Nephew ordered to repay almost $1.5m he ‘influenced’ his elderly aunt with dementia to gift him

The nephew of an elderly woman too confused to manage her finances has been ordered to repay her almost $1.5 million, after placing “undue influence” on her to gift him the cash.

The man netted the money from the sale of her home, as well as $38,000 in ATM withdrawals using the woman’s bank card, all of which he claimed she had agreed to.

In an anonymised decision of the Family Court from May, released to the public this week, Judge Kevin Muir ruled the nephew, who had enduring power of attorney over his aunt’s affairs, acted outside those responsibilities.

The findings are currently being appealed in the High Court.

According to the decision, Martha*, the elderly North Island woman at the centre of the case, was born in the 1920s. Her husband died in the 1980s and she lived alone until she was placed in care in 2020. She had no children but, over at least the previous decade, was cared for by her nephew, Simon*.

She had multiple properties to her name.

In 2014, a doctor first documented Martha’s apparent mental decline. A psychogeriatrician who gave evidence to the court said a diagnosis of dementia could have been made in 2014, but it was not.

An enduring power of attorney was executed in May 2014, with Simon becoming her attorney with respect to property and welfare.

Over the following years, Simon pocketed a significant amount of money from his aunt. The proceeds of a property sale of more than $1.3m were “gifted” to him.

Between 2015 and 2020, he withdrew a little more than $90,000 from four ATMs. He said the withdrawals were approved by his aunt, who accompanied him “the majority of the time”.

Further bank transfers in the tens of thousands were also made, although some of this was repaid. Simon also claimed his aunt gifted him $81,000.

He further deducted close to $34,000 from his aunt’s account for the running costs of two vehicles. One was for his sons, while he drove another car previously owned by Martha. He claimed she gifted both the cars and future running costs.

Another sum of almost $5000 was used by Simon to purchase a fridge, tools, accommodation at a Coromandel resort and rates bill penalties.

Simon, whose sister brought the Family Court case against him, told the court their aunt had remained competent to manage her affairs until May 2020, when she was certified as having “severe dementia” and was formally deemed mentally incapable of doing so. All payments and withdrawals were made with her agreement, Simon claimed.

But the decision noted multiple occasions between 2015 and 2020 where Martha’s mental capability was called into question. Judge Muir said that, over that period, she became “increasingly confused and forgetful”.

Simon said that, over the previous two decades, he was the only family member who showed any interest in her welfare, visiting her regularly and taking her to appointments.

Nephew acted ‘dishonestly’ – judge

Judge Muir accepted Simon had been a frequent visitor and source of comfort to his aunt for at least the previous decade and she had come to rely on him.

But when it came to the “gift” of $1.3m from the house sale, the judge ruled Martha lacked the capacity to properly weigh all the issues that arose from giving him the money.

“The significant reduction in her available assets as a result of the gift left her in a precarious position,” Judge Muir wrote in his decision, saying it reduced her ability to enter into a supported living arrangement in the future.

On the balance of probabilities, the judge ruled the “gift” came from “significant and undue influence from [Martha’s] trusted nephew”. He ruled the action was a clear breach of Simon’s duties as her attorney and ordered the money be repaid.

A total of just over $81,000 from the proceeds of the sale, over and above the $1.3m “gift”, was paid to BNZ to settle the remainder of Martha’s mortgage.

Simon claimed that, upon Martha learning of this, she thought he was being “short-changed” so came to a debt arrangement where she would pay him the sum over time. Much of the thousands in transfers from Martha’s account to Simon’s made up part of this supposed agreement.

Judge Muir said the only evidence of the agreement was a document Simon prepared himself and was allegedly signed by Martha, although the judge could not conclude the signature was actually hers.

“That document can only have been signed by [Martha] or [Simon] and I find on balance of probabilities that it was not signed by [Martha]. It follows that the document was both created and signed by [Simon].”

The judge found Simon acted dishonestly, and the decision to “gift” the money was not made by Martha at all.

“Her reliance on him was significant and [she] was given no opportunity to receive independent legal advice.”

Simon was ordered to repay the money with interest.

When it came to the thousands withdrawn from ATMs, Judge Muir said Simon did not keep receipts. He claimed Martha asked for the cash for things such as gifts, groceries and payment for cleaners.

The judge ruled $200 a week could reasonably be set aside for those purposes, which, from a total of about $90,000 in withdrawals, left $38,450 over the five-year period unaccounted for. He ordered Simon to repay that sum with interest.

When it came to the nearly $44,000 in legal fees, Judge Muir found that, for the majority of the sum, it was not a situation where Simon was acting with his self-interest at the fore. But the case he was pursuing on behalf of his aunt was ineffective.

He was ordered to repay only $12,000 of the legal fees as that sum was found to be for his benefit. For the use and running costs of the vehicles, some of it was reasonable, but some was for self-benefit. Simon was ordered to repay $20,000.

The costs of half of the tools, the rates penalties and Coromandel accommodation were also ordered to be repaid.

In total, Simon was instructed to pay $1,459,587, including interest on some of that total.

The appeal is set to be heard in the High Court in the near future.

*Names have been changed.

– This story originally appeared in the [https://www.nzherald.co.nz/nz/nephew-ordered-to-repay-almost-15m-he-influenced-his-elderly-aunt-with-dementia-to-gift-him/QNTB5TLIQVFI3CBLLM5QNJWLLA/ New Zealand Herald.