Hamilton v Carter - [2011] NSWSC 394

Supreme Court

New South Wales

Medium Neutral Citation: Hamilton v Carter [2011] NSWSC 394
Hearing dates: 4-6 April 2011 & 16 May 2011
Decision date: 23 September 2011
Jurisdiction: Equity Division
Before: Davies J
Decision:
(1) The proceedings are dismissed.
(2) The Plaintiff is to pay the Defendant's costs.

Catchwords: EQUITY - general principles - undue influence - unconscionable dealing - gift of remainder of real property to Defendant by elderly aunt - gift follows execution of will leaving the whole of the property to the Defendant - whether relationship one of influence - whether presumption rebutted - whether donor had mental capacity to make the gift - relevant time for considering capacity - principle in Parker v Felgate applied to inter vivos gifts - independent legal advice - no undue influence - no unconscientious dealing.
EQUITY - settlements - matters arising under settled estates - whether Court should authorise the sale of the life interest notwithstanding findings of no undue influence or unconscientious dealing.
Legislation Cited: Conveyancing and Law of Property Act 1898
Evidence Act 1995
Cases Cited: Bailey v Bailey (1924) 34 CLR 558
Bridgewater v Leahy (1998) 194 CLR 457
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447
Gibbons v Wright (1954) 91 CLR 423
Henry Ryan's Settled Estates (1899) 16 WN (NSW) 70
Johnson v Buttress (1936) 56 CLR 113
Louth v Diprose (1992) 175 CLR 621
Parker v Felgate (1883) 8 PD 171
Re Levey; ex parte Official Assignee (1894) 15 NSWR (B & P) 30
Singellos v Singellos [2011] 2 WLR 1111
Stivactas v Michaletos [No 2] (unreported - NSW Court of Appeal - 31 August 1993)
Tillett v Varnell Holdings Pty Ltd [2009] NSWSC 1040
Category: Principal judgment
Parties: Phillip Hamilton (suing as administrator and tutor of Norma June Carter) (Plaintiff)
Albert Barrington Carter (Defendant)
Representation: Dr J Glover (Plaintiff)
M Gronow (Defendant)
David Davis & Associates (Plaintiff)
Dwyer Robinson Pty Ltd (Defendant)

File Number(s): 2009/327359

Judgment

On 27 September 2005 Norma Carter transferred an estate in remainder of a property being Unit 18/1-5 Richmount Street, Cronulla to her nephew Albert Barrington Carter (known as Sam), the Defendant in these proceedings. The Plaintiff, who was appointed by the Victorian Civil and Administrative Tribunal as her administrator on 18 March 2009 seeks to set aside that transfer on the basis that it was executed under the undue influence of the Defendant, alternatively as a result of the Defendant's unconscionable dealing, alternatively that at the time of the transfer Mrs Carter lacked the capacity to effect the transfer.

I shall generally refer to Norma Carter as Norma, and to other family members by their first name, but I do not intend any familiarity or disrespect to them by doing so.

Family background

Norma Carter was born on 24 June 1925. She was one of three children in a Danish family called Poulsen. The family home was on the corner of Ewos Parade and Gardenia Street, Cronulla. Her older brother was Arthur and her younger sister was Irene.

Arthur married and had 3 children, Ann Louise (variously referred to as Ann or Ann Louise), Brett and Jessica. Arthur died in 2000.

Irene had meningitis as a child which stunted her growth. She never married and had no children. She died in 1991 or 1992.

Norma married Stanley Maurice Carter (known as Maurice) in the late 1960s or early 1970s when she was in her mid forties. He owned a farm at Lyons known as "Crawford" in Western Victoria. Norma moved to live with him on the farm. There were no children of the marriage. Maurice died in 1987.

Maurice came from a large family. He had 8 siblings, the only relevant one in these proceedings being his brother Tom. He had 23 nieces and nephews. Apart from the Defendant, only one of those is relevant to the matters in these proceedings, being Warren Carter (one of the sons of Maurice's brother Ross), to whom Maurice left his farm in remainder. Warren Carter had been the farm manager for a period of time whilst Maurice was alive.

The position is, therefore, that the only blood relatives of Norma Carter are her nephew Brett Poulsen, her two nieces Ann Louise and Jessica, and the 3 children of Brett, Ann Louise and Jessica. In 1983 Brett was severely injured in a rugby accident and left a quadriplegic. In 1992 Norma gave Brett $100,000 so that he could live independently.

By his will, Norma's father left the family home in Cronulla to Norma on condition that she take care of Irene, and allow Irene to live in the house for as long as she wished. Irene lived in the house until she died in 1991 or 1992. Thereafter Norma sold the family home and with the proceeds she purchased the apartment in Richmount Street, Cronulla, the subject of the present proceedings.

When Maurice Carter died in 1987 he left a life interest in the farm to Norma as well as a complete interest in the whole of the livestock and farming equipment on the farm. As mentioned, the remainder was left to his nephew Warren.

Maurice's brother Tom, and a person called Frank Hollis were the executors of Maurice's estate. In addition, Tom Carter had a Power of Attorney from Norma.

Norma remained living on the farm until 2004. She had a farm manager - Tony Moore.

Norma had a good circle of friends. She was very active in the Country Women's Association and other community activities. She was a member and regular attendee of the Anglican Church, worshipping at Dartmoor and subsequently at Heywood and Portland. Her closest friends were Emily Dallas and Jeanette Saunders from the Portland/Heywood area, Pat Bell from Warrnambool, and her great childhood friend Merle Barker with whom she grew up in Cronulla. Norma travelled widely, often with these friends. All of these friends gave evidence in the proceedings.

Norma's health problems

Members of the Poulsen family started to have concerns about Norma from about 2003 onwards. There was some hearsay evidence about concerns in about April 2003 by reason of the condition of the farmhouse and its plumbing. Ann Poulsen gave evidence that Norma stayed at her unit in Cronulla in 2003, and when Ann saw her she said it was obvious that Norma's mental health and mobility were deteriorating.

Things deteriorated in 2004 when Ann visited Norma at the farm in May. She said that Norma was not in good health, she did not feed herself properly and she appeared unable to do so. She was having great difficulty walking, and she was incontinent. It was said that mice infested the house. Her memory of recent events was poor and she was easily confused. When Norma drove on the road, Ann said that she was a serious danger to herself and others. There was some evidence to suggest that, because of her concerns Ann organised for Norma's licence to be taken away from her, probably during late 2004.

This trip in May 2004 to the farm by Ann was said to have been prompted by what she had been told by Emily Dallas and other people about Norma's health and the situation at the farm. I note, however, that Emily Dallas, who swore an affidavit for the Plaintiff in the proceedings, did not mention the matters described by Ann, nor any concerns about Norma at the farmhouse. Similarly, although Ann said in her affidavit that she relied on Emily Dallas and Jeanette Saunders to be watchful of Norma's condition around this time, Jeanette Saunders said nothing about that matter in her evidence. Jeanette Saunders did say that Norma suffered from a heart attack in 2000, and that she (Jeanette) went to Melbourne with her to the heart specialist and for her heart operation.

There was no doubt that Norma had serious problems with her knees. She had an operation for a total left knee replacement on 1 October 2004 by Dr Kierce, an orthopaedic surgeon, and it was intended that she would have a similar operation on her right knee. When she was discharged from Portland District Hospital on 15 October 2004 she moved, on Dr Kierce's advice, to the nearby accommodation at Seaview House in Portland. The significant matters for consideration in the case took place while she was at Seaview House.

In one sense, the present dispute appears to be based on animosity between the two sides of Norma's family, the Carters and the Poulsens. The Poulsens expected they would inherit the Cronulla property. Ann said in her affidavit that Norma had sometimes mentioned that they would inherit the Cronulla property. She referred to Norma having "defeated all the Poulsen family expectations concerning the Cronulla apartment", and said in her oral evidence:

We always understood the house in Cronulla was to be inherited by the children so, as a consequence, when she sold the house and bought the apartment we assumed then the apartment would be inherited.

A measure of mistrust has grown up between the Poulsens on the one hand and the Defendant on the other. To put the matter into some perspective it is worth examining the wills that were made by Norma from 1980 onwards. These wills are said by the Plaintiff to be significant in the assessment of the issues of undue influence and unconscionability by the Defendant.

Norma's wills

The first will that can be ascertained is the will of 3 November 1980. It was prepared by Harris, Stringer & Bird, solicitors at Portland.

This will appointed Maurice and Norma's brother Arthur as executors of the will. The will left what appears to be the share of the estate Norma received from her late father Arthur to her sister Irene. That share was said specifically to include the family home at 133 Ewos Parade, Cronulla and her Water Board bonds. The remainder of the estate was given to Brett, Ann and Jessica as tenants in common in equal shares.

The next will is that of 26 October 1987. It was made after Maurice's death. The will was prepared by William Bassett, the solicitor who was involved with the transactions the subject of these proceedings.

The will appointed Mr Bassett as the executor of the will and, in default, Warren Carter. The will left the property at 133 Ewos Parade, Cronulla to Irene. It left all the livestock and farming plant and equipment to Warren Carter. It gave the residue of the estate as to one quarter each to Ann and Jessica and as to one half to Brett.

The next will is dated 15 December 1989. It was also prepared by Mr Bassett. It appointed Patricia Bell as the executor and, in default, Norma's nephew Brett. It left the property at 133 Ewos Parade, Cronulla to Irene, and gave the livestock and farming plant and equipment to Brett. It again left a quarter of the residue to each of Ann and Jessica and the remainder to Brett. It seems likely that this will was brought about by a falling out between Norma and Warren Carter who gave evidence that he ceased employment at the farm on 19 October 1989 and left at that stage. Other evidence suggested that Norma did not approve of a relationship that Warren had with his then girlfriend, probably the fact that Warren brought her to live with him. Norma was said to be a woman of strong moral views.

The next will was dated 1 March 1993 and was somewhat belatedly prompted by Irene's death in 1991 or 1992. It was prepared by Mr Bassett.

The will appointed Patricia Bell as the executor and, in default, Brett. The will released Brett from all debts owing by him to Norma at the date of her death. It left the Cronulla unit at 18/1-5 Richmount Street, Cronulla (bought after the sale of the Ewos Street property) to Ann and Jessica as tenants in common in equal shares. It again left the livestock and farming plant and equipment to Brett and left the residuary estate in the same proportions as before.

There was then a considerable gap until the last will made on 7 March 2005. This will assumed some importance in the present proceedings and I shall deal with it in its appropriate place in the history of events relevant to the issues in the proceedings.

The Defendant's relationship with Norma

The Defendant was born on 1 July 1959. He was the son of Sidney Carter, one of Maurice Carter's brothers. Although his name is Albert Barrington Carter he has always been known as Sam. He has known Norma since he was a small boy when he used to be invited to stay on the farm at Lyons. He used to assist Maurice with stock work on the farm for which he was paid a small amount of money.

He did not have much contact with Maurice and Norma during his teenage years but he renewed his relationship with Norma when she asked him to do some handyman work at the farmhouse in the later 1980s. At the time the Defendant was carrying out handy work of his own to supplement his income as a local council employee. His uncle Maurice was still alive at this time but he was very ill.

Maurice passed away in 1987, and the Defendant continued his association with Norma carrying out whatever handy man work she needed on the farm and also in the house. One of the major tasks he undertook was painting the farmhouse inside and out. Norma generally paid him for the work, and he said she was appreciative of the services he provided.

The Defendant married in 1980, and his children were born in 1983, 1984 and 1987. His wife and children also visited the farm from time to time to see Norma. He now works as an estate agent in Portland.

Diaries kept by Norma for the years 2000 to 2003 were put into evidence. I was informed by Dr Glover of counsel who appeared for the Plaintiff (without demur from Mr Gronow of counsel who appeared for the Defendant) that the diaries show 8 references to the Defendant in the year 2000, 2 references in the year 2001, 7 entries in the year 2002 and 1 entry in the year 2003.

In addition, copies of 2 letters written by Norma to Sam's daughter Joala in September 2001 and February 2002 were put into evidence. Those letters, by their content, tend to show an ongoing and reasonably close relationship between Norma on the one hand and the Defendant and his family on the other.

The Defendant gave evidence that at least from the time Norma was in Seaview House he assumed the role of her carer in the form of transporting her to various appointments, taking her shopping and to regular church services. He also took her out to visit friends and on drives. He was not involved in her moving to Seaview House.

He said that in early 2005 on one of his regular visits to Seaview House Norma suggested that he and his family could make use of her unit in Cronulla, and that she would like them to have it. The Defendant told her that this was a very generous offer but that she should think about it very carefully. He said that he did not pursue the matter at all, but on a subsequent visit she raised the issue again. Subsequently she made contact with her solicitor William Bassett who visited her at Seaview House.

The events of 2004 and 2005

The evidence concerning the relevant course of events is largely to be found from the file of Mr Bassett, the solicitor who acted for Norma, supplemented by his oral evidence. There was also evidence from the Defendant. Mr Bassett declined to provide an affidavit to either party, apparently having concerns about legal professional privilege and disclosing confidential information.

There was considerable dispute about which party should call Mr Bassett to give evidence but, ultimately, he was called by the Plaintiff. Nevertheless, what ought to have been an examination in chief descended at times into cross-examination by Dr Glover. Although little objection was taken to this I stepped in on a few occasions to remind Dr Glover that Mr Bassett was his witness. Dr Glover sought on a number of occasions, the first being even before Mr Bassett had entered the witness box, to have Mr Bassett declared an unfavourable witness pursuant to s 38 Evidence Act 1995. One reason for this given during his evidence was that Mr Bassett was unable to recall receiving a document that was shown to him, the document having been addressed to his firm. I declined to find that Mr Bassett was an unfavourable witness. In my opinion, he gave his evidence in a frank and honest way, endeavouring to be of assistance to the Court. Certainly, he was not able to recall the detail of some matters but that is scarcely surprising when the events took place between 5 and 6 years before the trial. Whilst criticism was made of him for the way he went about his tasks in relation to Norma (and I shall return to those later), and whilst his file-keeping was a little disorganised with a number of file notes being undated, none of this impaired the reliability of his evidence.

Mr Bassett was admitted as a solicitor in 1979. He moved his practice to Portland in 1981. He said that he had drawn in excess of 2000 wills with, perhaps, 12% or more being from elderly clients. He had often handled transactions, several times per year, involving elderly clients making gifts of property to people.

Mr Bassett first met Norma in about 1987 when he acted to prepare her will of 26 October 1987. As noted, he also prepared her wills of 15 December 1989 and 1 March 1993. The file also indicates that he may have been involved in the payment of $100,000 from Norma to Brett Poulsen in November 1992.

Subsequent to the 1993 will the next contact Mr Bassett appears to have had in relation to Norma was a brief conference with Ann Poulsen on 13 October 2004. Mr Bassett thought that she had been down to Portland for some reason and she dropped in to see him on the off chance. The diary note discloses that she was talking about her Auntie Norma. She asked if anyone had a Power of Attorney. Mr Bassett said that there was an enduring Attorney but he could not release the name without contacting the Attorney.

He subsequently rang Tom Carter on that day. Tom told him that Norma had been in hospital for a knee operation and might end up in Seaview House. He mentioned her relatives being Ann Louise in Queensland and "a nephew in a wheelchair", and said he was happy for Mr Bassett to tell Ann that he, Tom, was the Attorney.

At some stage, probably in the second half of 2004 or early 2005 Tom Carter was having health problems including circulation problems in his foot. He wanted to reduce his responsibilities and for that reason suggested that his nephew, the Defendant, should be appointed Norma's Attorney in his place.

On 6 January 2005 Ann sent an email to Mr Bassett saying this:

I am writing in regard to Mrs Norma Carter, my Aunt. I spoke with you in your office on two occasions during my visit to Portland in October last year. Her situation is of concern to both family and friends. Her dementia has worsened and she is no longer able to manage any of her affairs. Her power of attorney, Tom Carter, is not well himself and does not want the responsibility of managing anything other than her farm which was left to his nephew by Norma's late husband Maurice Carter. Norma does however have other business requiring attention including a unit in Sydney. At present Tom has given responsibility for the management of her financial affairs to Norma's farm hand and his partner. When I left your office last year it was on the understanding that you would call Tom Carter and Frank Hollis ( Norma's agent and trusted friend ) and suggest that Norma consolidate her assets etc. We would very much appreciate it if you could follow through on this as soon as possible. We, as Norma's next of kin have no wish to interfere with her wishes regarding P-o-A, however, it is clearly a totally unsatisfactory situation at present. Someone needs to be appointed to manage her affairs as soon as possible. I will forward this letter by mail also. Thankyou for your advice in this matter. (emphasis added)

Mr Bassett replied on 20 January 2005 by email saying that he had written to Tom Carter asking him to make an appointment to discuss with him Mrs Norma Carter and her affairs at his earliest opportunity. He wrote a letter to Tom on the same day.

Tom came in to see Mr Bassett on an unspecified date but which must have been late January early February 2005. He gave the following information to Mr Bassett:

He had heard from Brett Poulsen regarding Norma's property at Cronulla;

Norma is now permanently in Seaview House on the top floor overlooking the bay. She was happy there;

The property in Crawford [i.e. the farm] was run by Tony Moore. The farm had been left to Warren Carter - the son of the late Ross Carter;

Tom would prefer the Poulsens to handle Cronulla;

Norma has a life interest in Crawford and owns the stock;

Frank Hollis and Tom were executors of Maurice's estate;

Norma is forgetful but has very lucid periods;

Sid Carter's son, Sam, is Maurice's nephew - he is very good to her;

He believed Cronulla brought Norma some income;

The diary note also suggests (although it is hard to read at this point) that Tom Carter wanted someone else to become an Attorney with him under the Power of Attorney, and he would be okay with either Sam, Brett or Ann Louise.

Some short time after that conference Mr Bassett recalled that the Defendant contacted him and said that Norma wanted to see him about her will.

Subsequently Mr Bassett went to Seaview House where he met the Defendant. The Defendant reintroduced him to Norma and then he left her room. Mr Bassett then took instructions for the will which he recorded in a dairy note.

Mr Bassett returned to his office and drafted a will in accordance with those instructions. He sent the draft under cover of a letter of 22 February 2005 to Norma at Seaview House. He asked her to arrange an appointment with him to discuss necessary amendments to the will when she had read it. There was in evidence in Mr Bassett's file a copy of the draft will with handwritten additions and alterations. The evidence was that the handwriting was Norma's. To paragraph 4 she added a gift of $10,000 to her sister in law Diana Poulsen. She completed the names and addresses of 3 other beneficiaries being Patricia Bell, Emily Dallas and Jeanette Saunders. In doing so she misspelt Emily's surname as "Dalas". She corrected the spelling of Brett's name from "Poulson" to "Poulsen".

There is a diary note of a further conference with Norma regarding changes to her will and changes to the Power of Attorney. The diary note is undated and Mr Bassett was not able to say whether the conference was held before or after she executed the will. It must have been before the execution of the will because the diary note says that the change to the Power of Attorney that she wants is to include both her brother in law Tom Carter and her husband's nephew Sam (the Defendant) as Attorneys. Since the Power of Attorney appointing Tom Carter and the Defendant as Attorneys was executed on the same day as the will itself, this diary note must have preceded it.

On 7 March 2005 Norma executed both a Will and the Power of Attorney in favour of Tom Carter and the Defendant. Mr Bassett said, and I accept, that the only persons present when the will was executed were Norma, himself and his assistant Leigh Blackman who was the other witness to the Will.

The Will appointed the Defendant as executor and left what is described as "my freehold property in Cronulla" together with the sum of $10,000 to the Defendant. It gave $10,000 to each of Ann, Jessica, the Defendant's wife Carol, Merle Barker and Norma's sister-in-law Diana Poulsen. It left $12,000 to each of Patricia Bell, Emily Dallas and Jeanette Saunders. It gave the residue of the estate to Brett entirely.

There is a diary note of Mr Bassett's conference with Norma on 7 March which he thought was made at the time the Will was executed. The diary note said that Norma wanted Sam and his family to have the use of the unit at Cronulla because his boys swim and would like the area. She said she wanted them to have it. There was a discussion about possible challenges by the Poulsens to the Will. Mr Bassett suggested some options to deal with such a challenge including a gift of the Cronulla property before Norma died or a gift of the remainder interest in the property before she died. It should be noted at this point that Norma must have had some understanding of life interests and remainders because she received a life interest in the farm property at Lyons from her husband with the remainder going to Warren Carter.

Mr Bassett wrote to Norma on 11 March 2005 and said this:

re: Will & Power of Attorney

We refer to your last attendance at our office on 7th March, 2005 at which time you executed your Will and Power of Attorney and the same are now held in our safe on your behalf.

We confirm that we discussed with you the possibility that the Poulsen girls could challenge your Will upon your death and that such challenge could defeat your intention that Sam Carter and his family take the benefit of the Cronulla unit. We mentioned that there are alternatives which would decrease the likelihood of a Will challenge by the girls or decrease the impact that such a challenge would have on your Estate.

These alternatives included gifting the Cronulla unit to Sam prior to your death or transferring the unit so that you have a life interest in the unit with Sam having a remainder interest in it. If either of these alternatives were chosen then it would not be possible for either of the Poulsen girls to claim that the unit should have been left to them in your Will.

In relation to the early gifting of the unit to Sam we note your belief that you will not change your view as to who should be the end beneficiary of that unit, the fact that you are not in receipt of Commonwealth benefits and therefore the transfer of the unit would have no impact on a pension and the fact that you are independently funded through the farm.

We confirm that this was the matter that you were going to give some thought to and that we should follow up on the matter in two to four weeks. We would appreciate hearing from you in that time as to your intentions. (emphasis added)

Much attention at the hearing was given by the Plaintiff to the statement in the first paragraph of that letter that asserted that Norma attended at Mr Bassett's office to execute the will. Mr Bassett was clear that that was an error although he could not properly explain why he made that error. He could not recall having seen Norma at his office at any time although there was evidence from the Defendant and some evidence in Norma's diary that she did attend Mr Bassett at his office on one occasion. The relevant diary entry was 22 March 2005, which provides no support for that occasion having been for the execution of the will. Nothing of significance turns on where the will was executed - it appeared that the matter went only to the reliability of Mr Bassett's evidence and his file.

Mr Bassett then had a further meeting with Norma on 22 March 2005. If he had any meeting with Norma at his office it would be this one as identified in Norma's diary note of the same date. Where the conference was held is not in itself significant. The diary note reads:

She has considered my letter of 11 March 2005 and is content to leave the unit to Sam in her will - doesn't believe girls would contest it - she then reconsidered and felt that if she could use it for her life and give Sam a remainder interest as that could not be challenged.

The diary note contains some words that are difficult to understand but the thrust of the sentence is that Norma was able to use the unit and let her friends use it, while she was alive and the Defendant was guaranteed it afterwards. The diary note then continues:

So proceed with Tfer to Norma for life and remainder to Sam.

She authorises us to talk to Sam about this.

Brought Sam in and Norma agrees.

Mr Bassett said that the explanation for the last statement is that he had conferred with Norma privately and after he received her instructions with regard to the remainder he brought the Defendant into the room. Mr Bassett's evidence about Norma's change of mind disclosed in the diary note was this:

Q. You read out to his Honour, am I right, that the end result of that it was decided to proceed to give a remainder interest in the unit to Sam, is that correct or not?

A. That's right.

Q. Even though Mrs Carter had had different views about the subject?

A. Yes, yes.

Q. But that's the reason--

A. I put it to - I made a suggestion and she sort of said no, and I left it at that. And she came back and said well we'll proceed as recommended.

Q. What did that mean, proceed as recommended?

A. To give a remainder interest to Sam Carter.

Q. At the time, did you think she freely formed that intention of her own will?

A. Yes, I did.

Mr Bassett next saw Mrs Carter on 12 April 2005. His diary note of this conference reads:

She wants to proceed with transfer of life interest to Norma, remainder to Sam.

She then raises issue of Anne (sic), Jessica and Brett - 1/2 to Brett and a quarter of residue to the girls.

Some significance was placed on the last sentence of this diary note by the Plaintiff to suggest that it showed confusion on Norma's part about the existence of the will she had executed a month earlier. Mr Bassett was not able to explain what prompted him to have written the last sentence. It will be recalled that the residue was to be divided in that fashion in the 3 prior wills. The only other evidence that threw any light on this matter was Norma's own diary note dated 13 April 2005 (the day after Mr Bassett's diary note). Norma's diary note said that Mr Bassett was coming at 2 o'clock and it went on:

Bill explained the will and other sections of it. Sam spent a little amount of time in the room and then left and Mr Bassett described various sections of the will.

It does not strike me as unusual that, when Norma was considering dealing with a significant asset in her estate in the way proposed (the gift of a remainder of the Cronulla property to the Defendant) she should be discussing what else she had done in the will executed a month earlier. What is still difficult to explain is why Mr Bassett's note suggests a consideration of, not the last will, but the wills before that.

On the other hand, another explanation for what appears in the diary note is that Norma was reconsidering the way she left the residue of her estate, to restore what she had previously done by leaving 50% to Brett (rather than the whole of it as in the 2005 will) and a quarter to each of the girls.

I do not think that that one unexplained sentence in Mr Bassett's diary note is evidence of confusion or lack of capacity on the part of Norma.

After that conference Mr Bassett took a number of steps to effect the instructions from Norma to transfer the Cronulla property to her as a life tenant with remainder to the Defendant. Norma had referred him to the Defendant for information as and when he needed it. He ascertained that Eliot Tuthill were the solicitors in Cronulla likely to have relevant title documents for the property, and he engaged solicitors in Albury, Harris, Leiberman Boyd, whom he had used previously and with whom he had been satisfied, to act as his New South Wales agent.

Harris Leiberman Boyd informed Mr Bassett that it would be necessary to get a valuation for stamp duty purposes. Mr Bassett thereafter rang the Defendant so that the Defendant could organise funds to pay for the valuer. The (undated) diary note that Mr Bassett recorded in relation to this call went on to say this:

We are also to get him to sign the Power of Attorney before it is deeded away and give him the information for attorneys and confirm for him that the Power of Attorney will not be released without Norma's approval that being something that I practically emphasised to Norma unless she was incapable of giving instructions in which case then quite clearly its (sic) in order for it to be given out. (emphasis added)

Mr Bassett subsequently wrote the word "emphatically?" and drew a line from it to the word "emphasised" in the diary note. Dr Glover made a great deal about the alteration to this diary note and ultimately suggested that Mr Bassett prepared his diary notes to put himself in the best possible light for any litigation that might ensue from the transfer that he was effecting for Norma.

During the cross-examination of Mr Bassett Dr Glover asked why he wrote that word. He gave this evidence:

A. Well the third last line of that diary note didn't make a lot of sense. It's a document that was prepared by my staff members and it didn't make sense. It will not be released without Norma's approval, that being something I practically emphasised to Norma. So I read it and thought that's not what I meant not what I meant to say, so I have put in "emphatically" instead of "emphasise". It doesn't improve the grammar greatly.

Q. So the wording should be "I practically emphatically to Norma"?

A. That's what I said. It doesn't make a lot of sense grammatically.

Mr Bassett was certainly right that it did not make a lot of sense although I would not confine that to grammatical matters. But for the inclusion of the word "practically" the sentence as it originally appeared made good sense. I cannot see that that handwritten change by Mr Bassett should be regarded in a sinister light. The change of the word does not improve the position for him or the Defendant in terms of the issues in this litigation.

On 1 June 2005 Mr Bassett wrote to Norma at Seaview House saying:

We refer to your proposal to transfer a remainder interest in your Cronulla Unit to your nephew Sam Carter retaining for yourself a life interest in the property.

We have checked with New South Wales solicitors who have advised us on the likely costs of the transfer and we enclose a copy of their recent letter for your information.

Please advise us if you wish to proceed with the transfer or, alternatively, contact the writer on 5523 3900 and we can attend at Sea View House to discuss the proposal with you further.

Thereafter on 2 June 2005 Mr Bassett had a conference with Tom Carter. Tom informed Mr Bassett that he had been talking to Norma and he suggested that the Defendant should take over her affairs as Power of Attorney and in due course sell her stock. Tom also wanted to be relieved of his responsibility under Maurice Carter's will. Mr Bassett explained in evidence that Tom's health was deteriorating reasonably rapidly and that was why he wished those changes to take place.

Mr Bassett then had a conference with Norma on 9 June 2005 with one of his employees named Jacinta. Because this diary note was relied upon by the Plaintiff to show a lack of capacity at this time on Norma's part I shall set it out in full:

Attendance out Bill & Jacinta at Sea View House attending on Norma Carter.

Norma had kept a Diary entry regarding our attendance at 4pm and a note that she needed to go through our correspondence with us. I advised her that I had spoken with Tom Cater who had suggested that Norma may wish to appoint Sam as an attorney to look after her affairs if anything was to go wrong and I explained what that would mean and that we had the Power of Attorney prepared but that she was under no obligation to sign it unless of course she wanted to she could. She thought it would be a good idea particularity given that if she was unable to look after her affairs then someone would be there to do it for her and she said jokingly that she could become incapable at anytime with great ease if that's what she wanted.

I went through the 3 letters that she had for us to go through one was an account for $495.00 which I am sure she is going to just pack up and put back in the drawer though she did say at 495 that amount was very "gettable". I then told her about the contents of the letter from the Solicitors in N.S.W. saying that a valuation would be between $500.00 and $1,000.00 she did remark that she thought that I said $500,000.00 but new (sic) that was a huge amount of money and that was out of the question, but when assured that it was only $500 to $1,000.00 she gave us instructions to proceed to get the valuation so we could then let her know what the full costs of the transfer to Sam was.

I confirmed my previous advices that we are only transferring a remainder interest so that she could do with the Unit what she wished during her life and she said that she felt that we were transferring over to Sam wholly and that she was quite comfortable with that but she was delighted that she and Pat could use it during her life - just as pleased about as she was when I told her that last time. I have no difficulty in believing that Norma knows what she is instructing us to do but that she is forgetful , for example she said that Tom. Carter relied totally on whatshisname in relation to things on the farm and of course who she meant was Frank Hollis. Additionally she inquired of me twice whether I knew Cronulla so she had forgotten the fact that she had already asked me. Nonetheless she is well aware that she owns the farm property, that she runs stock on it and she owns the Cronulla Unit and is looking at gifting that to Sam and that the farm is only hers for life. (emphasis added)

The new Power of Attorney appointing the Defendant only as her Attorney was executed by Norma at this conference.

Mr Bassett continued to carry out various tasks associated with the transfer including a valuation subject to the life interest for stamp duty purposes.

On 23 August 2005 Mr Bassett wrote to Norma asking for various information that the valuers required including "confirmation that the property is to be transferred to Sam subject to a life interest to yourself".

Subsequently Mr Bassett had a conference with Norma who informed him that there were no tenants in the property and she will locate a key. She said Merle Baxter had a new key for the flat because she lives at Cronulla and could "do the job for us", a reference to a contact for arranging an internal inspection of the unit. Norma mentioned that Merle had been down a few weeks ago. The last sentence of the note of the conference reads:

Asked Norma about her doctor - she doesn't have one - as she doesn't require one.

Mr Bassett also saw her again on 2 September. Norma told him that she would get the address of her friend who lives not far from the unit. The diary note then goes on to say:

I asked for the name of her doctor so I could get the doctor's agreement that she is fully aware of and did understand what it is that she is doing with the Cronulla flat and generally.

Since there were 2 references to asking Norma about who her doctor was at these conferences in late August and early September 2005, and no such references earlier, I asked Mr Bassett about this. He gave this evidence:

Q. Mr Bassett, on pages 95 and 96 ?

A. Yes, your Honour?

Q. There's reference to asking Norma about a doctor on each occasion?

A. Yes.

Q. Am I right in remembering that's the first time you had asked her for the name of her doctor?

A. I don't know if it was, your Honour.

Q. Did you ask her for the name of a doctor at or about the time she executed the will?

A. That was my thought, your Honour, that that was when it, the subject first arose. And I, I think that it's in the conference notes. But I can't recollect.

Q. When you say the conference notes do you mean the ones where you took the instructions as to what was to happen in the will?

A. Around about that time I thought there was some mention of the doctors at that stage.

Q. These are the conference notes at 46, 47, is that right?

A. I felt that I raised the issue with her at that time as well, your Honour, but it's not in the notes.

Q. So although it's not in the notes, your notes, you had the belief that you did raise that with her at the time of the will?

A. I do believe that.

Q. It wasn't because you had noticed some change or decline by August and September 05?

A. No, I didn't notice a decline in Norma until well after the time of the transfer.

Q. Did you think it odd that when you first asked her on 23 August that she said she didn't have a doctor, or she didn't require one?

A. No, no, because she appeared to me to be a robust, larger than life, strong person.

Q. Albeit one who had to be in full-time care?

A. No. Well, I don't believe she had to be in full-time care. That wasn't the observation that I made when I visited Seaview House. It's not full-time care. It's a low care facility, certainly not high care. It wasn't built for high care. People at high care were shifted off to either the Henry Mailing wing of the hospital, Seymour Cunding (?) [scil. Seymour Cundy] wing of the hospital, the dementia ward, or they were shipped down to Heywood, which was a very good dementia ward 16 miles away.

Q. But why did you understand she was at Seaview House instead of living on her farm at this time?

A. Oh, the farm was quite a distance out, was obviously not walking distance. The Seaview House is on the hospital grounds. It's very close to, obviously, medical assistance. It's close to the shops. It's close to family. A lot of people go into Seaview House who are very able. It's not, it is not an accommodation house of last resort.

Q. No but why did you understand that she went into Seaview House?

A. I would say for her convenience, not because of a physical incapacity or a mental incapacity but because you get, because they get fed, and it's somewhere where there's nursing staff there, in small numbers, 24 hours a day.

The last answer was not quite correct in the first instance because there is little doubt that Norma went into Seaview House for respite care after the operation on her left knee in October 2004. Although Mr Bassett said in his evidence that he was not aware of the operation on her knee his diary note of a meeting with Tom Carter on 13 October 2004 suggests otherwise. It is not unreasonable to think, however, that he had simply forgotten this and did not really know the initial reason for Norma's going to Seaview House. He was right, of course, in thinking that there was a problem in her living on the farm. He mentioned that it was "not walking distance" which I took to be a reference to the fact that he knew Norma could no longer drive.

The transfer was executed on a date which cannot be precisely ascertained in September 2005. It cannot have been later than 20 September 2005 because it was forwarded to Harris Leiberman Boyd on that day for stamping and lodgement. Mr Bassett does not recall the conference where it was executed although he said he was certainly there because he had witnessed her signature and also the signature of the Defendant as transferee. Whether both Norma and the Defendant were present at the same time of the execution was not made clear. The Defendant is not able to recall the occasion when the transfer was signed although he acknowledged that it was his signature on the transfer.

It is somewhat unfortunate, particularly in the light of the 2 diary entries of Mr Bassett where he requested the name of a doctor from Norma, that he did not make any file note concerning the execution nor about Norma's condition as he observed it at the time. He gave this evidence:

Q. As at September 2005 did you have the view that Mrs Carter had the capacity to execute this transfer and make the decision to execute it?

A. I did.

Q. Are you confident that she understood its affect?

A. Yes I am. She had that intention over a long period of time and had maintained that.

Q. And do you think she executed it of her own free will?

A. I thought so.

Q. Was there anything that you observed to cause you to doubt that?

A. No.

Q. If you had what would you have done?

A. I would have slowed the process down a lot and had a think about what I have to do about that situation, and it didn't present itself like that, but I would certainly have taken a different course of action.

Q. If you had thought that she didn't have capacity to execute it would you have witnessed it?

A. I wouldn't have let her sign.

Q. If you had had doubts about her capacity would you have witnessed it?

A. I wouldn't have let her sign. I would have had the matter investigated first.

The evidence he gives in that regard is evidence from inference only since he cannot recall the occasion. I accept nevertheless that, as a reasonably careful solicitor and one who had frequently dealt with elderly people signing wills and gifts inter vivos , if he had had any doubts about her capacity or free will he would not have let her sign it and would not have witnessed it. The matter would be of minimal concern but for some other matters in the medical records of Seaview House and the medical opinion of a doctor and a psychologist to which I shall come presently.

Other evidence

The other principal source of information about the relevant events was the Defendant. I did not find the Defendant an entirely satisfactory witness in the sense that I thought he was on occasions being defensive when cross-examined, and there were times when I had the impression that he was not trying to remember things that were put to him. One example of this is his inability to recall whether or not an accommodation bond was paid when Norma moved from Seaview House to Heywood. The Defendant said that he was looking after Norma's financial affairs at the time. The payment of an accommodation bond is a substantial outlay, and was likely to represent a larger sum than had been paid for any other of Norma's needs. It could be expected that he would remember what the position was in that regard.

Having said that I consider that the Defendant's evidence was generally reliable. In most matters his evidence was consistent with that of Mr Bassett. I did not have the impression that he and Mr Bassett had colluded in relation to their evidence, and that was certainly not put to either of Mr Bassett or the Defendant. Further, his evidence was largely consistent with the evidence given by Norma's friends in terms of the relationship the Defendant had with Norma, and where the idea came from to transfer the property to the Defendant.

In relation to where the desire to transfer the unit to the Defendant was derived, Mr Bassett said that it was Mrs Carter who first raised it. Similarly, Mrs Saunders said that she was quite certain that it was Norma's idea to give the unit to the Defendant. She said Norma had told Mrs Saunders that that was her wish. Indeed, when Mrs Saunders realised that Norma would not go back to the Cronulla unit because of her knees, she suggested to Norma that she should sell the Cronulla unit. It was at that time that Norma said that she did not want to sell it but wanted to give it to the Defendant because he and his sons liked surfing and could do so at Cronulla beach.

Similarly, Miss Barker, who said that she and Norma had been friends for a very long time and that Norma confided in her because they were very close, said that Norma had been telling her for a long time that she intended to transfer the unit to the Defendant. She said both she and Norma were procrastinators, and that caused Miss Barker to tell Norma that if she did not get round to doing it she "never knew what might happen". In similar vein, Miss Barker said that Norma wanted to give the Defendant her Power of Attorney.

Mrs Dallas also gave evidence suggesting that Norma wanted to gift the unit to the Defendant, but I did not find Mrs Dallas to be as objective and disinterested as Norma's other friends when she gave her evidence. Some of her evidence was certainly consistent with theirs, in particular, that Norma disapproved of the way Ann Louise lived her life with the result that some distance had grown between them.

What was also clear from the evidence of these witnesses was Norma's concern for Brett Poulsen, something that was in any event reflected in the Will of March 2005 as well as the earlier wills.

All of this evidence leads me to be comfortably satisfied that the idea of leaving the unit to the Defendant originated with Norma, and at all times she was the one determined to bring that about. There was no evidence that the Defendant or Mr Bassett encouraged her in any way in this regard. All that both of them did, after her intentions were made clear, was to assist in that process, with the Defendant's assistance being in relation to the provision of information and mechanical tasks requested of him by Mr Bassett after Norma instructed Mr Bassett to seek his assistance.

Medical evidence

Dr Paul Kierce, an orthopaedic surgeon, performed the left total knee replacement on Norma on 1 October 2004. It seems that there had been an intention, when she had recovered from that operation, to do a total knee replacement of the right knee.

When the Plaintiff applied to the Victorian Civil and Administrative Tribunal for a Guardianship Order, Dr Kierce provided a letter to the Tribunal dated 16 February 2009. He made reference to his contact with Norma since 17 June 2003 and thereafter. He referred to carrying out the operation 1 October 2004 and noted that she had no post-operative complications. His letter then went on to say:

I have decided against performing a right total knee replacement because of her increasing mental confusion.

When I had seen her on 4 November 2004 she was not sure where she was living - this was after she had been transferred to Seaview House post-operatively on 15 October 2004.

The letter went on to make reference to an assessment he conducted on 19 April 2007 which is not relevant for the issues in these proceedings.

Dr Kierce swore an affidavit in the present proceedings which said no more than what was contained in his letter. Dr Kierce's oral evidence added nothing except that he agreed that he did not do any cognitive tests on her - rather, he just found her very confused when he saw her post-operatively.

It is a little hard to understand what Dr Kierce meant when he said that on 4 November 2004 "she was not sure where she was living". The matter was not explored by either counsel. It could be a reference to the fact that it had not yet been determined whether she was to return to the farm or remain in Seaview House, or it could mean that she was so confused that she did not know that she was in Seaview House at the time. The latter seems somewhat unlikely except if it was a transitory period of confusion, because it does not sit consistently with the evidence of a number of witnesses including the Defendant, Mr Bassett, Mrs Saunders, Miss Barker and Mrs Dallas about their observations of Norma at various times in 2004 and 2005 in Seaview House. Nor is it consistent with anything in the Progress Notes of Seaview House until later May 2005 (discussed below). I have placed little weight on the statements by Dr Kierce.

There was an assessment of Norma by the South West Regional Aged Care Assessment Service carried out between the date of her knee operation on 1 October and 12 October, the date of a fax marking on the document. The information contained in the document came partly from Ann Poulsen who was said to be the contact person for Norma. Under the heading diagnoses/problems it said "pt admitted for L total knee replacement on 30/09/04. Confusion and short term memory loss (either "marked" or "noted") during admission. Niece reports that failing memory has been a problem for past 18 months". There was then a series of categories under the heading functional which indicated that Norma was continent for both urine and faeces but that there were signs of dementia. Under the heading psychological she was said to be alert and cooperative but confused at times.

There is a report from Dr Dina LoGuidice, a consultant physician in geriatric medicine, of 9 November 2004. Dr LoGuidice saw Norma at Seaview House. She relevantly said this:

I reviewed Mrs Carter in Seaview House. She has a past history of peripheral vascular disease, heart disease, osteoporosis and osteoarthritis. She recently had left knee surgery for which she made a good recovery and is currently in Respite at Seaview House. She is to be reviewed about the status of her right knee.

Mrs Carter is a delightful 79 year old woman who has been living alone on her farm since she was widowed a number of years ago. She has a number of friends who keep an eye out for her and today in attendance was her niece. District nursing service also monitor her and I gather that there have been concerns about her driving abilities. She has stopped driving at your encouragement which is appropriate.

Mrs Carter is very aware of memory loss that is gradually worsening for a number of months. She forgets names of people and has word finding difficulties. There are no features of neurological weakness She complains of dribbling saliva down her mouth more so on the left than the right in more recent times and nocturia but denies any incontinence. I did note an odor (sic) of urine in the room. Her bowels are fine and there is no indication of depression.

Her current medications are Zocor 20mg, Betaloc 50bd, Caltrate daily, Valium 5mg at night.

Further discussion was made with Mrs Carter regarding future care options and Enduring Power of Attorney.

On examination she is a delightful woman who had limited mobility due to recent left knee operation and right knee osteoarthritis. I couldn't detect any focal neurological signs on her upper arms or her face. I did note dribbling which was quite persistent. Today I did not perform a MMSE score which was done by Patricia Peters on 26/10/04 at which time she scored 25/30 with short term memory loss. Today she had some visual spatial difficulty in copying a diagram "and had marked new learning difficulties for both words and visual pictures which were not improved with prompting.

Her heart rate today was 60 in (sic) regular.

Mrs Carter is an elderly lady who is showing signs of early dementia most likely of the Alzheimer's type. She has quite a lot of insight into this. One cannot be sure unless CT scan is performed to exclude any vascular issues particularly in view of her vascular risk factor. I would also suggest a dementia screen including thyroid function, B12, Folate. I gather that routine blood screens would have been performed in recent times.

Her condition is therefore likely to deteriorate with time. We spoke about the issue of permanent care for this lady and she appeared quite willing to do this. She realises that she would be isolated on her farm without a car and is quite pragmatic about the whole issue. It would be a good time for her to move now so that she can settle into a new environment.

The other issues are

Enduring Power of Attorney she has apparently given this to her brother-in-law. Today she has understood the issues of Enduring Power of Attorney and indicated that she did not want her niece or her niece's mother to be involved. On assessment today I deem she is competent to make decisions regarding financial and personal matters.

Regarding the question of cholinesterase inhibitor her heart rate is low presumably due to beta blocker, and is a relative contraindication as cholinesterase inhibitors cause bradycardia. Unless the beta blocker is stopped and ECG shows normal rate I would be reluctant to commence her on any dementia modifying drugs. This could be revisited at a later date. Otherwise thanks for your ongoing care. I would appreciate the copies of any tests sent to me. (emphasis added)

The progress notes from Seaview House show that she went to that place for respite care. The notes deal almost entirely with matters concerning physical problems until May 2005. In particular, there was nothing in notes for January, February or March 2005 that indicate any memory problems, confusion, dementia or unusual behaviour.

The first such entry was on 26 May 2005 at 1:00am when the night shift reported that she was very incontinent. She was also reported as being up and fully dressed at 1:00am, and stated she was ready for church.

Certainly the progress notes identify incontinence as a problem at various times in 2005. Apart from that, there were a few other indications of confusion. On 18 June 2005 she went down to the dining room at 4:30am for breakfast. She said she wanted to be there at that time in case she missed it.

On 18 July 2005 the progress notes record:

Norma up and dressed at 3am, confused about the time, thought it was morning.

Again, on 18 September 2005 the progress notes read:

Norma seems disoriented as to time and place these past few days.

That date, of course, is of some significance in relation to the execution of the transfer.

There was a report from a clinical nuero-psychologist, Lindsay Vowels who was provided with a great deal of written material upon which she said that she attempted to give an opinion about Norma's cognitive state in September 2005. She did not examine Norma. Her conclusions were these:

1. By September 2005 it is extremely probable that Mrs Carter did not have the cognitive competence, as would be tested by conventional professional and legal tests, and her deteriorating cognitive abilities would have been likely to preclude full understanding of the implications and appreciation of the impact of the decisions she agreed to/ conveyed to her solicitor, although she may have been able to participate in the process of listening to him describe the new documents and agreeing to their conditions.

2. This comment would also apply to the change in her Enduring Power of Attorney in which on 7/05/2005 she revoked previous EPoA s and appointed Mr. Sam Carter as her single EPoA (Financial)

3. It is also very probable that Mrs Carter was not competent cognitively during different periods of 2005, culminating in December 2005 when the final Title documents show that by 13/12/2005 there was a change in ownership on the title of the Cronulla property which was financed by Mrs Carter herself paying stamp duty (and presumably solicitor's fees) to enable that transactions to be finalized.

4. By September 2005, Mrs Carter would very likely have been potentially prone to "undue" influence" due to her progressive dementia and change on life circumstances which was not as she wished, and hence less capable to reflect objectively on the implications of decisions she agreed to.

I did not find the evidence of Dr Vowels of great assistance to me. There is a considerable amount of speculation about her conclusions as she herself acknowledged. For example, she said in her report (p 7):

Thus, although from the documentation available and the events since those documents were signed by Mrs Carter, it is not possible to reconstruct the situation exactly and make objective judgments about whether Mrs Carter was exposed to any "undue Influence" or manipulation by others, which may have affected her actions in September 2005 in the matter of transfer of land, my speculative conclusion is that it cannot be excluded that Mrs Carter may have been influenced by emotional issues which were not relevant to the matter, but which did have an impact on her behaviour because of her personal circumstances and cognitive state in the previous months of which objective data does exist, it is quite likely. (emphasis added)

This was slightly expanded upon in her oral evidence as follows:

GRONOW

Q. Does it alter your view if there's evidence that Mrs Carter was always a very strong willed lady and, frankly, had very strong opinions about some matters?

A. That would have been the opinion that I myself had formed from the materials that I had had access to. I did not have a view that she was malleable or whatever.

Q. Yes. I think it would be fair to say - but ultimately it's a matter for his Honour, that the consistency in the evidence is that when she he had a view it tended to be a fairly strong one?

A. That was certainly what I had grasped from the material that been presented to me.

HIS HONOUR

Q. Sorry, in that regard I just wonder about your statement at the bottom of page 7 of your report. In the last paragraph you say your speculative conclusion is it cannot be excluded that she may have been influenced by emotional issues not relevant?

A. That would be my professional opinion. When people start to lose their cognitive capacity often emotion and immediate impact tends to override longstanding wisdom, so that if right now you're entertaining me or being pleasant to me, things like that I think you're terrific, even if what you've done is in the longer term in my best interests, it may not be my immediate wish and, hence, I may not be so positive that way.

And I think that that would be well accepted by most clinicians who work with people with dementia such as psycho-geriatricians and those ones and, hence, the importance of getting a pleasant and appropriate environment for people so that, hopefully, their comfort and immediate emotional well-being is considered.

...

Q. What if, for example, she strongly disapproved of a particular person's way of life. Would you regard that as an emotional issue not relevant to the matter?

A. When you use the term disapprove you mean making a moral or value judgment?

Q. In her view? It would appear she's a devout Anglican Christian and she seems to have fairly strong, conservative, social views?

A. I am not sure that I read enough from the material that I've been presented to agree or disagree, given, as I said, I never met the woman. I only examined these things. And what particularly was in my mind then was that her becoming more negative towards Ann Louise Poulsen, who stole her licence, got rid of her car and put her in a home, things which may well be in Mrs Carter's best interests but doesn't mean she enjoyed it one bit.

Apart from her opinion in this regard being speculative, the influence being spoken of by Dr Vowels appears more particularly to be a negative influence towards Ann Poulsen then any positive influence from the Defendant or some other person. It must be acknowledged, however, that Dr Vowels' answer to my question (above) might be thought to refer to being influenced by positive emotions derived from the Defendant's care of her. That is, however, a very long way from the doctrine of undue influence as I shall discuss later in this judgment.

Although she said she had not read all of Mr Bassett's file she was prepared to express an opinion about his professional obligations that went well beyond her expertise. For example, she said (at p 6):

It would seem that, given the medical issues raised in 2004, precipitated probably in part by the surgery in October 2004, and the move to the hostel, that her solicitor should have taken greater professional care to ascertain Mrs Carter's competence to give instructions and to agree to the proposed transfer of the Cronulla Property to Mr Sam Carter. He would have been very aware of her assets and potential income to pay for increased home care if she had been capable of living independently in her own home, which, according to her friends, would have been her preferred option. As she already supported the wages of a farm manager, one presumed that the cost of either a roster of daily carers or a live-in carer would have been well within her financial capability with some rearrangement of the financial situation. As she was a DVA card holder (presumably because of her husband's war service), application to DVA could have been made to fund more home care as is known in cases of geographic isolation where the person is deemed competent to live independently. As no such efforts seem to have been made despite the ACAS assessment and decision making process in October/November 2004, it could be concluded that all involved in Mrs Carter's care, her GP, the district domiciliary services, her relatives (Poulsons (sic) and Carters) and her friends as advocates had come to the common conclusion that she was not competent or safe to return home. This seems to have occurred more probably on account of her cognitive deterioration and diagnosis of Dementia than any poor outcome from her knee surgery which, according to the surgeon, was successful and the problems with her right knee did not exacerbate unduly.

Her conclusion at the end of this paragraph certainly does not necessarily follow from what goes before it, and it is an entirely speculative conclusion. There was clear evidence that the farm was isolated, and without her licence it would be difficult for Norma to go on living there without a great deal of home care. She may not have wanted that home care, or she may not have wanted to pay for it, and there is a limit to the amount of care that the DVA will fund. But the significant point is that what she says "could be concluded" is only one of a number of explanations for Norma's remaining in Seaview House.

Moreover, Dr Vowels worked on the mistaken assumption that it was only after the March 2005 will had been finalised by the solicitor that the Defendant commenced to visit her regularly (p 4). That seems to have led to this conclusion:

The essence in the case seems to me the appointment of Mr Sam Carter as Executor and the changes in provisions for the Poulson (sic) family relative to Mr Sam Carter (but not any other members of the Carter family). This is a significant change and there seems to have been no evidence that Mrs Carter was able to demonstrate that she understood the likely implications of the changes and was able to appreciate how they may impact on the recipients of her estate, and her own relationship to the Cronulla property which had been purchased with the funds from the sale of the Poulson (sic) family home in Cronulla, and hence the children of her deceased brother would need to be considered.

The unstated assumption from this last paragraph appears to accord with the view of the Poulsen family that because the Cronulla property was purchased with funds from the sale of the Poulsen family home they had some entitlement to it. The paragraph also seems to ignore the significance of the gift of the remainder of the estate to Brett Poulsen, an indication, I should have thought, that showed that she had weighed up the competing claims on her estate. Of course, the present case is not concerned strictly with testamentary capacity, but a clear indication that she was able to weigh up competing demands on her bounty is some indication against the claims being made by the Plaintiff of incapacity, undue influence or unconscionability. Further, there was evidence to suggest that Norma understood the likely implications of the changes. It was from Mr Bassett, although Dr Vowels may not have been aware of it.

Ultimately, the conclusions in Dr Vowels' report provide some limited assistance when considering the question of the capacity and, therefore, any special disadvantage for considering unconscionability, but provide little or no assistance in relation to matters of undue influence. Even her conclusions about her capacity in September 2005 do not seem to me to have a solid grounding in the facts that she relates earlier in the report. I am more assisted in relation to that issue by contemporaneous medical records in 2004 and 2005 to which I have earlier referred.

Undue influence

In Johnson v Buttress (1936) 56 CLR 113 Dixon J (as he then was) said:

The basis of the equitable jurisdiction to set aside an alienation of property on the ground of undue influence is the prevention of an unconscientious use of any special capacity or opportunity that may exist or arise of affecting the alienor's will or freedom of judgment in reference to such a matter. The source of power to practise such a domination may be found in no antecedent relation but in a particular situation, or in the deliberate contrivance of the party. If this be so, facts must be proved showing that the transaction was the outcome of such an actual influence over the mind of the alienor that it cannot be considered his free act. But the parties may antecedently stand in a relation that gives to one an authority or influence over the other from the abuse of which it is proper that he should be protected. When they stand in such a relation, the party in the position of influence cannot maintain his beneficial title to property of substantial value made over to him by the other as a gift, unless he satisfies the court that he took no advantage of the donor, but that the gift was the independent and well-understood act of a man in a position to exercise a free judgment based on information as full as that of the donee. This burden is imposed upon one of the parties to certain well-known relations as soon as it appears that the relation existed and that he has obtained a substantial benefit from the other. A solicitor must thus justify the receipt of such a benefit from his client, a physician from his patient, a parent from his child, a guardian from his ward, and a man from the woman he has engaged to marry. The facts which must be proved in order to satisfy the court that the donor was freed from influence are, perhaps, not always the same in these different relationships, for the influence which grows out of them varies in kind and degree. But while in these and perhaps one or two other relationships their very nature imports influence, the doctrine which throws upon the recipient the burden of justifying the transaction is confined to no fixed category. It rests upon a principle. It applies whenever one party occupies or assumes towards another a position naturally involving an ascendancy or influence over that other, or a dependence or trust on his part. One occupying such a position falls under a duty in which fiduciary characteristics may be seen. It is his duty to use his position of influence in the interest of no one but the man who is governed by his judgment, gives him his dependence and entrusts him with his welfare. When he takes from that man a substantial gift of property, it is incumbent upon him to show that it cannot be ascribed to the inequality between them which must arise from his special position. He may be taken to possess a peculiar knowledge not only of the disposition itself but of the circumstances which should affect its validity; he has chosen to accept a benefit which may well proceed from an abuse of the authority conceded to him, or the confidence reposed in him; and the relations between him and the donor are so close as to make it difficult to disentangle the inducements which led to the transaction. These considerations combine with reasons of policy to supply a firm foundation for the presumption against a voluntary disposition in his favour. But, except in the well-recognized relations of influence, the circumstances relied upon to establish an antecedent relation between the parties of such a nature as to necessitate a justification of the transaction will be almost certain to cast upon it at least some measure of suspicion that active circumvention has been practised. This often will be so even when the case falls within the list of established relations of influence. Because of the presence of circumstances which might be regarded as presumptive proof of express influence, cases outside the list but nevertheless importing a special relationship of influence sometimes are treated as if they were not governed by the presumption but depended on an inference of fact. Scrutton L.J. has remarked on the inclination of common law judges "to rely more on individual proof than on general presumption, while considering the nature of the relationship and the presence of independent advice as important, though not essential, matters to be considered on the question whether the transaction in question can be supported" ( Lancashire Loans, Ltd. v. Black [17]). Further, when the transaction is not one of gift but of purchase or other contract, the matters affecting its validity are necessarily somewhat different. Adequacy of consideration becomes a material question. Instead of inquiring how the subordinate party came to confer a benefit, the court examines the propriety of what wears the appearance of a business dealing. These differences form an additional cause why cases which really illustrate the effect of a special relation of influence in raising a presumption of invalidity are often taken to decide that express influence which is undue should be inferred from the circumstances. (emphasis added)

In Commercial Bank v Amadio (1983) 151 CLR 447 at 461 Mason J (as he then was) discussed the circumstances where equity will intervene to set aside contracts and dealings on equitable grounds. He said:

Historically, courts have exercised jurisdiction to set aside contracts and other dealings on a variety of equitable grounds. They include fraud, misrepresentation, breach of fiduciary duty, undue influence and unconscionable conduct. In one sense they all constitute species of unconscionable conduct on the part of a party who stands to receive a benefit under a transaction which, in the eye of equity, cannot be enforced because to do so would be inconsistent with equity and good conscience. But relief on the ground of "unconscionable conduct" is usually taken to refer to the class of case in which a party makes unconscientious use of his superior position or bargaining power to the detriment of a party who suffers from some special disability or is placed in some special situation of disadvantage, e.g., a catching bargain with an expectant heir or an unfair contract made by taking advantage of a person who is seriously affected by intoxicating drink. Although unconscionable conduct in this narrow sense bears some resemblance to the doctrine of undue influence, there is a difference between the two. In the latter the will of the innocent party is not independent and voluntary because it is overborne. In the former the will of the innocent party, even if independent and voluntary, is the result of the disadvantageous position in which he is placed and of the other party unconscientiously taking advantage of that position.

There is no reason for thinking that the two remedies are mutually exclusive in the sense that only one of them is available in a particular situation to the exclusion of the other. Relief on the ground of unconscionable conduct will be granted when unconscientious advantage is taken of an innocent party whose will is overborne so that it is not independent and voluntary, just as it will be granted when such advantage is taken of an innocent party who, though not deprived of an independent and voluntary will, is unable to make a worthwhile judgment as to what is in his best interest.

It goes almost without saying that it is impossible to describe definitively all the situations in which relief will be granted on the ground of unconscionable conduct. As Fullagar J. said in Blomley v. Ryan :

"The circumstances adversely affecting a party, which may induce a court of equity either to refuse its aid or to set a transaction aside, are of great variety and can hardly be satisfactorily classified. Among them are poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary. The common characteristic seems to be that they have the effect of placing one party at a serious disadvantage vis-a-vis the other."

Likewise Kitto J spoke of it as "a well-known head of equity" which -

"... applies whenever one party to a transaction is at a special disadvantage in dealing with the other party because illness, ignorance, inexperience, impaired faculties, financial need or other circumstances affect his ability to conserve his own interests, and the other party unconscientiously takes advantage of the opportunity thus placed in his hands".

It is not to be thought that relief will be granted only in the particular situations mentioned by their Honours. It is made plain enough, especially by Fullagar J., that the situations mentioned are no more than particular exemplifications of an underlying general principle which may be invoked whenever one party by reason of some condition of circumstance is placed at a special disadvantage vis-a-vis another and unfair or unconscientious advantage is then taken of the opportunity thereby created. I qualify the word "disadvantage" by the adjective "special" in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasize that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party.

In the present case the relationship between the Defendant and Norma was not one of the presumptive relationships. The Plaintiff asserts that there is here a proved relationship of influence. This is said to arise not by a general reliance by Norma on the Defendant but a reliance by her on the Defendant's business acumen and his ability to sort out the practical matters which needed to be decided upon in Norma's life.

The Plaintiff relied upon the references in Norma's diary to the Defendant being a frequent visitor to Norma, and that was said to show the level of trust between Norma and the Defendant so that she relied on his honesty and judgment. It is also said to show that she relied upon him for society to a large degree because the diary did not indicate that she had a lot of other people visiting her.

The Plaintiff relied upon the introduction, or reintroduction, of Mr Bassett to Norma by the Defendant. The Plaintiff pointed to certain items of correspondence that were sent to the Defendant's address to be acted upon for Norma. Reliance was placed upon what Norma's friends said about the way Norma viewed the Defendant and trusted him. Reliance was placed upon the fact that the Defendant held Norma's chequebooks and attended to her financial affairs in that way. The Plaintiff also relied on the secrecy attending the transaction. That had 2 aspects, the first was the silence of the Defendant in emails to Brett Poulsen about the gift of the Cronulla property, particularly when enquiries were being made about it by Brett Poulsen. The second aspect was Mr Bassett's use of Albury solicitors as his New South Wales agents rather than a firm in Sydney.

The first matter to be determined, therefore, is whether the Defendant assumed a position involving an ascendency or influence over Norma or a dependence or trust on Norma's part.

In my opinion, the evidence does not establish that the Defendant had an ascendency or influence over Norma. The evidence from Mr Bassett and Norma's friends was at one in asserting that Norma was a tough minded lady who knew her own mind and what she wanted.

On the other hand, the evidence tends to suggest that at least by March and April 2005 (which for reasons I will discuss later, are really the relevant dates for consideration) Norma had a degree of dependence on and trust in the Defendant because of what he was doing for her, not only in terms of managing her affairs but also from the point of view of visiting her and taking her out to the various places and activities she enjoyed and wanted to go.

The Defendant was not the only person on whom Norma relied in this way. Until March 2005 Tom Carter was the only appointed Attorney. Ann Poulsen referred to Frank Hollis, the other executor of Maurice's will, as her "agent and trusted friend". Tony Moore managed the farm for her. Ann herself was said to be the contact person when Norma moved to Seaview House.

Although the Defendant was one of a number of persons upon whom Norma relied, the evidence points to increasing trust and reliance on the Defendant after she moves to Seaview House. Although I do not think the matter is clear I am prepared to assume that the Defendant occupied a position relating to Norma where influence could be inferred.

Since, therefore, the Defendant took a substantial gift of property for no consideration, the onus is on him to show that that gift cannot be ascribed to the inequality between them which arises from the position of trust and dependence that Norma had in him.

The Plaintiff accepted that if I believed Mr Bassett's evidence about the strength of Norma's personality and that she was not an easy person to influence I would find that the Defendant had rebutted the presumption. The Plaintiff also accepted that I could take into account the evidence of Norma's old friends so that if I also believed them about her clearly stated intentions the presumption would be rebutted.

The Plaintiff also accepted that the presumption can be rebutted if it can be shown that the donor was provided with independent legal advice. The Plaintiff submitted, however, that Mr Bassett could not be regarded as independent because he had acted for the whole Carter family including for the Defendant. In addition, the Plaintiff submitted that the advice given by Mr Bassett was not otherwise independent because the Defendant was present for some of the time, at least, when advice was being given on relevant occasions.

The Plaintiff submitted that the advice given by Mr Bassett was inadequate because he did not advise her of the prudence of the transaction, bearing in mind her assets and needs - reference was made to Stivactas v Michaletos [No 2] (unreported - NSW Court of Appeal - 31 August 1993) at pp 12-13.

I accept Mr Bassett's evidence about the strength of Norma's personality and I accept the evidence, particularly of Miss Barker, of Norma's long-held desire to benefit the Defendant in relation to the unit.

The evidence concerning Mr Bassett's independence was that he had probably acted for all the brothers in the Carter family over the years, that he may have drawn Maurice Carter's last will, and that he had acted for the Defendant many years earlier when the Defendant purchased a property. What is also clear, however, is that Mr Bassett had acted for Norma since 1987 in drawing all of her wills from that time onwards. He had also acted in connection with Tom Carter being appointed her attorney and continued to have dealings with him regarding Tom Carter's position in that regard. None of that tends to show in any way that Mr Bassett had any conflict of interest nor that he was not an independent solicitor acting solely for Norma on the transactions in 2005.

In relation to the advice that he provided to her, including the prudence of the transaction, he gave this evidence:

Q. Now did you give Norma any advice about the transfer she was proposing to make?

A. Yes. I told Norma that what was being proposed was a transfer of a remainder interest so that she and her friends could use the premises, or she could rent it out during her life. And only after that, after her life, would it vest in Sam. That was not something that she promoted, she wanted me to transfer the property to Sam outright that was her initial instructions and I said to her wouldn't it - words to the effect of wouldn't it be better to retain an interest in it for your life.

Q. So did you advise Norma on the wisdom or prudence of this transfer?

A. I - we - discussed the fact that she relied on income from the farm that the life interest she had in the farm, for her day to day living, for her pin money, so to speak, and that the Cronulla property was not rented out as a matter of course, it was normally just used by friends. So she derived no income from that of any significance, and that it would not cause her any financial detriment so far as income was concerned by undertaking the transfer. We also discussed, or I said to her, that it would not impact on her pension because she wasn't in receipt of one. She was self funded.

Q. Did you keep a note of these advices that you tendered?

A. No, I don't think so. They were sort of - no, I don't think that was. And what was going to happen was covered in the letter that was sent out to Mrs Carter after the will was signed. But once she had made the decision, no, I don't believe that was recorded.

HIS HONOUR: Do you mean the letter of 11 March?

A. I think so your Honour.

GLOVER

Q. Now, did you ever discuss Norma Carter's future needs for care and maintenance?

A. We were in a situation where Norma was in Seaview House. She was happy in Seaview House. Her needs appeared to be met for the time being and I didn't take that further, apart from the fact future needs were able to be covered by her income from the farm and the plant and equipment and stock that she owned on the farm.

Q. Mr Bassett did you ever discuss the need that Norma might have to provide an accommodation bond in a subsequent hospital?

A. No, because Norma was already in an establishment where she had paid a substantial accommodation bond, and - sorry, she was in an accommodation where one normally paid a substantial accommodation bond, and when people transferred it was understood that a second bond not be required.

Q. Had Norma paid an accommodation bond?

A. I don't know whether she had paid an accommodation bond, but I know it was a practise of Seaview House to take accommodation bonds because that's how it financed itself.

...

Q. Well Mr Bassett, did you advise Norma Carter that her interests might have been best served by giving away her property by her will?

A. That was the starting point. That is what we did. That's what she instructed me to commence with, was to do just that, to leave whatever she had to whom ever she wished. But the letter that went out after the will was signed was to make sure that it was clear she had been made aware there were options. Because I felt that that was an obligation to tell her about her options, to document it, and then leave it with her. I then billed my file and that may well have been the end of my file.

Contemporaneous support for this evidence can be found in the letter Mr Bassett wrote to Norma on 11 March 2005 (para [53] above).

In my opinion Mr Bassett was an independent solicitor who provided competent and adequate advice to Norma, including a discussion of the financial implications of what she was doing, and I accept his evidence that in terms of the instructions she provided in March to June 2005 she understood what she was doing and did it of her own free will. As I have said, his evidence is consistent with that of Norma's friends in terms of Norma's intentions with regard to the unit. Whist the gift was certainly a generous one to the Defendant, the form of the gift meant that Norma and her friends would still be able to enjoy and use and benefit from the unit during her lifetime. The gift of the remainder to the Defendant cannot be seen in isolation from the gift of the unit to the Defendant in her will. The evidence is undoubted and unchallenged that the purpose of the gift of the remainder was to ensure that the gift in the will would not be able to be challenged or would minimise the risks of a successful challenge.

The Plaintiff pointed to what was said in Stivactas about secrecy to suggest that the gift was not free from the Defendant's influence because it was kept a secret. Kirby P said in Stivactas (at p.6):

It is worth noting that the transfers were kept secret from other members of the family - something unlikely to happen if they were the product of a fully informed mind, sure of its decision.

One can think of a number of reasons why Norma may not have wanted to let other members of the family know what she was doing. She was, as the evidence showed, a strong-minded woman who knew her own mind. She may well have considered that it was not their business to know what she was doing with her property.

The concern in the present case is that the Defendant made no mention of it after the transfer had been effected when he spoke with Brett Poulsen. The explanation given by the Defendant when asked in cross-examination was that he believed it was Norma's affair.

I do not consider that the failure of the Defendant to mention what had taken place to Brett Poulsen or other members of the Poulsen family puts any different light on the question of influence on his part. Whilst it is a factor that might be considered, it is of little significance in the light of the other matters which show that the transaction was effected by Norma free of any influence, particularly as a result of her receiving competent and independent legal advice about the matter.

I reject the suggestion that there was some secrecy engaged in by Mr Bassett in engaging solicitors in Albury rather than in Sydney. Neither Mr Bassett nor any firm of solicitors engaged by him as his agents was at liberty to divulge information about the transaction unless authorised to do so by Norma. The suggestion made on behalf of the Plaintiff that I should assume that the information would leak out from solicitors engaged in Sydney and that that was why Mr Bassett selected agents in Albury is ridiculous.

In my opinion, the Defendant has easily discharged the onus of rebutting any presumption of influence by reason of his relationship with Norma.

Unconscionability

Although it can be accepted, as Mason J said in Amadio , that a remedy based on unconscionable dealing is not mutually exclusive with one based on undue influence, the distinction between the two of them ought to be remembered.

A helpful summary of what amounts to unconscionable dealing and unconscientious bargain is to be found in the judgment of Brereton J in Tillett v Varnell Holdings Pty Ltd [2009] NSWSC 1040 at [49] - [54]. In particular Brereton J said:

[54] At the heart of the doctrine is the prevention of unfair exploitation of a disadvantage or vulnerability. A relationship of emotional dependence that renders a party susceptible to improvidence in favour of the stronger party may attract the doctrine [ Louth v Diprose (1992) 175 CLR 621; Bridgewater v Leahy (1998) 194 CLR 457]. But not every case of illness, impairment or emotional dependence is a case of special disadvantage. The cases to which reference has so far been made show that it is insufficient to attract the doctrine merely that there be an inequality of bargaining power, or that the plaintiff be affected by one or more of the relevant conditions; it is critical that the condition be such as to impact on the plaintiff's ability to conserve his or her own interests and render him or her vulnerable to exploitation. One can be ill, or poor, or even affected by delusions, and still perfectly capable of robustly conserving one's own interests [cf, albeit in a different field, Banks v Goodfellow (1870) LR 5 QB 549, in which it was established that the circumstance that a testator, who managed his general affairs perfectly capably, entertained certain insane delusions which did not impact on the will-making process, was not inconsistent with his having testamentary capacity].

In Louth v Diprose (1992) 175 CLR 621 at 631 Brennan J said:

When a donor who stands in a relationship of special disadvantage vis-a-vis a donee makes a substantial gift to the donee, slight evidence may be sufficient to show that the gift has been procured by unconscionable conduct. Whether that finding should be made depends on the circumstances. In Watkins v. Combes ((22) [1922] HCA 3; (1922) 30 CLR 180, at p 193; and see per Starke J. in Harris v. Jenkins [1922] HCA 54; (1922) 31 CLR 341, at pp 367-368), Isaacs J. said:

"It is not the law, as I understand it, that the mere fact that one party to a transaction who is of full age and apparent competency reposed confidence in, or was subject to the influence of, the other party is sufficient to cast upon the latter the onus of demonstrating the validity of the transaction. Observations which go to that extent are too broad."

But where it is proved that a donor stood in a specially disadvantageous relationship with a donee, that the donee exploited the disadvantage and that the donor thereafter made a substantial gift to the donee, an inference may, and often should, be drawn that the exploitation was the effective cause of the gift. The drawing of that inference, however, depends on the whole of the circumstances.

The Plaintiff submitted that Norma was under special disadvantage. The evidence was said to be the South West Aged Care Assessment Report of 11 October 2004, the evidence of Dr Kierce, the evidence of Dr Vowels, the evidence of Jeanette Saunders where she referred to Norma as having been vague and confused and the diary note of the telephone call to the Defendant about the Power of Attorney (para [64] above).

The Plaintiff submitted that Mr Bassett's knowledge should be imputed to the Defendant. I am not at all clear why that should be so. Mr Bassett was not the Defendant's solicitor at the time. The relationship between them at that time was simply that the Defendant was someone who was providing assistance to Mr Bassett to bring about the transaction in question, at the request and direction of Norma.

Mr Bassett did not consider, in any event, that there was a problem with Norma's capacity, nor her ability to understand what she was doing. If he had had concerns he would not have permitted her to go ahead with the transaction. I accept his evidence in that regard. It is of no assistance to the Plaintiff, therefore, to argue that Mr Bassett's knowledge should be imputed to the Defendant. Mr Bassett had no knowledge of any of Norma's conditions including any incapacity that did, or ought to have, put him on notice that she was in a position of special disadvantage.

Similarly the Defendant's evidence was that he did not find Norma confused and forgetful in 2004, nor that she had a failing memory or drove dangerously at that time, nor did he notice any deterioration in the level of house keeping at the time before she moved to Seaview House. The Defendant also gave evidence that he believed, for example, that Norma understood his explanation about the need to pay stamp duty on the transfer and he said he did not have any doubt about her capacity to sign the transfer.

Quite clearly the Defendant has an interest in giving evidence to that effect. However, as I have already indicated, I generally found the Defendant's evidence to be reliable. His evidence in that regard is certainly consistent with Mr Bassett's evidence on whom I place greater reliance because of his long experience as a solicitor, particularly acting for elderly people making wills and inter vivos transactions. For the Defendant to have taken unconscientious advantage of Norma he must have known of the special disadvantage that she was under: Re Levey; ex parte Official Assignee (1894) 15 NSWR (B & P) 30 at 36; Bridgewater v Leahy (1998) 194 CLR 457 at [100].

In my opinion, Norma was not under a special disadvantage in March, April and May of 2005. It can be accepted that from late 2004 and through 2005 she occasionally had some bad days where she was forgetful and occasionally confused although precise evidence of confusion is not available until late May 2005. Prior to that time there are merely conclusionary statements, largely in the South West Regional Aged Care Assessment Report of 11 October 2004 without any identification of the matters that led to that conclusion. I have already discussed reasons for not being assisted by Dr Vowels nor by the particular evidence of Dr Kierce in relation to his not performing a second operation on Norma.

The diary note (para [64] above) does not suggest any lack of capacity on Norma's part. Indeed it suggests the contrary. It was stressing that the Power of Attorney would not be released without her approval and it would only be otherwise released if she was incapable of giving instructions.

It can be accepted that there were specified events of confusion on a few occasions from the end of May 2005. There is no evidence that the Defendant knew about these occasions. Nor is there evidence that Mr Bassett knew about them.

The handwritten changes made by Norma to her draft will in about late February 2005 provide good support for a finding (if it was necessary) of testamentary capacity. She thought of her sister-in-law as an appropriate beneficiary and she even picked up the misspelling of Brett's surname. In the same way, those matters help to support a finding that at this time Norma did not lack the capacity to understand the transaction involving the Cronulla unit.

I do not consider that Norma was under a special disadvantage because I do not consider that her capacity was impaired in a way that meant that she did not have full appreciation of the transaction into which she was entering. She certainly understood its general purpose when it was explained to her: Gibbons v Wright (1954) 91 CLR 423 at 438.

Furthermore, I do not consider that the transaction was an improvident one from Norma's point of view. The Cronulla unit had been left to the Defendant in her will. What Norma was doing during her lifetime was only to limit her ability to sell the unit or, arguably, to raise a mortgage on the unit for some reason, because what she retained was only a life estate. There was no evidence that she did not have the wherewithal to pay for her full time care for the rest of her life. What little evidence there was suggested that, apart from her life estate in the farm and her ownership of the Cronulla unit, she had assets worth about $300,000. There was no suggestion that any bond to go into Seaview House or Heywood (to where she ultimately moved) remotely approached that figure. Further, retaining a life interest in the Cronulla unit meant that Norma could rent it out if there was a need for ongoing income.

The fact that she also had independent legal advice is a strong factor against the Defendant having taken unconscientious advantage of Norma: Bridgewater v Leahy at [100].

In my opinion nothing about the transaction suggests the Defendant took unconscientious advantage of Norma who was not, in any event, in a position of special disadvantage.

Capacity

I have already found that Norma did not lack capacity to effect the gift of the remainder of the Cronulla unit. She knew what she was doing and she intended to make the gift. She was provided with independent legal advice and that legal advice was adequate and appropriate. Further, I have accepted that neither Mr Bassett nor the Defendant had knowledge of matters that might be thought to impact on Norma's capacity.

I accept, however, that the position is less clear in September 2005 when the transfer was executed. There is no evidence, however, that the Defendant knew of any matters in or by September 2005 that put him on notice of any incapacity on Norma's part. If Norma lacked capacity in September 2005 the disposition would not be void, but would be voidable if the disponee knew or had reasonable grounds to know of the disponor's lack of understanding and did not act in good faith: Gibbons v Wright at 436 and 441.

If I am wrong about Norma's capacity in September 2005 and if I am wrong about the Defendant's knowledge of that capacity, there is a further principle which leads me to the view that the transfer should not in any event be avoided.

In Parker v Felgate (1883) 8 PD 171 Hannen P, in the course of his summing up, directed the jury as follows (at 173-174):

If a person has given instructions to a solicitor to make a will, and the solicitor prepares it in accordance with those instructions, all that is necessary to make it a good will, if executed by the testator, is that he should be able to think thus far, 'I gave my solicitor instructions to prepare a will making a certain disposition of my property. I have no doubt that he has given effect to my intention, and I accept the document which he put before me as carrying it out'. Now, I have only put into language that which flashes across the mind without being expressed in words. Do you believe that she was so far capable of understanding what was going on? Did she at that time know and recollect all that she had done with Mr Parker? That would be one state of mind. But if you should come to the conclusion that she did not at that time recollect in detail all that had passed between them, do you think she was in a condition, if each clause of this will had been put to her, and she had been asked, 'Do you wish to leave so-and-so so much', or do you wish to do this (as the case might be), she would have been able to answer intelligently 'Yes' to each question? That would be another condition of mind. It would not be so strong as the first, viz. that in which she recollected all that she had done, but it would be sufficient. There is also a third state of mind which, in my judgment, would be sufficient. A person might no longer have capacity to go over the whole transaction, and take up the thread of business from the beginning to the end, and think it all over again, but if he is able to say to himself, T have settled that business with my solicitor. I rely upon his having embodied it in proper words, and I accept the paper which is put before me as embodying it' it is not, of course, necessary that he should use those words, but if he is capable of that train of thought in my judgment that is sufficient.

See also Bailey v Bailey (1924) 34 CLR 558 at 572.

That case, of course, was one concerned with testamentary dispositions. However, the principle has been applied in relation to an inter vivos disposition in Singellos v Singellos [2011] 2 WLR 1111 at 1126-1130. I respectfully adopt the reasons given by the Deputy High Court Judge in that case for its conclusion that the principle is so applicable.

In my opinion, even if it were accepted that Norma's capacity had diminished by September 2005, the situation would fall within what Hannen P referred to as the third state of mind that would be sufficient for the gift to be validated. The evidence shows clearly that as a result of the discussions she held with Mr Bassett in March and April of 2005 she had given her firm instructions to him to transfer the remainder of the unit to the Defendant, leaving to Mr Bassett the business of properly effecting the transaction by whatever means were needed.

I am strengthened in the view that the principle should, here, apply to the inter vivos transaction because it was very closely related to the gift of the unit in the will for the reasons I have given.

The sale of the unit

The Plaintiff sought, if all else failed, that the Cronulla unit be sold pursuant to s 48(1) Conveyancing and Law of Property Act 1898. That section provides:

48 Court may authorise sale of settled estates

(1) The Court may, if it deems it proper and consistent with a due regard for the interest of all parties entitled under the settlement and subject to the provisions and restrictions in this part contained, from time to time authorise a sale of the whole or any parts of any settled estates.

The Plaintiff did not seek such relief in his Statement of Claim, a matter specifically complained about by the Defendant when the case was opened. Despite that the Plaintiff took no steps to amend his Statement of Claim.

The Plaintiff submitted that Norma's estate needed the funds represented by her life interest to discharge her present and future debts including debts associated with the litigation. Further, the Plaintiff submitted that without funds from the unit the residue of Norma's estate would be depleted.

Part of the Defendant's complaint about this issue even being considered was the absence of any proper evidence to support the Plaintiff's submissions. The evidence was confined to one paragraph in the Plaintiff's affidavit where he said that the value of the remainder of Norma's estate, excluding the land at Cronulla and the livestock and farming equipment, was approximately $300,000. The Defendant made the point, quite properly, that the Court could not be in a position to make an informed decision if it did not have any evidence about the value of the livestock and farming equipment.

The main difficulty for the Plaintiff, however, was that, despite my repeatedly asking why the Court should order such a sale, the Plaintiff was really able to advance no reason other than that the costs of the litigation would be substantial and that Brett Poulsen's share of the estate (the residue) would be reduced by virtue of those costs. That was scarcely a relevant consideration.

The argument that the Court should order such a sale only arises if the Plaintiff is otherwise unsuccessful in the litigation. If the Plaintiff is unsuccessful (as I have held) it is because the Plaintiff has not shown that the remainder was transferred by virtue of any undue influence or unconscientious dealing on the part of the Defendant, and that it was transferred by Norma having the mental capacity to do so. It is not apparent why, in those circumstances, the Defendant's interest as remainderman and ultimately as the full beneficiary of the Cronulla unit should be diminished because the Plaintiff has brought unsuccessful litigation for which there will need to be an order against the Plaintiff for the payment of legal costs.

Little guidance is provided by the cases as to the basis for the discretion given by the section. If there is any guiding principle, in circumstances where there is opposition from any of the parties, the test seems to be whether a sale would ultimately be advantageous to all: Henry Ryan's Settled Estates (1899) 16 WN (NSW) 70 at 71, although it must be conceded that the case is a weak authority for that proposition.

There does not seem to me to be any basis for ordering the sale under the section. Such a sale would be contrary to Norma's intention which I have found was clearly expressed in the transaction involving the sale of the remainder following on from the execution of the will in March 2005. Further, it has always been open to the Plaintiff to rent out the Cronulla unit to provide income that would ultimately benefit her residuary estate. No reason has been offered for the failure to do so. It is still open to the Plaintiff to effect such an arrangement. The sale would not be advantageous to the Defendant at all.

In my opinion, it would be quite inappropriate in all the circumstances to authorise a sale under the section.

Conclusion

I make the following orders:

(1) The proceedings are dismissed.

(2) The Plaintiff is to pay the Defendant's costs.

**********

Decision last updated: 23 September 2011

Medium Neutral Citation:	Hamilton v Carter [2011] NSWSC 394
Hearing dates:	4-6 April 2011 & 16 May 2011
Decision date:	23 September 2011
Jurisdiction:	Equity Division
Before:	Davies J
Decision:	(1) The proceedings are dismissed. (2) The Plaintiff is to pay the Defendant's costs.
Catchwords:	EQUITY - general principles - undue influence - unconscionable dealing - gift of remainder of real property to Defendant by elderly aunt - gift follows execution of will leaving the whole of the property to the Defendant - whether relationship one of influence - whether presumption rebutted - whether donor had mental capacity to make the gift - relevant time for considering capacity - principle in Parker v Felgate applied to inter vivos gifts - independent legal advice - no undue influence - no unconscientious dealing. EQUITY - settlements - matters arising under settled estates - whether Court should authorise the sale of the life interest notwithstanding findings of no undue influence or unconscientious dealing.
Legislation Cited:	Conveyancing and Law of Property Act 1898 Evidence Act 1995
Cases Cited:	Bailey v Bailey (1924) 34 CLR 558 Bridgewater v Leahy (1998) 194 CLR 457 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 Gibbons v Wright (1954) 91 CLR 423 Henry Ryan's Settled Estates (1899) 16 WN (NSW) 70 Johnson v Buttress (1936) 56 CLR 113 Louth v Diprose (1992) 175 CLR 621 Parker v Felgate (1883) 8 PD 171 Re Levey; ex parte Official Assignee (1894) 15 NSWR (B & P) 30 Singellos v Singellos [2011] 2 WLR 1111 Stivactas v Michaletos [No 2] (unreported - NSW Court of Appeal - 31 August 1993) Tillett v Varnell Holdings Pty Ltd [2009] NSWSC 1040
Category:	Principal judgment
Parties:	Phillip Hamilton (suing as administrator and tutor of Norma June Carter) (Plaintiff) Albert Barrington Carter (Defendant)
Representation:	Dr J Glover (Plaintiff) M Gronow (Defendant) David Davis & Associates (Plaintiff) Dwyer Robinson Pty Ltd (Defendant)
File Number(s):	2009/327359