Bridgewater, O'Neil, Ashton, Leahy & York v Leahy, York & York [1995] QSC 227

IN THE SUPREME COURT OF QUEENSLAND No 983 of 1991 Before Mr Justice de Jersey BETWEEN: DESLEY FAY BRIDGEWATER, JOAN MARGARET O'NEILL, JUNE LORRAINE ASHTON, SHIRLEY JOY LEAHY, AND STELLA YORK (Plaintiffs) AND: KEVIN LEAHY (Defendant) AND: NEIL WILLIAM YORK AND BERYL ELIZABETH YORK (Second Defendants) REASONS FOR JUDGMENT - de JERSEY J. Judgment delivered 23/08/1995 CATCHWORDS: Grant of option in will by testator to nephew: exercise of option diminished value of residuary estate which otherwise went to deceased's children - whether nephew and his solicitor exerted undue influence; transfers of land, before death, to nephew: whether induced by the undue influence of nephew, or unconscionably; standing of plaintiffs as beneficiaries to challenge transfers; whether transfers adeemed option; duty of solicitor, faced with conflicting interests, taking instructions from aged client. Counsel: D Cooper and Francis for Plaintiffs Ryan for First Defendants Williams QC and Whiteford for Second Defendants Solicitors: Morrow & Associates for Plaintiffs T J Gibson & Co for Firt Defendants Heiser Bayly & Mortensen for Second Defendants Hearing dates: 7, 8, 9, 10, 14, 15, 17 August, 1995 -- 1 of 30 -- 1 IN THE SUPREME COURT OF QUEENSLAND No 983 of 1991 Before Mr Justice de Jersey BETWEEN: DESLEY FAY BRIDGEWATER, JOAN MARGARET O'NEILL, JUNE LORRAINE ASHTON, SHIRLEY JOY LEAHY, AND STELLA YORK (Plaintiffs) AND: KEVIN LEAHY (Defendant) AND: NEIL WILLIAM YORK AND BERYL ELIZABETH YORK (Second Defendants) REASONS FOR JUDGMENT - de JERSEY J Judgment delivered 23/08/1995 Introduction William York died in Roma hospital on 22 April, 1989 of "old age". He was then 85 years old. He was survived by his wife of 53 years, Stella (the fifth named plaintiff), and four daughters, Joan (the second named plaintiff), June (the third named plaintiff), Desley and Shirley (the fourth named plaintiff). When the deceased - who was known as Bill - died, his daughters' ages were, respectively, 50, 47, 45 and 44. Bill was born in Wallumbilla, and lived there all his life. He was a grazier. By this action, the deceased's widow and his daughters challenge one important aspect of his last will, -- 2 of 30 -- 2 and aspects of certain land transactions he carried out before he died. The second defendant, Neil York, was Bill's nephew. The other second defendant, Beryl, is Neil's wife. Neil's father is Bill's brother, Sam. Over the years, Bill and Neil developed an extremely close relationship. Bill treated Neil as if he were his own son. Bill used to say, if rather insensitively to his wife and four daughters, that he always regretted not having had a son. Bill's last will (ex.3) is dated 12 April, 1985. There is no issue about its due execution. It was admitted to probate in the Supreme Court, in common form, on 28 August, 1989. By that will, Bill appointed the first defendant, Kevin Leahy, as his executor. Kevin is his daughter Shirley's husband. Bill gave his house at May Street, Wallumbilla (a humble dwelling worth about $20,000) and his car, and his money in the bank (precise amount not established, but probably more than $150,000) to his wife, Stella. By cl.4 of the will, the residue went to his four daughters in equal shares, but was subject to an option in Neil's favour. These are the terms of the option: "PROVIDED HOWEVER that I give my nephew NEIL WILLIAM YORK the option to purchase for the sum of TWO HUNDRED THOUSAND DOLLARS ($200,000.00) all my interest in the partnership known as 'Mt. Leigh Pastoral Company' together with livestock and machinery and my interest in the following lands all in the County of Waldegrave Parish of Wallumbilla SUBJECT to any Mortgages which may be in existence at the time of my death: (a) Portions 8V, 9V, 39V, 40V, 41V, 42V, 43V, 44V, 45V, 46V, 94V, 96V, 100V, 102V, 108V, 120V, 121V, 138AV, 140V, 162, 399V, 400V, 401V, 427V and Road License 876, 480V, 481V, 482V (held as tenant in common with my brother SAMUEL YORK) (b) Portions 294V, 295V, 296V and 691 (held as tenant in common with my said nephew NEIL WILLIAM YORK (c) Portions 13, 653 and Road Licence 875 (held in my name alone) -- 3 of 30 -- 3 I DIRECT that such option to purchase is to be exercised within twelve (12) months of the date of my death by notice in writing to that effect to my Executor BUT IN THE EVENT of the said NEIL WILLIAM YORK failing to exercise the said option I DIRECT my Trustee to sell my interest in the said lands livestock and machinery in such manner as he in his absolute discretion may think fit AND I DECLARE that all monies from the sale of my interest in the said lands livestock and machinery are to form part of my residual estate." Neil exercised the option on about 24 May, 1989 (ex.28). On 1 April, 1990 he paid the $200,000 due upon exercise of the option. As a result, each of Bill's four daughters receives $50,000 (only) from the estate. When Bill made the will, the value of the property held by him and his brother, Sam was $952,038; and Bill's own interest in that was worth $694,922. See ex.49. Before Bill died, he had, on 19 July, 1988 transferred to Neil his interest in part of the property referred to in the option. The value of Bill's interest in the property thus transferred was $696,811. Neil paid only $150,000 for that property, payment of the substantial balance of $546,811 being forgiven under a deed also executed on 19 July, 1988. Bill owned some of the property in common with Sam. Sam gave his interest in that property to Neil (for no consideration), so that Neil consequently gained full ownership. As may be seen, therefore, Neil paid the $200,000 option consideration on 1 April, 1990 although he had earlier gained ownership of some of the property covered by that option, for the $150,000 consideration, in July, 1988. Issues On the first day of the trial, Mr Cooper, Counsel for the plaintiffs, sought leave to amend the statement of claim. Mr Williams, QC, who appeared for the defendants, opposed my granting leave. He did however present an amended defence and counter-claim which anticipated a grant of leave. At the suggestion of Counsel, I deferred ruling at that stage on the question of leave to amend. -- 4 of 30 -- 4 The parties subsequently conducted the trial, which lasted seven days, on the basis of the proposed amended pleadings. I now grant leave to amend in accordance with them. There is no opposition to my doing that. Some of the pleaded issues were not pursued. These are the issues which were pursued: 1. As to the will: (a) Whether Bill granted Neil the option in the will because of Neil's undue influence (and that of his solicitor, Alan Pack). The statement of claim also alleges unconscionability, but the plaintiffs did not pursue that. Neither did they pursue what appeared to be a plea of testamentary incapacity (para.6), and a claim to set aside the will in its entirety. The plaintiffs sought to set aside only the option in cl.4, claiming probate in solemn form of the will so re-formed. (b) Whether the Court should set aside the option because of "the unrighteousness of the transaction". 2. As to the transfers. (a) Whether the transfers and related deed of forgiveness resulted from undue influence exerted by Neil, or his solicitor, Allan Pack, upon Bill; or alternatively, whether they resulted from unconscionable conduct; (b) If so, the plaintiffs seek an order that Neil and Beryl reconvey the subject properties to the estate, or pay the balance of the values of the properties. Some of the land was freehold Torrens land and transfers have been registered. Other was leasehold land under the Land Act . The question arises whether, in the absence of an established plea of fraud, the Court could, by an order -- 5 of 30 -- 5 for reconveyance, disturb Neil's (and Beryl's) prima facie indefeasible title. Mr Cooper contended that this question did not arise because the defendants did not plead that registration was a bar to reconveyance. The plaintiffs did however themselves plead the fact of registration (para.9 - statement of claim), and the second defendants admitted that. While it may perhaps have been more helpful had the defendants specifically asserted the consequence of that registration in the pleading, the issue is in the end one of law; and as the case developed, the plaintiffs could not have remained surprised when the question of the effect of the registration was ultimately pursued. I raised the matter myself on the third day of the trial (p.255), Mr Williams described the case then as an "indefeasibility case" (l.40), and it is the fact that Mr Cooper made submissions in his address dealing with the effect of registration (para.99). There has been no suggestion that had the defendants specifically pleaded that registration was a bar to reconveyance, the plaintiffs would have proceeded differently at trial - as for example, by themselves alleging fraud. That is why I say that the issue was in the end one of law. I consider that the question of the effect of the registration did arise in the case, and I am satisfied that the parties dealt with that question to the extent that they wished to deal with it. (c) Whether the plaintiffs have standing to challenge the transfers and deed of forgiveness on those grounds, and to seek the reconveyance of the property; (d) Whether the 1988 transfers operated to adeem the option in the will. I should record that the first defendant, Kevin Leahy, the executor under the will, played no particular part in the action, although he was through counsel available and ready to participate should he be called on. Challenge to will -- 6 of 30 -- 6 This is limited to the option in favour of Neil, and is based on allegations of undue influence and the "unrighteousness" of the option. As to undue influence there must be coercion, such that "the will of the person who becomes a testator is coerced into doing that which he ... does not desire to do" (Wingrove v. Wingrove (1885) 11 P.D. 81, 82-3). The will of the testator must have been overborne (Boyse v. Rossborough (1856-7) 162 ER 1192, 1211). The plaintiffs relied in part on Bill's alleged feebleness, and that may in theory be relevant if it made him "peculiarly susceptible to improper influence"(cf Mortimer on Probate 2nd ed., pp.62-3). It is clear that if only the option was obtained in this way, that part of the will may be set aside and the rest admitted to probate, as the plaintiffs seek (vol 50 Halsbury (4th) para 226). In para.7 of the statement of claim, the plaintiffs base their allegation of undue influence on these specific particulars - that Neil arranged for Allan Pack to take instructions from Bill for the preparation of the will; that Neil was present when Bill gave those instructions; that Allan Pack, faced with a conflict of interest because he was acting for both Neil and Bill, failed (as did Neil) to seek independent advice for Bill; that Neil failed to draw that to Bill's attention; that Neil allowed Allan Pack to witness the will; that Neil caused Allan Pack to prepare the will, and have it executed, with undue haste; and that Neil procured the grant of the option to purchase Bill's interest in a partnership which imposed a fiduciary duty on Neil towards Bill. In para. 6, the plaintiffs make other allegations about Neil's and Beryl's states of mind, and I see those allegations as relevant to the plea of undue influence. They are that when Bill gave instructions for the will and executed it, Neil and Beryl appreciated a number of circumstances, specifically, his age (81 years), his poor mental health and -- 7 of 30 -- 7 failing eyesight, that he did not appreciate what he was doing or the extent of his property and the competing claims upon it, that the terms of the will were unduly generous to Neil and manifestly unfair to the plaintiffs, that the option gave Neil the opportunity to acquire the property at a gross undervalue (for which there was no justification), and that the will was being prepared with undue haste. I do therefore see both paras. 6 and 7 as being relevant to the case of undue influence. It is convenient now for me to set out in some detail my findings of fact with relation to those matters. There was not a great deal of difference between the witnesses. I agree with Mr Williams that the differences related more to questions of emphasis than markedly differing recollections on matters of abiding significance. 1. Facts (a) General Background Bill was a quiet, reserved man of limited education, who travelled only infrequently away from his home at Wallumbilla. His health was always frail, and deteriorated in his last 10 years, especially after his driver's licence was not renewed in February, 1988. He had a reasonable relationship with his daughters, although he really excluded both them, and Stella his wife, from his business affairs, and rather stolidly considered their true place to be "in the home". Bill's life revolved substantially about his interest in cattle, and the recreations of shooting and football. Bill and his younger brother Sam enjoyed a very successful business relationship over many years. The business of their first partnership, York Brothers, was breeding stud cattle and farming. As a youth, Bill's nephew Neil worked on Bill's and Sam's properties. Neil's relationship with Bill became very close over the years. -- 8 of 30 -- 8 In 1981, Bill, Sam and Neil formed a new partnership, "Mt. Leigh Pastoral Co". That partnership took over the assets of York Brothers, then valued at approximately $229,500 (p.165). Bill and Sam admitted Neil as an equal partner, even though Neil made no capital contribution of his own. Neil took over responsibility for the day to day management of the partnership business. He lived rent free on the property "Wonga Park" which was the best of the partnership properties. Bill had previously looked after the paperwork. Neil assumed responsibility for that when he joined the partnership. As time went on, through the eighties, Bill's role reduced and Neil's increased. There is no doubt that Bill greatly admired Neil, and fully trusted him. For his part, Neil appreciated the high regard his uncle felt for him. (b) Bill's condition I refer to this in view of the allegation that Bill was, when he executed the will, in poor mental health (para.6 Statement of Claim). The solicitor Alan Pack, who prepared the will, said that Bill then appeared to him to know "exactly what he wanted to do" (p.357). There is actually no direct medical evidence about Bill's condition in April, 1985. But there is evidence from other, lay witnesses of their observations of Bill at about that time. For example, Bill's daughter Desley, the first witness at the trial, who saw him about once a year after she moved to Cairns, was quite satisfied about his mental condition in September, 1988 (p.41), albeit 3½ years after the will. Joan was the daughter who saw Bill most. Joan spoke of Bill's appearing dazed and confused from time to time, but she put that as his condition as from late 1988 (p.73). When Joan learnt of the terms of the will made in 1985 she was apparently satisfied that they were "probably" what Bill wanted (p.76). The essence of the daughter Shirley's evidence -- 9 of 30 -- 9 was that Bill's health did not substantially deteriorate until 1988 (p.88). Of Bill's neighbours, Mr Maunder considered that the marked deterioration occurred after Bill's licence was not renewed in 1988 (p.49). Mr Seawright did not see any sign of mental deterioration at all. Bill apparently displayed business acumen when dealing with the bank manager, Mr Wilson, in 1985 (p.218). I infer that as at April, 1985 when Bill executed the will, he was able to appreciate what he was doing. He was not then, as alleged by the plaintiffs, in "poor mental health". He was certainly a physically frail 81 year old man, but nevertheless knowledgeable about his property and affairs generally, and not so enfeebled as to render him especially vulnerable to the influence of a person inclined to take unfair advantage of him. Mr Cooper referred me to some additional matters as suggesting confusion on Bill's part as to what he was doing when he made the will in April, 1985. (i) For example, Bill told Shirley, after he had made the will - she cannot recall when - that he had appointed Kevin Leahy as his executor (to replace the executor under an earlier will), adding: "I would like you to sell (Hemples) to Neil." (p.24) Neil and his wife lived then (and still live) on Hemples. Mr Cooper made the point that the option in the will covered more property than Hemples. On the other hand, Bill may have mentioned Hemples - whenever that conversation occurred - because Hemples stood out in his mind as what was termed in the case, "the jewel in the crown" (p.102), therefore warranting particular mention. In addition, as Mr Williams suggested, this statement confirms at least Bill's comprehension then (whenever it was) of the existence of the office of -- 10 of 30 -- 10 executor, and who it was he had appointed to that role. (ii) Shortly after the making of the will, Bill told Shirley that he wanted Neil to have the option to purchase Hemples for $200,000 (p.86). Rather than suggesting confusion, that statement shows appreciation of the contents of the will: in that it referred to an option, and a consideration of $200,000. The reference to "Hemples" might well be explained as with the statement mentioned in para. (i) above. (iii) After Bill made the will, he told his executor, Kevin Leahy, that he had given Neil the option to buy his share in the partnership and that each of the girls would receive $50,000. This might be regarded as a reasonable relation of what had been done, although obviously not comprehensive or absolutely accurate, and may be regarded as what Bill would have seen as a sufficient account to Kevin of the purport of that part of the will. I would not conclude from any of those matters that the deceased was, probably, confused subsequently about what he had provided for by his will. (c) The preparation and execution of the will Contrary to what the plaintiffs allege, Neil did not initiate the making of the will. I accept that it was Bill who rang Neil and asked to be taken to Roma to make a new will (p.279). Neil consequently made the appointment, with Mr Taylor, who had previously acted for Bill. But when they got to Roma, Mr Taylor was too busy, so his partner, Alan Pack took over. I accept that Mr Pack had not previously met either Bill or Neil. I also accept Alan Pack's and Neil's evidence that when Bill gave instructions to Alan Pack, Neil was not present. Significantly, Bill had had the wit to take a rates -- 11 of 30 -- 11 notice with him to Roma to help him identify with accuracy the land to be made the subject of the option. Before Bill went into the solicitors' offices, while on the footpath outside, he asked Neil what he should give to "his girls", meaning apparently his daughters. Bill nominated $100,000. Neil responded that Bill should give them "twice that much", provoking Bill's comment: "I told mum you would be bloody fair." (p.246) Mr Cooper suggested that that illustrated Neil's influence, in that Bill adopted the precise figure suggested by Neil. But was Bill's will overborne? There had been no previous discussion about the possible content of the will, between Bill and Neil. Bill was by nature disinclined to discuss such matters with anyone. When Bill first raised the issue, on the footpath, Neil responded, but not - as I regard the exchange - with a view to influencing Bill, or exploiting any capacity for domination of Bill. Bill did not speak of the contents of the will until during the journey home, and then Bill simply told Neil what he had done. Bill did not raise the matter for Neil's comment. Mr Cooper challenged this as improbable, and suggested that Bill would more likely have told Neil what he intended doing on the way to Roma. I do not however accept that contention, in view of what I have come to learn of Bill's approach to such affairs. It is also significant that Neil did not take Bill back when Bill executed the will. I accepted the evidence of Neil and Alan Pack as to the circumstances in which the will was prepared and executed, and I find that when Bill executed the will, he understood what he was doing and was acting voluntarily, not subject to the influence of any other person. -- 12 of 30 -- 12 (d) The thrust of the will. The will is a relatively sophisticated document. Mr Cooper raised questions, during the cross-examination of Mr Pack, whether the will precisely recorded Bill's instructions. Those instructions are in typed form in ex.68. There is, certainly, some difference between the instructions and the terms of the will - although the two are obviously to generally similar effect. I do not see any sinister aspect to that discrepancy, and the significant feature is that Bill executed the ultimately prepared will after Alan Pack had taken him through it. The suspicion of the plaintiffs was no doubt aroused because of the generosity of the option to Neil, the disproportionately favourable treatment he was given as against them. There is no doubt in my mind that in view of the size of his estate, Bill could have treated Stella and his daughters more generously. That he did not do so is consistent, however, with the fairly ungenerous way he treated them throughout his life. I accept the evidence of the daughters and Kevin Leahy about that. Bill provided only very basic accommodation for his wife and daughters. He was remarkable frugal. He did not even give birthday presents. His treatment of his wife and daughters in this will was therefore consistent with that general approach, and not, on the other hand, necessarily suggestive of failing mental capacity. One must remember that this is not a "testator's family maintenance" application. Apart from those matters, the will did reflect, in a rational way, Bill's wish to achieve the goal, probably very important to him, of retaining the properties as an integrated farming enterprise. There is plenty of evidence warranting the inference that that was important to him (for example, p.71, l.50, p.35, l.38). All of the -- 13 of 30 -- 13 partnership lands, the farming lands and the grazing lands, complemented each other, and it is natural that Bill would have wished to retain them as a unit, under reliable and experienced management. Bill felt that the place for Stella and his daughters was in the home, not on the land or engaged in business affairs (p.43, l.20, p.47, l.50, p.62, l.50). In light of Bill's enormous affection for Neil, Neil's life-long dedication to those particular properties, and Bill's determination to keep Neil in the partnership (cf. p.36, l.10 as to the Injune matter), it is hardly surprising that Bill would wish to pass the properties to Neil - especially regarding him, as he did, as the "son" he always wanted but never had. 2. Conclusion - undue influence. There is no ground for a conclusion that Neil (or Alan Pack) coerced Bill into doing things by this will which he did not want to do; Bill's will was not "overborne" in the relevant sense. I am satisfied that Bill's execution of the will was the result of "the free exercise of his independent will", in terms of Adenan v. Buise (1984) WAR 61, 68. In the first place, Bill was not, as at April, 1985, in such a feeble state mentally as rendered him vulnerable to pressure. But beyond that, there was in fact no pressure exerted upon him. I am satisfied that by this will he did what he wanted to do, unfair as it may have been to Stella and his daughters. I should mention Mr Cooper's submission that the fiduciary relationship between Bill and Neil itself raised a suspicion as to the propriety of Neil's benefit under the will. Mr Cooper referred to vol 17 Halsbury para. 908. The principal authority cited in Halsbury is Barry v. Butlin (1833) 2 Moo PCC 480, a case of a -- 14 of 30 -- 14 solicitor benefiting under the will he prepared. The fiduciary relationship here, arising from the partnership between Bill and Neil, is a step removed. It may be that in theory that circumstance alone should cause the Court to be more vigilant in considering whether Bill is shown to have known and approved of the contents of the will. But many other circumstances combine more compellingly, I think, to warrant one's being careful in the inquiry: obviously enough, Bill's age, his state of health, and his previously close relationship with Neil over many years involving trust in Neil. In that context, the fact of the fiduciary relationship seems rather incidental. I have necessarily, through the comprehensive evidence put before me, gone through a very detailed examination in my mind of the question of Bill's knowledge and approval of the contents of the will he made, in the course of considering this allegation of undue influence. Conscious of the many limbs of the plaintiffs' challenge, I am in the end satisfied that Bill both knew and voluntarily approved of the contents of his will. It is important to revert to the particulars of undue influence set out in para.7 of the statement of claim. They were not made out by the evidence. Indeed, some apparently important particulars were even contradicted by the only acceptable evidence in the case. For example, Neil did not arrange for Alan Pack to take the instructions for the will from Bill; Neil was not present while Bill gave those instructions; Alan Pack did not act in the matter for Neil (as well as Bill), so that no conflict of interest arose; Neil was in no sense involved personally in the execution of the will; and in no sense did Neil "procure" the granting of the option in the will to himself. -- 15 of 30 -- 15 3. Suspicion. Mr Cooper submitted that a number of circumstances nevertheless raised suspicion about the will, and that that increased the burden on the second defendants - in propounding the will - of establishing that Bill knew and approved of its contents. He referred to Bool v. Bool (1941) St R Qd 26, 39 and Nock v. Austin (1918) 25 CLR 519, 523. Mr Cooper relied essentially on these circumstances as exciting that suspicion: that Neil, who took a substantial potential benefit under the will, was instrumental in having it executed; that Bill was substantially under Neil's influence; that Alan Pack was not a solicitor "independent" of Neil; that Bill was not advised to see a doctor for a medical certificate; that Bill was not given a copy of the will; that the terms of the will were kept secret; that the option was not completely consistent with Bill's instructions; that Bill is not shown to have appreciated the extent of his estate or the claims upon it; and that Bill was subsequently confused about what he had done. I have already dealt sufficiently with most of those particulars. Having considered the evidence, I am left with no residual suspicion about the option in the will, essentially because of these matters. Neil played no part in securing the option - it was Bill's own initiative; at the time Bill prepared and executed the will, he was rational mentally, and not relevantly disadvantaged by his physical debility; the granting of the option had a rational justification, in light of Bill's gratitude for Neil's past assistance and his probable wish to keep all of the properties together under the control of someone he considered reliable and experienced in managing them; although they were, as I feel, treated comparatively meanly, Stella and the daughters did receive more than nominal treatment in the disposition of the estate - Stella, who -- 16 of 30 -- 16 was 78 when Bill died, received property worth more than $170,000, and each of the daughters - independent, married adults - received $50,000. I have covered many other factual matters elsewhere in these reasons, and as may be accepted, have taken all of those matters into account. The matters I have just listed have however featured perhaps more prominently in my approach to the resolution of this particular issue. Subject to the question of "unrighteousness", I would therefore make a grant of probate in solemn form, as sought by the second defendants. (There is, I should say, no issue about the due execution of the will.) 4. "Unrighteousness" of the option Mr Cooper submitted that the second defendants were obliged to establish independently the "righteousness" of the option. He relied on Tanner v. Public Trustee, (1973) NZLR 68. In that case, however, the court's suspicion was immediately aroused by the circumstance that a party benefiting from the will was instrumental in its preparation. It is well established by Barry v. Butlin (1838) 2 Moo PCC 480, 482 and Fulton v. Andrew (1875) LR 7 HL 448, 461 - referred to in Tanner - that persons "instrumental in the framing of a will ... and who obtain a bounty by that will ... have thrown upon them the onus of showing the righteousness of the transaction" (Fulton, pp. 471-2). This case does not fall into that category. What I have already said about the facts is enough to dispose of the ground anyway, if it be separately arguable. 5. Challenge to land transfers In para. 13 of the statement of claim, the plaintiffs allege that the transfers of -- 17 of 30 -- 17 land from Bill to Neil and Beryl on 19 July, 1988 and the deed of forgiveness also executed on that date were induced by undue influence or unconscionable conduct on the part of Neil and Alan Pack. In essence, the particulars are these: Alan Pack acted for Bill in preparing the transfers and the deed, and did not advise him to seek independent advice, although he (Pack) was subject to a conflict of interest; Pack witnessed the transfers in the deed; Neil exerted influence over Bill in partnership affairs; the transfers acknowledged the payment of the entire "consideration", but it was not in fact paid; the transfers were made forthwith, although payment of the balance owing was not secured; and the transfers and the deed were shams, prepared with undue haste at the behest of the second defendants, and without independent advice to Bill. Those particulars are pleaded against the background of para.12 of the statement of claim which alleges that at the time of execution of the transfers and deed, the second defendants appreciated, in essence: Bill's age - then 84 years; that Bill's mental health and eyesight were poor; that Bill consequently did not appreciate what he was doing, and the extent of his property; that Bill's memory was defective and untrustworthy; that Neil was conducting the partnership affairs to Bill's total exclusion (because of his forgetfulness, impaired mental health and inability to involve himself efficiently); and that Neil and Sam did not, as co-transferors, agree to forgive the unpaid consideration. 1. Standing The second defendants challenge the plaintiffs' standing to claim relief in respect of these transfers and the deed. The plaintiffs claim the right to bring the proceedings, as beneficiaries, on behalf of the estate, because the first defendant as executor has -- 18 of 30 -- 18 failed and refused to do so himself (there is evidence of that at p.6 l.38), and because, in their claim for equitable relief, the circumstances on which they rely are "exceptional" or "special". Mr Cooper relies on Ramage v. Waclaw (1988) 12 NSWLR 84. Alternatively, the plaintiffs claim that their right to sue was established by Master White's order of 5 September, 1991, or that they should be granted assistance under s.6 or s.49(2) of the Succession Act. Master White's order, which is in ex.42, is not to be read as determining the issue of standing. I am however satisfied that the plaintiffs' right to bring the proceedings is sufficiently arguable on the basis dealt with by Powell J at p.91 of Ramage to warrant my considering the facts relating to this challenge. I am not to be taken however as concluding that the plaintiffs do have the necessary standing, and I observe that there are grounds on which the Ramage approach could be considered inapplicable here. 2. Facts (a) Background I accept Neil's evidence that after selling his Injune property, he had $150,000 available to him, and so approached Bill in late 1987 or early 1988 and asked whether Bill would be interested in selling Neil his interest in the land south of the railway line. (That land may readily be seen depicted on the plan ex.1.) Neil suggested a price of $150,000. (I mention Mr Cooper's contention that Neil thereby in a sense "deceived" Bill, by not offering more, on the basis that he could have borrowed additional moneys. I do not however see that as a matter of great significance in the end. The other view is that by offering $150,000, albeit much less than the value of the land, Neil was merely "floating" a possibility which Bill may or may not have accepted.) -- 19 of 30 -- 19 Bill did however agree to the proposal, saying that he had better do it "before someone causes bloody trouble" (p.250), or as he put it during cross-examination: "I had better do that just in case them bastards cause trouble." (p.301 l.15). Sam had agreed to give Neil his interest in the lands as co-owner. Neil had the land valued by Mr Watkins, for stamp duty purposes, on the advice of the solicitor Mr Pack. Mr Pack drew up the contracts, in which he applied the values to the respective properties as the prices, and the relevant stamp duty declarations and transfers, and a deed of forgiveness, covering the difference between the value of the properties as assessed by Mr Watkins and the $150,000 to be paid by Neil. Neil paid the $150,000, and transfers into his and Beryl's names were effected and registered. All of the relevant documentation had been signed by Bill, Sam, Neil and Beryl in Roma on 19 July, 1988. (b) Bill's condition (i) Generally, before 19 July, 1988. Probably from when Bill's driving licence was not renewed upon his 84th birthday in February, 1988, his condition deteriorated more rapidly (although Kevin Leahy did not see it that way - p.146 l.25). The recollection of the witnesses certainly varied. No doubt Bill had "good days" and "bad days", and that may explain the differing recollections. One should probably concentrate therefore on the evidence of his condition on 19 July, 1988. But I will nevertheless mention the following few aspects of the witnesses' evidence. I have already mentioned the daughter Desley's evidence that Bill appeared to be mentally competent in September 1988, and that Joan spoke of his being dazed and confused mainly from the latter part of that year. Mr Seawright saw no sign of -- 20 of 30 -- 20 mental deterioration, although Mr Maunder noted marked deterioration from the time of the loss of licence in February, 1988. I would however interpret Mr Maunder's evidence as meaning that Bill's position waxed and waned. Bill's failing to identify people may be consistent with fading eyesight: Joan, who knew him well, suggested that that was the explanation (p.79). Bill's failure to acknowledge Sergeant Lane by name may well have been explained by antipathy because of the police officer's refusal to renew the much valued licence, (p.205, l.45). I conclude that Bill's condition did probably wax and wane, leaving open the possibility that 19 July, 1988 was a "good" day. That conclusion is also generally consistent with my assessment of the evidence on those matters from other witnesses, Shirley and Kevin Leahy, Mr Inch and Mr Watkins. (ii) 19 July, 1988 The plaintiffs stress Bill's having been in bed with the flu for the previous week. But as Mr Maunder said, if Bill got sick he tended to "chuck in the sponge" and "go to bed" (p.46, l.15). It is therefore not clear just how sick Bill still was on 19 July. There is no evidence that a doctor had been called. When Joan saw him before he left with Neil, his wife Stella was helping him dress, but this was an ordinary feature of their life together (p.77, l.15). Before Bill and Sam signed the transfers and the deed on 19 July, Alan Pack had them examined by Dr Hatcher. Dr Hatcher's report, confirming them to be of sound mind and capable of making decisions about their personal affairs, is ex.54. It may have been a brief examination - some 10 minutes - and it is true that the doctor did not previously know Bill, but I am satisfied that he was properly briefed about the relevant issue by Mr Pack, and that he sufficiently explored with Bill the question of his -- 21 of 30 -- 21 relevant capacities. I accepted Dr Hatcher's evidence: it was of considerable significance to my resolution of this issue. I mention that Alan Pack and Neil also felt that Bill knew what he was doing. I am satisfied, in principal reliance on the evidence of Dr Hatcher, but also in the context of the other evidence as to Bill's condition, that this was "a good day", and that Bill had the capacity then to know what he was doing and to make informed decisions about the disposition of his property. (c) Documentation There were unusual aspects to the documentation drawn up by the solicitor, Alan Pack, to record these transactions. For example, the transfers acknowledge payments made on 19 July which were not made, and the contracts nominated 9 September, 1988 as a settlement date, although the transfers really took effect immediately subject only to the consent of the Lands Administration Commission in respect of the leasehold property. The transactions could have been effected much more simply. Mr Williams conceded that. Mr Cooper contended that they were "dressed up" artificially, to give them an appearance of authenticity intended to deter further inquiries. I must say that I found Mr Pack's explanation of some of these features unsatisfactory, but I nevertheless do not impute improper motives to him, and I am satisfied that Neil had left the documentation entirely to him. There were other substantial criticisms levelled at Alan Pack: as to his inability to substantiate his claim that the 9 September settlement date was extended by agreement; as to why the transfers were not concluded in early August, 1988 as could have been done; as to why he did not ensure Neil's payment of $150,000 until 28 -- 22 of 30 -- 22 November, 1988, after his meeting with the Leahys; as to why he acted for both Neil, Sam and Bill without alerting them to the desirability of their seeking independent advice where he, Pack, was plainly subject to conflicts of interest; as to why he focused, through Dr Hatcher, on Bill's mental condition (from the medical point of view), ignoring the possibilities of undue influence or unconscionable conduct. Again, I have to say that I found his responses to at least some of those challenges unsatisfactory. But in the end, I was not prepared to infer dishonesty or impropriety against Mr Pack. I take the view, rather, that he did not structure the transaction, or implement it, with the sort of close attention to detail one might reasonably have expected of a solicitor handling such a transaction. He did not turn his mind with sufficient acuity to some of the issues involved. But with particular relation to the question of independent advice, I am not prepared to conclude that had such advice been given, the result would have been any different. (d) Independent advice The question whether Mr Pack should have counselled Bill to seek independent legal advice warrants elaboration. In acting for both Bill and Neil, Mr Pack was subject to conflicting interests, even though he claimed he was not (p.394, l.10). On the one hand, Neil's interest was to secure a very substantial block of property for what was, on any view, a very low consideration. Bill's differing interest, on a purely rational level, was to secure adequate return for that property. Bill was in my view content to take the $150,000 because of other considerations. But a rational analysis does plainly point up that conflict. Adding in other objectively discernible factors - Bill's age (then 84), Bill's -- 23 of 30 -- 23 obvious physical debility, Bill's probable mental decline (ordinarily associated with such advancing years), and the high likelihood of dismay in Bill's immediate family at his being prepared to part with such valuable property for such disproportionately small return - a prudent solicitor should actively have canvassed with Bill the issue of his taking independent advice from another solicitor who was not also acting for Neil. Mr Pack claimed in his evidence that the only potential problem was capacity (p.392), thereby justifying his recourse to Dr Hatcher, but the potential challenge was broader than that. Why did Mr Pack not refer Bill to another solicitor for indisputably independent advice in these circumstances? Essentially, I believe, because he feared that he would thereby offend Bill. As he put it, (p.392), "if you refer any one of your clients to another firm of practitioners within the town ... you are likely to offend that particular family member, if you drafted them off as opposed to the other." This comes perilously close to self interest. In Ponder v. Burmeister (1909) SASR 62, 89 a solicitor confronted with a similar problem said that his client "might have been offended and ... gone some where else with his business". Way CJ rightly condemned that as a "miserable plea of self-interest". Mr Pack claimed that "the usual thing to do", in order to gain "a little bit of protection" in such cases, was "to send (the client) to the medical practitioner" (p.392). When challenged, he suggested that a requirement for reference to another solicitor failed to take account of "the way that country practices work in regard to family transactions". I doubt that cases of this special complexion would arise so frequently as to render the ordinary prudent requirement unduly burdensome. It is at least disappointing that Mr Pack did not satisfy that requirement here. But that does not -- 24 of 30 -- 24 ultimately benefit the plaintiffs in the resolution of the case, because I nevertheless accept Mr Pack's evidence that he personally was satisfied with the apparent bona fides of the intended transaction (see, for example, p.367, l.55, p.395, l.10) and accepting Dr Hatcher's evidence, I conclude that the doctor's examination of Bill gives sufficient independent assurance of Bill's capacity and independence in the matter. I am also satisfied that had Bill been independently advised by another lawyer, the end result would likely have been the same. (f) Subsequent accounts Bill gave differing accounts to his daughters of what he had done that day. On 20 July, he told Joan that he had gone to the bank. On that day or the next, he told Shirley that he had been to Roma to do his tax. In December, he told Desley that he had sold land to a fertilizer company. There is a possible explanation for those misstatements. Joan said that Bill sensed that she was "checking up on him" and probably for that reason "deflected" her question (p.78). Shirley did not accept that that was what Bill was doing in her case. As to the statement to Desley, it is true that by December, Bill had granted an option to Queensland Fertilizers Limited over some land. But all of the misstatements (notwithstanding Shirley's view) are consistent with Bill's well established disinclination to discuss his business affairs with his daughters. They do not to my mind warrant the inference that he was mentally confused about what he had done. It is convenient in this context to mention Beryl York's statement, in response to a question from Shirley, shortly after 19 June, that on that day they had taken Bill to Roma to see a solicitor about the sale of some property to a fertilizer company. That was untrue. That it was said by Beryl - who did not give evidence - is obviously -- 25 of 30 -- 25 consistent with her wishing to conceal from Shirley the true reason for the trip to Roma. I infer that Beryl, and no doubt Neil also, recognized the prospect of trouble from Bill's daughters if the truth came out. That is an unfortunate circumstance, but it does not warrant the conclusion that Neil and Beryl were "up to no good". It is equally consistent with their realizing that they had been treated disproportionately generously, and naturally wishing to keep their benefit secure, determining to keep the details from those who might be expected to seek to upset it. (f) Meeting on 24 November, 1988 On 24 November, 1988 Kevin and Shirley Leahy took Bill to see Alan Pack. Although the Leahys were interested in securing a power of attorney, and obtained a report from Dr Carlisle (ex.32) as to Bill's condition, Mr Pack approached the matter on the basis that Bill's purpose was the revision of his 1985 will, desirable because of the property transactions earlier that year in July. There was some difference between the accounts of the Leahys on the one hand, and Mr Pack on the other. Mr Pack's account was aided by his diary memorandum, ex.71. In the end I did not regard the differences between the accounts as particularly significant. Indeed, I did not draw great significance from the evidence of the meeting with relation to the overall resolution of the case. I do however take Mr Williams' point that what transpired did suggest Bill's determination to hold, in an informed way, to the dispositions which he had made and the will which he had executed. 3. Undue influence The plaintiffs contend that Neil improperly used his ascendancy over Bill for his (Neil's) own benefit, so that Bill's acts, in agreeing to those transfers and the deed, -- 26 of 30 -- 26 were not his free voluntary acts (cf. Commonwealth Bank v. Amadio (1982-3) 151 CLR 447, 474-5). Undue influence should be presumed, Mr Cooper submitted, because of Neil's relationship with Bill. The relationship between Bill and Neil was not sufficient to raise a presumption of undue influence. I accept Desley's description of Bill as a "very independent man" (p.43, l.45). Mr Maunder said that he had an "opinion of his own" (p.46, l.10). According to Joan, he "made his own decisions and stuck" to them (p.71, l.15). There was obviously a lot of other evidence bearing on this matter. Bill was extremely fond of Neil, certainly, but I do not conclude that that degenerated into utter, questioning reliance or dependence. In fact, there was no undue influence exerted by Neil upon Bill to induce these transactions. I note at once that they helped to achieve Bill's general intention that Neil should acquire all of the properties, a matter to which I referred earlier. The transactions were generally consistent with the intent of the 1985 will. According to Joan, Bill went off "quite happily" with Neil on the relevant day, 19 June (p.81, l.50). Mr Pack's evidence is inconsistent with Bill's being subject to improper influence. So is Dr Hatcher's. If, as alleged, Mr Pack was party to the alleged impropriety, it does seem odd that he would have taken the precaution of having Bill examined by Dr Hatcher. There is the added circumstance that when Bill returned to see Alan Pack on 28 July, 1988, in the absence of Neil, he was not repenting of the transaction nine days earlier, but, as if in possible extension of that transaction, was actively considering whether he should charge Neil for the balance of his interest in the partnership or give it to him for nothing (p.370, l.10). The allegation of undue influence was not made out. -- 27 of 30 -- 27 4. Unconscionability This concept is explained in Amadio, and, more recently, Louth v. Diprose (1992) 175 CLR 621, 626-7. From what I have said already, it will be apparent that I do not regard Bill as having been in a position of "special disability" vis-a-vis Neil, in July, 1988, and so that doctrine does not apply. 5. It is not necessary therefore for me to consider the question of reconveyance. ADEMPTION Mr Cooper submitted finally that the transfers made in 1988 adeemed the option granted in the will, because the property covered by the transfers was included in the option. Whether ademption has occurred depends eventually on the intention of the testator or donor (cf. vol 16 Halsbury (4th) para. 1407). Mr Cooper submitted that I should attribute to Bill an intention that the option to purchase the land (as distinct from the partnership assets) should cease as from 19 July, 1988 when the transfers were made; consistently with Bill's and Alan Pack's realisation, from that time, that the will should be withdrawn. The desirability of redrafting the will in light of the transfers was certainly raised between them, although Bill did not, in the end, change his will. On the other hand, the second defendants submitted that the doctrine does not apply. Since the will was in fact not redrawn, the option remained available for exercise, but applicable only to the property remaining in Bill's ownership, with the consequence that in return for the $200,000, Neil would receive less property than Bill intended when executing the will in 1985. A question one might ask is whether, subsequent to the transfers, Bill would, as at the time of his death, nevertheless have intended that Neil pay the $200,000 for the -- 28 of 30 -- 28 lesser amount of property then remaining. Alternatively, should one infer an intention that the option simply no longer apply? In my opinion that sort of analysis does not arise, because the doctrine of ademption is inapplicable. A testamentary gift is ordinarily adeemed (or taken away from the donee) by a subsequent disposition by the testator of the subject matter of the gift (vol.50 Halsbury (4th) para 342). The "testamentary gift" here is the grant of the option. I observe at once that it is not a residuary gift. The option relates to specified property. The residuary gift is to Bill's daughters. It is true, as Mr Williams submitted, that there can be no ademption of a residuary gift apart from questions of double portions (in Re Walker (1921) 2 Ch 63, 66), and that because of the relationship between Bill and Neil, this is not a double portions situation. But as I have said, one should not characterise this option as a gift of residue at all. Mr Williams rightly submitted that the doctrine could then apply only if the option amounted to a "specific gift". This option was no more than the right to purchase property for a specified consideration. I agree with the conclusion of Roxburgh J in re Eve (1956) 1 Ch 479, 482-3, that even though the consideration be markedly less than the value of the subject property, the grant of the option should not be regarded as a specific gift or bequest, either of the property subject to it, or of any "strong element of bounty" contained within it. See also Sharpe v. Union Trustee Company of Australia Ltd (1944) 69 CLR 549, 557: "the gift is not a devise or bequest of property but an option to purchase property ..." (per Williams J). I therefore conclude that the doctrine of ademption does not apply. If the doctrine had applied, it would have raised a presumption that Bill intended -- 29 of 30 -- 29 to satisfy the grant of the option by the earlier transfers (vol 16 Halsbury para 1407). That presumption might nevertheless have been rebutted by extrinsic evidence (in re Tussaud's Estate (1878) 9 Ch D 363, 373-5). It might, for example, have been argued here that Bill's ultimate disinclination to redraft the will, notwithstanding the transfers, suggested an intention that the option continue to operate, albeit with reference to the lesser quantity of property. It might also have been suggested that the extent of difference between the property subject to the transfers and the property subject to the option itself excluded the presumption, as in Tussaud. But it is not necessary for me to pursue those issues because of my conclusion that the doctrine is simply inapplicable, because the grant of the option did not amount either to a specific gift or to a residuary gift. It follows that the option survived the 1988 transfers, and could be exercised, but only with relation to such of the specified properties as Bill still owned when he died. Conclusion I dismiss the claim of the plaintiffs. On the counter-claim of the second defendants, there will be: 1. a declaration that the will dated 12 April, 1985, which is ex.3, was the last true will of the deceased William York, duly made and executed according to law; 2. an order that a grant of probate thereof should issue in solemn form of law, subject to the formal requirements, if any, of the Registrar. -- 30 of 30 --