Citation: Trevenar v Ussfeller & Ors [2005] NSWSC 582
Court: Supreme Court of New South Wales, Equity Division
Date: 23 June 2005
Judge(s): Gzell J
Background
The plaintiff was an 83-year-old woman who brought proceedings through a tutor. Following the death of her husband in July 2003, she became increasingly reliant on the first defendant, a close friend and neighbour who visited her three to four times daily, read her mail, drove her to appointments, and wrote out cheques on her bank account for her to sign.
Between June and September 2003, cheques totalling $584,200 were drawn on the plaintiff's account. The funds benefited the first defendant, her husband (the second defendant), and her father (the third defendant). The largest single transaction was a cheque for $520,500, which the first defendant said funded the balance of a purchase price for a property at Singleton in which all parties were to live. Only $7,000 was repaid before proceedings commenced.
The plaintiff denied consenting to any of these payments as gifts. The defendants maintained she had freely agreed to give the money. The plaintiff sought orders setting aside all alleged gifts, bringing the net sum in dispute to $577,200.
Legal Issues
- Whether a presumption of undue influence arose from the relationship between the plaintiff and the first defendant
- Whether the defendants rebutted that presumption
- Whether fraud was established (the plaintiff's alternative ground)
Decision
Gzell J accepted that the presumption of undue influence arose. The plaintiff was found to be a dependent personality who was emotionally reliant on the first defendant. That reliance intensified after the death of her husband, and the first defendant had assumed control over significant aspects of the plaintiff's daily life and financial affairs, including closing two term deposits totalling over $500,000.
Expert psychiatric evidence from Dr Strum supported the conclusion that the plaintiff did not understand the nature of the cheques she was asked to sign. That opinion was reinforced by the plaintiff's own performance in the witness box, where she was frequently unable to follow questions or explain her own conduct. The court accepted that her apparent agreement to financial transactions was a product of her dependent personality rather than free and informed consent.
Forensic evidence proved particularly significant in rebutting the defendants' account. An expert examiner analysed indentations on cheques and found that the defendants' explanations of how and when the cheques were completed could not be reconciled with the physical evidence. The court found the defendants' evidence could not stand against that forensic analysis.
The court declined to decide the fraud issue, as the finding of undue influence was sufficient to set aside the alleged gifts. However, Gzell J noted that had it been necessary, he would have found fraud established and would have rejected the defendants' claims that the transactions were consensual gifts.
Orders Made
- The alleged gifts totalling $577,200 were set aside
- The parties were directed to bring in short minutes of orders reflecting the court's reasons
- The court indicated it would hear the parties on the terms of appropriate orders and on costs
Key Takeaways
- A presumption of undue influence can arise where one party is emotionally and practically dependent on another, even outside formal relationships such as solicitor and client or doctor and patient, provided the factual circumstances disclose the requisite degree of dominance and reliance.
- Expert psychiatric evidence about a plaintiff's dependent personality was accepted as probative of whether apparent consent to financial transactions reflected genuine free will.
- Forensic document examination (here, analysis of indentations on cheques) can directly contradict a party's account of how financial documents came to be completed and is capable of displacing that account entirely.
- Where undue influence is established and the presumption is not rebutted, alleged gifts made during the period of influence will be set aside regardless of whether fraud is separately proven.
- In dismissing the defendants' contentions, the Supreme Court treated the closure of term deposits representing approximately 39% of the plaintiff's interest-earning assets, without any consideration of the financial impact on her, as consistent with the absence of genuine, independent consent on the plaintiff's part.
Legislation and Cases Referenced
Cases cited:
- Johnson v Buttress (1936) 56 CLR 113
- Union Fidelity Trustee Co of Australia v Gibson [1971] VR 573
- Allcard v Skinner (1887) 36 Ch D 145
- Stivactas v Michaletos (No 2), NSWCA, unreported, 31 August 1993
- Spong v Spong (1914) 18 CLR 544
- Briginshaw v Briginshaw (1938) 60 CLR 336
Legislation: No legislation was cited in this decision.