‘Dear Mother, for all your love and affection, I’m taking your house’: A case study on elder abuse

Elder abuse is a virulent problem within Australia that inconspicuously plagues elderly citizens in our society by robbing them of their financial security, dignity and social support. The title of this article is not intended to make light of elder abuse, but instead serves to highlight the seemingly innocuous way in which elder abuse can be perpetrated by an adult child against their parent.

What is elder abuse?

Broadly speaking, elder abuse constitutes any act that causes harm to an elder person, perpetrated by someone they know and trust.

Elder abuse is multifaceted, and the abuse can take can many forms including:

• physical abuse
• social abuse (i.e. restricting contact to friends and family members)
• psychological abuse
• mistreatment and neglect
• financial abuse
• sexual abuse

Commonly, the perpetrators of elder abuse are family members of the elderly person, particularly adult children, but the perpetrators can include friends, neighbours and even treatment providers. As a general proposition, elder abuse involves the subjugation of the elderly person’s rights by another person for their own benefit and control.

Elder abuse in the legal context

The statistics regarding the prevalence of elder abuse in Australia vary. However, according to a 2015 report by the Australian Institute of Family Studies, financial abuse is the most common form of abuse.

A prosaic example of where elder abuse can occur is where an adult child moves in with their older parent for reasons other than the elderly person’s benefit. Over time, this situation – while innocuous at the outset – can subsequently lead to the theft / misappropriation of the parent’s assets, physical abuse and social isolation.

Legal practitioners, especially in the jurisdictions of wills and estates, often take a front seat to financial abuse of an elderly person and sadly in some cases, they even act as facilitators of the abuse – as the case of McFarlane v McFarlane illustrates.

McFarlane v McFarlane [2021] VSC 197

The case of McFarlane v McFarlane is a textbook example of elder abuse perpetrated by an adult son over his elderly and vulnerable mother, wherein the transfer of property from the mother to her son was set aside due to undue influence and unconscionability.

It also illustrates how the solicitor who acted in the transfer of the property unknowingly facilitated the abuse and provides salutary lessons for practitioners when acting in transfers of assets between family members.

The case also has important practical implications with respect to adducing evidence of abuse / undue influence and the availability of equitable remedies to compensate the victim of elder abuse.

The facts

A brief summary of the facts of the matter:

• The plaintiff, Judith, was 77 years old at the date of trial.
• Judith had two children from separate relationships, namely her son Mark (defendant) and her daughter Nicole.
• Judith was diagnosed with schizophrenia in 1979 and suffered from a cognitive impairment, especially in her attention, decision-making and new learning.
• On 15 February 2012, Judith purchased a property in Glenrowan, Victoria (Glenrowan Property).
• In 2012, Mark moved in with Judith after the breakdown of his marriage and became Judith’s sole carer.
• Nicole lived with Judith and Mark intermittently between 2012 and 2015. Nicole observed Mark throwing water over Judith, punching Judith and withholding dinner and medication from Judith.
• On 19 November 2015, Mark instructs a law firm to prepare documents to transfer the Glenrowan Property into his name absolutely.
• Mark does not disclose Judith’s diagnosis of schizophrenia to his solicitors.
• On 25 November 2015, Mark and Judith attend the solicitor’s office. Judith does not receive any advice about the transfer. The transfer of land document records the consideration as ‘natural love and affection’.
• Mark’s solicitors do not meet separately with Judith to take her instructions or provide her with advice. There was no correspondence between the firm and Judith.
• The transfer of the Glenrowan Property is registered in January 2016.
• As a result of the transfer:

1. Judith’s pension payments are reduced by $150 per fortnight or $20,000 over a five year period.
2. Judith is unable to fund her accommodation at an aged care facility and she is charged a daily accommodation fee and means tested fee.

• On 24 August 2017, State Trustees Limited (STL) discovers that Judith has accrued arrears in payments to her aged care facility of approximately $95,000.
• On 30 November 2018, STL commences proceedings against Mark in the Supreme Court, seeking orders that the transfer of the Glenrowan Property be set aside on the basis that it was procured by undue influence or, in the alternative, the transfer was procured by unconscionable conduct.

The trial – Mark’s evidence

Mark briefly attended trial to object to the Supreme Court’s jurisdiction to decide the matter on the basis that Her Honour Justice Richards had committed treason and the trial was unconstitutional. After several interruptions and outbursts involving shouting, Mark left the courtroom and did not participate in the trial further.

Mark’s evidence, as outlined in his defence, in summary was that he had a loving long-term relationship with his mother; he left his life in Sydney to look after his mother’s needs; and his mother wanted to reward him for all that he was doing for her.

The trial – orders

The Court determined that the transfer of the Glenrowan Property was vitiated by undue influence based on the evidence that:

• At the time of the transfer, Mark was living with Judith and was her carer.
• Judith was dependent on Mark for transport to the shops, medical appointments and social appointments.
• Judith had a long history of serious mental illness resulting in impaired decision-making.
• Mark was physically and verbally abusive towards his mother. Judith was frightened of Mark and what he might do if she said ‘no’.
• Judith felt sorry for Mark because his father had abandoned him. Indeed, Judith stated during the trial, ‘whatever he [Mark] wanted, I’d give, even when he was mean and nasty’.
• Mark’s solicitor did not see Judith without Mark present, obtain instructions from her or explain the nature and effect of the transaction to her.
• Judith fundamentally did not understand the transfer. After the transfer, she assumed she could still gift the Glenrowan Property to Mark and Nicole in her will.
• Judith was not aware that the transfer would reduce her pension entitlements or her ability to fund her future care arrangements.

The Court also concluded that the transfer of the Glenrowan Property was unconscionable on the basis that:

• Judith’s mental illness and her emotional and physical vulnerability impaired her ability to make judgements about her best interests.
• Mark, in his correspondence to STL, confirmed he was aware of Judith’s emotional and physical dependence on him. One of his letters stated, ‘I was the only one there for my mother’.
• Mark did not arrange for Judith to receive independent legal and financial advice.
• After the transfer, Mark continued his abusive behaviour towards Judith and has maintained he was entitled to the benefit of the transfer, notwithstanding Judith’s financial position.

Why is the decision important?

The decision is important, for the following reasons:

• It is the first reported Victorian decision where the Court has ordered equitable compensation in addition to orders setting aside a transfer vitiated by undue influence / unconscionability. Equitable compensation was ordered on the basis that Judith had suffered losses totaling $128,853.13 as a result of the reduction in her pension entitlements and her requirement to pay a means tested fee and daily accommodation payment to her aged care facility.
• Judith’s legal representatives were able to adduce documentary hearsay evidence (i.e. STL’s records) by relying on the ‘business record exemption’ contained in s 69 of the Evidence Act 2008 (Vic). These records appear to have been pivotal in demonstrating Mark’s abuse and ascendency over Judith, which was recorded in their file and included reports from VCAT and Judith’s doctors.

Lessons learned

Family arrangements wherein a parent agrees to transfer their property to a child in exchange for ongoing care and a right to reside in the property are not uncommon and in certain circumstances can be mutually beneficial. Indeed, Centrelink recognises specific family arrangements known as ‘granny flat interests’.

However, the case of McFarlane v McFarlane serves as an important reminder for those seeking to transfer assets between family members. Specifically:

• If you are seeking to document a family arrangement with a lawyer, you should ensure that each party to the document has their own lawyer or has been given the opportunity to speak with an independent lawyer. If the transaction has the potential to have financial consequences, then advice from a financial planner / accountant is also recommended.

• If you have concerns that a family member does not properly understand the transaction or has issues with cognitive functioning, a report should be obtained by a medical practitioner to ascertain whether they have capacity to understand the transaction. It may also be useful to have the family member explain the transaction in their own words to ensure that they properly understand the transaction and that everyone is on the same page.

If you have concerns that a family member or loved one is being subjected to elder abuse or you would like advice regarding the transfer of assets to a family member, please contact us to speak with a member of our experienced Wills & Estates team.

Queries

If you have any questions about this article, please get in touch with an author or any member of our Wills & Estates team.

Disclaimer

This information and the contents of this publication, current as at the date of publication, is general in nature to offer assistance to Cornwalls’ clients, prospective clients and stakeholders, and is for reference purposes only. It does not constitute legal or financial advice. If you are concerned about any topic covered, we recommend that you seek your own specific legal and financial advice before taking any action.