A solicitor who took instructions from an elderly patient to allow the sale proceeds of her family home to be used by her daughter to simultaneously acquire another in her own name, has been referred by a court for investigation for the “conflict of interest” in having acted for both mother and daughter without their “informed consent”.
Sharon Wardle was duly appointed Attorney of and carer for her mother Patricia – age 86 – and with whom she had resided in Marsfield in Sydney with her son James since 2012.
Just six months after the transactions were completed in January 2019, Patricia – who had suffered from numerous ailments and a “cognitive decline” – died leaving a will dated August 2004 appointing Sharon and her estranged brother Roderick as her sole executors and beneficiaries.
Roderick had already gained from his mother’s benevolence in the form of her transfer to him in 2004 of a property at Crowdy Head – on the NSW mid-north coast – of which she had been the beneficiary under the estate of her late husband William.
The gift to Sharon of the $800k sale proceeds of the Marsfield home had however substantially depleted Patricia’s estate prompting Roderick’s challenge that it had occurred as the result of Sharon’s undue influence.
He filed proceedings in the Supreme Court in Sydney seeking an order that Sharon held the Macquarie Park residence on trust for the estate.
Sharon cross-claimed – in the event that her brother’s claim was upheld – for further provision out of the estate on the basis that she had been inadequately provided for.
She contended the gifted funds were intended by her mother to balance the transfer of the beach house to brother Roderick which had fully satisfied her moral obligation to him.
The contest came before Justice Michael Slattery who concluded from financial records that Sharron had contributed $327k to her mother’s bank account – $250k of which was from the sale of her own home – over the seven years she resided with her and that the relationship with her mother was “a faithful one of constant care and not one characterised by the misuse of the power of attorney”.
Her solicitor however had declined to act in the proposed simultaneous sale and acquisition and had advised her that she could not transfer the acquisition funds to herself using her mother’s Power of Attorney.
It was Patricia who made contact with another solicitor – Garry Pickering – and instructed him to proceed with her sale on instructions from Sharon as her Attorney.
On being told by Sharon of her mother’s “mild dementia” Pickering decided to interview Patricia to assess her legal capacity.
He administered tests of cognition at her bedside in Ryde Hospital to satisfy himself she had capacity to give instructions and had an appreciation and understanding of the decisions she was making as well as an insight into her health deficits.
It was as Mr Pickering was leaving her hospital bed that Patricia called him back to add a further request for Sharon to be able to use the proceeds of sale to buy a property for herself.
Out of an abundance of caution, the solicitor drew up a document when back at his office to record Patricia’s wishes. This was to avoid any conflict of interest on his part and any suggestion of undue influence on Sharon’s part as well as to record – as a precaution in the event of any dispute arising among the siblings – that Roderick had already been provided by way of the transfer to him of the beach house.
In rejecting the “undue influence” claim, His Honour noted Sharon and her mother “had a warm affection and parent child relationship which nourished both their lives”.
He found that the gift was “founded in gratitude” and a “recognition of Sharon’s need for her own accommodation” after she had given up her own property to come and live with her to provide much appreciated care.
“This was not a relationship in which the deceased’s reliance, trust or confidence in Sharon, although they clearly existed, was the dominant motive force for the gift to her daughter”.
Justice Slattery went on however, to note that the solicitor – probably because he was also acting for Sharon and was “somewhat blinded by the apparent consensus between mother and daughter” – had failed to consider that the gift of the whole of the sale proceeds to her daughter divested Patricia of resources to meet any major future medical expenses.
An independent solicitor – he thought – would have responded to the issue and would have “documented an arrangement” for Sharon to support Patricia’s future medical care if required.
“It was ultimately unconscientious of Sharon [as Attorney] to take these proceeds without this issue being discussed and dealt with,” he ruled.
On that basis the court ordered that the transactions be set aside as a consequence of which Sharon was deemed to hold the Macquarie Park property on trust for the estate.
Turning his mind to the family provision claim, His Honour noted Sharon’s significant financial contribution to the deceased and evidence of the “close, grateful and affectionate quality of her relationship with the deceased that was of greater intimacy than that she had with Roderick”.
Her greater needs, the fact Roderick had no full-time caring responsibilities and had already received the Crowdy Head property were also relevant to him deciding the home should be provided to Sharron by way of a further provision from the estate.
Sharon’s win was however subject to the “bitter pill” of it being made subject to a charge to the extent of $75k in Roderick’s favour.
Because the deceased did not give “informed consent” to Mr Pickering acting for her and for her daughter, His Honour – without making any adverse findings against him – directed the registrar forward a copy his judgment to the Law Society for its consideration of the circumstances and of “whether the deceased or Sharon has suffered any loss by reason of the conflict of interest that existed between his two clients”.
Wardle v Wardle [2021] NSWSC 1529 Slattery J, 3 December 2021 Read case