The Facts
Man becomes close friends with his neighbours
A man died on 24 November 2008 at the age of 93.
Prior to his death he had owned a farm in Queensland.
He had bought the farm in the 1970s and for many years spent his weekends there.
When his wife passed away in August 2003, he relocated to the farm permanently.
In 1988, Mr and Mrs A purchased the property adjoining the man’s farm.
Over the years that followed, the man became close friends with Mr and Mrs A.
Man leaves token amount to children and grants power of attorney to Mr A
On 6 November 2003, the man executed an enduring power of attorney, appointing Mr A as his attorney for financial, personal and health matters.
On 11 March 2004, the man made his final will. It was prepared by Mr and Mrs A’s solicitor and named Mr and Mrs A as executors.
The will left $200 to each of the man’s five children, his financial shares to his grandchildren and the residue of the estate to Mr A. The will included the following statement.
I HAVE SPECIFICALLY EXCLUDED my children from any substantial provision out of my estate due to the fact that I do not have a normal father/child relationship with them as I have had very limited sporadic contact with them for many years.
Farm removed from estate by transfer to neighbour’s sons
At around the same time, the man entered into a series of transactions with Mr A and his sons.
These transactions had the effect of transferring the farm to Mr A’s sons, to be held on trust for Mr A.
In return, the man was granted a life estate in the farm.
These transactions removed the farm from the man’s estate, so that even if his children successfully challenged his will after his death, they could not lay claim to this valuable asset.
Children challenge transfer of farm on basis of undue influence
After the man’s death, three of his five children made a claim for provision out of their father’s estate.
However, since the estate was not worth much without the farm, the children also sought to bring the farm back under the umbrella of the estate.
The children therefore made a claim in the Supreme Court of Queensland that their father’s gift of the interest in the farm to Mr A’s sons as trustees was induced by undue influence.
They asked the court to order the neighbour’s sons to transfer the farm to the executors of their father’s estate.
Expert commentary on the court's decision
Queensland Supreme Court decides in favour of deceased’s children
In the case of Baker & Ors v Affoo & Ors [2014] OSC 46, the Supreme Court of Queensland ruled in favour of the deceased’s children, Marguerite Baker, Charles Baker and Roger Baker.
The court found that the defendants, Shaune and Christopher Affoo, had not discharged their onus to rebut the presumption of undue influence.
Presumption of undue influence under Powers of Attorney Act
Under section 87 of the Queensland Powers of Attorney Act 1998, in a transaction between a principal and attorney under an enduring power of attorney, there is a presumption in the principal’s favour that the principal was induced to enter the transaction by the attorney’s undue influence.
In the case before the court, the deceased, Ted Blair, was the principal and Mr A, Bill Affoo, was the attorney.
As principal and attorney, they entered into the transaction to transfer Mr Blair’s farm to Mr Affoo’s children, Shaune and Christopher, to be held on trust for Mr Affoo.
Accordingly, in order to succeed with their case, Shaune and Christopher had to rebut the presumption that Mr Blair was induced to enter the property transaction by Mr Affoo’s undue influence.
The court found that Shaune and Christopher had failed to do so.
Neighbour’s sons fail to rebut presumption of undue influence
In refusing to accept that Shaune and Christopher had discharged their onus to rebut the presumption of undue influence, the court made the following remarks.
Court defers decision on whether provision to be made under Succession Act
Having ordered that the farm be transferred to the executors of Mr Blair’s estate, the court turned its mind to Marguerite, Charles and Roger’s claim for provision under section 41 of the Queensland Succession Act 1981.
The court found that no evidence had been provided by the executors to establish the value of the farm or the impact of that on the value of the estate as a whole.
Nor had Marguerite, Charles or Roger provided evidence as to the extent of their ongoing needs, so that the court could determine whether they had been left without adequate provision.
Rather than make a decision with insufficient evidence, the court issued a direction for the filing of further evidence by the parties.
Importance of understanding one’s duties under power of attorney
With powers of attorney, it is important to ensure that both the attorney and the principal fully understand their duties and responsibilities. If in doubt, seek independent legal advice.
As happened here, when Bill Affoo failed to ensure that Ted Blair had obtained independent legal advice, an attorney’s failure to consider carefully their responsibilities before entering into a transaction with the principal may expose them to litigation.