Birtwell v Sands [2012] QSC 396

SUPREME COURT OF QUEENSLAND CITATION: Birtwell v Sands [2012] QSC 396 PARTIES: KEITH BIRTWELL as administrator for a limited purpose of the ESTATE OF LINDSAY BIRTWELL, deceased (plaintiff) v DONNA ELIZABETH SANDS (first defendant) and PETER JON SANDS (second defendant) and PERPETUAL LIMITED ACN 000 431 827 (third defendant) FILE NO: BS1124/09 DIVISION: Trial PROCEEDING: Trial DELIVERED ON: 10 December 2012 DELIVERED AT: Brisbane HEARING DATES: 30, 31 July, 1 August 2012 JUDGE: Margaret Wilson J ORDER: CATCHWORDS: EQUITY – TRUSTS AND TRUSTEES – IMPLIED TRUSTS – CONSTRUCTIVE AND RESULTING TRUSTS – REBUTTAL OF IMPLICATION – PRESUMPTION OF ADVANCEMENT – where deceased purchased property and registered a joint tenancy with the first defendant (his daughter) – where deceased‘s son obtained limited grant of letters of administration for purpose of continuing claim – where plaintiff seeks declaration that first defendant holds her interest in the land and the improvements on it on trust for her late father‘s estate – where plaintiff seeks order that first defendant transfer her interest in the land to him as administrator of their late father‘s estate – where defendants counterclaim a declaration that to the extent that the plaintiff is successful he holds the land on trust for them – whether the first defendant holds her interest in the land on resulting trust for the estate EQUITY – UNDUE INFLUENCE AND DURESS – -- 1 of 31 -- 2 PRESUMPTION OF UNDUE INFLUENCE FROM ENDURING POWER OF ATTORNEY – where in the alternative the plaintiff seeks relief in equity based on undue influence and/or unconscionable conduct – where plaintiff had given first defendant an enduring power of attorney – where plaintiff alleges that the deceased was induced to include the first defendant as joint tenant by certain representations she made to him – whether alleged representations were proved – whether presumption of undue influence had been rebutted – whether the plaintiff acted freely and voluntarily in the acquisition of the land and the making of an interest only loan, and not as a result of undue influence by the first defendant EQUITY – UNDUE INFLUENCE AND DURESS – IMPLIED TRUSTS – CONSTRUCTIVE TRUSTS – UNCONSCIONABLE CONDUCT AND UNCONSCIENTIOUS DEALING – whether the plaintiff was at a serious disadvantage vis-à-vis the first defendant – whether the presumption of undue influence has been rebutted – whether the first defendant‘s conduct in signing certain documents without any express or implied qualification amounts to unconscientious dealing Evidence Act 1977 (Qld), s 92 Powers of Attorney Act 1988 (Qld), s 87 Blomley v Ryan (1956) 99 CLR 362, cited. Bridgewater v Leahy (1998) 194 CLR 457, cited. Calverley v Green (1984) 155 CLR 242, cited. Muschinski v Dodds (1985) 160 CLR 583, cited. Napier v Public Trustee (WA)(1980) 55 ALJR 1, cited. R v G [1998] 1 Qd R 659, cited. Smith v Glegg [2005] 1 Qd R 561, followed. COUNSEL: C C Heyworth-Smith for the plaintiff M E Pope for the first and second defendants SOLICITORS: Johnsons for the plaintiff Derek Geddes Lawyers for the first and second defendants [1] MARGARET WILSON J: This proceeding was commenced on 3 February 2009 by Lindsay Birtwell (―Mr Birtwell‖) as plaintiff against his daughter Donna Elizabeth Sands as first defendant, his son-in-law Peter Jon Sands as second defendant and Perpetual Limited as third defendant. [2] Mr Birtwell died later that year, and the claim was continued by his son Keith Birtwell who obtained a limited grant of letters of administration. I shall refer to Mr Keith Birtwell as ―the plaintiff‖. -- 2 of 31 -- 3 [3] The plaintiff seeks a declaration that the first defendant holds her interest in land at 15 Rosalie Court, Gaven on the Gold Coast (―the Rosalie Court land‖) and the improvements on it on trust for Mr Birtwell‘s estate, and an order directing her to transfer her interest in the land to the plaintiff as administrator of Mr Birtwell‘s estate. [4] At trial, no relief was sought against the second defendant. [5] The claim against the third defendant was discontinued on 22 December 2010. [6] The first and second defendants deny that the land is held on trust for Mr Birtwell‘s estate. They say they effected certain improvements to the land at their expense, and to the extent (if any) that the plaintiff succeeds in his claim, they counterclaim a declaration that he holds the land on trust for them to the extent declared by the Court. The acquisition and improvement of the Rosalie Court land [7] In December 2001 the Rosalie Court land was acquired in the names of Mr Birtwell and the first defendant as joint tenants. Mr Birtwell provided all of the purchase price, which was $140,000. [8] The Rosalie Court land was vacant land. It was an irregularly shaped block with a narrow access way to Rosalie Court. It opened out to a wider area, and was in part immediately behind the property at 207 Banyula Drive, where the first and second defendants lived. There was a gully running through two parts of it.1 Until earthworks in the nature of cutting and filling were carried out to create level areas, it was ―basically.. a ridge of a hill that contoured north and south.‖2 [9] In 2003 the first and second defendants constructed a machinery shed on the Rosalie Court land. There was a residential accommodation unit attached to the shed. They borrowed money from Suncorp for that purpose. The loan was secured by a mortgage over the land granted by Mr Birtwell and the first defendant, and guarantees and indemnities by Mr Birtwell and Plant Delivery Services Pty Ltd (―Plant Delivery Services‖). The first and second defendants repaid that loan in full. [10] A dwelling house was constructed on the Rosalie Court land between late 2005 and June 2006. Mr Birtwell paid the full amount charged by the builder ($169,405.00). The first and second defendants claim that they paid additional funds for pylons for the slab, the enviro-cycle system, installation of a power line from the road, installation of a water main from the road, ancillary items such as fencing, a retaining wall and fill, and construction of a road to the dwelling. [11] On 18 December 2009 the Rosalie Court land was transmitted to the first defendant as surviving joint tenant, and she remains the registered owner of it. [12] There is evidence that as at 17 July 2012 the market value of the land and improvements was $670,000.3 1 Evidence of first defendant: transcript 31 July 2012 page 2-11. 2 Evidence of second defendant: transcript 31 July 2012 pages 2-83 – 2-84. 3 Exhibit 23: report of Ian Brosnan, certified practising valuer. -- 3 of 31 -- 4 Narrative [13] Mr Birtwell was an elderly widower, born in 1926. He had married three times, his third wife having died before the events the subject of this litigation. He had seven children, but only the first defendant maintained any relationship with him. She held an enduring power of attorney for him dated 17 February 1997. [14] Mr Birtwell was a former policeman. After leaving the Police Service, he drove taxis and owned two taxi licences. By the time of the events the subject of this litigation he still owned one of those licences. [15] He lived in a house at Corinda, which he sold in late 2001 for $280,000. After selling that house, he bought a caravan. He put it in the first and second defendants‘ backyard at 207 Banyula Drive, Gaven, and lived there. [16] Mr Birtwell also had an interest in an investment property – a home unit at Coorparoo which was tenanted. After the tenants moved out, he lived there for a while. [17] The first and second defendants operated a horticultural transport business through their company Plant Delivery Services Pty Ltd. The second defendant attended to the management of the business, including the making of financial decisions, while the first defendant attended to the bookkeeping. The business was conducted from 207 Banyula Drive, and subsequently also from the Rosalie Court land. They used the Rosalie Court land as a depot, and parked large vehicles on it. [18] The machinery shed and attached accommodation unit was constructed in 2003. The first and second defendants‘ eldest daughter Emma married in late 2003. Her husband Scott Goldthorp worked for Plant Delivery Services. They moved into the accommodation unit. The shed was used for company purposes. [19] The first and second defendants also had three infant children, including a daughter XXX, who was born in 1994. XXX had a medical condition which required open- heart surgery more than once. [20] In June 2004 the second defendant underwent surgery. He had a series of major complications which prevented him from working. The first defendant cared for him, as well as the children, and tried to maintain the business. His medical expenses were high. Their own financial position and that of the company suffered badly. He has not worked since. [21] The Coorparoo unit was sold in 2005, and the proceeds were shared between Mr Birtwell and his wife‘s estate. After that, he went to live in the first and second defendants‘ house at Banyula Drive. [22] In about mid 2005 Mr Birtwell and Emma selected a project home to be built on the Rosalie Court land and occupied by Emma and her husband. [23] In about late June 2005 Mr Birtwell was charged with indecent dealing with XXX. [24] Mr Birtwell and the first defendant entered into a contract with a builder for the construction of the house. -- 4 of 31 -- 5 [25] Mr Birtwell pleaded guilty and was sentenced in December that year. He was imprisoned from 15 December 2005 to 14 September 2006. While he was in prison, he and the first defendant corresponded with each other; she attended to his business affairs; he executed a fresh enduring power of attorney appointing her as his attorney; and, using the power of attorney, she sold the taxi licence and paid the sale proceeds into his bank account. [26] The construction of the house was completed while Mr Birtwell was in prison. [27] Mr Birtwell wanted to take up residence in the accommodation unit attached to the shed upon his release from prison, but the first respondent refused to allow him to do so. [28] In 2006 the horticultural transport business was sold in two parts; since then, neither part of it has been conducted from the Rosalie Court land (or from 207 Banyula Drive). The first defendant (through Plant Delivery Services) became a consultant to the purchaser of one part of the business. [29] In late 2006 the first and second defendants borrowed $435,000 from the third defendant. Unbeknown to Mr Birtwell, the loan was secured by a registered mortgage over the Rosalie Court land. Although the mortgage was expressed to be given by Mr Birtwell and the first defendant (the registered owners of the land), the mortgagors‘ signatures were those of the first and second defendants. [30] The first and second defendants separated in May 2008 and were later divorced. [31] In about June 2008 Mr Birtwell first instructed Johnsons, solicitors, that he wanted to sell the Rosalie Court land. [32] In October 2008 Mr Birtwell was admitted to hospital suffering from a bowel virus. The first defendant visited him in hospital. [33] This proceeding was commenced on 3 February 2009. [34] At about the beginning of March 2009 Mr Birtwell suffered a stroke and was admitted to hospital. As a result of the stroke, he was incapable of managing his own affairs, and an order was made by the Guardianship and Administration Tribunal appointing the Public Trustee to do so. He died on 23 October 2009. [35] The debt to the third defendant was repaid in full by the first and second defendants and the mortgage was released early in the history of the proceeding. Mr Birtwell’s evidence [36] The plaintiff adduced evidence of statements Mr Birtwell made to his solicitors to prove his intention when the Rosalie Court land was acquired. These were admitted, without objection, pursuant to s 92 of the Evidence Act 1977. The ―statements‖ consisted of – (i) file notes made by Mr Ray Johnson and Mr Jeffrey Johnson with Mr Birtwell‘s knowledge prior to the commencement of this proceeding, but in preparation for it; -- 5 of 31 -- 6 (ii) a draft claim and statement of claim, prepared by Mr Jeffrey Johnson from information provided by Mr Birtwell, which had been read by Mr Birtwell who had not requested any changes to them. [37] The plaintiff relied also on evidence of Ms Katrina Pagey, a solicitor, of a telephone conversation she had with Mr Birtwell. She said that he would not have known that she was making notes and that she did not have any independent recollection of the conversation. But it was a note made in the ordinary course of her working day. There was no objection to its admission. However, she could not place it in context, and so her evidence is of little probative value. [38] Counsel for the plaintiff submitted that while these statements could not be the subject of cross-examination given Mr Birtwell‘s death, they were prepared in circumstances which spoke to their accuracy. She submitted that the information he provided remained consistent in the discussions with his solicitors and was provided and recorded in circumstances of ―formality‖ (adopting the expression of Macrossan CJ in R v G4). [39] It will be necessary to assess the credibility of Mr Birtwell as well as that of the first and second defendants. The circumstances in which he made the statements to his solicitors is a factor to be taken into account in making that assessment. [40] On 18 June 2008 Mr Birtwell told Mr Ray Johnson – (a) In late 2001 he sold his house at Corinda for approximately $280,000. (b) In late 2001 he and his daughter (the first defendant) purchased a property at 15 Rosalie Court, Gaven for $140,000, and despite their both being owners, he paid the full purchase price. (c) His daughter and son-in-law (the first and second defendants) were to pay him $200 per week in rent for their use of the property (emphasis added); (d) His daughter and son-in-law built a shed and residence [sic] on the Rosalie Court land. The shed was to be used in his daughter and son- in-law‘s business and he was to live in the residential accommodation; (e) He lived in a caravan on his daughter‘s property for about nine months and then moved into a unit he owned with his deceased wife at Coorparoo. (f) He sold the Coorparoo unit in 2005. His share of the sale proceeds was about $145,000 and the balance went to his wife‘s family. 4 [1998] 1 Qd R 659. -- 6 of 31 -- 7 (g) After that, it was agreed between him and his daughter that a house would be built on the Rosalie Court land and a contract with a builder was signed. (h) He was then charged with sexually assaulting his granddaughter, and was not able to reside at 15 Rosalie Court. He was sentenced on 15 December 2005 to three years imprisonment suspended after nine months. He was released from custody on 14 September 2006. (i) The house was paid for by him and completed in 2006. He paid $164,000 from his QPCU account for the construction. (j) His granddaughter paid $4,000 towards the septic system to be installed. (k) He wanted to convert his equity in the property into cash and said he was willing to sell to his daughter or sell by auction/private treaty. [41] On 2 July 2008 Mr Birtwell told Mr Ray Johnson – (a) One of the signatures on the mortgage to the third defendant was that of his daughter Donna (the first defendant). (b) The first defendant was [the donee of] his power of attorney while he was in prison, but he had formally revoked it since then. (c) The first and second defendants borrowed $85,000 to build the shed, and he knew that the Rosalie Court land was used as security for that loan and that he was a guarantor of it. (d) He was not aware that the Rosalie Court land was used as security for the $435,000 loan. [42] On 19 January 2009 Mr Birtwell told Mr Jeffrey Johnson – (a) He provided all funds for the property on the condition that he be permitted to reside in the shed which was built on it. (b) He confirmed that he was induced to enter into the arrangement to have his daughter‘s name on the property so that he could obtain the pension. (c) When he asked to reside in the shed, he was initially told ―Do what you want,‖ before being told, ―No‖. (d) His daughter and son-in-law operated a business out of the shed on his property. They also had an investment property up north where they grew bottle trees. He was unsure as to what activity went on in the shed. -- 7 of 31 -- 8 (e) The last communication he had with his daughter was when he was in hospital. She told him that she and her husband had separated and asked him to back off any legal proceedings. (f) His signature was not on the mortgage document, and he understood why the third defendant was being named as a defendant in the claim and statement of claim. (g) He understood Mr Johnson‘s explanation of the documents: he was claiming that his daughter held the property on trust for him, seeking an order that she transfer her share in it to him making him sole owner, and was asking for the removal of the mortgage to the third defendant. [43] Between 19 and 21 January 2009 Mr Jeffrey Johnson completed the drafting of the claim and statement of claim in the form in which they were ultimately filed. Before they were filed, Mr Birtwell read them, and did not request any changes. The other evidence about the acquisition of the Rosalie Court land [44] The first and second defendants talked about buying ―the back block‖ from their neighbour from about a year before it was purchased. In about December 2001 they paid their neighbour a deposit of $500 out of one of the company accounts, and the second defendant initiated discussions with their finance broker about raising the purchase price. After the deposit was paid there were one or more occasions at their house at Banyula Drive when they discussed the acquisition of that land with Mr Birtwell. The second defendant’s version [45] According to the second defendant, one night at the tea table they were talking about being in the process of arranging finance for the purchase when Mr Birtwell asked how much the Rosalie Court land was to cost. When he replied $140,000, Mr Birtwell looked at the first defendant and said, ―I can give that to you.‖ After some private discussion between the first and second defendants, the first defendant told Mr Birtwell that she appreciated the offer, but wanted to pay him. Mr Birtwell then did some mental arithmetic and said, ―You can pay me $200 per week which is 8 per cent.‖ He mentioned a figure of $10,400 a year. The first and second defendants ―said yes on that basis.‖ Looking at the first defendant, Mr Birtwell said, ―It will be your land to do what you want.‖ The first and second defendants were to bear the stamp duty, all costs, rates and costs of any improvements. He was the only witness to say that the cost of future improvements was mentioned before the land was acquired. [46] In cross-examination the second defendant said that the agreement reached was that the first and second defendants would pay Mr Birtwell $200 per week until his death, whether he lived one or 30 years. He said there was never any discussion to the effect that putting the property joint names would assist him to obtain a pension. Nor was there any discussion about Mr Birtwell living in a shed on the land: at that stage building a shed was not in contemplation. The first defendant’s version -- 8 of 31 -- 9 [47] According to the first defendant, after the deposit was paid there was a conversation with Mr Birtwell in which he said he was going to pay for the land as a gift to her. The contract was signed after that conversation. She said that the contract ―turned up‖ in joint names, and Mr Birtwell said he was paying for the land as a gift. She told him that was not necessary, as they had organised finance. Things moved very quickly, and her father insisted that it was a gift. [48] The contract had been prepared by the vendors (or someone on their behalf), whose solicitors were noted as Reaburn Solicitors. The purchasers‘ solicitors had been left blank, but the first defendant handwrote ―Pilgrim Geddes‖, a firm which had previously done work for the second defendant and her and their companies. [49] There was a subsequent discussion between Mr Birtwell and her about whether Mr Birtwell should receive any money in return. It is unclear on her evidence whether the second defendant was also present. It is also unclear on her evidence whether that subsequent conversation was before or after the contract was signed. ―It came up about – because he said – because of the way he loaned – gave the money to us and said was a gift, there was an issue the fact that he had done this previously with another family member, gave them money.‖ (Emphasis added.) I understood her evidence to be that because an issue had arisen about money he had given to another member of the family, she wanted to make sure she ―gave him some kind of money for it.‖ Mr Birtwell replied, ―You don‘t have to do that. It‘s already – I‘ve already put the property in joint tenancy anyway, so, it‘s yours.‖ She insisted, and Mr Birtwell replied, ―Well, fair enough. What about the interest I‘d receive if the money was in the bank?‖ [50] The first defendant denied that there was any discussion to the effect that putting the land in joint names would assist Mr Birtwell to obtain a pension. She said, ―There was no way he could even get a pension at that time. He had too many assets.‖ The evidence of Justin Geddes, solicitor [51] Mr Geddes received the contract from Reaburn Solicitors on 17 December 2001. He recalled that a day or two before he received it, the first defendant had brought Mr Birtwell into his office and introduced him. She had said they were purchasing land together and that the settlement was to be very quick, and had inquired whether he could help. He had directed her to a paralegal on his staff, Mike Chircop, who was to attend to the conveyancing. [52] Mr Geddes recalled Mr Birtwell as a tall man, over six feet in height, and as being about 75 years of age. He said the first defendant did the talking, and he remained silent. [53] While the first defendant had no recollection of taking Mr Birtwell to see Mr Geddes, there is no reason not to accept this evidence. Ronald Sands -- 9 of 31 -- 10 [54] The second defendant‘s father, Ronald Sands, recalled being present at Banyula Drive when the acquisition of the Rosalie Court land was discussed by Mr Birtwell and the first and second defendants. [55] Mr Birtwell expressed his appreciation of what the first defendant had done in looking after him and making him comfortable in her family. He was going to help her financially. ―From his own funds. … The purchase price I think was about 140-odd thousand. He was going to supply the money interest free to purchase that block and that the block would be in joint names between he and [the first defendant].‖ (Emphasis added.) When asked whether there was any discussion about repayment, he said – ―The money – it was on the basis of interest only and the - I wasn‘t party to an actual, an amount, but it was interest only and I couldn‘t refer to the percentages at that stage, because interest rates would have varied. … There was no discussion on [whether it had to be paid back]. The money was to be paid and because of joint tenancy he said it was to go to Donna on his death.‖ (Emphasis added.) Emma Goldthorp [56] The first and second defendants‘ daughter Emma Goldthorp gave evidence. She recalled Mr Birtwell and her parents discussing whether or not it was a good idea for her parents to proceed with the purchase of the Rosalie Court land. At that stage her parents were going to buy the land, and Mr Birtwell said it was a good idea. [57] She recalled a subsequent conversation – ―[Mr Birtwell] offered at that point in time to lend my parents the money.‖ (Emphasis added.) When asked whether terms had been mentioned, she replied – ―All I know that it was interest. … No, I can‘t remember the exact words. … -- 10 of 31 -- 11 That it was going to be an interest only payment paid to him – paid back to him. … I wasn‘t aware of the rate.‖ She said there was no discussion about when the loan was to be repaid. The land was to be ―held in joint tenancies between [Mr Birtwell] and my mother‖. When asked whether Mr Birtwell had said why that was to be so, she replied – ―That if anything was to happen to him that the land would automatically go back to my mother.‖ Other evidence [58] XXX gave evidence that Mr Birtwell told her on many occasions that the Rosalie Court land and the house had been a gift to her mother (the first defendant). [59] However, I do not attach any significant weight to this evidence. She was aged only seven when the Rosalie Court land was acquired. The circumstances in which Mr Birtwell said these things to her were not explored – no doubt because of a conscientious endeavour not to have her give evidence of his sexual misconduct. [60] A family friend, Ann Stanger, recalled being at Banyula Drive when Mr Birtwell said he would put the money forward as a gift – ―for all – that [the first and second respondents] had been the one family that really supported him.‖ [61] Ms Stanger seemed confused about when that conversation occurred. She placed it in 1999 by reference to her daughter‘s schooling, but she also said it was after the first and second defendants had paid the deposit. She was the only witness to speak of a gift to both the first and second defendants. Payments out of company accounts Payments at the rate of $200 per week [62] Between 15 February 2002 and 17 December 2007 $62,300 was paid from company accounts to Mr Birtwell. The payments were described as ―rent‖ in the company records. Mr Birtwell issued receipts for ―rent‖ and deposits into his QPCU account were described as ―rent‖. [63] The payments ceased when Mr Birtwell went to prison. [64] The first defendant said she described the payments as ―rent‖ in the company‘s books on instructions from the second defendant. [65] The second defendant said that their arrangement with Mr Birtwell had been simply to pay him $200 per week until he died, not to pay him ―rent‖. The payments were described as ―rent‖ for tax reasons, on advice from the company‘s accountant. -- 11 of 31 -- 12 [66] There is no evidence that Mr Birtwell was aware of any such advice having been given. There is no explanation for his describing the payments as ―rent‖ on the receipts he issued. Payment of Rates [67] The first and second defendants (or their companies) paid all rates due on the Rosalie Court land, which totalled $12,168.87 between 1 July 2002 and 30 June 2010. Site improvements and construction of shed [68] I accept the evidence of the first and second defendants that they carried out earthworks on the land, both before and after the shed was built. The costs of these works were largely paid out of company accounts, although the second defendant did some work himself, and other work was performed without monetary charge in exchange for work or services provided by the second defendant or the company without monetary charge. [69] It was common ground that they borrowed money from Suncorp for that purpose, and that they repaid the loan in full. I am satisfied that cost of the site works and the construction of the shed exceeded the amount of the Suncorp loan. [70] I accept the first defendant‘s evidence that the total amount expended on site works and the construction of the shed was $140,576.83.5 I find that the total amount was paid out of company accounts (despite the loan from Suncorp being to them personally). The other evidence about the construction of the house [71] When the second defendant became seriously ill in June 2004, the first defendant shouldered a heavy burden of caring for him, looking after their children and trying to keep their business going. [72] According to the first defendant, later that year or early in the following year, Mr Birtwell told her that he was going to sell the Coorparoo unit, give up driving taxis and move down to where she was living to help her. He said, too, that as he was getting on in years, this would mean he would be close to her if he needed assistance. He proposed building a house on the Rosalie Court land for Emma and her husband, and himself moving into the accommodation unit attached to the shed. The first defendant‘s reaction to the proposal was positive. [73] Mr Birtwell‘s sale of the Coorparoo unit was completed in June 2005, and he commenced living in the first and second defendant‘s household at Banyula Drive. He still owned a taxi licence, and I infer he had others driving for him. He and Emma selected a project home to be built on the Rosalie Court land. The builder submitted a preliminary tender, addressed to Mr Birtwell and the first defendant, dated 22 May 2005. It wrote to Mr Birtwell and the first defendant on 30 May 2005 about preparation of working drawings and referred to submission of the plans to 5 Exhibit 13. -- 12 of 31 -- 13 the appropriate certifying authority, subject to 5% deposit being paid. The next day it provided a quotation for site works.6 [74] In about June 2005 Mr Birtwell was charged with sexually assaulting XXX. Police took him from the house at Banyula Drive to charge him. Until his conviction and sentencing about six months later, he lived at Nerang. [75] Emma gave evidence of visiting him at Nerang. She said he asked how things were going with the house, and that she responded – ―We‘re not going ahead with the house because you will need to take care of yourself after everything is sorted.‖ Her evidence continued – ―At this stage he hadn‘t been sentenced so we had no idea.‖ She said he responded – ―I‘m going ahead with the house. I‘m giving it to your mother as a gift.‖ [76] According to the first defendant, Mr Birtwell telephoned her, saying that he did not want to lose contact with the family altogether. There was a meeting at the Arundel Tavern, attended by Mr Birtwell, the second defendant and her. The first defendant said the meeting took place in September 2005, while the second defendant said it was in late August or early September that year. The second defendant said that Emma was also present, but neither Emma nor the first defendant gave evidence to that effect. Otherwise, the first and second defendants‘ evidence of what transpired at the meeting is substantially consistent. [77] Mr Birtwell arrived at the meeting with a contract for the construction of the house, and said he had paid the deposit - on the second defendant‘s version, the second (ie substantial) deposit, intent on proceeding with the project. On the first defendant‘s version, she told him he could not go ahead with the house, that he would need the funds to support himself when he got out of jail. According to the second defendant, the first defendant said – ―You‘re stupid. Cancel the house. You cannot live on the block of land. We‘ve spoken to Family Services and they said that if you live there the three minor children will be removed from our custody.‖ The second defendant said he and Emma made similar comments; he said that Emma and the first defendant continued to say that he should not put any more money into the house and that he would be better to walk away from what he had already paid. [78] According to the first defendant, Mr Birtwell said – 6 Documents disclosed by the first and second defendants (exhibit 4). -- 13 of 31 -- 14 ―I‘ve got moneys. I‘ve told Emma that I‘m going to go ahead with this and I‘ve already started it so there‘s nothing we can do.‖ And she signed the contract. I accept that she had initially voiced her opposition to his moving into the accommodation unit, but he had expressed his determination to go ahead with the construction of the house, and there is no evidence that she affirmed her opposition to his moving into the accommodation unit when she did so. [79] According to the second defendant, Mr Birtwell said – ―I‘m going to go ahead with the house.‖ Looking at Emma, he said – ―This is a gift to your mother for what I have done to her.‖ [80] The contract document which Mr Birtwell produced at that meeting was not before the Court. The contract which was admitted into evidence was signed by Mr Birtwell and the first defendant and witnessed by S. Goldthorp (Emma‘s husband). The provision for insertion of the date at the top of Schedule 1 – Particulars of Contract was left blank. The attached Specification was similarly executed, but not dated. There was also a copy of a Formal Tender dated 28 September 2005; Mr Birtwell and the first defendant‘s acceptance of it was dated 14 October 2005. Also attached to it was a page headed ―Termite Protection System‖, which was signed by the builder on 29 September 2005 and by Mr Birtwell and the first defendant on 14 October 2005. The price under that contract was $166,088.7 [81] There is no evidence that the first defendant affirmed her opposition to Mr Birtwell‘s moving into the accommodation unit when she executed the formal contract. [82] Mr Birtwell may have paid a holding deposit at some stage before the meeting at the tavern. The only evidence of a deposit being paid after that meeting is in the first and second defendants‘ admission that payments Mr Birtwell made to the builder included $8,000 on 26 September 2005. [83] Construction of the house commenced. Mr Birtwell was convicted and sentenced in December 2005. Payments by Mr Birtwell [84] Payments to the builder totalling $169,405 were made from Mr Birtwell‘s QPCU account as follows – 26.09.2005 $ 8,000.00 20.02.2006 $ 16,609.00 07.03.2006 $ 24,913.00 7 Exhibit 25. -- 14 of 31 -- 15 03.04.2006 $ 24,913.00 19.06.2006 $ 61,752.00 $169,405.00 Other payments for construction and fitting out of house [85] I accept that the first and second defendants expended money on the construction and fitting out of the house beyond what was paid to the builder. The plaintiff did not dispute their allegation that they had paid additional funds for pylons, an enviro- cycle system, installation of a power line and installation of a water main, ancillary items such as fencing, a retaining wall and fill and construction of a road, but contended – (a) that no particulars of the value of such items had been provided; (b) that the improvements had been funded by the company; (c) that the company was a tenant on the land, and it treated these expenditures as allowable deductions for tax purposes; and (d) that there was no evidence the first and second defendants had entered into some arrangement with the company regarding these expenditures. Correspondence while Mr Birtwell in prison [86] As mentioned in paragraph 25, while Mr Birtwell was in prison, he and the first defendant corresponded. [87] In a letter to the first defendant dated 25 July 2006 Mr Birtwell said:- ―I was transferred from Palen Creek last Thursday the 20th. The doctor at Palen Creek operated on my right leg, about 6 inches below the knee, to remove a skin cancer. Everything went well until the nurse removed the last stitch. That became infected resulting in it turning into an ulcer. They moved me to Wolston [to] get treatment for the leg. It is a different regime here. We get locked up at 6 o‘clock at night and released some time between 7 and 7.30 am. So I cannot ring at night like I was doing. I have tried a number of times to ring you but to no avail. In being transferred from Arthur Gorrie C/C to Palen Creek some of my property went missing including my drivers licence and Medicare card. I posted an application for replacement of my Medicare card at Palen Creek. I gave the address, 15 Rosalie Court. When you receive a reply from Medicare will you please forward it on. -- 15 of 31 -- 16 Also I would appreciate if you post me the latest bank account statement. … A bit of gossip – news of the family – a photograph or two would be most welcome.‖ [88] The first defendant responded as follows:- ―I enclose the statement that you requested. I hope you understand why I am doing what I am about to do. I am unable to move your personal effects into the unit. Due to the fact it is attached to my property and in close proximity to my family and children to which one of them is why you are where you are. I don‘t want you to be in contact with them. XXX is not handling the fact of your release and that you wish to return and live here. I will not put her into that situation. I hope you can understand why?? I am happy to support you with finding a place to stay and with the initial discussion on the way you can receive the pension. The taxi money is still going to your account. This will stay [illegibile]. I know you apologized in your first letter to me. But as you should be aware the trust issue is one thing that is not going to be overcome in 9 months. I don‘t know if I could ever have that back. I hope you understand my request and respect it without any retaliation. I hope you understand that I must put XXX ahead of anything else. Donna. PS No Medicare Card or drivers licence has come.‖ Mr Birtwell released from prison [89] Mr Birtwell was released from prison on 14 September 2006. That day he called on the first defendant and said he wanted to move into the unit. She refused to allow -- 16 of 31 -- 17 him to do so, and told him that ―Child Services‖ had said they would remove the three infant children from her custody if he lived there. [90] Two days later, Mr Birtwell wrote to the first defendant - ―I can understand your reasoning in coming to the decision you have made. However from your and Peter‘s behaviour towards me from after hearing what had transpired between myself and XXX gave me a feeling that we could work things out. When I asked you how you felt about still building the house you said it was up to me to make a decision. That being so you also had to sign the contracts. Knowing that it depended on my building the house to reduce my assets. Also that I had to be living on the property as my permanent place of residence for me to qualify for the pension. With all this assumed you had assessed the situation thoroughly and had no objection to my living there and that you work out any problems.‖ Mr Birtwell instructs solicitors [91] Mr Birtwell instructed solicitors in June 2008. [92] On 5 September 2008, after discovering the existence of the mortgage to the third defendant, Mr Ray Johnson wrote to the first and second defendants summarising his firm‘s instructions and concluding – ―We advise that our client claims to be entitled to – (a) Reimbursement of the funds provided by him to acquire the Property and the construction of the Residence on the Property; (b) One half of the current market value of the Property after deducting the amount of $83,048.27 paid to Suncorp Limited but not the balance of the debt owed to Perpetual Limited.‖ Valuation evidence [93] I accept the evidence of Mr Brosnan that the market value of the Rosalie Court land as at 17 July 2012 was $670,000, and that that amount may be fairly apportioned to the land and improvements as follows - Land value (excluding fill & rock retaining wall) $ 295,000 Buildings: -- 17 of 31 -- 18 Shed & accommodation unit $ 100,000 House $ 200,000 Ground improvements: Septic/sullage & fencing $ 10,000 Fill & rock retaining wall $ 65,000 $ 670,000. Assessment of Mr Birtwell [94] Mr Birtwell was an old man, a widower, who had apparently fallen out with all of his children but the first defendant. He was stubborn and manipulative. The unshakeable confidence he displayed in his own assessment of what was in the best financial interests of the first defendant and her family was mixed with a shrewd assessment of his own needs for accommodation and future support. [95] I am satisfied that he was fully capable of managing his own affairs prior to his imprisonment in December 2005. He acted independently in the sale of his Corinda house in 2001 and the Coorparoo unit in 2005. There is no evidence to suggest that the first or second defendant or anyone else influenced his decision to sell either property, or that either sale was at an undervalue or otherwise improvident. At the time the Rosalie Court land was acquired he was operating a taxi licence, and after he sold the Coorparoo unit and went to live with the first and second defendants he retained the licence and had others drive for him. [96] By the arrangement he had previously made with the first defendant for the construction of a house for Emma and his move into the accommodation unit, he had effectively bought his own future accommodation and care. I find it strange that a man about to be imprisoned for sexually assaulting his granddaughter should think that upon his release he would be able to reside on the property adjoining the one where the child lived. But his impending incarceration placed him in a position of unaccustomed vulnerability. He was about to lose his freedom and potentially lose his ability to wield influence over the lives of others. [97] It is quite apparent from the letters Mr Birtwell wrote from prison that there was no diminution in his understanding of his investments or of his own interests. To the extent he could from prison, he gave the first defendant instructions for the conduct of his business and personal affairs. At her suggestion, he gave her a power of attorney. [98] For example, on 14 January 2006 he wrote – ―Any news on house? … We were talking about looking after things for me. The Taxi Licence Lease is due for renewal in May 2006. I do not know if the -- 18 of 31 -- 19 Woodridge Depot will want to renew their lease. I was thinking about your suggestion of giving you Power of Attorney. I think that would be the way to go. The President of the Yellow Cabs Bowls Club wrote to me offering to give any assistance I might need. His name is Mal Hartley. His home phone no is 3391 4559. You have my mobile phone and you will find his mobile no on it. He is operations manager for the Yellow Cab Owners Association. He should be able to help you. If the Woodridge Depot are prepared to renew the lease there should not be any drama. If they do not want to renew the lease then you may have to get help from Mrs Margaret Crust at Woolloongabba Base 3391 5955.‖ On 25 July 2006 he wrote: ―Also I would appreciate if you post me the latest bank account statement. I was talking to Mal Hartley. He was saying that they fitting the cabs with cab charge meters. Has Danny Ford from the Woodridge Depot been in touch with you concerning this. I understand there is a cost of about $100 involved. I am told by Mal it is well worth it. I would appreciate if you would send my the above by return post.‖ [99] His execution of the power of attorney on 24 February 2006 was witnessed by a prison officer at the Palen Creek Correctional Centre, Robert Jenyns. [100] Mr Jenyns described him as an old man of fragile health, and referred to his being transferred from Palen Creek to Princess Alexandra Hospital for medical reasons in July 2006 and from there to Wolston Correctional Centre where he remained until his release. He had spent six months at Palen Creek where he had worked in the textile factory cutting up bags for Lifeline, as did a lot of older prisoners at the time. According to Mr Birtwell‘s letter to the first defendant of 25 July 2006, a doctor at Palen Creek surgically removed a skin cancer from his lower right leg; the wound became infected and he was moved to Wolston to obtain treatment for the leg. [101] Mr Jenyns gave evidence of the execution of the power of attorney - ―Mr Birtwell brought in the enduring Power of Attorney paperwork to me and asked me if I could witness it for him. He intended to give enduring Power of Attorney to his next of kin that he had listed at the time who was [the first defendant] and I went through the process that I normally do with him, that – the conditions of it, what he was actually doing, if he understood that, and if he understood that he could revoke it at any time.‖ [102] There is nothing in Mr Jenyns‘ evidence to suggest that Mr Birtwell was of reduced mental capacity or that he executed the power of attorney other than in the exercise of a free will. -- 19 of 31 -- 20 [103] Mr Birtwell first contacted Johnsons Solicitors on 17 June 2008. The receptionist who took his call recorded – ―His daughter is living in his property- (he owns) not getting anything for it so he wants to sell it.‖ There is no evidence that the solicitors had any difficulty in obtaining instructions from him prior to his stroke in March 2009. They discovered the mortgage to the third defendant when they searched the title to the Rosalie Court land. He was coherent in his instructions that he knew nothing about the mortgage; he was able to identify the first defendant‘s signature but not the other signature. He approved the statement of claim before the proceeding was commenced. Assessment of first and second defendants [104] The first and second defendants were aged 39 when the Rosalie Court land was acquired. They had been married for about 20 years. [105] The first defendant impressed me as a strong minded and capable woman who took an active part in the company‘s affairs. Down the years she and the second defendant invested in a number of properties; to do so they borrowed moneys and gave mortgages to secure repayment of the loans. While I accept that it was the second defendant who made strategic business decisions and arranged finance when it was required, I am satisfied that the first defendant did not blindly follow his instructions in doing her work or executing documents by which she assumed legal responsibilities. After the business was sold in 2006, she became a consultant to the purchaser of part of it. [106] When the second defendant‘s health declined, their family unit and business affairs were placed under enormous strain. That strain was exacerbated by learning of Mr Birtwell‘s molestation of their infant daughter and his incarceration. Eventually the marriage crumbled: they separated in May 2008. [107] This may explain the first defendant‘s conduct in signing the document Mr Birtwell brought to the meeting at the Arundel Tavern and some weeks later executing the formal building contract. But if she maintained her opposition to his moving into the accommodation unit, it does not excuse her failure to tell him that before the contract was executed and he expended moneys on the construction of the house. [108] It may also explain but not excuse the first and second defendants‘ conduct in late 2006 in granting the mortgage to the third defendant not only without Mr Birtwell‘s consent, but also substituting the second defendant‘s signature for his. The first defendant claimed never to have read documents which were put in front of her for signature before signing them, and so professed ignorance of what occurred. I do not accept her evidence about this, and regard it as reflecting adversely on her credibility generally. [109] The way she worded the letter in which she told Mr Birtwell that he would not be able to move into the accommodation unit is consistent with her knowing that until then he thought he would be able to do so. It is also consistent with her having only recently decided that he could not do so. -- 20 of 31 -- 21 [110] It seems strange that the mother of a child who had been molested should have continued to support the molester while he was in prison. Of course, family dynamics are infinitely variable and the snapshot of this family which was placed before the Court was limited. If the first defendant did so out of some genuine sense of filial obligation, her magnanimity was outweighed by her allowing her father to believe until shortly before his release that he would be able to occupy the unit. [111] The second defendant endeavoured to support the first defendant in the evidence he gave. There were some inconsistencies between their accounts, which are explicable by the passage of time. Although his execution of the mortgage to the third defendant cast a shadow over his credibility generally, I do not think he was deliberately dishonest in his evidence. Findings of fact about the acquisition of the Rosalie Court land [112] I am satisfied that at the time the Rosalie Court land was acquired – (a) Mr Birtwell was of advanced years but fully capable of managing his own affairs and making his own decisions about the disposition of his property; (b) He was financially independent: he had the proceeds of sale of the Corinda property; he had an interest in the Coorparoo unit which was tenanted; and he held a taxi licence. He was living in a caravan on the property at Banyula Drive as a temporary measure until the tenants vacated the Coorparoo unit; (c) While the first defendant and her family were the only family members with whom he had contact, he was not emotionally dependent on them; (d) The first defendant held an enduring power of attorney for him; (e) The first and second defendants had already decided to acquire the land and had paid a deposit when he said he would provide the purchase moneys as a gift to the first defendant; (f) Mr Birtwell proposed that the land be acquired in the names of the first defendant and him as joint tenants, saying words to the effect that on his death it would vest absolutely in the first defendant; (g) The first defendant and second defendants agreed to his proposal only when he said he would accept payments from them of $200 per week, which was his calculation of interest at 8% per annum; (h) It was agreed that the first and second defendants would be responsible for stamp duty and other acquisition costs, rates and other outgoings on the land; (i) There was no discussion of repayment of the purchase moneys Mr Birtwell was to provide; (j) Construction of a shed and accommodation unit was not discussed; -- 21 of 31 -- 22 (k) There was no other discussion of Mr Birtwell‘s living on the land; (l) There was no discussion of the arrangement being to Mr Birtwell‘s advantage in obtaining an aged pension; (m) The arrangement was not reduced to writing. [113] The contract was prepared by the vendors‘ solicitors, naming Mr Birtwell and the first defendant as joint tenants as purchasers. Mr Birtwell and the first defendant signed it before they retained Pilgrim Geddes to act for them in the conveyance. The enduring power of attorney was not exercised in the transaction. [114] Payments at the rate of $200 per week commenced immediately after the transfer was effected. They were made from company accounts, and styled ―rent‖ both in the company‘s records and in Mr Birtwell‘s records. The second defendant directed that they be so styled in the company‘s records for tax purposes. [115] Consistently with the agreement, the first defendant met stamp duty and other acquisition costs, and through the company, paid for rates and improvements in the nature of earthworks. Legal analysis of acquisition of Rosalie Court land Resulting Trust [116] The plaintiff‘s primary position is that Mr Birtwell, who provided all of the purchase price, did not intend the first defendant to have any beneficial interest in the Rosalie Court land, and so she holds her interest in it on resulting trust for his estate. [117] The first defendant pleads in response – (a) that Mr Birtwell provided the purchase price to the first and second defendants by way of an interest only loan; (b) that interest was to be paid at the rate of $200 per week; (c) that the capital sum was not repayable; (d) that the debt would be forgiven on Mr Birtwell‘s death; (e) that Mr Birtwell initially intended that the Rosalie Court land be held by the first and second defendants as joint tenants, but she convinced him that it should be held by him and her as joint tenants because if she and the second defendant ever had matrimonial problems his interest in it might be lost; (f) that Mr Birtwell intended that she hold her interest in the Rosalie Court land absolutely and that she receive his interest by survivorship. -- 22 of 31 -- 23 [118] There is a rebuttable presumption that where a person pays the purchase price of property and causes it to be transferred to another (or to another and himself or herself jointly) without consideration passing from that other person, the transferee (or joint transferee) holds the property (or the interest transferred to him or her) on trust for the person who provided the purchase price. The presumption does not arise where there is a parent – child relationship between the person who provided the purchase price and the transferee, and the benefit is presumed to have been provided by way of ―advancement‖.8 [119] The presumption of advancement and the presumption of a resulting trust are both presumptions as to the intention of the person who provides the benefit. They are both rebuttable. Neither can prevail over the actual intention of that person as established by the evidence. [120] I am satisfied that that Mr Birtwell intended that she hold her interest in the Rosalie Court land absolutely and that she receive his interest by survivorship, and that he provided the purchase price to the first and second defendants by way of an interest only loan on the terms alleged by them. [121] That the payments at the rate of $200 per week were made from company accounts and styled ―rent‖ for tax purposes does not detract from the force of the other evidence that that was what was agreed. [122] There was no formal loan documentation, but that is not unusual in family dealings. [123] Mr Chircop, the paralegal who attended to the conveyancing, was not called by the first and second defendants. Counsel for the plaintiff submitted that he would not have given evidence favourable to their case. However, the evidence goes no further than establishing that the firm Pilgrim Geddes was retained to attend to the conveyancing: Mr Geddes did not give evidence that he knew anything about Mr Birtwell‘s being the source of the purchase moneys. In those circumstances I decline to draw the adverse inference for which counsel for the plaintiff contended. [124] There is no evidence to support the first and second defendants‘ allegation that Mr Birtwell initially proposed that the land be held by them as joint tenants and that the first defendant persuaded him it should be held by him and her as joint tenants. [125] The plaintiff has not established that the first defendant holds her interest in the Rosalie Court land on resulting trust for Mr Birtwell‘s estate. Undue influence, unconscientious dealing [126] In the alternative, the plaintiff seeks relief in equity on the basis of undue influence and/or unconscionable conduct. [127] These are conceptually discrete bases for relief. In Bridgewater v Leahy9 Gaudron, Gummow and Kirby JJ said – 8 Napier v Public Trustee (WA)(1980) 55 ALJR 1 at 3; Calverley v Green (1984) 155 CLR 242 at 266 – 267; Muschinski v Dodds (1984 – 1985) 160 CLR 583 at 612. 9 (1998) 194 CLR 457 at [73] – [76]. -- 23 of 31 -- 24 ―73. 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.10 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. 74. In Commercial Bank of Australia Ltd v Amadio,11 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,12 could provide a particular forensic advantage to plaintiffs. 75. Sir Anthony Mason, with reference to the well developed Australian body of authority on the subject, has contrasted the two doctrines as follows:13 ‗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.14 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.15 ... 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 10 Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 at 461. 11 [1983] HCA 14; (1983) 151 CLR 447 at 474. 12 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. 13 Mason, "The Impact of Equitable Doctrine on the Law of Contract", (1998) 27 Anglo-American Law Review 1 at 6-8. 14 Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 at 461, 474. 15 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. -- 24 of 31 -- 25 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'.16 Unconscionable conduct is also recognized in New Zealand as a ground of relief in these circumstances.17‘ 76. In Commercial Bank of Australia Ltd v Amadio,18 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,19 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’.20 In so giving the judgment of the Privy Council, Lord Brightman was reflecting a general proposition put by James LJ in Torrance v Bolton.21 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‘.‖ [128] The plaintiff alleges - (a) that Mr Birtwell was induced to include the first defendant as a registered proprietor (as joint tenant) by certain representations she made to him, namely – (i) that her inclusion as a joint tenant would assist Mr Birtwell to obtain a pension; (ii) that the first and second defendants would cause a machinery shed with unit residential accommodation to be built on the land; (iii) that Mr Birtwell would be permitted to reside free of charge in the residential accommodation part of the machinery shed; and 16 [1983] HCA 14; (1983) 151 CLR 447 at 462. 17 Hart v O'Connor [1985] UKPC 1; [1985] AC 1000; Bowkett v Action Finance Ltd [1992] 1 NZLR 449. 18 [1983] HCA 14; (1983) 151 CLR 447 at 474. 19 [1985] UKPC 1; [1985] AC 1000. 20 [1985] UKPC 1; [1985] AC 1000 at 1024. 21 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. -- 25 of 31 -- 26 (iv) that the first and second defendants would pay Mr Birtwell $200 per week for the use and occupation of the machinery shed once built; (b) that the representations were made at a time when Mr Birtwell was at a serious disadvantage vis-à-vis the first defendant; (c) that the purchase of the land and placing it in the name of the first defendant was an improvident transaction for Mr Birtwell in that it was a transaction in which he received no consideration. [129] The alleged representations were not proved. Issues of pension eligibility and the erection and occupation of a shed on the land simply did not arise. [130] My findings are inconsistent with Mr Birtwell‘s being at a serious disadvantage vis- à-vis the first defendant. There is no evidence to support an inference that he relied on her for advice and guidance, that he accepted and trusted her advice, or that he readily acceded to her requests. Rather, the evidence supports the inference that he was intellectually and emotionally capable of making his own decisions, and that he in fact thought and acted independently. He had independent means, apart from the money he expended in the acquisition of the Rosalie Court land – both a source of income (the taxi licence) and a place to live (the Coorparoo unit). His living in a caravan at Banyula Drive was a temporary measure which suited his convenience. [131] It was not a transaction in which Mr Birtwell received no consideration; on the contrary the first and second defendants agreed to pay him $200 per week for the rest of his life. The payments ceased when Mr Birtwell went to prison. In oral submissions counsel for the first and second defendants conceded that there is an amount owing by his clients to Mr Birtwell‘s estate on this account. It has not been claimed or quantified, but he estimated it at about $30,000. [132] There was no unconscientious dealing on the part of the first defendant. [133] At the time the Rosalie Court land was acquired the first defendant held an enduring power of attorney for Mr Birtwell. [134] Section 87 of the Powers of Attorney Act 1988 (Qld) provides – ―87 Presumption of undue influence The fact that a transaction is between a principal and 1 or more of the following— (a) an attorney under an enduring power of attorney or advance health directive; (b) a relation, business associate or close friend of the attorney; gives rise to a presumption in the principal‘s favour that the principal was induced to enter the transaction by the attorney‘s undue influence.‖ -- 26 of 31 -- 27 The presumption of undue influence applies whether or not the transaction involves an exercise of the attorney‘s powers.22 It is a rebuttable presumption. [135] In the circumstances of this case, I am satisfied that the presumption has been rebutted. Mr Birtwell acted freely, voluntarily and independently in the acquisition of the land by the first defendant and him as joint tenants and the making of an interest only loan to the first and second defendants, and not as a result of undue influence by the first defendant. Breach of fiduciary duties [136] The plaintiff also alleged that the relationship between Mr Birtwell and the first defendant was a fiduciary one and that she breached fiduciary duties she owed to him. However, that was not pressed at trial. Findings of fact about the construction of the house [137] I am satisfied of the following – (a) that in late 2004 or early 2005 first defendant agreed to Mr Birtwell‘s proposal that he sell the Coorparoo unit and with his share of the proceeds fund the construction of a house on the Rosalie Court land for Emma and her husband to occupy and that he should then live in the accommodation unit attached to the shed; (b) that the first defendant and Emma selected a project home to be built on the land, and the builder submitted a preliminary tender in May 2005; (c) that Mr Birtwell was living in the first and second defendants‘ household when he was charged with sexually assaulting XXX in about June 2005; (d) that until his conviction and sentencing in December 2005 Mr Birtwell lived in Nerang; (e) that the first and second defendants and Emma all expected that Mr Birtwell would be convicted and sentenced to a term of imprisonment; (f) that in late August or early September 2005 there was a meeting at the Arundel Tavern attended by Mr Birtwell and the first and second defendants; (g) that Mr Birtwell was then an old man with no other family support whose impending incarceration meant that he was about to lose his freedom and potentially also his ability to wield influence over the lives of others; the deal he had previously struck to secure his own future accommodation and care was at risk; 22 Smith v Glegg [2005] 1 Qd R 561 at 569. -- 27 of 31 -- 28 (h) that Mr Birtwell produced a document which he described as the building contract; (i) that the first and second defendants both told Mr Birtwell that he should not go ahead with the construction of the house as he would need the money to look after himself when he got out of jail; (j) that Mr Birtwell understood them to mean that he would have to find somewhere else to live upon his release from prison; (k) that Mr Birtwell expressed his determination to proceed with the project; (l) the first defendant thereupon signed the contract document which Mr Birtwell had brought to the meeting; (m) that the first defendant well knew that for Mr Birtwell the project always involved both his funding the construction of the house and his moving into the accommodation unit; (n) that in signing the document at that meeting the first defendant represented to Mr Birtwell that he would be able to move into the accommodation unit on his release from prison; (o) that Mr Birtwell paid the builder a deposit of $8,000 on 26 September 2005; (p) that Mr Birtwell and the first defendant executed a formal contract with the builder on 14 October 2005; (q) that in executing the formal contract the first defendant represented to Mr Birtwell that he would be able to move into the accommodation unit on his release from prison; (r) that Mr Birtwell paid the deposit, executed the formal contract and authorised the first defendant to make the other payments to the builder in reliance on the aforesaid representations by the first defendant that he would be able to move into the accommodation unit on his release from prison; (s) that Mr Birtwell was incarcerated between 15 December 2005 and 14 September 2006; (t) that on 24 February 2006 Mr Birtwell executed a fresh enduring power of attorney appointing the first defendant as his attorney; (u) that the first defendant did not tell Mr Birtwell he could not move into the accommodation unit until she wrote to him towards the end of his incarceration; -- 28 of 31 -- 29 (v) that upon Mr Birtwell‘s release from prison the first defendant refused to allow him to live in the accommodation unit; (w) that the first defendant failed to compensate Mr Birtwell for his exclusion from the accommodation unit; (x) that Mr Birtwell provided $169,405 for the construction of the house; (y) that the first and second defendants paid additional sums for pylons for the slab, the enviro-cycle system, installation of a power line from the road, installation of a water main from the road, ancillary items such as fencing, a retaining wall and fill, and construction of a road to the dwelling. Legal analysis of construction of house [138] The plaintiff alleges – (a) that at the time the payments for the construction of the house were made Mr Birtwell was at a serious disadvantage vis-à-vis the first defendant; (b) that at all material times the first defendant knew this; (c) that in or about September 2005 Mr Birtwell and the first defendant agreed that if he paid for the construction of the house, he would be able to reside in the accommodation unit attached to the shed upon his release from prison; (d) that Mr Birtwell was induced to enter into the agreement in reliance on the first defendant‘s statements that – (i) if he agreed to pay for the construction of the house, upon his release from prison he would be able to live in a place that was safe, given his age and infirmity and its close proximity to the house where the first and second defendants would be living; and (ii) he would have the care and supervision of his family to assist with his rehabilitation upon his release from prison; (e) that Mr Birtwell entered into the agreement and made the payments for the construction of the house as a result of the undue influence of the first defendant and by reason of her taking unconscientious advantage of him whilst he was at a serious disadvantage vis-à-vis her. [139] The plaintiff also alleged that the relationship between Mr Birtwell and the first defendant was a fiduciary one and that she breached fiduciary duties she owed to him. However, that was not pressed at trial. -- 29 of 31 -- 30 Unconscientious Dealing [140] Equity may grant relief against unconscientious dealing. It may do so – ―… whenever one party to a transaction is at a special disadvantage in dealing with the other party because illness, ignorance, inexperience, impaired faculties, financial need or other circumstances affect his ability to conserve his own interests, and the other party unconscientiously takes advantage of the opportunity thus placed in his hands.‖23 [141] In my assessment Mr Birtwell was at a serious disadvantage vis-à-vis the first defendant when the payments were made to the builder. He was an old man with no family support other than that of the first defendant. He was in prison (or about to be when he made the first payment) for his conduct in sexually interfering with her infant daughter. He was dependent on the first defendant to attend to his financial affairs while he was in prison. He had made no other arrangements for his accommodation and care needs upon his release. The first defendant was clearly aware of his predicament. [142] Before he had been charged, the first defendant had agreed to his proposal to fund the construction of a house for Emma and then move into the accommodation unit herself. At the meeting at the Arundel Tavern she initially told him he would not be able to move into the accommodation unit. He proclaimed his intention to go ahead with the construction of the house. Despite knowing that for him the project always involved both his funding the construction of the house and his moving into the accommodation unit, she neither expressly nor impliedly communicated continued opposition to his moving into the accommodation unit when she signed the document he described as a contract at the Arundel Tavern or later when she signed the formal contract. [143] In the final analysis I do not think it matters when the first defendant resolved not to allow Mr Birtwell to move into the accommodation unit – whether she never wavered from the attitude she evinced at the commencement of the meeting at the tavern, or whether it was a decision she came to shortly before writing the letter telling him he would not be able to take up residence there. What matters is that by her conduct in signing the two documents without any express or implied qualification she represented to him that he would be able to do so. [144] Her conduct in then refusing to allow him to occupy the accommodation unit and not compensating him was unconscientious. Undue Influence [145] On all of the evidence relevant to the payments for the construction of the house, I am satisfied that the payments were not made as a result of undue influence of the first defendant. The presumption arising from her holding his power of attorney has been rebutted. Resulting trust 23 Blomley v Ryan (1956) 99 CLR 362 at 415 per Kitto J. -- 30 of 31 -- 31 [146] The evidence does not support the plaintiff‘s allegation that Mr Birtwell did not intend the first defendant to hold a beneficial interest in the improvements to the land, and that she holds her interest in them upon a resulting trust for his estate. Remedy [147] The key issue in fashioning a remedy for the first defendant‘s unconscientious conduct in relation to the payments for the construction of the house is the identification of the minimum equity necessary to meet the need for relief. [148] The Rosalie Court land, including the improvements on it, is now worth $670,000. [149] Approximately 30% of the total value ($200,000) is attributable to the value of the house. [150] Another 11% of the total value ($75,000) is attributable to the value of the septic/sullage system and fill and rock retaining wall. [151] I accept Mr Birtwell‘s evidence that Emma paid $4,000 toward the septic system. [152] The fill and rock wall and other components (pylons, the enviro-cycle system, installation of a power line and a water main, construction of a road) were paid for out of company accounts. While I do not think anything turns on payments for these various components having been made out of company accounts rather than the first defendant‘s (or the first and second defendants‘ personal accounts), there is no evidence of what was expended on them, and, apart from the fill and rock wall, there is no evidence of their present value. [153] In all the circumstances there should be a declaration that the first defendant holds 30% of the beneficial interest in the land at 15 Rosalie Court, Gaven on trust for the estate of Lindsay Birtwell deceased. [154] The claim against the second defendant should be dismissed. [155] The counterclaim should be dismissed. [156] I will hear the parties on the form of the order and on costs. -- 31 of 31 --