STATE TRUSTEES QUESTION TRANSFER OF PROPERTY TO SON ALLEGING THAT IT WAS VITIATED BY UNDUE INFLUENCE

McFarlane v McFarlane [2021] VSC 197 (23 April 2021)

This case involves a property transferred by the mother to his son which is allegedly due to “natural love and affection”. The State Trustees Limited in this case questions the transfer saying that such transfer was vitiated by undue influence.

Facts:

Judith McFarlane signed a transfer of land, gifting her home at 139 Warby Range Road, Glenrowan (the  Glenrowan property) to her son, Mark McFarlane. The consideration for the transfer was recorded as ‘natural love and affection’.  At the time of the transfer, Mr McFarlane was living with his mother at the Glenrowan property. He became the registered proprietor of the property on 4 January 2016. In November that year, Mrs McFarlane moved from the house in Glenrowan to  St John’s Village, an aged care home in Wangaratta.

In August 2017, the Victorian Civil and Administrative Tribunal appointed State Trustees Limited as Mrs McFarlane’s administrator, under the Guardianship and Administration Act 1986. In its capacity as her administrator, State Trustees inquired into the circumstances surrounding the transfer of the Glenrowan property to Mr McFarlane. It commenced this proceeding on Mrs McFarlane’s behalf, claiming that the transfer was procured by undue influence and was unconscionable.  The relief sought includes an order that the transfer be set aside, or alternatively a declaration that Mr McFarlane holds the Glenrowan property on constructive trust for the benefit of Mrs McFarlane.

Issue: Was the transfer of the property vitiated by undue influence?

Analysis:

The evidence, in this case, establishes that Mr McFarlane was in a position of ascendancy and influence over his mother, who depended upon and trusted her son.

Mr McFarlane was living with his mother as her carer. Mrs McFarlane has a long history of very serious mental illness.  A neuropsychological assessment in 2011 found a ‘cognitive profile of primary impairments of executive functioning and attention’ which was ‘consistent with long-standing schizophrenia’.

Before Mrs McFarlane moved to Glenrowan, her mental state had been monitored regularly by her case manager at the Peter James Centre at Eastern Health, which provides mental health services for aged persons. She does not appear to have received the same level of care after the move. The mental health treatment plan prepared by Dr Radaei in November 2014 was rudimentary in comparison to the case closure summary prepared by Eastern Health in January 2012.  More importantly, Dr Radaei’s treatment recommendations were not acted on by Mr McFarlane. He did not facilitate the recommended home medication review and did not arrange for his mother to be assessed by a psychologist or a psychiatrist.

On occasion, Mr McFarlane behaved towards his mother in an abusive manner. He shouted at her, called her names, and pushed her around.  She was frightened of him, and of what he might do to her if she refused to sign the transfer. At the same time, Mrs McFarlane felt sorry for Mr McFarlane because his father had abandoned him.

Mr McFarlane did not attempt to displace the presumption of undue influence. He did not demonstrate that the transfer was his mother’s free, independent, and well-understood act, notwithstanding his influence over her. It is also significant that Mrs McFarlane did not have the benefit of independent financial or legal advice before signing the transfer.  She clearly did not understand that transferring the property to her son would affect her age pension, or her future ability to pay for aged care accommodation.

Conclusion: The transfer of the Glenrowan property by Mrs McFarlane to Mr McFarlane was vitiated by undue influence.

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