussed the matter with Mrs. Reynolds and gave her certain advice with regard to the form of the documents, it is impossible to treat his advice as ‘independent’ within the meaning of the rule.”^[14]

97. The defendants sought to establish by their evidence that Ted was fixed in his views, determined, and not likely to change his mind once he formed a view. All of this was presumably intended to show his independence and “a footing of equality”. But against the objective facts, the attempt took on an unreal aspect. At the time of the transfers, Ted was 89, recently widowed, and without other close by emotional supports, except for Bill and Rhonda. He was already physically dependent upon them and that was increasing. He was probably aware that his short term memory was failing or had failed. His concern was to live out his days on the farm. His hope and intention, in doing so, were to persuade Bill and Rhonda, as close friends, to continue and increase their support for him.

98. In those circumstances, for Bill to take a gift of a large amount from Ted was on its face unconscientious because Bill was in a position where great confidence was reposed in him by Ted. Bill, with the benefit of legal advice as well as financial advice, ought to have realised that it was necessary to establish that Ted’s decision was made with the benefit of independent advice. That Ted was doing it apparently without telling his children made that even more important.

99. The strongest countervailing circumstance in the facts as I have found them to be above was that Ted had the intention to disinherit his children from at least May 2002. In the end, the reasons why Ted did that were not made very clear. He appears to have thought that his children had some intention to have him committed. There is no suggestion that there was any basis for that belief. It indicates unfounded suspicion on Ted’s part, perhaps even some paranoia. Unless there was some basis for the belief, a wise friend might have counselled Ted against it. It does not appear that Bill or Rhonda did that. Perhaps understandably, Bill supported Ted when Roger confronted Ted about whether he had changed his will.

100. However, despite Ted’s 2002 change of heart so as to disinherit his children, I am not prepared to find in the circumstances, as previously described, that the defendants discharged their onus to rebut the presumption of undue influence.

Section 41

101. Following the methodology affirmed by the High Court in Singer v Berghouse,^[15] the two stage process under s 41 starts with a decision whether the relevant applicant has been left without adequate provision for his or her proper maintenance or support.  If the answer is “yes”, the second stage enquires what provision should be made.  At the first stage, the date at which the person’s eligibility to make the claim is to be determined is the date of the death of the testator.  In this case, that was at the end of 2008.  To some extent, the applicants’ affidavits address that question, because they were prepared in August 2009. 

102. Charles divorced about six years ago. He was unemployed at the time of the trial and had been unemployed for some time. He is now the owner of Unit 1, 10 Balmoral Place, Balmoral, Newcastle.  He purchased it in 2013.  The purchase price was $308,000.  The mortgage is $268,000.  He said he had approximately $15,000 at the time of the trial.  At one point, he had $112,000 in other assets including superannuation of $65,000.  He had other liabilities in the sum of $108,000.  It was not clear whether any of those assets had been realised to buy Unit 1.

103. Marguerite’s marital status was unclear at the trial. She was unemployed at the time of the trial. Her assets totalled $60,000 approximately. Her liabilities were approximately $39,000. She does not own or appear to own a home.

104. Roger is married to a successful architect. He had casual contract work on a renovation project at the time of the trial. The contract period was 10 weeks with an income estimate of approximately $10,000. He then had no other work on the horizon. His assets were about $435,000 including $350,000 attributed to his home. His liabilities were approximately $188,000, including $160,000 owed on a mortgage.

105. There was little information provided to the Court of the applicants’ recurrent needs or living expenses.

106. The value of the estate is unclear. There are two reasons. First, neither the applicants nor the executors called evidence of the value of the farm. Secondly, Bill’s affidavit, as executor, as to the assets and liabilities of the estate was made on 16 October 2009. No update was provided after that time. In opening the case for the applicants, their counsel said that an additional asset of the estate is the sum of $100,000, received from a negligence claim that the estate brought against the Caboolture Legal Centre for damages for the loss of Ted’s claim against the estate of Irene. Using the 2009 values, otherwise, in round terms, the value of the estate is approximately $150,000. To that must be added the value of the farm. There is no other evidence of liabilities.

107. From the foregoing, it can be seen that there are some significant deficiencies in the evidence concerning the relevant values.

108. The answer to the question whether the provision made from the estate is adequate requires the court to take into account of the circumstances existing at the date of the order. It is trite that the personal representative is required to inform the court on affidavit as to the value of the estate. As a matter of commonsense, a second affidavit updating the position as at the time of the final hearing is usually also required.^[16]

109. In the present case, the affidavits of the applicants are spare, because they do not descend into any evidence about their recurring needs at Ted’s death or later. However, the failure of Bill and Rhonda as executors to provide any updated evidence to the value of the estate or any evidence of the value of the farm mean that it is not possible to proceed to a final determination of the applicants’ claims for provision.

110. The inadequacy of the evidence is reflected in the pleadings and submissions of the parties. The applicants may not have been able to file evidence as to the value of the farm. Their statement of claim alleges that the estate’s value includes the value of the farm but did not identify an amount of that value. The claim was simply made for adequate provision. Bill and Rhonda as executors simply denied the allegations. The applicants submitted that, excluding the specific bequest in the will to Ted’s grandchildren, the applicants should be entitled to 75 percent of the estate, leaving Bill and Rhonda with 25 percent.

111. The executors submitted that any order must reflect the contributions Bill and Rhonda made to assisting Ted. They acknowledged that the applicants might have a claim in the circumstances. They submitted that an apportionment of the estate of one third to the applicants and two thirds to Bill and Rhonda might be appropriate.

112. In my view, in the absence of evidence to the value of the farm and the impact of that value on the estate as a whole, there is no rational basis on which to make a decision as to what provision ought to be made from the estate.

113. Not only that, because the applicants’ evidence does not deal with the extent of their ongoing needs, it is better to express no final conclusion on the question whether Charles and Roger as adult sons and Marguerite as an adult daughter have established that they had been left without adequate provision for their proper maintenance and support.

114. For that reason, and because evidence of the value of the farm is a responsibility that lies at Bill and Rhonda’s door as executors, it seems to me that there should be a direction for the filing of further evidence as to that question before any final order is made on the application for relief under s 41.

115. I will hear the parties as to the appropriate further directions as to the filing of evidence.

Costs

116. As appears from the foregoing, the substantial issue litigated by the parties at the trial was the question of undue influence in connection with the transfers of the farm. On that claim, the applicants have been successful. The second respondents, as the transferees from Ted, have been unsuccessful. Strictly speaking, the first respondents were not necessary parties to that claim. It was a claim made on behalf of the estate, which they represent, but it was made by the applicants on behalf of the estate against the second respondents. Their opposition to that claim reflected their interest as beneficiaries under the trust of which the second respondents are the trustees.

117. In my view, the costs of the undue influence claim should follow the event. Further, an order for those costs should be made against both the first and second respondents. Because the first respondents’ defence of the undue influence claim was not made on behalf of the estate, the first respondents should not have their costs of that defence paid out of the estate.

118. The second respondents sought an order that the first respondents pay their costs. No reason was advanced for that order as between the second respondents and first respondents. Accordingly, in my view, the appropriate order for costs on the applicants’ claim to invalidate the transfers of the farm for undue influence is that the first and second respondents pay the applicant’s costs of that claim to be assessed.

119. It would be premature to make any order for costs of the family provision claims, as those claims have not yet been resolved.