A v N - [2012] NSWSC 354

Supreme Court

New South Wales

Medium Neutral Citation: A v N & anor [2012] NSWSC 354
Hearing dates: 13-17, 20-24 February 2012
Decision date: 13 April 2012
Jurisdiction: Equity Division
Before: Ward J
Decision:
Judgment for plaintiff. Orders to be made for performance by first defendant of obligations under Deed of Settlement and Release.

Catchwords: CAPACITY - presumption of sanity - test of capacity is 'issue specific' - relevant issue was whether there was capacity to enter into March Deed - HELD - onus of proof to displace presumption not satisfied on balance of probabilities - EVIDENCE - whether Court bound to accept expert evidence where the expert is not called for and hence challenged in cross-examination - HELD - general principle that Court is not bound to accept such evidence although it may be given more weight depending on the balance of the evidence before the Court - uncontradicted evidence is still be to assessed in light of all other lay and expert evidence - UNCONSCIONABLE CONDUCT - two allegations of unconscionable conduct - first, that plaintiff took advantage of her position vis-Ã -vis the second defendant to induce him to enter the deed - second, that plaintiff took advantage of first defendant's concern that she would be denied access to the second defendant to induce her to enter the deed - HELD - unconscionable conduct not established in relation to either allegation - UNDUE INFLUENCE - no presumption of influence between husband and wife - evidence of increasing dependence of second defendant on plaintiff giving rise to a presumption of influence - relevant consideration is the quality of consent by the donee - second defendant had independent legal advice - context in which gift is given is also relevant, including any benefits which are obtained by the donee - HELD - benefit to plaintiff was not procured by undue influence over the second defendant - DURESS - conduct alleged to amount to duress being alleged threats made against the person of the first defendant and an alleged threat to deny first defendant access to the second defendant - consideration of Karam and whether the alleged conduct must be unlawful to establish duress - alleged threats against person made two years before the deed entered into - no evidence aside from the first defendant's testimony that alleged threats to deny access to second defendant were made - HELD - duress not established by first defendant - DEED - non est factum defence not pleaded - even if first defendant succeeded in making out a vitiating factor the deed was only voidable and not void - whether deed would have been set aside in the circumstances of the case - OBITER - deed would not have been set aside - CONTRACTS REVIEW ACT - whether deed was 'unjust' - whether first defendant had standing to plead 'unjustness' insofar as the injustice pleaded was not suffered by the first defendant - HELD - first defendant had standing under the Contracts Review Act 1980 (NSW), however none of the allegations of injustice made out - EQUITY - equitable maxims - relief sought was approximate to specific performance as deed was executed rather than executory - whether plaintiff disentitled to relief due to unclean hands - where unclean hands alleged in relation to a putative breach of the deed by the plaintiff - where the relief sought would affect the interests of the second defendant as another party to the deed, the second defendant's interests are relevant to whether relief is denied - HELD - not satisfied that alleged conduct of the first defendant amounted to unclean hands
Legislation Cited: Contracts Review Act 1980 (NSW)
Guardianship Act 1987 (NSW)
Law Reform (Miscellaneous Provisions) Act 1994 (NSW)
Powers of Attorney Act 2003 (NSW)
Real Property Act 1901 (NSW)
Cases Cited: A Little Company Ltd v Peters [2007] NSWSC 833
Agricultural and Rural Finance Pty Ltd & Anor v John Edward Atkinson & Ors [2010] NSWSC 635
Arthur Young v Tieco International (1995) 182 LSJS 367
Ashpifel v Bryan (1884) 122 ER 999
Australian and New Zealand Banking Group v Aldrick Family Company Pty Ltd [2010] NSWSC 1000
Australia and New Zealand Banking Group v Karam [2005] NSWCA 344; (2005) 64 NSWLR 149
Australian Consolidated Press Ltd v Morgan (1965) 112 CLR 483
Baburin v Baburin [1990] 2 Qd R 101
Banks v Goodfellow (1870) LR QB 549
Banque Commerciale SA (in liq) v Akhil Holdings Ltd (1990) 169 CLR 279; 92 ALR 53; [1990] HCA 11
Barton v Armstrong [1976] AC 104; (1973) 3 ALR 355
Baulderstone Hornibrook v Gordian Runoff [2008] NSWCA 243
Black Uhlans Inc v NSW Crime Commission & Ors [2002] NSWSC 1060
Blanch v British American Tobacco Australia Services Ltd [2005] NSWSC 241; 62 NSWLR 653
Brandi v Mingot (1976) 12 ALR 551
Bridgewater v Leahy (1998) 94 CLR 457
Browne v Dunn (1893) 6 R 67 (HL)
Bull v Fulton (1942) 66 CLR 295
Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 4) (2006) 229 ALR 136; [2006] FCA 446
Canon Australia Pty Ltd v Patton (2007) 244 CLR 759
Carantinos v Magafas [2008] NSWCA 304
Chappell & Co Ltd v Nestle Co Ltd [1960] AC 87
Charter Carter Pty Ltd v The Shop, Distributive and Allied Employees' Association of Western Australia (1987) 13 FCR 413
Clarke v Lopwell [2008] NSWSC 615
Commercial Bank of Australia v Amadio (1983) 151 CLR 447
Commonwealth of Australia v McLean (unreported, NSWCA, 31 December 1996)
Corin v Patton (1990) 169 CLR 540
Crago v McIntyre [1976] 1 NSWLR 729
Crescendo Management v Westpac (1988) 19 NSWLR 40
Dalle-Molle (by his next friend Public Trustee) v Manos BC-200402709
Dimskal Shipping Co SA v International Transport Workers Federation (The Evia Luck) [1992] 2 AC 152
Director of Public Prosecutions for Northern Ireland v Lynch [1975] AC 653
Elders Rural Finance Ltd v Smith (1996) 41 NSWLR 296
Ellis v Wallsend District Hospital (1989) 17 NSWLR 553
EMG v Guardianship and Administration Board of Victoria (unreported, Supreme Court of NSW, Young J, 28 May 1999)
Ford v his Tutor Watkinson v Perpetual Trustees Victoria Ltd [2009] NSWCA 186
Frizzo & Anor v Frizzo [2011] QSC 107
Gibbons v Wright (1954) 91 CLR 423
Gregory Paul Montfroy v Roads Corporation (trading as VicRoads) [2005] VSC 320
Harding v Tingey (1864) 12 WR 684
HML v R [2008] HCA 16; (2008) 235 CLR 334; (2008) 245 ALR 20
Ho v Powell (2001) 51 NSWLR 572; [2001] NSWCA 168
Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26
Howitt Transport v Transport and General Workers' Union [1973] ICR 1
Huguenin v Basely (1807) 14 Ves Jun Supp 273
Hume v Munro (No 2) (1943) 67 CLR 462
ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248
Ingot v Macquarie [2004] NSWSC 1136
Ingot Capital Investments Pty Limited v Macquarie Equity Capital Markets Limited (2008) 73 NSWLR 653; (2008) 252 ALR 659; (2008) 68 ACSR 595; [2008] NSWCA 206
Jackamarra v Krakouer [1998] HCA 27 at 29; (1998) 195 CLR 516
Jenyns v Public Curator (Qld) (1953) 90 CLR 113
Johnson (by her tutor Smith) v Johnson [2009] NSWSC 503
Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
Kation Pty Limited v Lamru Pty Limited [2009] 257 ALR 336
Katsilis v Broken Hill Pty Co Ltd (1977) 18 ALR 181; (1977) 52 ALJR 189
Kazar, in the matter of Frontier Architects Pty Ltd (in liq) [2010] FCA 1381
Kowalczuk v Accom Finance Pty Ltd (2008) 252 ALR 55
Kung v Wang Din Shin [2005] HKCFA 54
Low v Innes (1864) 4 De GJ & Sm 286
Lush v Russell (1850) 5 Exch 203
Maher v Honeysett & Maher Electrical Contractors Pty Ltd [2007] NSWSC 12
Makita (Australia) Pty Limited v Sprowles (2001) 52 NSWLR 705
Malco Engineering Pty Limited v Ferreira & ors (1994) 10 NSWCCR 117
Massoud v NRMA Insurance Ltd (1995) 8 ANZ Insurance Cases 61-257 (75,873)
Masterman-Lister v Brutton & Co [2003] 3 All ER 162
McLarnon v McLarnon (1968) 112 Sol J 419
McNair Anderson Associates Pty Ltd v Hinch; McNair Associates Pty Ltd v 3AW
Broadcasting Co Pty Ltd [1985] VR 309
Mercantile Credit Co Ltd v Hamblin [1965] 2 QB 242; [1964] 3 All ER 592
Mitchell v Pacific Dawn Pty Ltd [2006] QSC 198
Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723
Murphy v Doman [2003] NSWCA 249
Nowlan v Marson Transport Pty Ltd [2001] NSWCA 346
O'Brien v Australia and New Zealand Bank Ltd (1971) 5 SASR 347
Orleans Investments Pty Ltd and Anor v Mindshare Communications Ltd [2009] NSWCA 40
Paric v John Holland Constructions Pty Ltd [1984] 2 NSWLR 505
Patterson v Pongrass Group Operations Pty Ltd [2011] NSWSC 1588
Petelin v Cullen (1975) 132 CLR 355; 6 ALR 129
Poricanin v Australian Consolidated Industries Ltd [1979] 2 NSWLR 419
PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643
Ratcliffe v Evans (1892) 2 QB 524
Re Bega Co-operative Society Ltd & Anor v The Milk Authority of the Australian Capital Territory & Anor [1997] FCA 200
Read v Nerey Nominees Pty Ltd [1979] VR 47
Riz v Perpetual Trustee Australia Ltd (2008) NSW ConvR 56-198; [2007] NSWSC 1153
Sanpine v Koompahtoo Local Aboriginal Land Council [2005] NSWSC 365
Saunders v Anglia Building Society [1971] AC 1004; [1970] 3 All ER 961
Saxon v Saxon [1976] 4 WWR 300
Silver v Dome Resources NL [2007] NSWSC 455
Smith v Elders Rural Finance Pty Ltd (1995) Aust Contract R 90-054
Spina v Conran Associates Pty Ltd [2008] NSWSC 326
Spina v Permanent Custodians Ltd (2009) 14 BPR 26,923
Spokes v Banbury Board of Health (1865) LR 1 Eq 42
Sternbeck v Sternbeck (1968) 11 FLR 360
Szabo v Battye [2006] NSWSC 1351
Szozda v Szozda [2010] NSWSC 804
Temiha v Sadebarth [1997] NSWCA 308
The Juliana (1822) 2 Dods 504
Thomas v Thomas (1842) 2QB 851
Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632
Vella v Permanent Mortgagee Pty Ltd [2008] NSWSC 505
Vines v Australian Securities and Investments Commission (2007) 73 NSWLR 451; (2007) 62 ACSR 1; [2007] NSWCA 75
Walker v Police (Unreported, Supreme Court of South Australia, Mullighan J, 19 June 1998)
Watson v Foxman (1995) 49 NSWLR 315
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Texts Cited: J W Carter, E Peden and G J Tolhurst in Contract Law in Australia (5th ed, 2007)
J Fonblanque, Treatise of Equity (1831)
J D Heydon, Cross on Evidence (8th Australian ed)
R P Meagher, W M C Gummow and J R F Lehane, Meagher Gummow and Lehane's Equity: Doctrines and Remedies (3rd ed, 1992)
R Meagher, D Heydon and M Leeming, Meagher Gummow and Lehane's Equity: Doctrines and Remedies (4th ed, 2002)
Myers, Australian Bar Gazette, 1967 Vol 2 p 3
P Vout (ed), Unconscionable Conduct the Laws of Australia (2006)
Category: Principal judgment
Parties: A (Plaintiff/Cross Defendant)
N (First Defendant/Cross Claimant)
E (by the NSW Trustee & Guardian (formerly Office of the Protective Commissioner) as Manager of the Estate of the Second Defendant) (Second Defendant/Second Cross Defendant)
Representation: Counsel
D Roberts (Plaintiff/First Cross Defendant)
SS Ahmed (First Defendant/Cross Claimant)
C Zucker (Solicitor) (Second Defendant/Second Cross Defendant)
Solicitors
Hunt & Hunt (Plaintiff/First Cross Defendant)
Buttar Caldwell & Co (First Defendant/Cross Claimant)
Zucker Legal (Second Defendant/Second Cross Defendant)

File Number(s): 09/287664

Judgment

HER HONOUR: At the heart of these proceedings is a dispute between members of the L family (more particularly, between A (the second wife of E) and N (E's daughter from his first marriage)) as to a deed entered into between each of E, A and N in March 2008 following a mediation of certain disputes then before this Court between E and N.

In these reasons I will refer to the family members or extended family members (such as A's nephew and former son-in-law, NM) by their initials because E is a person in respect of whom orders under the Guardianship Act 1987 (NSW) have been made. Section 57 of that Act prohibits the publication or broadcast (except with the consent of the Tribunal) of the name of any person who is under guardianship, whether before or after disposal of the Tribunal proceedings. (I note that s 101(c) of the Act excludes from the prohibition on disclosure of information obtained in connection with the administration or execution of the Act where this is for the purposes of any legal proceedings arising out of this Act or of any report of such proceedings, but that does not necessarily apply to the present situation. Sub-s (e) permits disclosure with "other lawful excuse", which I accept would be likely to encompass reference to the parties by name in the context of the proceedings before me, but again it is not necessarily the case that publication of material contained in my reasons for judgment would fall within this sub-section.)

In EMG v Guardianship and Administration Board of Victoria (unreported 28 May 1999, Supreme Court of NSW), Young J (as his Honour then was) observed that although s 57 clearly does not apply to the Court itself, it is difficult to comply with the Court's obligation as to publishing its judgments (especially those which deal with questions of principle) where this may involve persons in a possible breach of s 57 thereafter. His Honour noted that "the Court does not wish [to see] people who are involved in publishing the Court's judgments in the ordinary course of their business innocently breaching this section". His Honour in that case provided the parties with an appendix to the reasons in which identifying material was contained and retained a copy of that appendix in the Court's file but the published reasons did not contain that information. With respect, I will adopt that practice in the present case.

E is (and, on the medical evidence before me, has been since about June 2008 if not before) incapable of managing his own affairs and of providing instructions in relation to the disputes the subject of these proceedings. E is represented in these proceedings by his tutor, the NSW Trustee and Guardian, who does not seek to set aside the March Deed. In practical terms, therefore, the present dispute is between A (who seeks to enforce the deed) and N (who seeks, on a variety of grounds, that it be set aside and who contends that the effect of setting aside the deed would have certain consequences as to her interest in the properties the subject of the earlier proceedings).

The March Deed provided, inter alia, for the disposition as between the parties thereto of interests in three properties (to which I will refer, respectively, as the Concord, Leichhardt and Summer Hill properties). Before entry into the March Deed (though subject to the efficacy of certain steps that had been taken by E in 2007 to sever the joint tenancies under which ownership of the properties had been held), E and N were the owners as joint tenants of each of the three properties. What the March Deed provided for (in respect of the ultimate ownership of those properties) was that the Concord property was to be held by E and N as joint tenants in equal shares (with E entitled to occupy that property during his lifetime); N's half share in the Leichhardt property was to be transferred to A (E retaining the remaining half share in that property); and the Summer Hill property was to be sold with the proceeds of sale divided as to 35% to E and 65% to N.

The March Deed also provided for the reversal in effect, of steps that had been taken by E in December 2007 to sever in equity the joint tenancies subject to which those properties had previously been held (those steps being the execution by E of transfers unilaterally severing the joint tenancies by transferring a small percentage interest in each of those properties, for consideration, to A). Those transfers (which had not then been registered) were to be cancelled, with A's agreement, and the then existing proceedings between E and N (in which N had challenged the entitlement of E to sever the joint tenancies, inter alia on the basis of an alleged agreement reached with E pursuant to which N asserted a half share in the properties had been transferred to her) were to be dismissed. (The March Deed contained a number of other provisions to which I will refer in due course.)

These Proceedings

A's claim

These proceedings were commenced by A by Summons in April 2010. There followed successive pleadings of her claim, the final version of which is her Further Amended Statement of Claim filed in Court on 13 February 2012, by which A seeks an order that N specifically perform, and carry into effect, the provisions of the Deed of Settlement and Release dated 28 March 2008 entered into by her (the March Deed) and a declaration that E had the mental capacity to enter into the March Deed. At one stage in the proceedings, A also sought a declaration in relation to a collateral agreement said to have been entered into between she and E very shortly after the March Deed but the claim in relation to that alleged agreement has not been pursued. (The circumstances underlying the allegation of such an agreement are, however, relied upon by N as support for her claim that, as at late March 2008, A was in a position of undue influence over E).

A has sought, in addition, consequential relief in relation to the March Deed (including an order that N vacate the Concord property; a declaration that, by virtue of the covenants contained in the March Deed, N's interest in the Leichhardt property is held on trust for A from the date of the March Deed, so as to effect a severance of the joint tenancy between E and N in respect of that property; an order that N produce the title deed of the Leichhardt property and for steps to be taken for the registration of the 2007 transfers severing the joint tenancies). A also seeks a declaration that E had the mental capacity in January 2007 to execute (or, more precisely, register) the transfers unilaterally severing joint tenancies over the various properties then held jointly with N (those transfers having been the ones in issue in the former Court proceedings).

N's defence

N, in her defence to A's claim, admits signing the March Deed and the relevant provisions contained therein but denies that A is entitled to have the March Deed specifically performed. She alleges that A has failed to perform the covenants in the March Deed (in particular, it being alleged that A refused N access to her father in breach of clause 3(e) of the March Deed).

In further answer to the whole of the claim, N pleads:

first, that her execution of the March Deed was procured by A by the exercise of unconscionable conduct and duress over N (in each case those allegations being cross-referenced to matters pleaded in N's cross-claim); and

secondly, that E's execution of the March Deed was procured by A by the exercise of undue influence over E; by unconscionable conduct of A towards E; and in circumstances where A was aware of E's lack of capacity at the time of execution of the March Deed (again, these allegations being cross-referenced to matters pleaded in the cross-claim).

N also pleads an unclean hands defence to A's claim for specific performance of the March Deed by reference specifically to her allegation as to the refusal by A of access to E and as to the various allegations of undue influence, unconscionable conduct and duress in respect of one or both of N and E (as well as the allegation of A's awareness of E's lack of capacity).

E's position

The NSW Trustee and Guardian, as E's tutor in these proceedings, pleads as to objective matters (such as that the March Deed was signed, sealed and delivered by E and that, at the time and prior to his execution of the March Deed, E had received advice from legal practitioners who acted for him (and did not act on, or so far as he is aware receive, instructions from any of the other parties to the March Deed)). However, E's tutor does not know (and therefore neither admits nor denies) whether E had the mental capacity to enter into the March Deed.

Mr Zucker, the solicitor appearing for the NSW Trustee and Guardian, has submitted that, to the extent that the claims made by N were to be upheld, the Court should nevertheless, as a matter of discretion, uphold the deed provisions as they affect E (pointing out that a number of the provisions were to E's benefit - such as the dismissal of the 2007 Court proceedings).

N's cross-claim

The substance of N's various allegations of undue influence, unconscionable conduct, duress and the like is to be found in her Third Further Amended Statement of Cross Claim filed in Court on 21 November 2011. N seeks declaratory relief and orders setting aside or rescinding or terminating the March Deed on various bases (namely, that E did not have the mental capacity to enter into the March Deed; that N signed the March Deed under duress from A; that it is unconscionable for A to insist upon performance of the March Deed and to retain the benefits to be provided by N and E thereunder; that the execution of the Deed by each of N and E arose from the exercise of undue influence by A over both N and E); and, alternatively, by way of relief under the Contracts Review Act 1980 (NSW) or on the basis that A breached an essential term of the March Deed. I set out in due course the basis on which those allegations are made.

A declaration is sought by N that the Leichhardt Transfer and the Transfers Severing Joint Tenancy (both terms as defined in the Third Further Amended Cross-Claim) are void. The Leichhardt Transfer is defined in [11] of the Third Further Amended Cross-claim as a transfer signed on or about March 2008 by N and E "purporting to transfer their interest in the Leichhardt Property to [A]" (ie this a reference to a transfer signed in accordance with the March Deed). The "Transfers Severing Joint Tenancy" are defined at [5] of that pleading as the transfers described as having been signed by E on 8 January 2007 "purporting to unilaterally [sic] sever the joint tenancies between [E] and [N]" in relation to the three properties respectively (the reference to those transfers thus being a reference to the Real Property Act 1901 (NSW) Notice of Unilateral Severance of Joint Tenancy that the Registrar-General was restrained in the earlier proceedings before Windeyer J from registering and not, as I understand it, the transfers to A of an interest in the properties executed in December 2007, which it is contended for A operated in equity to sever the joint tenancies.)

A, in her defence to N's cross claim, broadly denies or puts in issue the allegations made by N as to mental capacity and the like. The NSW Trustee and Guardian, as E's tutor in these proceedings, pleads in defence to the cross-claim that E now suffers such medical condition that he is unable to provide instructions or evidence in the proceedings; says that the various medical reports speak for themselves; does not admit or deny whether E had mental capacity to enter into the March Deed and does not plead to the allegations of duress, unconscionable conduct or the like.

Potential outcome of proceedings

In summary, from a property perspective, the outcome (if A is successful in her claim) is said by her Counsel (Mr Roberts) to be that A will then own half of the Leichhardt property (as tenant in common with E); N will be required to vacate the Concord property (though I interpose to note that on any view she would remain a half owner of that property as joint tenant or perhaps tenant in common with E); and the Summer Hill property is to be sold with the proceeds being apportioned as to 65% to N and 35% to E.

Counsel for N (Mr Ahmed) maintains that the March Deed should be set aside. (Mr Zucker, as I say, has urged me (if the claims by N are established) at least to uphold the March Deed insofar as E is concerned.) That said, in the course of closing submissions Mr Ahmed appeared to concede that the setting aside of the March Deed will not necessarily of itself result in the overall outcome for which N contends (since, if the parties are to be put back into the position in which they were prior to the March Deed, this would require recognition to be given to the fact that the transfers in favour of A that were executed in December 2007 might still be relied upon as effecting a severance of the joint tenancies in equity and there would remain a question as to the registrability of the January 2007 notice of severance). The ability of E to sever the joint tenancies at law, as he had sought to do in January 2007, was in issue in the proceedings that had been commenced by N and that were ultimately dismissed by consent pursuant to the March Deed.

The setting aside of the March Deed would not, of itself, encompass any conclusion as to the mental capacity of E in late 2007. At the very least, this would leave to be determined the position as to the effect of the transfers in late 2007 (and A's ability to register those transfers, had they not been cancelled pursuant to the March Deed).

It was agreed between E's tutor and N, when the issue was raised by me as to what would be the effect of the setting aside of the March Deed on the parties' respective property interests, that the prospect of a resumption of those earlier proceedings would not be a ground upon which I should decline to set aside the March Deed. (From that somewhat cryptic statement, the logical inference seems to be that, if the March Deed were now to be set aside, N would no longer press as against E the claims previously made by her in those proceedings.)

Issues

As will be apparent from the above, a broad range of issues were raised in the proceedings. These may be summarised as follows:

(i) E's mental capacity as at 28 March 2008 to give instructions and to enter into the March Deed;

(ii) whether E's entry into the March Deed was procured by unconscionable conduct by, or the undue influence of, A (or in the knowledge by her that he did not have the mental capacity to do so);

(iii) whether N's entry into the March Deed was procured by duress or unconscionable conduct by A;

(iv) whether, if E did not have the mental capacity as at 28 March 2008 to enter into the March Deed, the March Deed is void ab initio or should be set aside and, if so, on what terms;

(v) whether N is entitled to the relief claimed under the Contracts Review Act 1980 (NSW) in relation to the March Deed;

(vi) whether the covenant in relation to N's access to E (clause 3(e))was an essential term of the March Deed (breach of which would entitle N to terminate that deed) and whether A in fact breached that term;

(vii) whether A should be granted relief in the nature of specific performance of the covenants contained in the March Deed (and, in particular, whether she is disentitled to such relief by reason of a lack of clean hands);

(viii) what declaratory relief, if any, should be granted.

Summary

For the reasons set out below, on the above issues I am of the view that:

(i) mental capacity

I am not satisfied, on the balance of probabilities, that E lacked the mental capacity as at 28 March 2008 to give instructions and to enter into the March Deed; it is not disputed that at that stage E was in the advanced stages of a progressive dementing illness but his mental capacity was one that fluctuated from time to time, such that it is possible that on any particular day (at least up until June 2008) he had the capacity to understand and give instructions in relation to a transaction of the kind contemplated by the March Deed; (the room for fluctuation of capacity of that kind seems to me the most likely explanation of the fact that on 13 March 2008 E could not remember what had occurred at the mediation, while on 11 March 2008 the various lawyers at the mediation apparently did not see fit to suggest that E was not competent to proceed with the mediation or to enter into the transactions contemplated by the settlement reached at the mediation);

the corollary of the above is that, while I cannot grant the declaratory relief sought by N, nor would I grant the positive declaratory relief sought by A that E did have the mental capacity to enter into the March Deed (since that would require exclusion of any possibility that he did not);

had the question been necessary for determination, I would have declared that E had the necessary mental capacity in December 2007 to execute the transfers in favour of A of a small share in each of the Concord, Leichhardt and Summer Hills properties and to execute the will; power of attorney and enduring power of guardianship that he did on 19 December 2007 (in that regard I place weight not only on the observations of Professor Dickson contained in his 3 December 2007 report but also on the observations of Mr Raymond Ward, the independent solicitor with experience in the practice of elder law who was clearly prepared on 19 December 2007 to certify that E appeared to him to have understood the nature and effect of the testamentary documents then being executed);

(ii) Unconscionable conduct/ undue influence vis-à-vis E

E's entry into the March Deed was not procured by unconscionable conduct by, or the undue influence of, A or in the knowledge by her that he did not have the mental capacity to do so (though A was clearly on notice of the possibility that he might not have had the necessary capacity from time to time and at around the time the deed was entered into);

I consider that a presumption of undue influence did arise by virtue of the dependence E placed on A by March 2008 but I consider that the presumption was rebutted having regard to the independent advice that E had received over the period from at least December 2007 to March 2008 as to the settlement of the proceedings between he and N; I am not satisfied that actual undue influence was established in relation to the entry into the March Deed; I note that, at least as from 2006, once E appreciated the effect of ownership as joint tenants as opposed to ownership under a tenancy in common, E had consistently expressed the desire to a number of legal practitioners and to his specialist, Professor Dickson, that the joint tenancies should be severed and that his intention was that N should have half of his properties but not the right of survivorship in respect of those properties and that he should have the right to dispose of those by will; I also note the evidence of Mr Moore as to the circumstances in which the transfer of an interest in the Leichhardt property from N to A occurred during the course of the mediation negotiations;

as to the allegation of unconscionable conduct, E clearly suffered from the disabilities associated with age and the dementing disorder and physical infirmity he had; he had limited education (but had been involved in business and the acquisition of property throughout his working life); I am not satisfied that A exploited or took advantage of those disabilities nor acted unconscionably towards E in relation to the entry into the March Deed;

(iii) Duress/unconscionable conduct vis-a-vis N

N's entry into the March Deed was not procured by duress or unconscionable conduct towards her by A;

when considering the allegation of duress, I am not satisfied that, even if they were made, any earlier threats of violence were subsisting or reasonably operative on N's mind as at 2006; as to the question of access to E, I am not satisfied there was a threat in relation to the denial of access nor that A's conduct in relation to access to E over the period up to March 2008 amounted to illegitimate pressure or an unlawful act for the purposes of the principles relating to duress;

as to the alleged unconscionable conduct, N had at the relevant time the benefit of independent legal advice; she conceded that she entered the deed of her own free will and not under pressure; I consider that she was not at any special disadvantage vis-à-vis A in the sense in which that expression has been used in the authorities - she was perfectly capable (as she had by her past conduct already shown) of seeking the assistance of the courts to uphold her claimed rights and to seek protection against any perceived harassment or intimidation by A;

N made a considered decision, with the benefit of legal advice (and, she accepts, of her own free will), to enter into the March Deed; her real complaint is as to what happened after that deed was entered into in relation to access to her father, and the perceived breach by A of the deed; in effect it seems that N does not consider it fair that A should now reap the benefits of the arrangement to which N had agreed, in circumstances where N did not receive the benefit she had sought to obtain from the bargain she made (a circumstance I consider likely to have arisen as a result of her own breach of the March Deed) and where the visitation/access rights are no longer in issue due to E's residence in the nursing home;

(iv) relief had lack of mental capacity been proven

strictly speaking, in light of the finding in (i), this question does not arise; however, had I been satisfied on the balance of probabilities that E did not have the mental capacity as at 28 March 2008 to enter into the March Deed, then in the absence of a plea of non est factum, the March Deed would be no more than voidable;

in circumstances where E's tutor does not seek to have the deed (or those portions of the deed that it is acknowledged are favourable to E) set aside, and where it is not suggested that, if the deed were to be set aside A could (or would) be put back in the position in which she was as at the time of entry into the March Deed (namely, that she held transfers in registrable form in respect of a fractional interest in each of the properties in question), nor that E would be in a position physically to effect the registration of the January 2007 Notice Unilaterally Severing Joint Tenancy (since I do not know whether the signed document has been cancelled by the LPI, although there could be an order for re-execution and lodgement of such a document by E's tutor had that been necessary), had the March Deed been voidable for unconscionable conduct or otherwise as claimed, I would nevertheless not have exercised the discretion to set it aside;

even then, had I been persuaded (contrary to the view expressed above) that the March Deed should be set aside, I would have considered that this should be on terms so as to preserve the benefit to E of the provisions in his favour in the deed and to restore A and N (so far as could be done consistent with preserving the benefits of the deed for E) to the position in which they would have been prior to the entry of the March Deed; this may have required consideration as to whether, in equity, the transfers signed on 19 December in A's favour should be treated as having severed the joint tenancies in circumstances where it seems to me that they were clearly signed in breach of the spirit, if not the terms, of the orders made by Windeyer J on 9 November 2007;

(v) Contracts Review Act claim

I do not consider that N is entitled to the relief claimed under the Contracts Review Act 1980 (NSW) in relation to the March Deed; the allegations of unfair pressure and the like vis-à-vis N have been dealt with in (iii) above; as to E, the position for which his tutor contends is that the agreement contained in the March Deed was not unjust (since I am asked not to disturb the provisions in his favour). The evidence does not establish that N (or, for that matter, E) was not in a position to be able to negotiate the terms of the March Deed nor does N in fact have any issue as to the bargain struck in that deed other than her complaint that A failed to comply with the provision for access to E (a complaint I deal with in (vi) below);

(vi) Breach of essential term

I do not consider that the covenant in relation to N's visits or access to E at the Concord property, objectively construed, was an essential term of the March Deed (breach of which would entitle N to rescind or to terminate that deed) nor, on the facts, am I satisfied that A breached that term;

(ironically, in circumstances where N's legal representatives, and through them N, were alive to the prospect that a dispute might in future arise in relation to the implementation of the agreement in relation to the Concord property, it seems that N chose not to comply with the requirement that she vacate the Concord property within three months of the date of the deed and that this may or is likely then to have led or contributed to E and A not returning to live in the Concord property for some months - hence arguably making the provisions of the deed in relation to access to E at that property unworkable at least prior to November 2008);

even if there was a breach of the covenant in clause 3(3) by the failure of A to move back into the Concord property with E prior to November 2008, I am not satisfied that this permits N now to treat the deed as terminated or her obligations thereunder as having been discharged - the deed itself made provision for what was to happen if there was a breach of that clause;

(vii) Unclean hands defence

the alleged lack of clean hands relates primarily to a breach of the March Deed that I am not satisfied has been established and to which it seems likely that N's own breach of the deed had contributed; I find that there has been no unclean hands on the part of A in relation to entry into the March Deed;

I consider that relief should be granted to A (in the nature of an order to compel performance by N those covenants contained in the March Deed in relation to the transfer of the interest in the Leichhardt property to her); orders should also be made for the appointment of trustees for the sale of the Summer Hill property; however, I do not consider that an order for N to vacate the Concord property is warranted;

(viii) Declaratory relief

N has not established an entitlement to the declaratory relief sought in her cross-claim and the declaratory relief sought by A in relation to the January 2007 unilateral severance of the joint tenancies is of no utility in light of the relief I propose to grant. Therefore I make no declarations as to the matters the subject of the applications for declaratory relief.

I will make orders accordingly and will hear submissions at a convenient time as to the costs of the proceedings. (I note that Mr Zucker at the close of oral submissions at the hearing requested that there be such an opportunity.)

Background

Mr Ahmed has impressed upon me the importance, given the factual matrix in these proceedings, of bearing in mind the adoption by the High Court in Jenyns v Public Curator (Qld) (1953) 90 CLR 113 of Lord Stowell's generalisation concerning the administration of equity found in The Juliana (1822) 2 Dods 504, at p 522 (165 ER 1560, at p 1567):

A court of law works its way to short issues, and confines its views to them. A court of equity takes a more comprehensive view, and looks to every connected circumstance that ought to influence its determination upon the real justice of the case.

With that admonition in mind, I consider below the background in which the present dispute has arisen and the connected circumstances in light of which the issues in dispute in the present case must be determined. Some of the factual background will have been gleaned already from the above but is repeated below for ease of reference as part of the relevant chronology of events.

Relationship between A and E

E (who it is not disputed no longer has the mental capacity to manage his affairs or to enter into transactions such as those the subject of the March Deed or to provide instructions in relation to the conduct of these proceedings) has two children from his first marriage (R, who is not a party to these, nor was he a party to the earlier, proceedings, and N).

E was born in Italy in 1932. He left school at 11 years of age and hence it can be inferred that his education was limited. E worked first in the timber industry when he emigrated to Australia and then as a concreter. He established a concreting business and invested in real estate through his company [E L company] in which he held the controlling share. N was, from 1979 (thus apparently from the age of around 14), a director of that company. She later (on 2 January 1985) became a shareholder of that company.

In 1993, E married A (whom he had met when she was a tenant at his Leichhardt property). A had earlier immigrated to Australia from Egypt after her first husband's death. She has three children from her first marriage: two sons (who feature in this dispute mainly because of N's claim that A threatened her with violence from them) and a daughter, who was formerly married to A's nephew, NM. NM was called to give evidence in N's case and was described by Mr Ahmed as a longstanding friend of N's.

Exhibited to N's first affidavit in these proceedings is a copy of a pre-nuptial agreement entered into by deed (which I read subject to relevance) by E and A prior to their marriage. It discloses E's ownership of the Concord, Summer Hill and Leichhardt properties (without any suggestion that it was his company that then owned the Concord property). It was entered into with the express acknowledgment that the parties had not sought independent legal advice.

E and A lived at the Concord property as their matrimonial home until 1999 on a fulltime basis. During their marriage, other properties were acquired (A says with financial contribution from her) including a property at Illawong, a property at Cabramatta (the proceeds from the sale of which were then used to acquire a property at Chipping Norton) and a property at Padstow. A says that, from 2001, for her convenience, they lived during the week above the Chipping Norton from which she operated a childcare business and on weekends at the Concord property. (She also referred to visits by E on his own to the Concord property from time to time while she was at Chipping Norton.) For some time during the course of the disputes with N (namely, from around January 2007 to March 2008), it seems that the couple lived at an address in Liverpool (this being the period during which N and NM say that E and A were at an undisclosed location).

From around 2003, N lived in a flat downstairs at the Concord property. (A says that E agreed to this at her (A's) behest. N disagrees with A's account of events on this and many other aspects of the matter.)

E and A returned to live fulltime in the Concord property on 18 November 2008 (in circumstances to which I will later return) until May 2009 when E was admitted to a nursing home. He now resides in full time care at another nursing home and it is not envisaged that he will ever be in a position to return to live at the Concord property. (N, having lived elsewhere for a 12 month period, has been resident at the Concord property for some time since 2010.)

N deposes that, in early July 2000, E and A separated and that in this period E resided at the Illawong property and she saw her father every day. She says that the couple reconciled in about December 2002. I admitted, again subject to relevance, a copy of a binding financial agreement signed by E and A (the copy in evidence seemingly being undated but which N says was dated 29 November 2002). (In the recitals, E and A depose to having lived together since their marriage (Recital C), which is inconsistent with the allegation by N that there had been a period of separation in 2000. However, A herself accepts that there was at least a two to three week period in about July 2000 when the two lived apart after a disagreement and a later time when they lived apart for three weeks in mid 2002.) In that agreement, E's assets are stated as including properties at Illawong, Leichhardt and Summer Hill, his shares in his company and a share in the Padstow property; A's assets are stated as including the Chipping Norton property and kindergarten and a share in the Padstow property.

Mr Roberts submits that, from approximately 2004 through to 2007, E was engaged in a process of estate planning. That may be so. Nevertheless (and whether that estate planning process was at E's own or at others' instance), it seems fair to say that both N and A took an active interest (and from time to time played an active role) in that process (R's involvement being limited to events at an earlier stage in that period when he accompanied E to solicitors in 2006). Unfortunately, the facts of this case bear the hallmarks of an attempt by both A and N to ensure E's estate planning was favourable to them.

Events in 2004

The chain of events leading up to the present dispute begins in 2004. N deposes that, in about August 2004, she attended the offices of a solicitor (Mr Sheriff Cassab) with E. A will was prepared for E by Mr Cassab (in which E's address is noted as being at the Illawong property) under which E appointed N his executor and left his interest in the Summer Hill property and his "half share interest" in the Illawong property to N, as well as the residue of his estate. (The will states that E has not made provision for his son (R) as he "has not acted reasonably or appropriately to me during my lifetime" and also that E had gifted him a share of the Illawong property; it states that he has not made provision for his wife A as he has "adequately made provision for her" during his life by "gifting" her the business and property at Chipping Norton and a half share of a property at Padstow.) This will was executed on 11 August 2004.

On 9 December 2004, a different solicitor (Mr Bruce Macdonald) prepared a codicil to E's will in which was added, to the bequest to N, E's interest in the Concord property (something seemingly unnecessary in light of the right of survivorship N had by then acquired in respect of that property). A further statement was included by the codicil to E's will as to his son's conduct in lodging documents appointing himself a director and secretary of E's company without E's authority or consent (and in which E denied having signed the documents that purported to bear his signature). Again, N attended with E at the solicitor's office at the time of the preparation of the codicil. It is not clear why the services of a different solicitor were engaged to prepare this codicil.

Creation of joint tenancies in respect of the properties

As at October 2004, E's company (in which N was a shareholder) owned the Concord property. On 20 October 2004, the company transferred the Concord property to E and N as joint tenants (hence the right of survivorship referred to above). N says that the transfer was with a life estate to E, though this is not noted on the transfer. The transfer acknowledges receipt of consideration in the sum of $980,000. It is stamped as to no duty being payable thereon. It does not seem to be disputed that there was no actual payment to the company of the stated consideration for that transfer. (This transfer may have been explicable on the basis that it was at a time when E was contemplating retirement and the company was de-registered not long thereafter. However, by reference to the codicil referred to above, which was executed shortly after the transfer of shares, it seems that the transfer of the property out of the company may also have coincided with concerns by E and/or N as to attempts by R to interfere with the company.) (N, in her affidavit in the earlier proceedings, deposed to concerns she says E had expressed that Rand/or A might challenge E's will.)

On 28 December 2005, E signed transfers of two other properties that he then owned in his own right (at Leichhardt and Summer Hill) in favour of himself and N as joint tenants, for no consideration. The execution of those transfers was witnessed by a Mr Devine (who I understand to be a real estate agent, not a solicitor). N, in her affidavit, does not explain by whom those transfers were prepared.

E later told a number of third parties that he had not understood at that time that the effect of holding ownership of those properties with N as joint tenants, rather than as tenants in common, would operate automatically to give his half interest in those properties to N (by way of a right of survivorship) in the event that he predeceased her and, in particular, that this meant he would not have the ability to dispose of his half share of those properties under his will. (N asserts in her affidavit in the 2007 proceedings that the concept of ownership under a joint tenancy was explained to E by Mr Macdonald but any such explanation by Mr Macdonald was presumably not given until September 2006 as it would seem to have been inconsistent with the earlier action in relation to the will in 2004 and hence had it been raised at an earlier time by Mr Macdonald one might have thought a different step would have been taken in relation to the then codicil.)

From instructions given to Ms Therese De Pasquale (one of the various solicitors with whom E and A had conferred in relation to the dispute with N that arose in 2006), it seems that either or both of E and A was (or were) then of the view that N had encouraged E to execute those transfers due to a concern on N's part that otherwise her brother R would obtain more than a fair share of her father's assets on his death. Whether or not that be the case, there is evidence to indicate that, by the time E later sought to sever these joint tenancies, he was doing so in order that his half interest in the properties would not pass automatically to N on his death but would be able to be dealt with in accordance with his will (and in that regard I note that the will he executed in December 2007 left his estate equally to his son, R, and his wife, A.)

Over the Easter weekend in April 2006, E suffered a seizure and was admitted to Concord Hospital. There was a dispute between A and N as to the extent to which the latter had visited her father in hospital during this time. A says that N visited for only a short time on the Easter Monday (and that this upset E and led to him disclosing to her that he had made the 2004/2005 transfers and that this had been a mistake). N, on the other hand, says that she was with her father most of the visiting hours during his stay in hospital and that she stayed overnight with A at her place on the first evening of her father's stay in hospital. (That evidence is noted by Mr Roberts as being inconsistent with N's assertions as to an apprehension at least at that time of violence on the part of A (or A's sons), though I note that the principal allegation of threats seems to relate to conduct in September/October 2006, some months after E's hospitalisation in April.) In any event, N is adamant that she did stay with A (and says that this was at A's request).

A's evidence was that it was at this time (after E had become upset that N had not visited him in hospital for more than a brief stay) that E told her (for the first time) that he had given N half of his properties at Concord, Leichhardt and Summer Hill (and the whole of a property at Abbotsford). A says that E then said he wanted her to take him to a solicitor to take back the property.

N was adamant in the witness box that her father had told her in a telephone conversation in March 2006 (ie, before his hospitalisation) that he had told A about transferring the Leichhardt and Summer Hill properties to N and that A "has gone crazy and doesn't want me to see you anymore". A, as noted above, says that she first learnt about the transfers to N after E's admission to hospital in April 2006. (A's timing of events is consistent in this respect with the version of events to which N seems to have deposed in [20] of her affidavit in the earlier 2007 proceedings - Exhibit H - at least to the extent that she says that A had spoken to her in an "angry voice" about this in about May 2006.) It might be thought that if A had heard before May about the transfers (and had been as anxious to pressure E into giving them to her as N asserts she was) then A would have spoken to N about them or taken action of some kind at that time. Whereas, the first steps taken to reverse the transfers were after E's hospitalisation, which is consistent with A's recollection of the timing of events.

Pausing there, the timing of the discovery by A of the transfers was one of a number of inconsistencies, highlighted in the course of N's cross-examination, between N's affidavit in the 2007 proceedings (Exhibit H) and her affidavit sworn in the present proceedings. Another was the statement at [20] that "[A] found out [about the 2004/2005 transfers] in circumstances which I do not know, a few months after the 2005 transfers" (my emphasis) - whereas in the current proceedings N deposes to having found this out in the telephone conversation with E in March 2006. (Another inconsistency is as to the circumstances in which the September 2006 documentation attempting to reinstate the joint tenancies was signed - to which I refer in due course.)

N deposes to attempts to speak with E by telephone in the period from March to May 2006 in which she claims N restricted her access to E ([47]-[54] of her first affidavit in these proceedings. (A denies having restricted N's telephone access to E.)

First attempt to sever joint tenancies

In June 2006, A (according to her, in compliance with E's request) took E to her own solicitor in Parramatta (Mr Rami Attia). Her evidence is that E had told her he wanted to fix a mistake he had made in transferring all the properties into N's name (although by that stage it is not clear that E had yet received any advice as to the relevant difference between joint tenancies/tenancies in common in this regard, hence the "mistake" might have been the transfers per se). A says that she was not present during the conference with Mr Attia. Following that conference, A says that E told her Mr Attia had explained the difference between joint tenants and tenants in common and had said that he was going to send N a letter.

On 27 June 2006, documentation was signed by E (prepared by Mr Attia) for the unilateral severance of the joint tenancies in respect of each of the Concord, Leichhardt and Summer Hill properties. Therefore, Mr Attia (who did not give evidence in the proceedings) must have understood his then instructions to be that, whatever "mistake" had been made, it was one to be rectified simply by severing the joint tenancies.

N recounts a conversation with her father in mid July 2006 at the Concord property in which she says that her father told her that he had left A and that she was demanding money or the Illawong property. N says that in that conversation E told her that two weeks ago A had forced him to go to her lawyers and "give her half of everything". I interpose to note that the Transfer Unilaterally Severing Joint Tenancy that was signed by E and witnessed by Mr Attia, would on no version of events have operated to give A "half of everything". All it purported to do was to sever the joint tenancies, thus making it possible for E to avoid the operation of the right of survivorship attaching to joint tenancies and thus to dispose under his will of his half share of the Concord, Leichhardt and Summer Hill properties. However, there was no suggestion of any attempt by E at that stage to change his will. Therefore, the suggestion by N that E had told her otherwise, seems to me to point either to E not having an understanding at that stage of what the severance of the joint tenancies would do or that N's recollection of events is unreliable or otherwise tainted by her suspicions of A. I am inclined to think the latter, given the suspicion N seems to have attached to A's motivation in accompanying E to the various solicitors for the severance of the joint tenancies (even in the face of later communications by E's lawyers in October 2006 conveying his instructions that this was to permit the disposition of his interests by will to R, not A).)

At least as at late July 2006 (whether or not there had been a separation, as N says, or whether E was simply spending time at Concord, as A says was his wont), E was staying at the Concord property. On 30 July 2006, E was admitted to the Emergency Department at Concord Hospital. The Registrar's notes record that the diagnosis was seizure and that E's daughter (N) had found him confused, disoriented and "talking gibberish". The notes record that it was about one hour before E was normal again and that he had been referred to his "usual neurologist", Dr McDougall. On his discharge from hospital, it appears that E returned to the Concord property.

N then alleges that, on 1 August 2006, A forcibly removed E from the Concord property, dragging him into her car, and that E did not return for the entire month of August. A seems to accept that E did leave the Concord property with her but A says that she did not forcibly remove him. (A says her sister-in-law rang to say E was sick and that she should take her husband home; and that she did.)

From August to September 2006, E and A were living at Chipping Norton. (N's evidence that E had separated from or was going to leave A at around this time seems inconsistent with any submission that at this time E was under pressure, or at a disadvantage, from A due to a fear that he would be left alone by her.) N says that on one occasion around August/September 2006, when E and A visited the Concord property, her father asked her to book an appointment with the solicitor to put the properties back to joint tenancies (and that he told her that A did not allow him to make phone calls, something A denies).

On 11 September 2006, N took E back to Mr Macdonald (the solicitor who had drafted the 2004 codicil to E's will). Mr Macdonald prepared a transfer form for the transfer of the three properties back into the names of E and N as joint tenants. N says in her affidavit that the transfer was signed by E and by her and was witnessed by Mr Macdonald. It is dated 11 September 2006.

In Exhibit H (N's affidavit sworn in the 2007 proceedings), she deposed that the day after the transfer was signed Mr Macdonald called her and said that there was a requisition on the notice severing the joint tenancy; that it had not in fact been severed and that all that was required was for E to sign a letter (which he then emailed to her) withdrawing the transfer of the joint tenancy. In that affidavit she swore that she went to the Chipping Norton property with the draft letter that Mr Macdonald had sent to her and that A "physically prevented me from entering the house" and "actually blocked my entry" stating that "As a result my father had to come out of the house to sign Mr MacDonald's document in the car". In her evidence in the current proceedings N accepts that she did enter the Chipping Norton house on this occasion but denied that anything had been signed by E in the car (thus her evidence was inconsistent with that to which she had earlier deposed on two counts). (I add that it is not clear whether the 2007 affidavit was ever formally read in the earlier proceedings, but it was tendered by Mr Roberts in these proceedings and relied upon by him, as I understand it, as containing inconsistent statements earlier made on oath by N.)

A's version of events is that on 13 September 2006 N attended at her Chipping Norton residence (where E and she were living at the time), above the childcare centre where A operated a business, and she saw N and E sitting in the car and E signing a paper. A says (but N denies) that N said to her "Cry as you like, I've taken everything from him". N's version in these proceedings of the encounter on that day is that A sought to prevent her having access to her father and was screaming at her and said words to the effect "You are going to pay for this N, you are really going to pay for this. I have two sons behind me you are going to pay for this" (which she interpreted as threats and which she says were repeated over the telephone two days later) and that it was only after those threats that she and E sat in the car talking.

A then deposes to a visit from R to the home at Chipping Norton during the evening of 13 September 2006 and to a conversation he had with E in which she says E asked R to take him to a good solicitor. (How R became involved at that stage is otherwise not clear.)

Second attempted severance of joint tenancies in late 2006/early 2007

On 14 September 2006, E attended the offices of Nesci Lawyers with his son R (which supports A's account that E had asked for R's assistance in that regard since otherwise there seems no explanation for R's attendance on that occasion).

Mr Bruno Nesci, a solicitor as at September 2006, practising as the principal of Nesci Lawyers, gave evidence that for over 20 years up to August 2007 he had acted for E in relation to various matters (family dispute proceedings, conveyances, work related litigation and general advice). Mr Nesci said that his dealings with E were conducted mainly in the Italian language (in which his observation was that E felt most comfortable conversing in relation to such matters). (I pause there to note that the fact that in 2004 N took E first to Mr Cassab and then to Mr Macdonald, rather than to the solicitor who had by then acted for E for a number of years, seems to indicate that N was the moving force behind the 2004 transactions, since had E been the decision-maker in this regard, it might be thought that he would have chosen to go to Mr Nesci. That said, it also does not explain why E would, as at September 2006, have needed R's help to find a good solicitor if E already had a professional client relationship with Mr Nesci.)

Mr Nesci deposed ([5] of his affidavit sworn 15 November 2011) that in about 2006 "[E] came to appreciate that he had executed certain documents which as he explained to me, were not fully understood by him" as a result of which he had transferred certain proprietary interests to N. The giving of whatever instructions had led Mr Nesci to form this view were not expressed in Mr Nesci's affidavit but his understanding of E's intention is consistent with the action E had earlier taken June 2006 when he saw Mr Attia (and I note that Mr Nesci, who gave evidence called in N's case in the proceedings, does not seem to have had a concern at that stage as to E's competence to give such instructions).

Mr Nesci was apparently unavailable at the time E and his son arrived at his office on that occasion and they conferred instead with a solicitor then employed by Nesci Lawyers (Ms Therese De Pasquale). (Ms De Pasquale from October 2006 became the principal of the firm now known as Nesci De Pasquale Lawyers, with whom from that time Mr Nesci has been a consultant.) (A was not present at the conference.)

Ms De Pasquale had not previously met either E or R and was unaware that E had previously been a client of Mr Nesci. She has deposed that R was present during the conference but says this was at E's request.

According to Ms De Pasquale ([6] of her first affidavit), during this conference (at which there was a discussion as to the three properties (Concord, Leichhardt and Summer Hill), E said to her words to the effect "I think I may have signed over all my properties to N, my daughter". Ms De Pasquale says that she conducted a number of searches and explained to E that the properties were in his and N's name as joint tenants. She says that she explained that this meant that when E passed away the properties would automatically pass to N and that E said to her, in effect, that he wanted to transfer his (half) share in the properties to his son R but that he did not want R and N to kick him out and that he wanted to get the rental from the properties. Ms De Pasquale says that she explained that the way the properties were held at that time meant that this could not be done and that an application would have to be made to sever the joint tenancy (and she foreshadowed a problem if N did not agree thereto). Ms De Pasquale further says that E told her that he wanted her to prepare a will leaving everything to R "just in case something happens to me and then we can deal with the situation with [N]".

As noted, A does not appear to have accompanied E to this conference (indeed Ms De Pasquale deposes that she did not meet A until 14 November 2006), although A accompanied him on other occasions to various solicitors' offices. Furthermore, the transactions then contemplated would not have benefited A (at least directly). Rather, the benefit from what was there being discussed, consistent with Ms De Pasquale's initial communications with N in October 2006 would seem to have been to R's account. (I also note that while the properties remained held by E under a joint tenancy with N, a will leaving E's half share of the properties to R would not have had the effect of giving him an interest in those properties if E were to pre-decease N.)

Ms De Pasquale deposes that during the initial conference (and thereafter) she spoke with E in Italian but that on occasion he would speak to her in English and she would reply in English.

On 21 September 2006, Ms De Pasquale had a further meeting with E, which she says was primarily in order for him to sign the will she had prepared. (It is not clear who accompanied E, if anyone, on that occasion.) They had a conversation in which she tested E's recollection as to what he had said the week before and as to what he wanted in his will. (Her account of what E said as to his wishes in respect of the transfer of his share in the properties to R and as to the will indicates that his recollection was then consistent with what had been discussed the previous week). Annexed to Ms De Pasquale's affidavit is a copy of her file note of those instructions. Relevantly, that file note of the meeting (recorded as being of one hour's duration) was as follows:

21/9/06

Meeting with [E]

Instructions: He wants to tsf [which I read as an abbreviation for transfer] his share of the properties to [R] so that [R] & [N] hold properties as tenants in common in equal shares.

he wants a life estate

he wants rent until death & will be responsible for expenses

Read will to him - he said that he could understand English enough to read it in English where he appeared not to understand I read [deleted] translated it to him in Italian

Expressed concern that [A] get nothing that she is a blood sucker and he has given her so much that if he gives her anymore in terms of property/money she will kick him out if he has nothing else that she can get from him.

She is apparently harassing him for $ & property.

Ms De Pasquale, in her first affidavit of 14 November 2011, deposes that, at the meeting on 21 September 2006, E also explained to her how it came about that he had signed the documents that N had given him. That explanation is not set out in her affidavit. However, annexed to her affidavit is a chronology that Ms De Pasquale says she prepared (but never completed) "in accordance with [E's] instructions" (Annexure D), in which there is a description of events that suggests that the context in which E had signed the documents was pressure from N (in circumstances where N was concerned that her brother was attempting to get hold of all of his father's properties). If that chronology did accurately record E's instructions to Ms De Pasquale, then the fact that he had communicated this to her (whether or not it was true) would indicate his belief at the relevant time.

However, the source of the information contained in that chronology is not clear (Ms De Pasquale denied having prepared the document, in a supplementary affidavit that I gave leave to be filed in the course of the hearing). It appears that Ms De Pasquale received a document headed "[A]'s Testimony" by facsimile transmission from a fax number used by one of A's sons and that this may have been the source for some of the information there contained. (Mr Ahmed noted in some detail the close similarity between the "testimony" document and both the draft chronology and draft affidavit prepared by Ms De Pasquale.) A denies preparation of the chronology document but says that she gave her account of events orally to Ms De Pasquale. That said, as I understood Ms De Pasquale's evidence she had satisfied herself that the documents she prepared reflected instructions from E (whoever may have prepared the "testimony" document).

In that (admittedly incomplete and seemingly draft) chronology, Ms De Pasquale sets out a description of various events (commencing from an entry for 29 November 2002 that E and A had entered a binding financial agreement pursuant to Part VIII(a) of the Family Law Act), part of which agreement provided for the transfer of A's share in the property at Illawong to be transferred to E's son R (the only relevance of which seems to be to explain references later made to the property transactions in 2007 as amounting to an attempt by A to have a 'second bite of the cherry'). (A denies that she is seeking a 'second bite of the cherry'. In her affidavit of 7 February 2012, A deposes to the purchases made with E after her marriage of properties at Illawong, Cabramatta (the proceeds of which she says were used to purchase Chipping Norton) and Padstow. A maintains that when E gave R half of the Illawong property in 2004 (and the other half of that property in 2007) E promised to give her an amount equal to Illawong from his other properties.)

The incomplete chronology which is annexed to Ms De Pasquale's statement records what seems to have been Ms De Pasquale's understanding of her instructions as to the suggestion by N that her brother had forged E's signature on a will and was seeking to get all of E's properties as the context in which the joint tenancies were created in the first place. While I consider that little weight can ultimately be placed on this chronology, given the difficulty of determining from whom the instructions recorded therein had been obtained (since it is not clear whether the chronology reflected or recorded instructions given or confirmed by E or, as the case may be, from others), the assertion that the 2004/2005 transfers were executed in the face of concerns in relation to a challenge by R or A to E's will is one that was made on oath by N in an affidavit sworn by her in the first proceedings commenced in this Court in relation to the 2007 transfers (Exhibit H).

In any event, Ms De Pasquale then proceeded to prepare a draft deed between R, N and E in relation to the proposed transfer of E's half share to R. She wrote, by letter dated 13 October 2006, to N, advising her that she had been instructed that, at the time of transferring his half interest in the three properties, E's understanding was that the property would be transferred as tenants in common and that it was never his intention that the property be held as joint tenants. The letter noted E's wish to sever the joint tenancy and stated that "We also note that this had previously been attempted to be done by other solicitors in July of this year. At some stage thereafter [E] signed a document of which he was not aware of the precise contents but which we assume reinforced the joint tenancy". At this stage, it must have been clear that what E was proposing was a transaction that would benefit R. There was no suggestion in the letter that A would benefit from the severance of the joint tenancies.

The letter sought N's acknowledgment as to the severance and the receipt of independent legal advice in relation thereto; and stated that the relevant forms would be submitted for lodgement if Ms De Pasquale did not hear from N or her legal advisers within 14 days.

N says that on 28 October 2006 (thus after the expiry of the 14 day period), A and E came to the Concord property and that A demanded that she sign some legal documents relating to the properties and threatened that if she did not then A would get E to kick her out of the house and would take N to the Supreme Court. (It is not clear whether these were the documents that Ms De Pasquale had prepared but as those are the only documents that N had been requested to sign at that stage, it seems to me likely.) N says that her father was "vague, could barely walk, expressionless and motionless" on his arrival and stayed in another room during the discussion as to the signing of the documents. A says that E was present in the kitchen at the time with them at the time the request was made and was his "normal self". N refused to sign the documents. (A admits that on a Sunday in October 2006, she called N. She says she asked her to sign the documents that Mr Nesci had given E and that she made that request because E had asked her to do so).

An application unilaterally to sever the joint tenancy in respect of the Concord property was then signed by E (whose signature was witnessed by Ms De Pasquale) on 1 November 2006 (suggesting that Ms De Pasquale was then taking steps to make good the action that had been foreshadowed in the October letter). However, this application was apparently not sought to be registered until 8 January 2007, that being the handwritten date at the bottom of the form. (This therefore seems to be the document referred to in N's pleading and the subject of her claim for declaratory relief as to lack of capacity on the part of E at that time.)

On 8 January 2007, as adverted to above, E lodged for registration the notices of intention unilaterally to sever the joint tenancies in respect of the three properties.

2006 AVO application by N

Meanwhile, on 10 November 2006, N had lodged an application for an apprehended violence order against A. (This was the second time N had lodged such an application, the first being in 2000.) The Complaint and Summons issued on that date describes the circumstances of the complaint as relating to the incident on 13 September 2006 and in that complaint N says that she fears further harassment abuse and violence. The complaint refers to attempts by A to get N to agree to sign a legal document "that would allow A to inherit [E's] property after his death" (the document in question seems, however, to have been the document prepared by Ms De Pasquale that would have benefited R not A). N deposes to the threats made to her by A in paras [73], [77], [81]-[84] of her first affidavit. (In those, she says that A referred to her as "rubbish" and "garbage", among other things. A, in her evidence, used not dissimilar language.) That summons was returnable on 18 December 2006 and apparently stood over for a mediation to take place on 15 January 2007.

On 15 January 2007, N and A participated in a mediation at the Community Justices Centre in relation to the apprehended violence application that had been lodged by N. E was apparently present on that occasion. N says that E sat through the whole mediation without saying a word and that he appeared very ill. A handwritten agreement was signed by A and N following the mediation between A and N, in which A agreed to certain arrangements (namely, that "she will ensure that [N's] telephone calls are received by her father or if he is unavailable that he is informed that [N] has called and wants him to return the phone call"; that if N knocks on the door she would inform N's father "who can then join [N] outside the flat"; and that neither A nor any of her family would contact N except in the case of an emergency concerning N's father "and then only [A] will contact [N]") and N in turn agreed that she would not enter the premises of her father's flat except in the case of an emergency concerning her father. On the basis of those undertakings, N agreed to withdraw her application for an apprehended violence order. (She says that she did not see her father after this occasion until the mediation on 11 March 2008. For some time between January 2007 and March 2008, E and A resided at a place in Liverpool. A admitted that there was no landline at that residence. She says that she and E shared one mobile telephone.)

N's Court proceedings

On 29 January 2007, N commenced proceedings against her father seeking to restrain the registration of the notices of severance. In her affidavit in those proceedings (Exhibit H), N deposed to her belief that A was pressuring E into signing documents he did not understand (though she also denied that her father did not understand the difference between joint tenants and tenants in common (at [33])) and deposed that "She [A] further is attempting by all means possible to prevent my access to him, with a view to firstly placing the properties into a tenancy in common and then secondly, pressuring him into making another Will leaving his share of those three properties to her". The assertions there made are inconsistent with the terms of what Ms De Pasquale's letter indicated were her then instructions from E (namely that he was seeking to sever the joint tenancies in order to benefit his son, R).

In the witness box N, asked as to the importance she attributed to the letter dated 13 October 2006 from Ms De Pasquale when commencing her proceedings in 2007 said "I don't even recall this letter at that time" (T 434.35).

Ms De Pasquale acted for E in and had the conduct of the defence of those proceedings until April 2007. It was presumably in that context that she prepared the draft chronology referred to above. She also prepared a draft affidavit of E (on which, never having been sworn, I can again place little weight on other than that this may be inferred to be reflective of Ms De Pasquale's then understanding of her instructions) and a brief to Counsel to prepare a defence and cross-claim.

Concerns about E's health

Ms De Pasquale deposes that by April 2007 she had become concerned that E was not in the best of health "and potentially did not have capacity". She explains that at times he appeared confused and did not appear to understand either Italian or English. Due to those concerns, Ms De Pasquale obtained authorisation to the release of E's medical records. It is not apparent that she obtained any such records before ceasing to have the conduct of the proceedings. (From late April 2007, after she had raised those concerns with Mr Nesci, until around August 2007, it was Mr Nesci who had the carriage of the matter.)

Mr Nesci has deposed to a meeting on 1 May 2007, in which E came to his office accompanied by A. Mr Nesci says that E started relating to him what appeared to him to have been information previously provided to Ms De Pasquale (though it is not apparent from this whether Mr Nesci is suggesting that E did not remember having already given the instructions or whether he was confirming them - the latter would of course indicate that E's memory was consistent in relation to those instructions). Mr Nesci deposes that A became annoyed that E was speaking in Italian (and had said it was important that "we stop [N]" and that she wanted to understand and to correct him when he was not right). A denies being annoyed but agrees that she may well have asked E to speak English in her presence (as she does not speak Italian). Mr Nesci asked A to wait outside.

Mr Nesci deposes that after A was outside the room E told him that he had signed a number of documents that he thought were to transfer half of his properties to N but that he had found out went further than that and that if he died before her the right of survivorship meant that she would get the whole of those properties. Mr Nesci deposes that E told him that N had taken him to a solicitor to do so and that there had been no explanation in Italian. He says that E said words to the effect:

I have been tricked. I want everything to be undone and put back the way it was.

Mr Nesci says that he pointed out to E that undoing the whole transaction was different from what he had tried to do the previous year (when he had wanted to change the tenancy such that if he died he could do what he wanted with his half share), E had said to him:

That's right, but I have changed my mind and I really want the whole thing undone. It hurts me a great deal that I am fighting with my daughter, but that is what I want done.

Mr Nesci says that he also explained that for the whole thing to be undone it would be necessary to reinstate the company that had been deregistered and that E said he understood that. In the witness box Mr Nesci gave evidence as to how he had explained the concept of deregistration in lay terms and there seems no reason to think that a person in E's position would not have understood that.

As to 9(2)(j) - the allegation that unfair pressure and unfair tactics were exerted on, or used by, A against N and E, raises the same issues considered in (ii) and (iii) above and I reach the same conclusion in this regard that there was no such unfair pressure or tactics;

As to 9(2)(l) - the allegation that the deed was unjust having regard to the commercial or other setting, purpose and effect of the March Deed, Mr Roberts submits that the setting in which the mediation occurred on 11 March 2008 (and subsequent negotiation, settling and execution of the Deed) could not have been more appropriate, having regard to the assistance of a mediator of a significantly senior standing and each of E and N being represented. I agree.

As to the other matters pleaded, I note as follows:

As to 9(2)(a) - the allegation is as to the inequality of bargaining power between A and E; that seems to me to be a matter that might be raised by E but is not relevant to whether N has an entitlement to the relief that she seeks. In any event, E had the benefit of legal advice to mitigate any disadvantage vis-à-vis A.

As to 9(2)(b) - the allegation that E was unable to negotiate the March Deed, Mr Roberts submits that the evidence is that significant negotiation occurred both at the mediation and in relation to the drafting of the March Deed. While there may be a dispute as to the extent of negotiation on E's behalf as opposed to N's there is nothing to suggest that his legal representatives were not able to negotiated on his behalf.

As to 9(2)(e) - the allegation that E was not reasonably able to protect his interests because of his age and state of mental and physical health, I accept that he was elderly and suffering from a progressive dementing disorder. The evidence is that this was a matter of which Mr Moore was conscious. I do not accept that there is evidence that E did not have such protection through his legal representatives.

As to 9(2)(h) - the allegation (that I assume is intended to refer to E) that there was not the opportunity to consult and that there was no consultation with 'legal representation' [sic] and to receive their advice without A being present, Mr Roberts notes that both N and E had independent legal and other advice (and that N also had the opportunity of obtaining independent expert medical advice which she chose not to do).

As to 9(2)(i) - the allegation that E did not understand the effect of the March Deed, reliance is placed on the evidence of Mr Moore that he explained the deed. While that evidence was general in nature, I am not satisfied that the evidence establishes that E did not understand the effect of the deed.

For the reasons given above, I find that the claims made under the Contracts Review Act have not been established.

(vi) Whether the covenant in relation to N's access to E was an essential term of the March Deed (breach of which would entitle N to terminate that deed) and whether A in fact breached that term

As to breach of the March Deed, it is alleged ([68]) that it was an essential term of the March Deed that A not prevent N from visting E (reliance being placed in this regard on clause 3(e) of the deed). (All that is relied upon for this allegation is the terms of clause 3(e) themselves). It is further alleged that, in breach of that essential term of the March Deed, A "refused or denied N access to her father" [69] and that by virtue of that breach N is entitled (and by her pleading does so) to terminate the March Deed and hence that A is not entitled to have the deed specifically performed ([71]).

Mr Ahmed submits that A breached this essential term in that "she in fact prevented N, actually and constructively, from seeing her father" (my emphasis). Mr Ahmed submits that in the event that the Court finds that the March Deed should not be set aside for any of the reasons submitted above, the March Deed should be rescinded on the basis of A's breach of this essential term of the contract. I consider below the allegation of breach. I do not accept that any breach has been established but even had it been established I do not accept that it would give rise to a right to treat the deed as having been terminated or to rescind the deed.

A taxonomy of contractual terms was considered in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited [2007] HCA 7. With respect to essential terms, which are also referred to as "conditions" (Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26), the plurality (Gleeson CJ, Gummow, Heydon and Crennan JJ) approved the test set out by Jordan CJ in Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632 at 641-642:

The test of essentiality is whether it appears from the general nature of the contract considered as whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or a substantial performance of the promise, as the case may be, and that this ought to have been apparent to the promiser. (my emphasis)

The High Court plurality noted at [48] in Koompahtoo that Jordan CJ's comment regarding substantial (rather than strict) performance should now be understood in light of later developments in the law, which now embraces an 'intermediate term' as developed in Hong Kong Fir and approved by the plurality in Koompahtoo at [52]. Regarding essential terms or conditions, their honours in Koompahtoo then said at [48] that:

It is common intention of the parties, expressed in the language of their contract, understood in the context of the relationship established by that contract and (in a case such as the present) the commercial purpose it served, that determines whether a term is "essential", so that any breach will justify termination. (my emphasis)

As to the consequences of a breach of an essential term, Jordan CJ in Tramways said:

If it is a condition that is broken, ie, an essential promise, the innocent party, when he becomes aware of the breach, has ordinarily the right at his option either to treat himself as discharged from the contract and to recover damages for loss of the contract, or else to keep the contract on foot and recover damages for the particular breach.

...

If the innocent party would not have entered into the contract unless assured of a strict and literal performance of the promise, he may in general treat himself as discharged upon any breach of the promise, however slight.

Similarly, in Hong Kong Fir, Lord Diplock described the consequences of the breach of a condition as being a breach that relieved the innocent party of the obligation to perform in the future.

As I understand it, Mr Ahmed relies for the essential nature of clause 3(e) on the last line or sentence of that clause (T 613). I have extracted above the clause in full. Relevantly, it provides for N to vacate the Concord property (other than that she was entitled to leave small items there) within 3 months (ie by 28 June 2008) and for E and A to move into the upper part of the Concord property (at an unspecified time but it might be inferred that this would be after N moved out) and that they were to be entitled permanently to reside there. The clause went on to record the parties' agreement "that N shall be entitled to visit the property at least once a week to see E" (my emphasis) and A covenanted that she "shall take no steps to prevent such visits and shall take no step to deny N access to the property" (again, my emphasis). There is no provision for visits or access to any other property (as Mr Ahmed accepts). The clause concluded:

Should she [A] take such a step [ie to prevent "such vists" namely weekly visits to the property to see [E] or to deny [N] access to the property], [N] shall be entitled to seek relief from the Supreme Court of New South Wales and shall be entitled to right of access as co-owner of the Concord Property. This Deed may be pleaded by [N] as a complete bar to any defence that [A] may raise in such proceedings. (emphasis as per Mr Ahmed's submission re essentiality of clause)

I do not accept that the term in question should be construed as an essential term on the face of the document or having regard to the surrounding matrix of facts. There is no clause in the agreement providing that it, or another other clause, was to be an essential term and the fact that the clause itself specifies the relief that N would be entitled to seek if there were to be a breach by A of the covenant in question (and does so otherwise than by providing a right of termination of the March Deed) suggests that it was intended to continue to operate even if there were to be a breach of the clause. There is not suggestion that N sought to invoke that relief or that the parties contemplated that a breach of the clause would give rise to an automatic termination of the March Deed. The last sentence of the clause simply precludes A relying on any defence A might raise to a claim for relief in respect of the breach of the March Deed. However, it would remain for N to establish that there had been a breach.

Was there a breach by A of the covenants contained in clause 3(e)? The fact that N may have had no access to her father in the relevant period can have been no breach of the agreement for N to have access to the property to see her father. The obligation on E and A to move back to the Concord property did not specify a time within which that was to occur. In light of the acrimony between A and N (to which Mr Ahmed has referred in the context of the allegations of unconscionable conduct and duress by A), it seems likely that the clause was intended to operate such that N would vacate the property and E and A would then move into the property. N chose, for whatever reason, not to vacate the Concord property.

I do not consider that any breach of the agreement to permit N weekly access to the property to see E can be established when N was living at the property at the time (having failed to comply with her obligation to vacate it) and when E was not living there. The question is whether it can be said that the failure by A to move back into the Concord property with E was a step taken by A to prevent weekly visits of the kind provided for under the clause. (Of course, that assumes it was A's decision not to move back into the property and not that of E but by June 2008 Professor Dickson had determined that E did not have capacity to manage his affairs, so any such decision must realistically have been made by A - and Professor Dickson's notes reflect as much.) In one sense the decision not to move back into the Concord property until November 2008 had the necessary consequence that N could not visit E at the property in that time. However, the clause clearly contemplated that N would first vacate the property insofar as it speaks of access to the property. So, notwithstanding the ability of N to plead clause 3(e) as a bar to any defence by A for a claim for relief in respect of the provision for access to the property, it does not seem to me to preclude A relying upon N's breach of the obligation to vacate the property as, in effect, extending the time within which she and E were to move back into the property (meaning that until then no obligation to give access to the property could have arisen).

I am not satisfied that there has been a breach of clause 3(e) by A in all the circumstances. Even had I been so satisfied, I would not have found that it entitled N to rescind the March Deed or relieved her from performance of her obligations thereunder.

(vii) Whether A should be granted relief in the nature of specific performance of the covenants contained in the March Deed (and, in particular, whether she is disentitled to such relief by reason of a lack of clean hands)

The unclean hands defence requires that the conduct in question have an immediate and necessary relation to the equity sued for (Black Uhlans Inc v NSW Crime Commission &Ors [2002] NSWSC 1060; Carantinos v Magafas [2008] NSWCA 304; Kation Pty Limited v Lamru Pty Limited [2009] 257 ALR 336). Hence, equity would not enforce the March Deed at the suit of A if there was unlawful or unconscionable conduct on her part in relation to the entry into the deed or the transactions sought to be performed thereunder such that specific performance would enable her to benefit from, or reward her for, that conduct. However, to the extent that a refusal to compel N to comply with her obligations under the March Deed would prejudice E, then that must also be taken into account when determining whether the conduct of A is such as to warrant a denial of the relief sought.

Further, to the extent that N's conduct involves N resiling from obligations entered into by her after she had had an opportunity to observe E and to obtain her own independent legal advice, there is a flavour of N now seeking to resile from an agreement that is no longer as favourable to her - ie, while it served a purpose in securing for her the arrangements as to access N was prepared to agree to the benefits provided for A under the deed and now that such arrangements are of no use (because of E's mental condition) N is seeking to deprive A of those benefits.

Mr Roberts does not dispute that as at late 2007 there was an issue as to E's capacity to participate and give instructions in the proceedings then before the Court, noting that Mr Moore had advised that medical evidence be obtained concerning E's capacity. He also points out that this evidence was served upon N's solicitors and N's solicitors were invited to have E independently examined prior to mediation on 11 March 2008. In effect, this seems to be a submission that N must be taken to have assumed the risk that E may not have been mentally competent at that time. While I do not accept that this conclusion should be drawn, I am concerned that this is a situation where E's tutor does not raise any issue as to this - but N seeks to rely upon it to avoid the separate obligations imposed on her under the deed.

Mr Zucker emphasises that the March Deed does not require E to do anything other than to participate in the sale of the Summer Hill property and receive 35% of the proceeds of sale (clause 3(j)) and that the NSW Trustee in the interests of E is ready to proceed with that sale and distribution and there is no evidence that E would not have done so but for this litigation.

I am not satisfied that the allegations as to the conduct said to amount to unclean hands has been made out in relation to the orders for specific performance that have been sought. (While I consider that there would have been a real issue as to whether relief should be given in equity that would reward the conduct in executing transfers that would effect a severance in equity where a severance in common law had been the subject of injunctive restraint, the issue does not arise. Here what is sought to be enforced is the result of a compromise entered into with the benefit of independent legal advice and in circumstances where the complaints now made go to issues that were known or the possibility of which was known at the time.)

N asserts unclean hands on A's part in that A has failed to comply with the access provisions contained in clause 3(e) of the March Deed. As noted earlier, insofar as the access provisions related to visitation rights at the Concord property from which N had yet to depart and I am of the view that such conduct is likely to have contributed to the decision by A and/or E not to return to the Concord property at that time, I consider that there is no lack of clean hands on the part of A which can be relied upon by N in her defence to the claim for an order requiring the transfer of her interest in the Leichhardt property to A. In relation to the entry into the March Deed, for the reasons given above in relation to the allegations of undue influence and unconscionable conduct, I find that the unclean hands defence has not been established.

Conclusion

I consider that A has made out her claim for relief by way of an order to compel performance of the obligation of N to effect a transfer of her half interest in the Leichhardt property to A. (It is not an order for specific performance strictly so-called as the deed has been executed and so performance is not being ordered of an executory contract (see Meagher Gummow Lehane's Equity: Doctrines and Remedies (4th ed, 2002) at [20-010]-[20-015]). Thus the principle that specific performance is awarded in whole and not in part does not apply.)

N has failed in her claims for relief against A. As to declaratory relief, I consider that E had capacity when he executed the transfers in December 2007 but a declaration as to this was not sought (and it would seem to be of no utility in the light of the relief I propose otherwise to grant). In the circumstances there is also no utility to any declaration as to capacity as at the time of the January 2007 severance of the joint tenancies.

Where I consider that there is a question is as to whether A has made out her claim for an order for the vacation of the Concord property by N. True it is that N was obliged under the March Deed to vacate the property within 3 months and failed to do so; and that E was entitled to live there for his lifetime. However, what the March Deed did not address was the circumstance that E would leave the Concord property due to ill health (as has now happened). The March Deed provided for A to vacate the property within 3 months of E's death but this seems to have been premised on the assumption that E and A would be living there up to his death. Mr Ahmed submitted that if the March Deed were to be upheld or parts of it not disturbed, then N should be permitted to remain in the Concord property.

I note that in the context of the negotiation of the March Deed concern was expressed by N's solicitor that there be no ongoing dispute as to the Concord property. Ironically, that concern being uppermost at least in his mind, it seems to me that the situation is that the parties did not address what was to happen in the events that have now transpired. It is not for me to re-make their deal in that regard. The position is that E is not capable of exercising his right to remain in the Concord property (and it is accepted that he will not be in a position ever to return to live in that property). As N is his co-owner under the subsisting joint tenancy, she would have an entitlement to occupy the property but for any arrangement between the two of them and the only circumstance in which that right was suspended no longer applies. While there might potentially be an issue as to the payment of an occupation fee to E for the benefit obtained by occupying the whole of the property to his exclusion, no such issue has been raised by the NSW Trustee and Guardian and I do not consider it further.

Therefore, while I will grant the relief sought in relation to the transfer of N's half interest in the Leichhardt property to A, I do not consider it appropriate to order that N vacate the Concord property. As to the Summer Hill property, Mr Ahmed had instructions to agree to a trustee sale of that property. I will direct that N and the NSW Trustee and Guardian submit signed consents to act by proposed trustees (as agreed between them or otherwise as each contends would be appropriate) in order to permit such a trustee sale to be effected.

Orders

For the reasons above, I propose to order as follows:

1. Order that the first defendant take all steps and execute all documents necessary (including delivery to the plaintiff within 14 days of the title deed to the Leichhardt property) for the transfer into the plaintiff's name of the first defendant's interest in that property.

2. Declare that, by virtue of the covenants contained in the March Deed, the first defendant's interest in the Leichhardt property has been held on trust for the plaintiff from the date of the March Deed, so as to effect a severance of the joint tenancy between the second defendant and the first defendant in respect of that property;

3. Direct that the first defendant and the second defendant by his tutor file within 14 days signed consents to act by proposed trustees to be appointed as trustees for the sale of the Summer Hill property (with the proceeds of sale to be distributed as to 35% to the second defendant and 65% to the first defendant).

I will then re-list the matter for orders to be made for the appointment of trustees for sale of that property in due course. (Failing agreement between the defendants as to the persons to act as trustees for sale, each is to file within the 14 day period consents to act by the persons he or she nominates and submissions as to why those persons should be appointed.)

I will hear submissions as to the costs of the proceedings at a time convenient to the parties and the Court.

**********

Decision last updated: 13 April 2012

Medium Neutral Citation:	A v N & anor [2012] NSWSC 354
Hearing dates:	13-17, 20-24 February 2012
Decision date:	13 April 2012
Jurisdiction:	Equity Division
Before:	Ward J
Decision:	Judgment for plaintiff. Orders to be made for performance by first defendant of obligations under Deed of Settlement and Release.
Catchwords:	CAPACITY - presumption of sanity - test of capacity is 'issue specific' - relevant issue was whether there was capacity to enter into March Deed - HELD - onus of proof to displace presumption not satisfied on balance of probabilities - EVIDENCE - whether Court bound to accept expert evidence where the expert is not called for and hence challenged in cross-examination - HELD - general principle that Court is not bound to accept such evidence although it may be given more weight depending on the balance of the evidence before the Court - uncontradicted evidence is still be to assessed in light of all other lay and expert evidence - UNCONSCIONABLE CONDUCT - two allegations of unconscionable conduct - first, that plaintiff took advantage of her position vis-Ã -vis the second defendant to induce him to enter the deed - second, that plaintiff took advantage of first defendant's concern that she would be denied access to the second defendant to induce her to enter the deed - HELD - unconscionable conduct not established in relation to either allegation - UNDUE INFLUENCE - no presumption of influence between husband and wife - evidence of increasing dependence of second defendant on plaintiff giving rise to a presumption of influence - relevant consideration is the quality of consent by the donee - second defendant had independent legal advice - context in which gift is given is also relevant, including any benefits which are obtained by the donee - HELD - benefit to plaintiff was not procured by undue influence over the second defendant - DURESS - conduct alleged to amount to duress being alleged threats made against the person of the first defendant and an alleged threat to deny first defendant access to the second defendant - consideration of Karam and whether the alleged conduct must be unlawful to establish duress - alleged threats against person made two years before the deed entered into - no evidence aside from the first defendant's testimony that alleged threats to deny access to second defendant were made - HELD - duress not established by first defendant - DEED - non est factum defence not pleaded - even if first defendant succeeded in making out a vitiating factor the deed was only voidable and not void - whether deed would have been set aside in the circumstances of the case - OBITER - deed would not have been set aside - CONTRACTS REVIEW ACT - whether deed was 'unjust' - whether first defendant had standing to plead 'unjustness' insofar as the injustice pleaded was not suffered by the first defendant - HELD - first defendant had standing under the Contracts Review Act 1980 (NSW), however none of the allegations of injustice made out - EQUITY - equitable maxims - relief sought was approximate to specific performance as deed was executed rather than executory - whether plaintiff disentitled to relief due to unclean hands - where unclean hands alleged in relation to a putative breach of the deed by the plaintiff - where the relief sought would affect the interests of the second defendant as another party to the deed, the second defendant's interests are relevant to whether relief is denied - HELD - not satisfied that alleged conduct of the first defendant amounted to unclean hands
Legislation Cited:	Contracts Review Act 1980 (NSW) Guardianship Act 1987 (NSW) Law Reform (Miscellaneous Provisions) Act 1994 (NSW) Powers of Attorney Act 2003 (NSW) Real Property Act 1901 (NSW)
Cases Cited:	A Little Company Ltd v Peters [2007] NSWSC 833 Agricultural and Rural Finance Pty Ltd & Anor v John Edward Atkinson & Ors [2010] NSWSC 635 Arthur Young v Tieco International (1995) 182 LSJS 367 Ashpifel v Bryan (1884) 122 ER 999 Australian and New Zealand Banking Group v Aldrick Family Company Pty Ltd [2010] NSWSC 1000 Australia and New Zealand Banking Group v Karam [2005] NSWCA 344; (2005) 64 NSWLR 149 Australian Consolidated Press Ltd v Morgan (1965) 112 CLR 483 Baburin v Baburin [1990] 2 Qd R 101 Banks v Goodfellow (1870) LR QB 549 Banque Commerciale SA (in liq) v Akhil Holdings Ltd (1990) 169 CLR 279; 92 ALR 53; [1990] HCA 11 Barton v Armstrong [1976] AC 104; (1973) 3 ALR 355 Baulderstone Hornibrook v Gordian Runoff [2008] NSWCA 243 Black Uhlans Inc v NSW Crime Commission & Ors [2002] NSWSC 1060 Blanch v British American Tobacco Australia Services Ltd [2005] NSWSC 241; 62 NSWLR 653 Brandi v Mingot (1976) 12 ALR 551 Bridgewater v Leahy (1998) 94 CLR 457 Browne v Dunn (1893) 6 R 67 (HL) Bull v Fulton (1942) 66 CLR 295 Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 4) (2006) 229 ALR 136; [2006] FCA 446 Canon Australia Pty Ltd v Patton (2007) 244 CLR 759 Carantinos v Magafas [2008] NSWCA 304 Chappell & Co Ltd v Nestle Co Ltd [1960] AC 87 Charter Carter Pty Ltd v The Shop, Distributive and Allied Employees' Association of Western Australia (1987) 13 FCR 413 Clarke v Lopwell [2008] NSWSC 615 Commercial Bank of Australia v Amadio (1983) 151 CLR 447 Commonwealth of Australia v McLean (unreported, NSWCA, 31 December 1996) Corin v Patton (1990) 169 CLR 540 Crago v McIntyre [1976] 1 NSWLR 729 Crescendo Management v Westpac (1988) 19 NSWLR 40 Dalle-Molle (by his next friend Public Trustee) v Manos BC-200402709 Dimskal Shipping Co SA v International Transport Workers Federation (The Evia Luck) [1992] 2 AC 152 Director of Public Prosecutions for Northern Ireland v Lynch [1975] AC 653 Elders Rural Finance Ltd v Smith (1996) 41 NSWLR 296 Ellis v Wallsend District Hospital (1989) 17 NSWLR 553 EMG v Guardianship and Administration Board of Victoria (unreported, Supreme Court of NSW, Young J, 28 May 1999) Ford v his Tutor Watkinson v Perpetual Trustees Victoria Ltd [2009] NSWCA 186 Frizzo & Anor v Frizzo [2011] QSC 107 Gibbons v Wright (1954) 91 CLR 423 Gregory Paul Montfroy v Roads Corporation (trading as VicRoads) [2005] VSC 320 Harding v Tingey (1864) 12 WR 684 HML v R [2008] HCA 16; (2008) 235 CLR 334; (2008) 245 ALR 20 Ho v Powell (2001) 51 NSWLR 572; [2001] NSWCA 168 Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 Howitt Transport v Transport and General Workers' Union [1973] ICR 1 Huguenin v Basely (1807) 14 Ves Jun Supp 273 Hume v Munro (No 2) (1943) 67 CLR 462 ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 Ingot v Macquarie [2004] NSWSC 1136 Ingot Capital Investments Pty Limited v Macquarie Equity Capital Markets Limited (2008) 73 NSWLR 653; (2008) 252 ALR 659; (2008) 68 ACSR 595; [2008] NSWCA 206 Jackamarra v Krakouer [1998] HCA 27 at 29; (1998) 195 CLR 516 Jenyns v Public Curator (Qld) (1953) 90 CLR 113 Johnson (by her tutor Smith) v Johnson [2009] NSWSC 503 Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 Kation Pty Limited v Lamru Pty Limited [2009] 257 ALR 336 Katsilis v Broken Hill Pty Co Ltd (1977) 18 ALR 181; (1977) 52 ALJR 189 Kazar, in the matter of Frontier Architects Pty Ltd (in liq) [2010] FCA 1381 Kowalczuk v Accom Finance Pty Ltd (2008) 252 ALR 55 Kung v Wang Din Shin [2005] HKCFA 54 Low v Innes (1864) 4 De GJ & Sm 286 Lush v Russell (1850) 5 Exch 203 Maher v Honeysett & Maher Electrical Contractors Pty Ltd [2007] NSWSC 12 Makita (Australia) Pty Limited v Sprowles (2001) 52 NSWLR 705 Malco Engineering Pty Limited v Ferreira & ors (1994) 10 NSWCCR 117 Massoud v NRMA Insurance Ltd (1995) 8 ANZ Insurance Cases 61-257 (75,873) Masterman-Lister v Brutton & Co [2003] 3 All ER 162 McLarnon v McLarnon (1968) 112 Sol J 419 McNair Anderson Associates Pty Ltd v Hinch; McNair Associates Pty Ltd v 3AW Broadcasting Co Pty Ltd [1985] VR 309 Mercantile Credit Co Ltd v Hamblin [1965] 2 QB 242; [1964] 3 All ER 592 Mitchell v Pacific Dawn Pty Ltd [2006] QSC 198 Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723 Murphy v Doman [2003] NSWCA 249 Nowlan v Marson Transport Pty Ltd [2001] NSWCA 346 O'Brien v Australia and New Zealand Bank Ltd (1971) 5 SASR 347 Orleans Investments Pty Ltd and Anor v Mindshare Communications Ltd [2009] NSWCA 40 Paric v John Holland Constructions Pty Ltd [1984] 2 NSWLR 505 Patterson v Pongrass Group Operations Pty Ltd [2011] NSWSC 1588 Petelin v Cullen (1975) 132 CLR 355; 6 ALR 129 Poricanin v Australian Consolidated Industries Ltd [1979] 2 NSWLR 419 PT Ltd v Maradona Pty Ltd (1992) 25 NSWLR 643 Ratcliffe v Evans (1892) 2 QB 524 Re Bega Co-operative Society Ltd & Anor v The Milk Authority of the Australian Capital Territory & Anor [1997] FCA 200 Read v Nerey Nominees Pty Ltd [1979] VR 47 Riz v Perpetual Trustee Australia Ltd (2008) NSW ConvR 56-198; [2007] NSWSC 1153 Sanpine v Koompahtoo Local Aboriginal Land Council [2005] NSWSC 365 Saunders v Anglia Building Society [1971] AC 1004; [1970] 3 All ER 961 Saxon v Saxon [1976] 4 WWR 300 Silver v Dome Resources NL [2007] NSWSC 455 Smith v Elders Rural Finance Pty Ltd (1995) Aust Contract R 90-054 Spina v Conran Associates Pty Ltd [2008] NSWSC 326 Spina v Permanent Custodians Ltd (2009) 14 BPR 26,923 Spokes v Banbury Board of Health (1865) LR 1 Eq 42 Sternbeck v Sternbeck (1968) 11 FLR 360 Szabo v Battye [2006] NSWSC 1351 Szozda v Szozda [2010] NSWSC 804 Temiha v Sadebarth [1997] NSWCA 308 The Juliana (1822) 2 Dods 504 Thomas v Thomas (1842) 2QB 851 Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632 Vella v Permanent Mortgagee Pty Ltd [2008] NSWSC 505 Vines v Australian Securities and Investments Commission (2007) 73 NSWLR 451; (2007) 62 ACSR 1; [2007] NSWCA 75 Walker v Police (Unreported, Supreme Court of South Australia, Mullighan J, 19 June 1998) Watson v Foxman (1995) 49 NSWLR 315 West v AGC (Advances) Ltd (1986) 5 NSWLR 610 Whereat v Duff [1972] 2 NSWLR 147 White v Overland [2001] FCA 1333 Winefield v Clarke [2008] NSWSC 82
Texts Cited:	J W Carter, E Peden and G J Tolhurst in Contract Law in Australia (5th ed, 2007) J Fonblanque, Treatise of Equity (1831) J D Heydon, Cross on Evidence (8th Australian ed) R P Meagher, W M C Gummow and J R F Lehane, Meagher Gummow and Lehane's Equity: Doctrines and Remedies (3rd ed, 1992) R Meagher, D Heydon and M Leeming, Meagher Gummow and Lehane's Equity: Doctrines and Remedies (4th ed, 2002) Myers, Australian Bar Gazette, 1967 Vol 2 p 3 P Vout (ed), Unconscionable Conduct the Laws of Australia (2006)
Category:	Principal judgment
Parties:	A (Plaintiff/Cross Defendant) N (First Defendant/Cross Claimant) E (by the NSW Trustee & Guardian (formerly Office of the Protective Commissioner) as Manager of the Estate of the Second Defendant) (Second Defendant/Second Cross Defendant)
Representation:	Counsel D Roberts (Plaintiff/First Cross Defendant) SS Ahmed (First Defendant/Cross Claimant) C Zucker (Solicitor) (Second Defendant/Second Cross Defendant) Solicitors Hunt & Hunt (Plaintiff/First Cross Defendant) Buttar Caldwell & Co (First Defendant/Cross Claimant) Zucker Legal (Second Defendant/Second Cross Defendant)
File Number(s):	09/287664