Motuzyshyn v Bissell [2005] NSWSC 1134

New South Wales Supreme Court

CITATION : Motuzyshyn v Bissell [2005] NSWSC 1134

HEARING DATE(S) : 7 November 2005

JUDGMENT DATE : 7 November 2005

JURISDICTION : Equity

JUDGMENT OF : Campbell J

DECISION : Transfer void. Retransfer ordered. Acquaintance to pay amount plaintiff needs to pay to mortgagee to obtain discharge of mortgage.

CATCHWORDS : MENTAL HEALTH - declaration of finding of mental illness or incapacity - transfer by elderly lady of half interest in real estate to an aquaintance, and raising money on mortgage of real estate for the benefit of that acquaintance - capacity to enter - no question of principle

Beatrice Adele Motuzyshyn - Plaintiff Peter Gregory Bissell - First Defendant PARTIES : Lawteal Pty Ltd - Second Defendant Stanley Arthur Price - Third Defendant Dennis James Biggs - Fourth Defendant

FILE NUMBER(S) : SC 6830/04

A Gee - Plaintiff No Appearance - First Defendant A Rogers - Second Defendant COUNSEL : J Baker, solicitor - Third Defendant A Jamieson - Fourth Defendant

C G Taylor & Son - Plaintiff No Appearance - First Defendant R L Kremnizer & Co - Second Defendant SOLICITORS : Mallesons Stephen Jaques - Third Defendant Bond Lawyers - Fourth Defendant

LOWER COURT JURISDICTION :

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST

CAMPBELL J

MONDAY 7 NOVEMBER 2005

6830/04 BEATRICE ADELE MOTUZYSHYN v PETER GREGORY BISSELL & ORS JUDGMENT – Ex Tempore 1 HIS HONOUR: The plaintiff is a lady who was born in 1916. In 2003 her former husband had been dead for many years. It is unclear whether she had been divorced from him at the time of his death. She owned, unencumbered, a house property located at 35 Clovelly Road, Randwick. 2 She had had a friend, George Roby, who died in approximately 2000 or 2001, with whom she had carried out many social activities. She came to know the first defendant, Peter Bissell, at the New South Wales Leagues Club in mid to late 2002, and met him there twice. The plaintiff at that time was living on a pension. On the third occasion she met him there in mid 2003, he told her that he was going to live in a motel. She offered to let him live with her. 3 He moved into a spare room at her house. He had an occupation in the car business, and was involved in taking trips away from Sydney from time to time, sometimes for a few days, and sometimes for a week or two, to repossess motor vehicles. When he was in Sydney, however, he would take the plaintiff on many social outings and many more mundane outings like shopping. He lavished attention on her, and she thought that all that attention was wonderful. I have no doubt that she became emotionally dependent on him. 4 In October 2003, the plaintiff signed a transfer of a 50 percent interest in her real estate at Clovelly to the first defendant, for no consideration. The plaintiff and the first defendant applied for and obtained, jointly, a loan for $660,000 from a money lender, the second defendant, which was secured upon the property. 5 The third defendant is a solicitor, who acted for both the plaintiff and the first defendant in connection with the transaction. The fourth defendant is an accountant, who provided to the second defendant a certification of the ability of the plaintiff and the first defendant to meet the repayments on the loan. To enable him to provide that certificate he contacted the first defendant, who told him that he - that is the first defendant - was the plaintiff's nephew. That was quite untrue. 6 The totality of the $660,000 raised by the mortgage of the property was paid to the first defendant. The first defendant disappeared from the plaintiff's home in 2004, and the plaintiff has not seen him since. 7 The plaintiff had had a problem for some years with excessive drinking of alcohol, mainly Scotch. 8 She came to be assessed in November 2004 by Professor Caplan, who is a specialist geriatric and physician. He has provided a report on her capacity as at October 2003, at the time she executed the transfer and mortgage. At the time of his report, in June 2005, it was clear that the plaintiff had dementia and did not have the capacity to make complex decisions about a mortgage and signing over half of her house. He has diagnosed her as suffering from a slow and progressive form of Alzheimer's dementia with frontal lobe involvement. He is of the view on the balance of probabilities that she had significant dementia in late 2003 and would not have been able to understand a long or complex legal document at that time. 9 That view received some support from two lay witnesses. One of them is a nephew of the plaintiff, who had lunch with her in November 2003. He had at that time carried out a search of the title of the plaintiff's property, and had discovered that she had signed the transfer and the mortgage. She denied, to this nephew, that she had transferred half of the property to the first defendant, or lent him the money, but when shown the documents which made clear that she had engaged in those transactions, she said she did not know what the mortgage was, and that, "I can't talk to you about my business with Peter. He told me not to talk to anyone about it." As well, she said, "I haven't done anything except help Peter and I won't talk about it any more". 10 A solicitor, Mr Fitzgerald, had previously acted for the plaintiff's late husband, and, on some occasions, for the plaintiff herself. He had custody of the certificate of title to the property in October 2003. First of all, the third defendant, then the plaintiff herself, requested him to forward that certificate of title to the third defendant. Mr Fitzgerald was not convinced that she understood what the transaction she was going to enter into was, but felt he had no alternative but to follow her instructions. 11 As well, the plaintiff gives affidavit evidence that she did not understand the documentation, nor did she have the opportunity to read it. 12 When there is expert evidence, which is consistent with such of the lay evidence as deals with the question of capacity, I am satisfied that she did not have the capacity to sign the documentation. 13 There are alternative grounds upon which the transaction was attacked, concerning undue influence, unconscionability, and the Contracts Review Act. Had I not been of the view that she lacked capacity, I would have set the documents aside under each of those alternative grounds. 14 The first defendant has not appeared in the proceedings. He initially avoided service. Orders for substituted service were made, and have been complied with. 15 It is appropriate to make orders setting aside the transfer of the half interest in the property to the first defendant. 16 The proceedings which the plaintiff brought against the second, third and fourth defendants have been settled. The effect of that settlement is that, apart from an amount of $82,500, the mortgage of the second defendant will be discharged without the plaintiff needing to make a payment. However, she will bear the liability to pay that sum of $82,500. 17 The first defendant is sued by the plaintiff, seeking damages in the alternative or in addition to the order for setting aside of the transaction. I am satisfied that a case for damages in the sum $82,500 has been made out. 18 I shall make orders to give effect to the conclusions arrived at in these reasons for judgment. I make orders in accordance with draft orders which I initial, date today's date and shall place with the papers. These orders may be entered forthwith. **********