Archer v Archer No. 2 [1999] NSWSC 500

New South Wales Supreme Court CITATION : Archer v Archer No. 2 [1999] NSWSC 500 CURRENT JURISDICTION : Equity FILE NUMBER(S) : 2040 of 1995 HEARING DATE(S) : 10 and 11 May 1999 JUDGMENT DATE : 27 May 1999

PARTIES : Una Evelyn Archer (Plaintiff) Trevor Robert Archer (Defendant) JUDGMENT OF : Windeyer J at 1

COUNSEL : Mr. B.A. Coles QC with him Mr. P.B. Walsh (Plaintiff) Mr. J. Trebeck (Defendant) SOLICITORS : Garden & Montgomerie (Plaintiff) Peter Adams & Co (Defendant) CATCHWORDS : EQUITY UNDUE INFLUENCE - gift of farm by parent to one of three sons - chain of events leading up to transfer - documents signed by all parties in office of one solicitor - claim built on document held to be a forgery; UNCONSCIONABLE TRANSACTION - claim founded on same facts - no special disadvantage - no opportunity by trickery or otherwise - no improper procuring of benefit Bridgewater v Leahy (1988) 158 ALR 66 CASES CITED : Commercial Bank of Australia Limited v Amadio (1983) 151 CLR 447 Johnson v Buttress (1936) 56 CLR 113 DECISION : Claim dismissed

- 29 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

WINDEYER J

THURSDAY 27 MAY 1999

2040/95 UNA EVELYN ARCHER v TREVOR ROBERT ARCHER

JUDGMENT Issue 1 The plaintiff, Una Evelyn Archer, (Mrs. Archer) originally sought an order that a transfer by her to her son Trevor of a one half interest in a property known as 'Sussex' near Cudal be set aside on the ground of undue influence. That property has been sold and she now seeks an order that a sum of money, being one third of the proceeds of sale of 'Sussex', being the same as two thirds of a one half interest, be paid to her on the grounds of the transfer of the two thirds of her one half share was obtained by undue influence or through unconscionable conduct of Trevor. The question is whether or not she is entitled to relief. Facts 2 This is a very sad case. The original claim was brought by Mrs. Archer and her husband, Ernest Robert Archer (Mr Archer) against their son Trevor, both claiming that the transfer by them of 'Sussex' to Trevor was procured by undue influence. 3 Those proceedings were heard over 11 days in 1995 before Simos J when the claim of Mr. Archer was dismissed but the claim of Mrs. Archer was upheld in part and a declaration made that the transfer by her to Trevor of her one half interest in the property 'Sussex' was as to two thirds of that one half procured by the undue influence of Trevor. Other orders were made which are not relevant at the present time. Mr. Trevor Archer appealed to the Court of Appeal against the finding of undue influence. That appeal was heard by the Court of Appeal on 18 August 1998 and its judgment was delivered on 23 February 1999. The Court of Appeal allowed the appeal and set aside the orders made by Simos J, upholding part of Mrs. Archer's claim and ordered that there be a new trial of her claims. 4 The new trial was heard before me on 10, 11 and 12 May 1999. As Mr. Archer had not filed any appeal against the decision of Simos J that he claimed that the transfer of his one half share of 'Sussex' had been obtained by undue influence, the new trial before me was only of the claim of Mrs. Archer, and only in respect of the fund representing two thirds of her notional one half interest in the property, namely one third of the proceeds of sale of that property, that amount being agreed and held in a trust account in the names of the solicitors for the parties. However, as I will explain the action was founded not only on undue influence, but on unconscionable conduct as well. 5 The new trial before me proceeded quite quickly as a result of certain procedural directions or orders made by Bryson J that the evidence in the original trial be evidence in the new trial and that cross-examination of witnesses be limited in time and directed towards the major matters of contention. In view of the very substantial amounts which would have been and have been incurred for costs in this action in comparison to the amount involved it seems to me those orders were very effective, and counsel on both sides should be congratulated on their efficient handling of the new trial in the bounds of those procedural directions. It is proper to say that while some comments were made about the directions by Mr. Coles QC and the use I could make of the material he made no application for their variation and the hearing proceeded on the basis they were in place. It is of course obvious that a lot of the material is irrelevant to the trial before me, particularly insofar as it related to a claim about a house and the partnership. I have had no regard to that irrelevant material. I have received a further communication from Mr. Coles about this, which I have disregarded. Uncontested facts 6 Mr. Archer was born in 1919 and his wife in 1920. At about the time the events under consideration in this action occurred they were aged about 70 and 69 respectively. They were married in 1946. They have three children, Colin born in 1949, Trevor born in 1952 and Neville born in 1956. Mr. Archer purchased a property known as "'Glenroy'" near Cudal in 1948. He and his wife conducted a farming enterprise on that property, Trevor became a partner in 1978 and Neville a partner in 1980, Neville withdrawing from the partnership in 1987. Another property in the Cudal area known as "'Sussex'" had been owned by Mrs. Archer's father. That property was purchased by Mr. and Mrs. Archer in 1979 from the estate, they buying out Mrs. Archer's sisters. The purchase moneys were provided at least in part by loans from the Rural Assistance Board of $30 000, from the Commercial Banking Company of Sydney Limited for $27 000 and from the four sisters of Mrs. Archer for $40 000. All these loans were secured by mortgage over 'Sussex'. It had been originally intended that 'Sussex' would be purchased in the names of Mr. and Mrs. Archer and Trevor, but that was not possible due to the conditions under which Rural Assistance Board loans were available, thus Trevor did not become a purchaser although he was a guarantor of the liability of his parents under the Rural Assistance Board mortgage. 7 Trevor married his wife Sue Archer in 1982 and they lived in a cottage on 'Sussex' and for a time Neville lived there as well. After Neville withdrew from the partnership a new partnership was formed in which Mr. and Mrs. Archer had a one half share and Trevor a one half share. This occurred in March 1989. 8 Trevor continued to work on the two properties and from time to time was engaged in additional employment with a security company at Orange. Both he and his wife were concerned about their future security at 'Sussex'. Trevor discussed this with his father at various times, particularly during 1989 and I will come back to these matters later for determination. 9 Mr. and Mrs. Archer had both made wills on 1 March 1989 which were in effect mirror wills under which they each gave their estate to the other, provided that other survived, but if that did not happen then 'Sussex' was given to Trevor and the residue of the estate was given to the three sons equally, except that the share of Colin was charged with payment of certain legacies. Trevor said he was given a copy of those wills by his mother and I will come back to that later because Mr. and Mrs. Archer denied that they had given copies to him. In September 1989 the mortgage loan to the sisters of Mrs. Archer was repaid and the Rural Assistance Board mortgage was discharged, moneys being advanced by the State Bank of New South Wales. The Rural Assistance Board mortgage was over both 'Sussex' and 'Glenroy', but the State Bank substituted loan was secured only on 'Glenroy'. 10 On 21 September 1989 Trevor consulted Mr. Cheney of Messrs. Cheney and Wilson solicitors of Orange, doing this he says as a result of a conversation with his father who told him, so Trevor said, to find out how much it would cost to transfer 'Sussex' into his name. 11 After the visit to Messrs. Cheney and Wilson, Mr. Cheney wrote to Trevor setting out the desirability of having a transfer to himself effected during the lifetime of his parents and as quickly as possible. There is then some dispute about what happened, Trevor saying that there were discussions when it was agreed that the transfer would go ahead but to him alone and the parents denying that. 12 On 16 October Trevor and his wife saw Mr. Cheney and told him Mr. and Mrs. Archer had agreed to transfer 'Sussex' to Trevor, but not to Sue. As a result of this Mr. Cheney prepared the necessary documents. Mr. Archer suffered a heart attack on 6 November 1989 and was in hospital in Orange for a time, being discharged on 17 November 1989 with arrangements that he would consult his general practitioner, Dr. Winkworth within a week and then see his specialist treating doctor shortly thereafter. 13 On either 24 November 1989 or 1 December 1989 Mr. and Mrs. Archer were driven by Trevor and his wife to the office of Messrs. Cheney and Wilson where they signed a contract for the sale of 'Sussex' to Trevor together with a transfer of that property and an authority directed to the State Bank to send the title deeds to Cheney and Wilson. Mr. Cheney and Trevor say that this took place on 24 November 1989. Mrs Archer says it took place on 1 December. Mr. Archer really does not know. In evidence before me he said he saw Dr. Shannon on the critical day, but later he seemed to concede that it must have happened on 24 November. After the documents were signed in the office of Mr. Cheney, Mr. Archer was taken to a medical appointment, either with Dr. Ridge who is Dr. Winkworth's partner or Dr. Shannon. 14 The consideration shown in the agreement for sale was $436,500. I will come back to this. Mr. Cheney said that was his method of dealing with what he described as "inter-generational transfers of rural property" in 1989 although it was never intended that any money should be paid. It is not the case of Mrs. Archer that any moneys were to be paid. On 5 December 1989 Mr. Cheney gave instructions to Messrs. Toner Savage & Co., to prepare a valuation; wrote to the National Australia Bank asking it to discharge what was the old Commercial Banking Company of Sydney Limited mortgage; and to the State Bank at Canowindra for the deeds and a discharge of the mortgage which had previously existed to that bank to secure the Rural Assistance Board debt. There was an error about the banks but that does not matter. 15 By some lucky co-incidence which is likely to have been pre-arranged, the valuation came in at the purchase price stated in the contract and after the National Australia Bank received an authority signed by Mr. and Mrs. Archer for the handing over of the title deeds, Mr. Cheney completed the contract and transfer by dating the contract 20 March and the transfer 9 April, and arranged for the discharges and the transfer to be registered. 16 In the meantime, according to Mrs. Archer, she wrote a note on the date of signing these documents which is dated in two places 1 December 1989 in which she expressed her dismay at what she had done. She said that she had destroyed the original of this but had made a fair copy of it later on. Unfortunately the original of that fair copy, which is exhibit 18 in the proceedings, is somehow missing from the court papers, but that does not matter for this decision as it is reproduced in the appeal books which were used for the purposes of the re-hearing before me. 17 During December 1989 there seem to have been the usual family activities including a birthday party for Mr. Archer and a family Christmas at 'Glenroy' when there was no complaint about anything that had been done, but no mention of it either. 18 On 2 March 1990, Mr. and Mrs. Archer signed an authority to the National Bank of Australia at Orange authorising it to send the title deeds to 'Sussex' to Cheney and Wilson. This was the day or day after Mr. Archer returned home from a period in hospital in Sydney. 19 On 12 September 1990, Mr. and Mrs. Archer made new wills. They each appointed the other and Trevor as executors and gave the whole of their estate to the other. In the event that the spouse did not survive then each will gave a one half share in the estate to Colin, once again charged with payment of certain legacies and a one half share to Neville. There were some other provisions which do not matter. Each will contained the following clause: 8. I DECLARE that I have made no provision for my son Trevor Robert Archer as I have provided adequately for him during my lifetime. 20 Things seemed to proceed along reasonably well during 1991, Trevor and his wife conducting some independent activities on 'Sussex', but generally so far as one can tell still using the land for partnership activities. Some time, probably in April 1992, Mrs Archer obtained a copy of the contract of sale from Mr. Cheney as a result of a discussion with one of her sons, who had been told by Trevor that 'Sussex' was his. 21 On 10 December 1992 Messrs. Timmins & Partners, who have remained the solicitors for Mrs. Archer, wrote to Messrs. Cheney and Wilson, stating that they acted for Neville and Mr. and Mrs. Archer and seeking further information to which Mr. Cheney responded on 22 December 1992, but his letter was quite inaccurate as to dates. The next day he wrote to Trevor with a copy of the letter from Timmins & Partners and his response and stated that he would not be able to act further. On 4 January Trevor wrote to Mr. Cheney acknowledging the letter and asking for a copy of the agreement or the transfer payment "which released 'Sussex' to me that Mr. and Mrs. E.R. Archer signed on the day of 24 November 1998 at 12.30 p.m. in your office". The last two figures in the date were obviously transposed and it has not been suggested otherwise. Trevor had no idea of the claim of Mrs. Archer that she signed on 1 December when he wrote his letter. 22 On 26 January 1993 Trevor went to see his parents at 'Glenroy' and had a conversation with them and quite wrongly taped it without their knowledge. Apart from going some distance towards discrediting Trevor the taped conversation in the main does acknowledge that one of the contested conversations to which I will come at least took place even if what was discussed is not agreed, and it is also reasonably clear that the engagement of Messrs. Timmins & Co was brought about through dissatisfaction of the other two sons with what had happened. 23 In early 1994, Trevor injured his back at work and apparently decided to sell 'Sussex'. In March 1995 Mr. and Mrs. Archer entered caveats against the title to 'Sussex'. These proceedings commenced as a result of lapsing notices having been served and on 28 April 1995 after some procedural difficulties had been overcome because the original caveat had lapsed, I gave leave to Mr. and Mrs. Archer to lodge further caveats. In any event a statement of claim was filed in May 1995 and the proceedings were expedited. 24 On 19 November 1996 an order was made giving Trevor power to sell 'Sussex' on condition that the one third of net proceeds of sale (not making any allowance for the sums required to discharge any mortgage or encumbrance) be paid into an account in the joint names of the solicitors for the parties to abide the outcome of the appeal to the Court of Appeal. It is those moneys, which now, with interest, total something over $214 000, which are the subject matter of this new trial. There is also to be determined in this new trial the question of who should pay the costs of the original proceedings before Simos J. 25 When this new trial was opened before me by Mr. Coles QC, senior counsel for the plaintiff, Mrs Archer, he stated that the claim was first for undue influence and second for unconscionable conduct in accordance with the principles laid down by the High Court in Bridgewater & Ors v Leahy & Ors (1998) 158 ALR 66. There were some procedural difficulties about this because the unconscionability claim had never been allowed as a separate claim before Simos J but was treated merely as additional matter on the claim for undue influence. Thus the claim in respect of which a retrial was ordered was really only the claim based on undue influence. Nevertheless I gave a judgment about this on the first day allowing an amendment thereby allowing paragraphs 24 to 26A of the amended statement of claim to be treated as a claim separate from the claim based on undue influence. As I have explained to counsel, in hindsight I may have made a mistake in allowing the claim to be made as it is not clear the Court of Appeal did not preclude it. However, it was allowed on the basis the plaintiff would call no additional evidence and the defendant did not seek an adjournment, which I indicated I would have allowed, to deal with the claim, so that no harm was done. 26 The claim based on undue influence was brought on allegations that Trevor brought constant pressure on Mr. and Mrs. Archer to transfer 'Sussex' to them; that Mr. Archer was in poor health and Mrs Archer was concerned about this; they were taken to the office of a solicitor whom they did not know without any notice, and induced to sign the contract and transfer without any advice about the transaction; that they were pressured into signing the documents immediately on their first visit to Mr. Cheney's office without the opportunity of obtaining legal advice on their own position; and that Mrs. Archer was so concerned about the effect on her husband's health if she did not sign that she went ahead and did so. So far as the claim based on unconscionability is concerned it is said in addition that the plaintiff was in a position of special disadvantage when dealing with Trevor by reason of the illness of Mr. Archer, inexperience, inequality of bargaining power and inability to protect her own interests and that Trevor took unconscionable advantage of these disabilities. An important position adopted on both counts is the allegation that Trevor was concerned and worried after his father's heart attack in November that he might die, so that it was necessary to act immediately to secure his position. In dealing with the claim of Mrs. Archer it is necessary to remember that the claim of Mr. Archer in the original proceedings was dismissed. Contested facts 27 The claim of Mrs. Archer put at its most simple is that she never agreed to transfer her interest in 'Sussex' to Trevor, or certainly no more than a one third interest, that she gave no indication that she was prepared to do so, that she and her husband did not give to Trevor a copy of their 1989 wills and although she recognised their contents she said that as she was younger she expected to survive her husband and that having done so she would make a new will, that after her husband's heart attack he was quite ill, that after his discharge from hospital on 17 November Trevor and his wife had agreed to take them to see Dr. Shannon in Orange at 2.00 p.m. although in earlier evidence she had given a later time of 4.00 p.m, that she and her husband had been picked up by Trevor at about 11.00 a.m. and driven to Orange, that the car had stopped outside the office of Messrs. Cheney and Wilson, that she had no idea why this was but that they were taken up to the office where her husband signed some documents and she signed some documents she saying in various parts of her affidavit and oral evidence that she understood they had something to do with giving some authority to make inquiries about stamp duties or other matters, that they were for the transfer of 'Sussex' to Trevor, and that they were for the transfer of one third of her share to Trevor. Mr. Archer said before me that he thought the documents were something to do with giving management authority over the farm while he was sick. Mrs. Archer says that no proper explanation was given to her, that she was so concerned about her husband's health she went ahead, and that she took no part in the conversation in Mr. Cheney's office. She said that after the documents were signed they left and went to Dr. Shannon. She then says that on the same night at 11.00 o'clock she was so concerned after thinking about what she had done that she wrote the note which is Exhibit 18. It is necessary to set that out in full as follows: ''Glenroy'' Cudal 1st December 1989