Johnson v Buttress
High Court of Australia · 1936
Johnson v Buttress (1936) 56 CLR 113
Mrs Johnson had been kind to his dying wife, and he was fond of her. He gave her the cottage that was his only income. Was that a gift, or something the law will not let her keep?
In Thorne v Kennedy the joint reasons of Kiefel CJ, Bell, Gageler, Keane and Edelman JJ restated the presumption as arising where the person is proved to be in a particular relationship and the transaction is one, commonly involving a substantial benefit to another, that cannot be explained by ordinary motives or is not readily explicable by the relationship of the parties ([34]). They drew on Latham CJ's list in this case, said the classes are not closed, and said that outside the recognised categories the presumption can be raised by proof that the history of the relationship involved ascendancy or influence on one side and dependency or trust on the other ([34]). They declined to treat the relationship of fiancé and fiancée, which Dixon J had accepted in this case as one of the relationships imposing the burden, as one to which the presumption attaches, because common experience today negates the conclusion that it gives rise to a presumption that either person substantially subordinates free will to the other ([35]-[36]). A student who states the presumption should therefore include the transaction limb as well as the relationship, and should not treat an engaged couple as a recognised class.
What happened?
John Buttress could not read or write. Latham CJ recorded that he depended for his living on the rent from a cottage at Maroubra, which, with a small life policy and some furniture, was practically all he had. His wife died on 9 December 1930 (Dixon J). Mary Johnson, a married woman and a relative of his late wife, had visited Mrs Buttress in her last illness, and had known Buttress for more than twenty years (Dixon J; McTiernan J). In the months after the death Buttress made a series of wills, the last before the transfer being made on 18 March 1931 in favour of Mrs Johnson (Dixon J).
On 24 April 1931 he went with Mrs Johnson to her solicitor's office, where a transfer of the land to her by way of gift was prepared, the consideration being stated as "natural love and affection"; he was then taken to a justice of the peace, before whom he made his mark (Dixon J). The managing clerk asked whether there was any reason for it, and Buttress answered that he wanted her to have it, that she was very good to his wife and that he was very fond of her (Dixon J). Latham CJ recorded that Mrs Johnson was present at the interview, that nothing was said to draw Buttress's attention to the fact that he was in effect parting with the whole of his property without any equivalent, and that it was not suggested the advice he received was independent. Buttress died about three years later. His only son, as administrator with the will annexed, sued to set the transfer aside. Nicholas J decreed that it be set aside as obtained by Mrs Johnson's undue influence (Starke J), and she appealed to the High Court.
What did the Court decide?
The High Court dismissed the appeal, so the decree setting aside the transfer stood. There were five separate judgments: Latham CJ, Starke J, Dixon J, Evatt J and McTiernan J. The order was "Appeal dismissed with costs." The Justices did not give the same reasons, and the Proposition sets out whose reasons are whose.
Proposition
What is the principle?
Where a person has made a voluntary gift to someone who stood in a relation of influence over them, equity sets the gift aside unless the donee shows that it was the donor's free and understood act, and the Justices who decided the case on that footing described the relation more widely than a closed list.
Latham CJ. Undue influence is presumed in a gift inter vivos in the relations of parent and child, guardian and ward, trustee and beneficiary, solicitor and client, physician and patient and cases of religious influence, and the list is not exhaustive. The presumption is raised "[w]herever the relation between donor and donee is such that the latter is in a position to exercise dominion over the former by reason of the trust and confidence reposed in the latter". The donee must then show the gift was "the pure, voluntary, well-understood act of the mind" of the donor. Evidence of independent advice is "one means, and the most obvious means" of establishing a free exercise of will, though it may not be necessary in every case; the onus is harder to discharge for an illiterate donor and heavier where all or practically all of the donor's property is given. His Honour held that, although it had not been affirmatively proved that Mrs Johnson exercised undue influence, she had not displaced the presumption.
Dixon J (Evatt J agreeing). Undue influence may be proved by facts showing an actual influence over the donor's mind. Where the parties antecedently stand in a relation giving one an authority or influence over the other, the recipient of a substantial gift must satisfy the court that it was "the independent and well-understood act of a man in a position to exercise a free judgment based on information as full as that of the donee". That doctrine "is confined to no fixed category" and applies "whenever one party occupies or assumes towards another a position naturally involving an ascendancy or influence over that other, or a dependence or trust on his part". His Honour said that if positive proof is required that the transfer was procured by the improper exercise of an actual ascendancy or domination, and the case cannot rest on presumption, that requirement was not satisfied, but concluded that "an antecedent relation of influence existed which throws upon Mrs. Johnson the burden of justifying the transfer", which she had "quite failed" to do.
McTiernan J. The donor's trust and confidence in the donee and his dependence on her, with the immoderate nature of the gift, brought the case within the principle on which equity sets aside a voluntary gift upon the presumption that it was obtained by abuse of the relationship. His Honour said "It may be that the evidence does not prove the actual exercise of undue influence", and held that the donee had not satisfied the burden.
Starke J. His Honour had "some difficulty" in accepting the trial judge's view that the facts placed Buttress within a protected class. He held that the donor's age and capacity, the improvident and unfair nature of the transaction, the want of proper advice and the other circumstances were evidence from which the trial judge might infer that the transfer was the result of unfair and undue pressure rather than free and deliberate judgment, and he noted that the trial judge had seen and heard the witnesses.
Limit. The case concerned a gift. Dixon J said that where the transaction is a purchase or other contract the matters affecting its validity are necessarily somewhat different.
Why does this case matter?
Gifts from older, dependent or vulnerable people to the relatives, friends and carers who look after them are a common setting for undue influence, and this is a High Court decision a problem question on such a gift draws on. The usual error is to look for evidence that the donor was pushed and give no weight to the standing of the person who received the gift. Citing the case without saying which Justice's formulation is meant invites the examiner's question, whose test is that?
Exam and application relevance
Name the Justice whose formulation you apply, because the case gave no single joint statement of the test.
Work through the facts in order: the relationship between donor and donee, the size of the gift to the donor's position, and what the evidence shows about whether the donor freely understood what was being done. Treat independent advice as evidence on that last question: Latham CJ regarded its absence as a most important factor, even if not sufficient in itself.
State the presumption as Thorne v Kennedy later restated it, with its transaction limb, and do not treat an engaged couple as a recognised class.
The case concerned a gift, so say that a purchase or other contract raises somewhat different matters (Dixon J).
Check your understanding
1. An elderly widower who cannot manage his affairs gives his house to a neighbour who has run his errands for a year, and the neighbour was present when the transfer was prepared. Using Latham CJ's reasons, what must the neighbour show, and what would the absence of independent advice add?
2. Which Justices rested the result on a presumption, and what did Starke J say about the trial judge's view that the case fell within a protected class?
3. Dixon J said that a requirement of positive proof that the transfer was procured by the improper exercise of actual ascendancy was not satisfied. What did he conclude instead, and what burden followed?
4. A buyer under a contract of sale says the seller was in a position of dependence on the buyer. What did Dixon J say about the difference between a gift and a purchase?