A recent case shines a light on the elder abuse that exists in our community, and the importance of appropriate remedies being available to victims. In McFarlane v McFarlane [2021] VSC 197 (23 April 2021), a transfer of land from an elderly woman to her adult son was set aside on the basis that it was procured by undue influence and was unconscionable.
Background
On 26 November 2015, Judith McFarlane signed a transfer of land document which gifted her property to her adult son Mark McFarlane. The consideration for the transfer was recorded as ‘natural love and affection’. At the time of the transfer, Mark was living with Judith at the property, acting as her primary carer.
On 4 January 2016, Mark became the registered proprietor of the property and then later that year Judith moved from the property into an aged care facility. The transfer had significant financial implications for Judith – it affected her pension and her ability to pay the aged care facility’s refundable accommodation deposit.
In August 2017, the Victorian Civil and Administrative Tribunal (VCAT) appointed the State Trustees as administrator for Judith, following which the State Trustees inquired into the circumstances surrounding the transfer of the property.
In November 2018, the State Trustees commenced proceedings on Judith’s behalf, claiming the transfer was procured by undue influence and was unconscionable.
By March 2019, it was calculated that Judith’s total loss suffered as a result of the transfer was $128,853.13 due to the reduction in her pension and the additional fees she had to pay the aged care facility (as she was unable to pay the upfront deposit).
Undue influence
Richards J quoted Dixon J in Johnson v Buttress,[1] noting that the equitable doctrine of undue influence ‘applies whenever one party occupies or assumes towards another a position naturally involving an ascendancy or influence over that other, or a dependence or trust on his [or her] part’[2] and further noted that ‘the onus rests with the stronger party to demonstrate that the transaction was an independent and well-understood act of the weaker party.’
Her Honour held that the evidence sufficiently established that Mark was in a position of ascendancy and influence over Judith, noting her reliance on the following matters:
- Mark was living with Judith and acting as her primary carer.
- Judith while financially independent, was dependent on Mark to drive her to the shops and to appointments.
- Judith had a long history of very serious mental illness.
- Judith was not receiving appropriate care for her mental health issues – primarily because Mark did not facilitate the treatments recommended by her general practitioner.
- Judith was frightened of Mark because he behaved in an abusive manner towards her – he shouted at her, called her names and pushed her around.
- Judith felt sorry for Mark because his father had abandoned him and she stated it was difficult for her to say ‘no’ to him.
Mark did not attempt to displace the presumption of undue influence and failed to demonstrate that the transfer was Judith’s free, independent, well understood act.
The Court held that the transfer of the property was vitiated by undue influence.
Unconscionable conduct
Richards J also considered whether the transfer was unconscionable, noting ‘the essence of an unconscionable transaction is that the stronger party exploits some special disadvantage affecting the weaker party’ and that ‘the onus is on the stronger party to show the transaction was fair, just and reasonable.’
Her Honour held that:
- Judith was in a position of special disadvantage in relation to Mark.
- Mark was aware of his mother’s mental health issues and emotional and physical dependence on him.
- Mark took unfair advantage of his mother’s vulnerability by arranging for her to transfer the property to him, in particular noting that he instructed a solicitor to prepare the transfer documents without also arranging for his mother to receive any independent financial and legal advice.
- Mark failed to demonstrate that the transfer was fair, just and reasonable.
The Court held the transfer of the property was also vitiated by Mark’s unconscionable conduct.
Conclusion
The Court made orders for the reinstatement of Judith as the registered proprietor of the property and for Mark to pay equitable compensation ($128,853.13 less any amount recoverable from Centrelink) to Judith for the loss that she suffered because of the transfer.
Jaime Ashworth, Lawyer and Terence Ogge
[1] Johnson v Buttress (1936) 56 CLR 113, 134–135.
[2] Ibid.
