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Administrator of Estate Sues Widow of Deceased Over Property Transfer

Ip v Chiang [2021] NSWSC 822 (6 July 2021)

The plaintiff alleged unconscionable conduct against the first defendant who she claimed to have a null marriage with the deceased.  The first defendant entered into transactions and property dealings with the deceased where the deceased had a mental incapacity. 

Facts:

Lisa Ip, the plaintiff and administrator of the estate of the deceased Mr Lo Sing Ip sued Ms Lisa Tsui Pen Chiang, the first defendant, for equitable relief arising from the transfer to her and her subsequent sale of the Redfern Property (the deceased's residential property).  The first defendant had a disputed marriage with the deceased which was dissolved after the Binding Financial Agreement caused the transferring of the Redfern Property into her sole name. 

The deceased was a poorly educated man who could not speak, read or understand English and who only ever conversed in Cantonese using a particular dialect derived from the Taishan District in China.  During the first defendant's lengthy absences from the marital home, a disputed marriage arose between the deceased and Ms Guo.   

The NSW Civil and Administrative Tribunal made orders for the appointment of the NSW Trustee as the deceased’s financial manager and the plaintiff as his guardian.  The plaintiff contends that the first defendant tricked the deceased into transferring to her his principal asset through a "sham" process of marriage. 

The plaintiff claims relief against the first defendant and settled compensation claims against the second, third, and fifth defendant.  The second, third, and fifth defendants acted as solicitors which the plaintiff alleged to have breached their duties.  The second defendant agreed to pay $116,667.00; the third and fourth defendants agreed to pay to the plaintiff the sum of $466,666.00; and the fifth defendant agreed to pay the sum of $116,667.00; all of these payments are in full and final settlement of the estate's claims.  Upon payment of sums by second to fifth defendants, the proceedings against them were dismissed. 

Issues:

Whether or not the plaintiff has standing to sue her on behalf of the estate of the deceased.

Whether or not Ms Guo, as the deceased's widow, is entitled to the whole of the estate.

Whether or not the marriage between the first defendant and the deceased is a nullity.

Whether or not there was an unconscionable conduct on the part of the first defendant.

Whether or not the deceased estate of Long Sing Ip is entitled to recover property acquired by the first defendant as a constructive trustee.

Applicable law:

Succession Act 2006 NSW - provides for intestacy provisions entitling widows to their deceased husband's whole of estate. 

Marriage Act 1961 Cth, section 23B(1)(d)(iii) - provides that a marriage is void, and may be declared a nullity, on the ground that the consent of a party to the marriage was not “real consent” because the party was “mentally incapable of understanding the nature and effect of the marriage ceremony.”

Analysis:

The plaintiff’s standing derives from the order of the Court appointing her as administrator of the deceased’s estate.  Despite the first defendant’s objection to the plaintiff’s standing, no application has been made by her for revocation of the order appointing the plaintiff as administrator.

During the deceased’s occupancy of the nursing home, the first defendant engineered their divorce and, without notice to the plaintiff or her family, his marriage to Ms Guo.  A “Declaration of No Legal Impediment to Marriage” dated 26 April 2016 purportedly signed by the deceased as well as Ms Guo.  However, the evidence is silent as to whether the marriage was consummated and the question of validity remains to be litigated, as between Wing Tong Ip and Ms Guo, in the probate proceedings presently listed for hearing on 20 September 2021.

The deceased was proven to lack capacity to marry the first defendant, execute a Memorandum of Transfer of the Redfern Property on 9 September 2013, the Binding Financial Agreement dated 6 July 2015 and the Memorandum of Transfer dated 22 April 2016 pursuant to which the first defendant ultimately became the sole registered proprietor of the Redfern Property; and execute documents, and to give instructions, incidental to steps taken by the first defendant to acquire the Redfern Property for herself.

During the impugned transactions, the deceased was suffering from a special disadvantage which affected his judgment or ability to protect his own interests.  To take advantage of such disposition could not be rendered conscionable.  As such, the first defendant acquired title over the property as a constructive trustee who is liable to account to the deceased's estate for her dealings with his property.

Conclusion:

The Court held that there was an unconscionable dealing on the part of the first defendant.  As to the marriage between the first defendant and the deceased, the court declared such to be a nullity.  Furthermore, the deceased estate of Long Sing Ip is entitled to recover property acquired by the first defendant as a constructive trustee.  The Court allowed the parties an opportunity to be heard as to the form of orders to be made to give effect to this judgment and as to costs.  The Court ordered that the first defendant pay the plaintiff’s costs of the proceedings.  Submissions are invited on the topic of whether or not there is a need to make orders consequential upon subsisting interlocutory orders (including a freezing order affecting the first defendant made on 12 October 2018).

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