AN ANNUITY DEAL

Nelson Evening Mail, Volume LVI, 25 August 1922, Page 4

AN ANNUITY DEAL

.SUPREME COURT JUDGMENT

VERDICT FOR PLAINTIFF

Reserved judgment was delivered in the Supreme Court this morning in the case (heard at the last sitting of the Supremo Court, before His honour Mr Justice J. Salmond,) Alice Brusewitz (executrix in the estate of the late 11. E. L. Brusewitz) v. George Brown, an application to set asido on the ground of Undue influence a transaction entered into between the defendant and the deceased on the Bth of November, 1921, four months before his death. By the transaction, Brusewitz, who for many years, stated the judgment, had been an habitual drunkard and at the date of the transaction was in a"very bad state of health, transferred a mortgage for £IOOO (his whole estate) to the defendant in consideration of an annuity of £IOB, and on deceased’s death defendant v was left in possession of the mortgage (on which four monthly instalments had been paid), without any further liability under his deed or covenant except that of paying the annuitant» funeral expenses. It is clear, said the judgment, that in the first place the assignment of the mortgage was obtained by defendant for a _ grossly j inadequate consideration. His : Hon- ■ our was satisfied that the defendant 1 was well aware that Brusewitz'was |in a very bad state of health, and | was unlikely to ; live more than a very | few years at the most, and that the annuity was a wholly inadequate con- , sicleration for the mortgage. The defendant was an intimate associate and friend of Brusewitz, and for some - considerable period before his death | and before the transaction in question the defendant had visited Britse- < witz and drunk liquor with him every day, and had abundant opportunities therefore of observing and knowing v his state of health. His Honour’was unable to accept defendant’s Statement that he believed that Brusewitz - might live for another ten years. Even, however, if this was true it must have been clear to defendant that he was giving an inadequate consideration. It was cleat also that the transaction was grossly improvident on the part of Brusewitz. The result of the transaction was that lie deprived himself ;.of all redouts© to his capital, had obtained an income which was insufficient' for him 'during ‘ his life, and had left his wife without any inheritance upon his death. The mere fact tliat a transaction is based oh an inadequate consideration dr is otherwise improvident, unreasonable, or unjust, is hot in itself any ground : on which the Court can set it aside as invalid. 'For is such a circumstance ;in itself evein a sufficient ground for a presumption that the transaction was the result of fraud, 'misrepresentation', l mistake, or undue influence, so as to place the burden- of supporting the transaction upon the person who profits by 'it. The law in general leaves a man at liberty to make such bargains as he pleases and to dispose of his own property. as he chooses. However improvident, unreasonable, or unjust such bargains or dispositions may be, they are binding on every party to them unless he can prove affirmatively the existence of one of the recognised invalidating circumstances, such as fraud or undue influence. This general, principle, however, is subject to an important exception, where there is hot, merely an .absence or inadequacy of consideration for the transfer of property, hut there algo exists between the grantor and the grantee some - special relation of. confidence, , control, domination, influ- . ence, ow other form of superiority, such as to render reasonable a presumption that the transfer was pro-. cured by the grantee through some unconscicntious use of his power over the grantor, the law will make tnat presumption, and will place on the grantee the burden of supporting the transaction by Which he so benefits .and of * rebutting the presumption' ,of its invalidity. In such cases it 1 is necessary for the grantee to prove that the suspected. transaction has not its source in any improper influence over the mind or will of the grantor or in any fraud, misrepresentation, mistake, or concealment of material facts, which ought to have beten disclosed by the grantee to the grantor in view of the. relations between them. Unless the grantee can . prove this the transaction will be set aside at the suit of the grantor ;or, his representatives..';-His.Honour then went on to quote important instan- t ces of this presumption, and apply- , iug these principles and authorities to the facts of the present case, -he was of opinion that there existed between. Brusewitz and the" defendant such a relation of confidence and influence as is sufficient to raise “a legal presumption that the transaction by which Brown seeks to benefit was procured by means of some tinconscientious Abuse of the power which he possessed over the deceased. Having regal’d to the character of Brusewitz, the nature pf Brown’s relations with him, and the nature'of the'transaction which took place .between them and is now in question, His Honour thought there was a sufficient basis for the presumption undue influence, and that it was for defendant to rebut that presumption if he could. His Honour was quite satisfied tliat Brusewitz when fho signed the documents was sober add was well aware of their contents, na- , ture and effect. But that was not .. tlie real question. The presumption against the transaction, His Honour held, had not been successfully ro. butted by 'proof of independent competent advice, nor by any other evidence. I view the transaction with grave suspicion, continued His Honour. It has the appearance of a ’ scheme designed to enable the defendant to obtain possession of Brusewitz’s estate on his impending death and to deprive his wife and family of their inheritance . '. . and al-* 1 though the defendant may in fact have acted in good faith, it is for Him to dissipate the suspicion with which his actions must bo regarded. In my opinion he lias not done so, and. the transaction cannot be upheld. ' * , His Honour made a. decree to the following effect: (1) Declaring the ‘ transfer of the mortgage void Us against the plaintiff as having been obtained from Brusewitz by undue means; (2) directing the defendant to execute an assignment of that mortgage to the plaintiff free from encumbrances within seven days, after the instrument of assignment has been tendered to him for that purpose, and at the same time to deliver tlie deed of mortgage to the plaintiff; (3) directing an account to be taken by the Registrar of all interest received by the defendant from - the mortgagor and not accounted for) to the deceased, and the plaintiff’s costs of the preparation, execution, stamping and registration of the assignment so to be executed by tlie defendant ; (4) directing an account'to bo taken by the Registrar of all moneys paid by the defendant to .the

deceased by way of instalments of the annuity under the defendant’s deed of covenant; (5) directing the moneys so paid by the defendant to the deceased to'be set off against the amount of the said interest and costs, and directing the defendant to, pay the balance to the plaintiff within 21 days after the Judge’s approval of the Registrar’s certificate certifying the balance due to the plaintiff; (0) reserving liberty for.either party to apply. Defendant was also ordered to pay the plaintiff’s cost of the action on the highest scale, as on a, claim for £IOOO, together with disbursements and witnesses’ expenses to be settled by the Registrar. 'Mr C. R ; . Foil appeared for plaintiff and Mr J. P. Hayes for defendant.