Kenneth Charles Ward v Brian Charles Ward [2011] NSWSC 107

An elderly father sued his son and grandson to recover $140,000 and to undo a transfer of real property.

The $140,000
The son represented to the father that he would, on his behalf, make and investment of $140,000 returning $20,000 per month.

In fact the son used a power of attorney to make a loan of $140,000 to the grandson.

The loan agreement provided for repayment but only to the extent sales proceeds were available. There was no evidence as to the status of project sales. Had the case been defended, liability would have been difficult to prove. However neither the son nor grandson appeared at the hearing. The court found their failure to plead to be deemed admissions of the allegations. On the pleadings the sum of $140,000 had become repayable, and this entitled the father to succeed on those admissions and entitled him to repayment of the loan and interest.

The transfer
The father sued to undo the transfer of the one-third in real property on the ground of unconscionable dealing.

To set aside a transaction for unconscionable dealing, it must be shown that:

  1. There was a relationship of “special disadvantage” (the case of special disadvantage was not a strong one);
  2. The son knew or ought reasonably to have known that the grandfather was not in a position to look after his own interests (the transfer of the one-third interest was of no benefit to the grandfather and involved substantial risk whereas it was entirely without risk for the son and conferred substantial benefit);
  3. The transaction was not fair, just and reasonable (here the grandfather did not receive full value and was not independently advised).

The grandfather had the benefit of the deemed admissions in relation to each of the above issues and the transaction was set aside for unconscionable dealing.

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