Torok v Becker [2019] NSWSC 1662

Supreme Court New South Wales

Medium Neutral Citation: Torok v Becker [2019] NSWSC 1662 Hearing dates: 12, 14 and 21 November Decision date: 28 November 2019 Jurisdiction: Equity Before: Robb J Decision: The parties must deliver appropriate short minutes of order to my associate within 7 days (per par 132) Catchwords: EQUITY — Alleged unconscionable conduct or undue influence — Whether the Court should make interlocutory orders restraining the first defendant from dealing with certain of his assets pending final determination of proceedings for the restoration by the defendant of funds allegedly misappropriated by the defendant to the estate of the parties' deceased mother — Where it appears the plaintiff has a good arguable case, and the defendant has not satisfactorily explained the disbursement of a substantial part of the deceased's funds Legislation Cited: Succession Act 2006 (NSW) Uniform Civil Procedure Rules 2005 Cases Cited: Hewitt v Gardner [2009] NSWSC 705 Category: Procedural and other rulings Parties: Lara Caroline Torok (plaintiff) David Theodore Becker (first defendant) David Theodore Becker as executor of the estate of the late Isolde Becker (second defendant) Representation: Counsel: P Folino-Gallo (plaintiff) J Stephenson (defendants)

Solicitors: Prime Lawyers (plaintiff) Austin Giugni Martin (defendants) File Number(s): 2019/337892

Judgment 1. The issue on this interlocutory application is whether the Court should make an order restraining the defendant from dealing with his assets pending the determination of these proceedings, and if so what that restraint should be. 2. The plaintiff, Lara Caroline Torok, is the sister of the defendant, David Theodore Becker (Mr Becker). The parties are the only children of the late Isolde Becker who died on 13 July 2019, aged 82 years. 3. The deceased's husband, Theodore Becker, died on 6 May 2016, aged 93 years. 4. Ms Torok commenced these proceedings by statement of claim filed in court on 28 October 2019. In essence, Ms Torok sought declarations that a payment of $1,522,272.03 made to Mr Becker by the deceased from the sale proceeds of the deceased's residence at Glenhaven was obtained by undue influence or unconscionable conduct by Mr Becker, and an order that Mr Becker pay that amount to the estate. Ms Torok also sought an order that Mr Becker holds the net proceeds of the sale of a property at Beaumont Hills, which was purchased using the $1,522,272.03, on trust for the estate. 5. Alternatively, Ms Torok sought an order under s 59 of the Succession Act 2006 (NSW) that she receive further provision from the estate or the notional estate of the deceased. 6. The context in which Ms Torok made this claim was the last will of the deceased made on 31 August 2016. By that will, the deceased appointed Mr Becker and a niece of the deceased as her joint executors and trustees. The niece has renounced probate. 7. In essence, the will divided the deceased's estate as to legacies of $2,000,000 to Mr Becker and $1,000,000 to Ms Torok, with the residue being divided equally between the two children. 8. It appears that, at the time of the making of her will, the deceased held assets with an approximate value of $3,000,000. It is likely that the deceased thought that her estate was worth more than that amount. What has prompted these proceedings is that the deceased died with $2,917.57 in cash. Mr Becker said, in par 39 of his 8 November 2019 affidavit, that on her death the deceased also owned 1,143 shares in Insurance Australia Group Ltd, 444 shares in AMP Ltd and 1,400 shares in Telstra Corporation Ltd. 9. Substantially all of the difference was paid by one means or another to Mr Becker. As matters stand, the estate is insufficient to pay to Ms Torok any part of the legacy given to her in the deceased's will. In fact, Mr Becker has given evidence that, given the size of the estate, he does not propose to obtain a grant of probate. 10. As this is an interlocutory application upon which judgment must be given expeditiously, it is not appropriate that the Court make any detailed findings of fact, or that it pre-empt the consideration of the issues that it will be necessary to determine at the final hearing. 11. For the reasons that I will now briefly state, I am satisfied that Ms Torok has established a good arguable case that she will succeed at the final hearing in obtaining orders that will have the effect that she is entitled to a substantial part of the assets that remain in Mr Becker's hands that can be traced to the assets of the deceased before her death, and possibly more. 12. It is necessary only to recite the background facts in outline. 13. Ms Torok said that she had "a wonderful upbringing with two loving parents", and she had a very close relationship with the deceased until the second half of 2015. The deceased and her husband purchased the property at Glenhaven in 1988, and it was thereafter the family home until it was sold, with completion taking place on 3 October 2017. Both parties to these proceedings lived at the Glenhaven property during their childhood and for various times thereafter. 14. Ms Torok's parents helped her and her husband acquire a home and Ms Torok acquire a physiotherapy business by making advances and guaranteeing bank loans. The amounts involved are immaterial for present purposes, but it is said that the reason for the disparity in the legacies provided for in the deceased's last will was to even up the deceased's financial treatment of her children. 15. It appears that, at some time in 2014, by reason of infirmity and ill-health, the parties' father moved into an aged care home. In about July 2014, Mr Becker sold his residence located at Kellyville and moved into the Glenhaven property with his wife and three children. 16. Ms Torok gave evidence that the deceased's health began to decline from about 2012. The deceased had a number of falls and other accidents. She dislocated her shoulder after a fall in 2012. The deceased also suffered from arthritis and had ongoing back pain from many spinal fusions she had had over her life. The deceased suffered from degenerative disc disease. 17. According to Ms Torok, there was a significant change in the deceased's demeanour in the second half of 2015. The deceased became withdrawn, and less affectionate to Ms Torok and her children than had previously been the case. 18. For some time before February 2016, Ms Torok and her husband had been engaged in a carpet overlocking business with Mr Becker. The business ultimately failed and Ms Torok and her husband ended up on bad terms with Mr Becker. 19. On Saturday 6 February 2016, Ms Torok received a telephone call from the deceased during which she was advised by her mother that Mr Becker was extremely upset and that the deceased thought that it was best for her and her husband and children to no longer come to the house at Glenhaven. From that time on, Ms Torok was unable to visit with the deceased at her home, although from about May 2016 Ms Torok succeeded in having occasional contact with the deceased by arranging visits that were kept secret from Mr Becker. 20. Ms Torok gave evidence of her observation that her father attended to the payment of household bills and attended to the family's finances. Ms Torok said that she had never seen her mother write a cheque, nor had she ever seen the deceased use a computer despite there being one in the Glenhaven property. The deceased owned a mobile phone that she used to make and receive calls, but she did not use the other facilities on the phone. 21. Throughout 2017, Ms Torok continued to speak with the deceased on the telephone, and to post her Easter, birthday and Christmas cards. She did not see the deceased in person in 2017. 22. The deceased had a knee replacement operation in 2017. During Ms Torok's telephone discussions with the deceased in 2017, the deceased said: "I am in terrible pain as a result of the knee operation". The deceased declined Ms Torok's offers to help, and said: "I never thought it would be this painful" and "I never thought it would be this bad". 23. Mr Beckett said in par 24 of his 8 November 2019 affidavit that, after his father passed away in 2016, the deceased received the proceeds of his estate which included his nursing home bond. The deceased received $532,000. 24. According to Mr Becker, both he and the deceased thought that if the Glenhaven property was renovated and landscaped it would have a value between $6,000,000 and $7,000,000. Although the evidence at this interlocutory stage of the proceedings does not permit any clear findings, it should be recorded that Mr Becker claimed that a considerable amount had been spent by Mr Becker and the deceased from their several resources for the purpose of renovating and landscaping the Glenhaven property. 25. On 24 June 2017, the deceased sold the Glenhaven property for $4.625 million. Completion occurred on 3 October 2017. 26. Mr Becker explained in par 29 of his 8 November 2019 affidavit that the deposit on the sale of the Glenhaven property was released early on 4 July 2017 to the deceased, to enable payment of the landscaper and contractors engaged for the restoration of the Glenhaven property. 27. On completion of the sale, an amount of $2,045,209 was paid to redeem a mortgage over the Glenhaven property. There was some evidence that the mortgage was called a "reverse mortgage" and it entitled the mortgagee to be paid a percentage of the sale price, rather than an amount of debt plus interest. Mr Becker said in par 30 of his 8 November 2019 affidavit that he believed that 40% of the payout figure, being $816,378, was the proportion of the loan that was owed due to the loans and guarantees made by his parents for the benefit of Ms Torok. The evidence would suggest that the actual value of those loans and guarantees was considerably less than the sum suggested by Mr Becker. 28. $591,212.22 was paid to the deceased. $1,522,272.03 was paid to acquire a residence in Beaumont Hills that was purchased in the joint names of Mr Becker and his wife. The $1,522,272.03 is the subject of the claim made by Ms Torok in the statement of claim. 29. The total amount disbursed in accordance with the settlement sheet was $4,168,293.91. That left a balance of $456,706.09, which I assume would have been paid to the deceased after the deduction of any commission payable to the agent. 30. On 31 October 2019, which was the return date for the statement of claim, the Court dealt with claims for interlocutory relief made by Ms Torok in her statement of claim. In the interim, Mr Becker and his wife had sold the Beaumont Hills property for a net receipt of about $1,225,295.80, according to par 43 of Mr Becker's 8 November 2019 affidavit. Mr Becker said that the amount that he received by way of deposit was reduced to account for a payment that was made for the lease of the duplex that was rented to be the home of the deceased and Mr Becker and his family. The evidence does not disclose why it was necessary for Mr Becker and his wife to sell the Beaumont Hills property at a loss. 31. The interlocutory relief sought by Ms Torok in substance would have required Mr Becker to keep the sale proceeds of the Beaumont Hills property separate from his other monies, and would have restrained him from dealing with those sale proceeds until further order of the Court. 32. Upon Ms Torok by her counsel providing the usual undertaking as to damages to the Court and undertaking to the Court to apply for expedition and to prosecute the proceedings expeditiously, Mr Becker, through his counsel, undertook to the Court, on a without admissions basis, as follows: 1. Within 7 days to provide the sum of $350,000 to his solicitors Austin Giugni Martin to be held in a controlled monies account in the name of the first defendant. 2. That the first defendant will not transfer the monies referred to in paragraph 1 above from the controlled monies account until 7 days after final judgment at first instance in these proceedings or further order of the Court. 3. That the first defendant will not transfer or encumber his Tesla motor vehicle which he owns until 7 days after final judgment at first instance of these proceedings or further order of the Court. 4. That the first defendant will not deal with the Estate assets of his mother until further order of the Court. 1. Directions were made for the preparation of the matter for a contested interlocutory hearing, including for the service of evidence by Mr Becker on the interlocutory application, and Ms Torok was given leave to issue a notice to produce and subpoenas. 2. The matter was listed before me as duty judge for hearing on 12 November 2019. 3. On 12 November 2019, when this matter was called on for hearing, Ms Torok advised the Court that she wished to be given leave to file an amended statement of claim. 4. The principal reason for the application to amend was that Ms Torok had, as a result of the service of the notice to produce and subpoenas, discovered that a substantial number of additional payments had been made out of the deceased's accounts to Mr Becker than the $1,522,272.03 that was the subject of the statement of claim. 5. The additional payments were listed in two schedules to the draft amended statement of claim. 6. Schedule A was headed "Benefit Funds" and listed a total of 61 payments made between 27 March 2015 and 19 June 2019 for amounts ranging up to $100,000, with a total of $790,539.83. There were a number of different descriptions of the purpose of the payments taken from the bank statements. According to the affidavit of Ms Torok's solicitor affirmed on 11 November 2019, the payments in Schedule A were selected because the description of the transactions superficially appeared to be for the benefit of the deceased. A substantial number of the transactions appeared to be for "Home Renovations" and a number were described as "Repay loan". 7. According to Ms Torok's solicitor, Schedule B, which is described as "Misappropriated Funds", lists payments out of the deceased's bank accounts that superficially appeared to be for the benefit of Mr Becker. There are 28 payments with a total of $1,030,596.42. Eight of the payments are in sums of $100,000. 8. In essence, Ms Torok will claim by her amended statement of claim, that by March 2015, Mr Becker obtained access to the deceased's bank account, and on 18 May 2016 the deceased appointed Mr Becker to act as her attorney. Mr Becker therefore owed fiduciary duties to the deceased. Ms Torok will claim in par 53 that, between 23 March 2015 and 19 June 2019, Mr Becker "accessed the deceased's Netbank and transferred into his personal account, or accounts controlled by him, his wife or company, the amount of $790,539.83 said to be for the deceased's benefit". She will also allege, in par 55, that between 7 October 2016 and 13 June 2019, Mr Becker "accessed the deceased's Netbank and transferred into his personal account, accounts controlled by him, his wife or company, or third party accounts for purchases made for the first defendant's benefit, the amount of $1,030,596.42". 9. It is not clear why the draft amended statement of claim appears to base the new claims on breach of fiduciary duty by Mr Becker. It may not have been necessary for Mr Becker, if he acted as alleged by Ms Torok, to use the power of attorney granted to him, so Ms Torok may have a good claim simply on the basis that Mr Becker made the transactions on the deceased's behalf without her authority, if that can be proved by Ms Torok. 10. The change in Ms Torok's case caused by the revelation of the additional transfers from the deceased's bank account to or for the benefit of Mr Becker affected the hearing that was to take place on 12 November 2019, and it became necessary for the Court to deal with the matter on that date, on 14 November 2019 and on 21 November 2019. 11. As I understand it, Mr Becker does not dispute Ms Torok's claim that the payments said to have been paid out of the deceased's bank account were in fact made. 12. Mr Becker said in his 14 November 2019 affidavit: 6. Since I commenced living with my mother at the Glenhaven property, my mother kept her own bank accounts and was the only person who had access to them. I did not have her passwords until after she passed away. Whilst looking for documents relating to this matter, after her death, I discovered where she had written down the passwords. 7. All monies provided to me, my wife or our business were transferred to us by way of internet transfers authorised and made by my mother. At no stage prior to her death did she not make her own financial decisions. 1. There will be an issue at the final hearing as to whether, as claimed by Mr Becker, the deceased unilaterally and of her own volition made all of the internet transfers, or whether, by means presently unknown, Mr Becker made those transfers without the deceased's consent, or caused the deceased to do so in a manner that the law considers will vitiate the transfers. 2. In his 14 November 2019 affidavit, Mr Becker explained that he had only had time to look at the payments in Schedule B, and in par 26 he set out a schedule of why the payments were made. He explained that he had not had time to trace the payments to correspond to payments made by him on behalf of the deceased. It appears that Mr Becker also did not have time to ensure that the day and month information in the "Date" column was accurate. It will be appropriate to set out Mr Becker's schedule as follows, and I have included "[sic]" for all entries in the "Date" column for which Mr Becker appears to have mistakenly swapped the day and month information: DATE AMOUNT REASON 10/07/2016 $55,000.00 Parts Purchase Telegraphic transfer for $50,815 on the 11 Oct Balance was to top up the business account [sic] 20/12/2016 $10,000.00 Top Up Account for Unplugged Business 20/12/2016 $9,996.42 My mother paying me back refer to credit card statement card paid on 30th Dec $1000 and $9000 14/01/2017 $5,000.00 Top Up Business Account 14/01/2017 $5,000.00 My mother paying me back for household expenses ongoing work to Glenhaven and her care 22/02/2017 $5,000.00 Top Up Business Account 3/07/2017 $2,000.00 My mother paying me back for household expenses ongoing work to Glenhaven and her care [sic] 3/07/2017 $2,000.00 Top Up Business Account [sic] 23/03/2017 $4,000.00 My mother paying me back for household expenses ongoing work to Glenhaven and her care 5/09/2017 $1,200.00 My mother paying me back for household expenses ongoing work to Glenhaven and her care [sic] 21/06/2017 $500.00 My mother paying me back for household expenses ongoing work to Glenhaven and her care 7/05/2017 $11,200.00 Credit card was used to purchase materials and rental equipment for the renovations at Glenhaven [sic] 7/06/2017 $13,000.00 Used to pay MasterCard which was used for things used at Glenhaven property living expenses for my mother and the family [sic] 7/10/2017 $100,000.00 For Tesla Business and part put into Netbank Saver and/or part used for deposit on [redacted], Beaumont Hills [sic] 7/10/2017 $100,000.00 Deposit on Model X used to transport my mother and my family and used as display car for Business Note: Ongoing loan repayment had to be made also [sic] 14/07/2017 $100,000.00 My mother paying me back for household expenses past work at Glenhaven and her care 7/05/2017 $5,000.00 Business account top up [sic] 10/09/2017 $90,000.00 For Telegraphic Transfer Tesla Parts on the 11 OCT 2017 [sic] 10/12/2017 $100,000.00 Transfer by my mother for us to pay her future expense, living costs and care [sic] 13/10/2017 $100,000.00 Transfer by my mother for us to pay her future expense, living costs and care 16/10/2017 $100,000.00 Transfer by my mother for us to pay her future expense, living costs and care 18/10/2017 $100,000.00 Transfer by my mother for us to pay her future expense, living costs and care 19/10/2017 $100,000.00 Transfer by my mother for us to pay her future expense, living costs and care 22/05/2018 $5,000.00 Transfer for her living expenses 24/09/2018 $3,000.00 Transfer for her living expenses 17/10/2018 $1,000.00 Transfer for her living expenses 15/11/2018 $1,500.00 Transfer for her living expenses 13/06/2019 $1,200.00 Transfer for her living expenses TOTAL $1,030,596.42