Blog 55. Alleged unconscionable dealing/undue influence – no caveatable interest established.

Pryse v Castleman & Anor [2021] VSC 833, Ierodiaconou AsJ (14 December 2021)

The facts were –

  • Gweneth Pryse had three children: the plaintiff Raymond, his sister Lorna, and his other sister the first defendant Colleen.
  • A farm at Walpeup dating at least from the lives of Gweneth’s late parents consisted of land in various Lots.  In 1994 Gweneth became registered proprietor of Lots 52 and 53.  Raymond worked on the farm.
  • In 2013 Gweneth and Raymond discussed the possibility of her giving him Lots 52 and 53.  In September 2013 he had an argument with Colleen’s husband about this.  In October 2013, Gweneth met twice with a solicitor to obtain independent legal advice on the transfer, eliciting letters of advice dated 2 and 18 October 2013 described by her Honour as “forthright and frank”.  The solicitor subsequently deposed in the caveat removal proceeding that: he was not the family solicitor; at the first meeting he conferred with Gweneth for over an hour and did not doubt her capacity to understand his advice and give instructions; on his recommendation she agreed to go away and think about the matters he had raised; during the second meeting it was apparent that Gweneth had understood and considered these matters; she wanted the farm to go to her son who had worked it all his life and wanted to keep the farm together and in the family.
  • After the advice Gweneth transferred the two Lots to Raymond who became registered proprietor. They executed a deed of agreement regarding the transfer of the land.  At this time he was aged 61 and she was aged 85.
  • In 2013 (it appears after executing the transfer) Gweneth moved from the farm to a house owned by Raymond in Walpeup.  Lorna also lived there.  Gweneth was physically frail.
  • In 2014 Colleen applied to VCAT to have an administrator and guardian appointed for Gweneth.  Three medical reports were produced, including from Drs Vowels and Wardill.  Dr Wardill met with Gweneth at her home.
  • In August 2014 Colleen sought leave to withdraw the VCAT application.  Initially VCAT refused to give leave as it was not satisfied that this would be in the best interests of the proposed represented person.  However, at the conclusion of the hearing leave was granted.
  • Gweneth died on 8 July 2021.  On 7 October Raymond executed a contract to sell the two Lots.  On 20 October Colleen lodged a caveat over them.  Raymond commenced this proceeding under the Transfer of Land Act s. 90(3) for removal of the caveats.  Settlement of the purchase was due on 15 December, being the day following the hearing.

Ierodiaconou AsJ held –

  1. The law on where a transaction would be set aside for unconscionable dealing was as stated by Mason J. in Commercial Bank of Australia v Amadio (1983) 151 CLR 447 –

    “… if A having actual knowledge that B occupies a situation of special disadvantage in relation to an intended transaction, so that B cannot make a judgment as to what is in his own interest, takes unfair advantage of his (A’s) superior bargaining power or position by entering into that transaction, his conduct in doing so is unconscionable. And if, instead of having actual knowledge of that situation, A is aware of the possibility that the situation may exist or is aware of facts that would raise that possibility in the mind of any reasonable person, the result will be the same.”  [41]

  2. Given the independent legal advice, there was no serious question to be tried of unconscionable dealing.  This was reinforced by the fact that the proposed transfer was discussed in the family and that Lorna deposed that Gweneth said she would give the land to Raymond. [43]
  3. In equity, a transaction, whereby a donor transfers property to a donee (or recipient), is voidable if the result of undue influence exercised by the recipient over the mind of the donor. [44]
  4. There was no serious question to be tried that the transfer was the result of undue influence.  Against the suggestion that Gweneth was not exercising her own free will was –
    (a)   the independent legal advice;
    (b)   the Wardill report indicated that Gweneth had capacity;
    (c)  Lorna deposed that her mother was “sharp as a tack until the day she died”.  [45]-[46]
  5. The doctrine of laches may have been applicable in light of the matters agitated before VCAT.  However it was unnecessary to consider this further. [48]
  6. The balance of convenience favoured removal of the caveat so that the sale could proceed.  Colleen had established no prejudice to her if the caveat was removed and there should be no order regarding preservation of the sale proceeds. [51]

Philip H. Barton

Owen Dixon Chambers West

Wednesday, May 18, 2022