Michael John Anderson (Formerly Michael John Lauridsen) v Daphne Lauridsen & anor [2011] NSWSC 849 (28 April 2011)

Last Updated: 10 August 2011

Supreme Court New South Wales

Case Title:	Michael John Anderson (Formerly Michael John Lauridsen) v Daphne Lauridsen & anor
Medium Neutral Citation:	[2011] NSWSC 849
Hearing Date(s):	28/04/2011
Decision Date:	28 April 2011
Jurisdiction:	Equity Division
Before:	Brereton J
Decision:	Proceedings dismissed with costs.
Catchwords:	RES JUDICATA - Issue estoppel, Anshun estoppel and equitable estoppel - consent orders previously made by Family Court dismissing application by wife of plaintiff to set aside dispositions to first defendant of interests in real property - plaintiff had sought declaration wife had no claim to relevant property - plaintiff now impugns transfer of property to first defendant on grounds of undue influence and unconscionable dealing - where disposition of allegations raised in submissions to Family Court relating to undue influence and unconscionable dealings not essential to Family Court outcome - such matters nonetheless intimately connected with or arise substantially from same matters of fact - plaintiff was bound to have raised such claims in Family Court proceedings -unconscionable to seek to litigate them now.
Legislation Cited:	(CTH) Family Law Act 1975, s 78, s 79, s79A, s 106B
Cases Cited:	Allcard v Skinner (1887) 36 Ch D 145 In the Marriage of Clifton and Stuart (1990) 14 Fam LR 511 Port of Melbourne v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 Robson v Robson [2003] FamCA 217; (2003) FLC 93-145 Valceski and Another v Valceski and Another [2007] NSWSC 440; (2007) 70 NSWLR 36 Zavodnyik v Alex Constructions Pty Ltd [2005] NSWCA 438; (2005) 67 NSWLR 457
Texts Cited:
Category:	Principal judgment
Parties:	Michael Anderson (plaintiff) Daphne Lauridsen (first defendant) Sharon Julie Franey (second defendant)
Representation
- Counsel:	Counsel: Mr A J McInerney (plaintiff) Mr J S Drummond (defendants)
- Solicitors:	Solicitors: Lee & Lyons (plaintiff) Adrian Holmes (defendant)
File number(s):	2007/257833
Publication Restriction:

Judgment (ex tempore)

1. HIS HONOUR: The plaintiff Michael John Anderson sues his mother, the first defendant Daphne Lauridsen, and his sister, the second defendant Sharon Julie Franey, to set aside on grounds of undue influence or unconscionable dealing the transfer of Michael's one-third interest in property at Kalaroo Road to Daphne, the issue to Daphne and Sharon of additional units in the Laurisden and Franey Unit Trust and the redemption of his and his former wife Michelle's units in that trust, and the giving of a mortgage over Michael's interest in Kalaroo Road to Daphne. This morning, Michael sought leave to amend his statement of claim, and to file a reply to the defence to the amended statement of claim. Additionally, the plaintiffs applied to have me revoke an order that I had previously made, to the effect that the "special defences" plead by the first defendant be determined as separate questions prior to the substantive hearing. These reasons deal with these various applications, and the determination of the affirmative defences plead by the first defendant.
   
2. I grant leave to amend the statement of claim substantially as sought, although to require some repleading of it better to articulate the claims for the additional relief in the proposed amended statement of claim.
   
3. I refuse leave to file the reply. In short, paragraphs 2 and 3 of the proposed reply are unnecessary; they merely traverse the defence, on which there would be an implied joinder of issue in any event.
   
4. The claim for relief in paragraphs 7 and 8 of the proposed reply cannot succeed, essentially because, insofar as it relies on incapacity, or disadvantage on the part of the plaintiff, it was for that very reason that the plaintiff had a next friend in the Family Court proceedings; insofar as it is asserted that the next friend was a friend of the first and second defendants, there is no assertion that she preferred their interests to those of the plaintiff or otherwise acted improperly and, in those circumstances, the mere alleged fact of friendship goes nowhere; and insofar as it is alleged that the next friend did not receive adequate legal advice as to the consequences, or assumed that the plaintiff's position would not be disadvantaged by the order made in the Family Court proceedings, the mere absence of adequate advice, if established, would not found a case of unconscionability or estoppel and, in any event, there is evidence that the next friend was advised that Michael's potential causes of action against his mother might be defeated by laches if they were not raised in the Family Court proceedings. The same observations pertain to the matters raised in paragraph 8.
   
5. So far as paragraph 9 is concerned, while I accept that an order dismissing a claim for relief under (CTH) Family Law Act, s 79, is an order made under section 79 for the purposes of section 79A [see Robson v Robson [2003] FamCA 217; (2003) FLC 93-145], a claim for relief under s 106B of the Family Law Act is not a claim for an order under s 79, and an order dismissing such a claim is not an order made under s 79. Accordingly, the orders of the Family Court, insofar as they dismissed the s 106B application, are not amenable to being set aside under s 79A.
   
6. In addition, the reasons given for concluding that the claims under paragraphs 7 and 8 of the proposed reply cannot succeed, apply also to the claim under s 79A, reinforced in that context by the observations, in In the Marriage of Clifton and Stuart (1990) 14 Fam LR 511, to the effect that mere inadequacy of legal advice or legal representation is not a sufficient circumstance, for the purposes of s 79A(1)(a) to justify the setting aside of an order made under s 79.
   
7. The plaintiff also seeks revocation of an order made by the Court on 23 November 2010, that the affirmative defences be determined separately and before the other issues in the proceedings. I see no basis on which that order should be disturbed.
   
8. To my mind, the utility of those "special defences" in the nature of estoppel, if they are valid, would be seriously undermined if the whole matter were allowed to go to trial, before those defences were determined. The purpose of the doctrines invoked by those defences is to preclude the re-litigation of matters, rather than to allow re-litigation to take place but decide retrospectively whether that re-litigation was appropriate. In any event, I do not see how revoking the order for separate determination would substantially address the difficulties of which complaint is presently made on behalf of the plaintiff. The issue as to whether or not the plaintiff's evidence should be read and is admissible will remain an issue on any final hearing, just as it may be on a hearing of the separate questions. There is no unfairness in the plaintiff having to decide now whether to seek to rely on his evidence.
   
9. When this matter was before the Court on 28 October 2010, it was adjourned to 23 November for further directions and I indicated that I then proposed to set the matter down for final hearing, at least in respect of the separate questions previously identified. On 23 November 2010, the Court was advised and noted that the evidence of both parties on the hearing of the separate questions was complete. Directions were made in respect of evidence on the application for leave to amend and for submissions in respect of the separate questions, which were set down for hearing today. Whether they must be determined today or not is another matter, but it seems to me that the interests of justice require that the special defences be determined as separate questions, before the other issues in the proceedings.
   
10. Accordingly, I decline to revoke the order for determination of the affirmative defences as separate question.
    
11. Pursuant to the leave to amend which I have granted, although requiring some reformulation of the pleading, Michael also seeks to have set aside an acknowledgment of debt of 10 April 1987 and a number of subsequent transactions, the ultimate effect of which appears to be that funds which Michael claims were beneficially his, became assets of the Laurisden and Franey Unit Trust. By her defence, the first defendant Daphne pleads, in addition to general and more specific traverses of the various allegations of undue influence or unconscionable dealing, which appear to be the basis of Michael's claim, a number of affirmative defences: in particular, res judicata (paragraphs 44 to 52), Anshun estoppel (paragraphs 53 to 57), estoppel by reliance and detriment (paragraphs 58 to 72), and unclean hands (paragraphs 73 to 81). Each of these defences raised, albeit in different ways, the proposition that the issue of the validity of the impugned dealings had been concluded by the outcome of proceedings in the Family Court of Australia in which a claim by Michael's ex-wife to set aside the transfer of his interest in Kalaroo Road and the issue of the additional units in the unit trust had been, by consent, dismissed. As has been previously indicated, an order was made for the determination of the issues raised by those paragraphs of the defence as preliminary questions. A further affirmative defence of laches (paragraphs 82 to 86), which relied on delay and prejudice by loss of evidence and recollection, but did not involve any matters arising out of the Family Court proceedings, and was not included in the matters for determination as preliminary questions.
    
12. On the present hearing, the defendants read affidavits of Daphne Lauridsen, Jennifer May Drennen and Adrian Stewart Holmes. The plaintiff tendered some documentary evidence, but did not cross-examine any of the defendant's witnesses and did not adduce evidence, notwithstanding that he had filed affidavits at an earlier stage of the proceedings. No doubt this was for good reason, but - especially bearing in mind that the Court had made it as clear as it could that the circumstance that the plaintiff had been found to be "incapable" so as to require the appointment of a tutor was a different question from whether he was incompetent so as to be unable to give evidence - I must therefore proceed on the basis that the defendant's evidence is unchallenged and uncontradicted; and as there is nothing implausible about it - indeed, the important aspects of it are established more by contemporaneous documents than by the more recent affidavit evidence itself - I should accept it.
    
13. After Michael separated from his former wife Michelle, she brought proceedings against him in the Family Court of Australia at Newcastle. In those proceedings, she filed an amended application, joining Daphne as second respondent and seeking an order pursuant to (CTH) Family Law Act 1975, s 106B, setting aside the transfer, dated 29 April 1999, by Michael to Daphne of his one-third share in the Kalaroo Road property. She also sought, pursuant to Family Law Act, s 79, an order that Michael transfer his interest in that property to her. Michael filed a response in the Family Law proceedings, which was subsequently amended to seek, inter alia , a declaration that Michelle had no claim action or demand against him or Daphne in any way relating to the Kalaroo Road property and/or the Lauridsen and Franey Unit Trust.
    
14. In the course of the Family Law proceedings, Jennifer May Drennen (then under the surname of Watson) was appointed Michael's next friend: he suffers from a number of psychiatric illnesses, which resulted in his being held to be an incapable person at an earlier stage in these proceedings. In support of the appointment of Ms Drennen as next friend, the plaintiff's then solicitor - Kim Monnox, who was also the solicitor acting when these proceedings were instituted, swore an affidavit on 30 January 2002, which came to the notice of Daphne (as I infer from the exhibit to Daphne's solicitor's affidavit), in which, inter alia , she deposed to having given Michael advice concerning the transfer of his interest in Kalaroo Road to his mother and also concerning the issue of the additional units in the unit trust, including his right to institute proceedings against his mother and his sister in respect of the issuance of those units.
    
15. The Family Law proceedings were ultimately set down for hearing on 12 September 2002. In anticipation of that hearing, the parties exchanged case outline documents. In support of her section 106B application, the wife alleged, inter alia , that the husband was controlled by Daphne and was under the influence of Daphne, which had been exercised in such a way as to deprive Daphne of claims against Michael for alteration of property interests in respect of property which, but for its disposition to Daphne, would have been property of the parties available for division under s 79. In reply, Daphne inter alia submitted that the transactions were bona fide and regular transactions.
    
16. The case was settled in principle on the first day of the hearing and adjourned while terms were prepared. On 19 September 2002, Waddy J, by consent, made orders, notations and declarations in terms of a document entitled, "Terms of Settlement", dated that day, which relevantly provided:
    

1. The applicant wife's amended application filed 14 January 2002 be dismissed against the first respondent.

2. The applicant wife's amended application filed 14 January 2002 be dismissed against the second respondent.

3. Each party to pay his or her own costs.

Notation A: That the applicant wife, second respondent and trustees of the Lauridsen and Franey Unit Trust have entered into a deed, a copy of which is annexed.

17. The terms of settlement were signed on behalf of Michael by his next friend. The deed to which the terms of settlement referred provided that, in order to resolve all claims of any nature between Daphne, the trustees and Michelle, the trustees would pay the wife's solicitors $9,344 and Daphne would pay the wife's solicitors $38,155, and Michelle released Daphne and Daphne released Michelle from all and any claims et cetera, in relation to any matter arising out of or referred to in the recitals in the deed, Michelle's affidavit in the proceedings, the trust and the land.
    
18. After 12 September, but before the orders were made on 19 September, Ms Drennen retained Mr Brian Kelly, solicitor, to act on her behalf. Mr Kelly was provided with a copy of the wife's amended application, Michael's response, the proposed consent orders and deed. He was also provided with a letter from Daphne's then solicitors, which expressed the following opinion:
    

"In our view, Michael's position is not disadvantaged in any way by the orders being made in the Family Court proceedings. Michael's position will not be disadvantaged in any way by virtue of the deed, as he is not a party to it".

19. As was also pointed out in the covering letter, the order dismissing the wife's application proposed in the consent orders corresponded with what was sought in Michael's response.
    
20. After she became Michael's next friend in the Family Law proceedings, Ms Drennen had a number of conversations with Michael. She had some prior experience as an advocate in the Tenancy Tribunal, in particular in acting for incapacitated people. She was careful to ascertain and confirm his wishes. She received from Ms Monnox very firm advice to the effect that it seemed in Michael's interests for Michael to join in impugning the transfer of Kalaroo Road to his mother and the issuing of the additional units in the trust. In particular, this was pointed out, although not for the only time, in a letter from Ms Monnox to Ms Drennan of 5 March 2002, where reference was made to a possible claim to set aside the transfer of Michael's interest in Kalaroo Road on the basis of undue influence. A letter of 29 January 2002 had pointed out the possibility of impugning the issue of the additional units in the trust and had given prominence to the risk that if that claim were not promptly advanced, it might be lost by laches. Ms Monnox went so far, in a letter of 8 March 2002, to point out to Ms Drennan the onerous obligations of a next friend and that failure on her part to discharge them might jeopardise her admission as a solicitor, she being a law student at the time.
    
21. A number of letters written by Ms Drennan to Ms Monnox, particularly of 17 March 2002 and 13 May 2002, establish that Ms Drennan gave careful and close attention to her responsibilities and took into account the relevant considerations, including Michael's wishes, in deciding what course to take. She concluded, consistent with Michael's then wishes, that he would best be served by an out of court settlement. It is quite clear that, both before and after her appointment as next friend, Michael's consistent position was that he did not wish to take proceedings against his mother. In her letter of 17 March 2002 to Ms Monnox, after she had been given the strong advice to which I have referred, Ms Drennan recorded: "Michael assures me that he has not changed his mind".
22. In her affidavit, Daphne explains that as the hearing date approached, she decided to attempt to negotiate a settlement and proceed to a hearing only if a settlement could not be achieved, her attitude being that if she could settle with Michelle, then it would all be over. She says that she believed that she did not have to worry too much about negotiating any settlement with Michael, because he was not making any claim against her which needed to be resolved. She agreed to settle by paying Michelle money, over and above the loan account balance that she and Michael held with the unit trust. She believed that the settlement was for all Michelle's claims, "against both me and Michael", and would mean there would be no more claims in the future about Kalaroo Road or the trust. If she had known that Michael would later seek to impugn the disposition to her of his interest in Kalaroo Road, or the dealings relating to the unit trust, she would not have settled the claim as she did. She told Michael of the proposed settlement, to which he responded: "That is good. That will pay her out forever. I will sign something to make sure I don't ever have to go to court".
    
23. Without expressing a concluded view, I doubt that this is a case of res judicata, issue estoppel, or cause of action estoppel. The order of the Family Court dismissing the applications before it did not necessarily dispose of any allegation that the disposition of Michael's interest in Kalaroo Road was procured by undue influence or unconscionable dealing. The relevant issue then before the Family Court was whether it was a transaction within s 106B, namely, one that was intended to, or had the effect regardless of intention of, defeating a claim in the property adjustment proceedings. Although Mr Drummond, for the defendants, rightly points out that questions of influence and pressure were raised in the submission made for the wife in the Family Court proceedings, the dismissal of the s 106B claim could have occurred without determination that there was no undue influence, or unconscionable dealing. In other words, disposition of the allegations of unconscionable dealing, or undue influence were not essential to dismissal of the s 106B claim.
24. However, that is not the end of the matter. The principles enunciated by the High Court of Australia in Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 require that, where a potential claim or cross-claim is intimately connected with one already made in proceedings, or arises out of the same matters of fact, the parties are expected to bring forward and litigate all the related claims at one time, thereby minimising duplication of proceedings, vexation and oppression arising from multiple proceedings in respect of the same overall dispute and avoiding the risk of inconsistent judgments [see, for example, Anshun, at 297-8; Zavodnyik v Alex Constructions Pty Ltd [2005] NSWCA 438; (2005) 67 NSWLR 457, [38] and [40]).
    
25. As in all proceedings for property adjustment under Family Law Act, s 79, an initial issue is, what are the assets and liabilities of the parties so as to establish the matrimonial estate available for division between them. In that respect, both spouses are under an obligation to the Court to make a full and frank disclosure of their financial position. Property, for those purposes, includes equitable interests.
    
26. By her s 106B application, Michelle was seeking to have restored to the matrimonial estate Michael's interest in Kalaroo Road. If, indeed, Michael claimed to remain entitled in equity to his former interest in Kalaroo Road pursuant to the doctrines of unconscionable dealing or undue influence, then that was an interest which he was bound to disclose in those proceedings. Moreover, through Ms Monnox's affidavit, to which I have referred, Daphne was on notice that Michael had been advised that he had causes of action against her; indeed, Daphne was present at a conference when Michael was given such advice. Knowing that he had that advice, she entered into a settlement with Michelle, which also benefited Michael, in that it brought to an end the proceedings against him, in accordance with his wish that they be terminated. She did so on the entirely reasonable assumption that Michael did not wish to prosecute any such cause of action against her.
    
27. In circumstances where, on the one hand, Michelle's property adjustment claim and, on the other hand, Daphne's settlement of the claims against her, would both have been significantly influenced if Michael had asserted that he was entitled to have set aside the disposition of his interest in Kalaroo Road, or the dealings concerning the unit trust, it was essential that, if he were ever going to advance such a claim, he advance it in the Family Law proceedings. It was fundamentally relevant to ascertainment of the pool of divisible assets and it was very closely associated with the s 106B application.
    
28. In my view this is a case where, at least, once the s 106B application was brought so that Daphne was joined to the Family Law proceedings, Michael was bound to raise those claims, if at all, in those proceedings. The Family Court had accrued, if not ordinary, jurisdiction to hear and determine it [see Valceski and Another v Valceski and Another [2007] NSWSC 440; (2007) 70 NSWLR 36, 48-59; cf Family Law Act, s 78(3), (now repealed)].
    
29. An alternative basis, upon which I would reach the same conclusion, is that pleaded as "estoppel reliance by detriment" and/or "unclean hands". For the purposes of this determination, I have assumed that Michael would otherwise succeed on a cause of action based on undue influence or unconscionable dealing. Through his next friend, he was given advice that he might do so, by Ms Monnox. By his next friend, he gave close consideration to whether or not he should do so. For what seemed to her to be good reasons at the time she, on his behalf, determined not to do so.
    
30. It will be recalled that in the seminal case of Allcard v Skinner (1887) 36 Ch D 145, Ms Allcard had sued to recover gifts made by her to a sisterhood of nuns, St Mary of the Cross, which she had joined in 1868. Some time after joining the sisterhood, Ms Allcard, at the request of the lady superior of the sisterhood, Ms Skinner, made a will leaving all her property to the sisterhood. She also bestowed a large portion of her fortune to the sisterhood, comprising from shares in railway stock and various other securities, and amounting to some 8,500 pounds. After leaving the sisterhood in May 1879, Ms Allcard revoked her will, but made no demand for the return of her property until 1885. The evidence established that, soon after she left the sisterhood, she had a conversation with her brother about getting her money back. He said she did not need the trouble and had better leave it alone. Having left the Church of England's sisterhood and joined the Roman Catholic Church, she was advised by a Roman Catholic priest not to trouble about it. In February 1880, she consulted a solicitor about making a new will and discussed with him her gifts to the sisterhood. He told her it was too large a sum to leave behind without asking for it back, but she would not trouble about it. In 1884, she heard that another sister had left the sisterhood, had asked for her money back and had had it returned to her. Only then did Ms Allcard make up her mind to try to get her money back.
    
31. It was held that the gifts had been voidable for undue influence, but that Ms Allcard's claim was defeated by confirmation, estoppel, acquiescence and/or laches. Lindley LJ said that the evidence showed that she had considered the matter and had come to the conclusion that it was not worth troubling about. His Lordship said (at [178]) that it was not necessary to decide whether or not delay alone would be a sufficient defence, because the case did not rest on mere lapse of time:
    

There is far more than inactivity and delay on the part of the Plaintiff. There is conduct amounting to confirmation of her gift.

His Lordship concluded (at [189]):

Whether the Plaintiff's conduct amounts in point of law to acquiescence or laches, or whether it amounts to an election not to avoid a voidable transaction, or whether it amounts to a ratification, or a confirmation of her gifts, are questions of mere words which it is needless to discuss. In my judgment, it would not be fair or right to the Defendant to compel her now to restore the money sought to be recovered by this appeal. Nor, in my opinion, would such a result be in conformity with sound common legal or equitable principles.

32. The other majority judge was Bowen LJ who concluded:
    

In my view, this appeal ought to be dismissed, and dismissed on the ground that the time which has elapsed, though not a bar in itself, though not accurately to be described as mere laches which disentitles the Plaintiff to relief, is nevertheless, coupled with the other facts of the case, a matter from which but one reasonable inference ought to be drawn by men of the world - namely, that the lady considered her position at the time and elected and chose not to disturb the gift which she then at that moment felt, if she had the will, she had the power to disturb.

33. In my view, this case is closely analogous to Allcard v Skinner . The plaintiff, by his next friend, knowing that there was a serious possibility of disturbing the transactions now impugned in these proceedings, decided, for reasons relevant to the welfare and interests of the plaintiff, not to do so. Coupled with that, Daphne acted to her detriment by paying moneys to Michelle on the footing that there would be no more claims against her and believing that Michael would bring none against her. In addition, Daphne otherwise continued to support Michael in other ways referred to in the evidence; these are not essential to, but support, the conclusion that she acted in a way in which she would not had Michael determined at the time of the Family Court settlement to bring the present claim. In my view, to permit the present claims now to be maintained would be unconscionable, or, in the words used by Lindley LJ, not fair or right.
    
34. It therefore seems to me that the defences broadly described as Anshun estoppel and equitable estoppel/ acquiescence succeed, and the proceedings should be dismissed.
    
35. I order that the proceedings be dismissed with costs.
    
36. I direct that this order not be entered for a period of seven days from this day.
    
37. I reserve liberty to either party to apply by arrangement with my Associate within seven days for some different order.
    

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