Reconveying property to father after undue influence
On 26 August 2011, Savvas Aslanidis (“Dad”) and Nick Aslanidis (“Son”) attended the office of Mr Massey, a solicitor (acting for both parties), and executed three documents:
- Transfer of the property at Blacktown from Dad to Son for $1.00;
- Written Agreement; and
- Dad’s Will leaving his entire estate “to his two children as tenants in common in equal shares”.
Dad’s Will was interesting because the only principal asset Dad had was the property at Blacktown so it was arguedfor the Dad what was the point of the Dad making a Will, if, at the same meeting, he was also signing over that asset to only one of his children?
The Son firstly suggested that the Transfer should be classified as a gift which was conditional upon the Son agreeing to pay his sister $100,000 if and when he sold the property. He secondly suggested that the purpose of the Transfer was to protect the residence from any potential claim by the Dad’s then partner (now wife) should that relationship breakdown. However none of the documents executed on 26 August 2011 refer to any disharmony between the Dad and then partner (now wife). The Son thirdly suggested the Transfer was the Dad’s way of evening up the distribution of his estate.
The preamble in the Written Agreement states the reason for the Transfer is that the Dad gave the daughter, around 20 years earlier, an unencumbered house worth around $400,000 and that the Written Agreement was a way to even out the estate. However, the daughter stated this was not true and that she and her then husband bought a property from Dad financed by a bank mortgage paid out only upon their subsequent divorce.
In 2018, Dad commenced proceedings to set aside the Transfer.
It was Lindsay J’s assessment that the Dad was an elderly, unsophisticated man whose lack of confident proficiency in English, in combination with trust reposed by him in the Son, would have rendered him psychologically dependent upon the Son even with the intervention of a solicitor, Mr Massey. Mr Massey acted for both parties.
Lindsay J adopted the principles summarised by McCelland J in Quek v Beggs (1990) 5 BPR 11, 761 “where a donor makes a gift as a result of “undue influence” of the donee, it is liable to be set aside in equity”. In this context, “influence” means a psychological ascendancy by the donee over the donor and “undue influence” means the donee’s taking improper advantage of such ascendancy. In this case, his Honour said the Son had a psychological ascendancy over the Dad and, in inducing the Dad to sign the Transfer, he took advantage of that ascendancy to the detriment of the Dad and in service to his own personal interest. His Honour further stated that even if the Dad knew and understood what he was doing in signing the Transfer (a debatable proposition in itself) he was not acting independently of any influence arising from the son’s ascendancy over him.
The Court ordered the Transfer be set aside and the property be reconveyed to the Dad subject to Dad reimbursing the Son all the rates paid by the Son since the date of the Transfer or as agreed by them (or by the Court if necessary).
Lesson to be taken away from this case
When dealing with the transfer of assets for any reason, ensure all parties receive independent legal advice with English language support (if necessary) to ensure there is no chance of undue influence.