Lawrence v Gunner; Gunner v Lawrence

[2015] NSWSC 944

Supreme Court

New South Wales

Medium Neutral Citation:	Lawrence v Gunner; Gunner v Lawrence [2015] NSWSC 944
Hearing dates:	24 November – 8 December 2014, 17 December 2014, 5 February 2015, 5 – 7 May 2015
Decision date:	16 July 2015
Jurisdiction:	Equity Division
Before:	Stevenson J
Decision:	(1) Plaintiffs’ claim to be dismissed. (2) Cross-claimant entitled to declaration of entitlement to possession of Clontarf Street property. (3) Parties to make submissions concerning Court’s power to terminate residential tenancy agreement and make order for possession. (4) Cross-claimant entitled to profit made by cross-defendants on the sale of Beecroft property. (5) Cross-claim otherwise to be dismissed. (6) Notice of motion of 2 December 2014 to be dismissed. (7) Parties to bring in short minutes to give effect to these reasons.
Catchwords:	CONTRACT – whether oral partnership or joint venture entered into between first plaintiff and defendant’s late husband to develop properties then owned by late husband – whether such partnership survived the death of the defendant’s late husband – whether defendant bound by agreement or otherwise to continue arrangements allegedly agreed to by her late husband – whether first plaintiff entitled to recovery under a quantum meruit; LANDLORD AND TENANT – residential tenancy agreement – whether defendant/cross-claimant entitled to possession of property the subject of oral residential tenancy agreement – whether Court has jurisdiction to make an order terminating the residential tenancy or an order for possession; EQUITY – whether plaintiffs acted in breach of fiduciary duty to defendant – whether plaintiffs obliged to account to defendant for profit thereby made
Legislation Cited:	Civil and Administrative Legislation (Repeal and Amendment) Act 2013 (NSW) Civil and Administrative Tribunal Act 2013 (NSW) Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) Conveyancing Act 1919 (NSW) Partnership Act 1892 (NSW) Probate and Administration Act 1898 (NSW) Residential Tenancies Act 1987 (NSW) Residential Tenancies Act 2010 (NSW) Trade Practices Act 1974 (Cth) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Aboriginal Housing Company Ltd v Kaye-Engel (No. 3) [2014] NSWSC 718 Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1 Browne v Dunn (1893) 6 R 67 Celermajer Holdings Pty Ltd v Kopas [2011] NSWSC 40 Consul Development Pty Ltd v DPC Estates Pty Ltd [1975] HCA 8; 132 CLR 373 Fulton v Fulton [2014] NSWSC 619 Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; 156 CLR 41 Keith Henry & Co Pty Ltd v Stuart Walker & Co Pty Ltd [1958] HCA 33; 100 CLR 342 Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; 243 CLR 361 Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 Pedersen v Larcombe [2008] NSWSC 1362 Phipps v Boardman [1967] 2 AC 46 Queensland Mines Ltd v Hudson (1978) 52 ALJR 399 Reid v Kerr (1974) 9 SASR 367 Whiteford v Commonwealth of Australia (1995) 38 NSWLR 100
Texts Cited:	J D Heydon, Cross on Evidence, (Looseleaf Edition, LexisNexis Butterworths) J D Heydon, M J Leeming and P G Turner, Meagher, Gummow and Lehane’s Equity: Doctrines & Remedies, (5th ed 2014, LexisNexis Butterworths) K Mason, J W Carter and G J Tolhurst, Restitution Law in Australia, (2nd ed 2008, LexisNexis Butterworths)
Category:	Principal judgment
Parties:	Wayne Lawrence (First Plaintiff/First Cross-Defendant) Valerie Lawrence (Second Plaintiff/Second Cross-Defendant) Frances Gunner (Defendant/Cross-Claimant)
Representation:	Counsel: P E King (Plaintiffs/Cross-Defendants) B W Collins QC with A Hourigan (Defendant/Cross-Claimant) Solicitors: The People’s Solicitors (Plaintiffs/Cross-Defendants) Paton Hooke Lawyers (Defendant/Cross-Claimant)
File Number(s):	SC 2012/277403

TABLE OF Contents

Introduction	1
Disposition of Mr Gunner’s estate on his death	10
The plaintiffs’ case – the alleged agreements	13
The Old Bar Agreement	17
The Beecroft Agreement	19
The Mt Colah Agreement	21
The 132 Clontarf Street Agreement	23
The 134 Clontarf Street Agreement	25
The alleged agreement of 27 January 2012	31
The alleged agreement of 18 March 2009	32
The relief sought in relation to the alleged agreements	35
Aspects of the course of the proceedings	41
The course of events – overview	57
The absence of a contradictor	63
Circumstances said to point to the probability of Mr and Mrs Lawrence’s case	72
The alleged history of property dealings between Mr Lawrence and Mr Gunner prior to 2004	76
Mr Gunner’s afflication with leukaemia	81
Mr and Mrs Lawrence’s alleged residence in the “Blue House”	90
The course of events	96
Events leading to Mr and Mrs Lawrence’s occupation of 134 Clontarf Street	96
The events of 18 March 2009	118
Events thereafter	138
Mr Lawrence’s dealings with Mr Mirosevich	147
132 Clontarf Street	172
134 Clontarf Street	180
Beecroft	199
Mr Lawrence’s dealings with Mr Searles	208
Purported rescission by Mrs Gunner of the Beecroft contract	220
Mrs Lawrence’s application to the Guardianship Tribunal	230
The 27 January 2012 document	259
The “Declaration of Trust”	270
Resolution of dispute concerning the sale of Beecroft	279
The CTTT proceedings	300
Mr Lawrence’s representations concerning Mr Gunner’s death certificate	309
Decision	316
Inconsistency between Mr and Mrs Lawrence’s claims and Mr Lawrence’s conduct following Mr Gunner’s death	319
The inherent improbability of Mr and Mrs Lawrence’s case	325
Credit – Mr Lawrence	328
Absurd allegations	329
False statements to the Guardianship Tribunal	337
Cladestine purchase of the Beecroft property	344
The “loans affair”	347
The abandoned Braemar reliance evidence	362
Credit – Mrs Lawrence	368
Credit – Ms Pearson	379
Credit – Mrs Gunner	393
Partnership Act 1892 (NSW)	399
Mrs Gunner not “bound” by the agreements	408
The alleged agreement of 18 March 2009	411
Estoppel and constructive trust claims	419
Other bases on which Mrs Gunner resisted Mr and Mrs Lawrence’s claims	426
Has Mrs Gunner “admitted” Mr and Mrs Lawrence’s claim?	427
Mr Lawrence’s quantum meruit claim	448
The process undertaken by Mr Lawrence to make out his quantum meruit claim	452
Mrs Gunner’s cross-claim – possession of 134 Clontarf Street	494
Mrs Gunner’s cross-claim – 134 Clontarf Street – land tax	526
Mrs Gunner’s cross-claim – 134 Clontarf Street – loss of rent	529
Mrs Gunner’s cross-claim – breach of fiduciary duty regarding the Beecroft property	538
Mrs Gunner’s cross-claim – Old Bar property agreement	552
Mrs Gunner’s cross-claim – Old Bar property equipment	559
Mrs Gunner’s cross-claim – Deutz tractor mainentance and repair	562
Conclusion	564

Judgment

Introduction

1. The plaintiffs, Mr Wayne and Mrs Valerie Lawrence, are husband and wife. Mrs Lawrence is the identical twin sister of the defendant, Mrs Frances Gunner.

2. In or about November 1990, Mr Lawrence introduced Mrs Gunner (then known as Ms Frances Sanders) to Mr Norman Gunner. Mr and Mrs Gunner commenced living together in or about December 1990. They were married on 21 August 1999.

3. Mr Gunner died on 17 March 2009.

4. Mr Gunner had been a property developer and investor since about 1943. At the time of his death he owned over one hundred properties in Sydney and regional New South Wales, some of which he had purchased as long ago as 1950. On the date of his death, those properties were worth something in the order of $10 million.

5. Mrs Gunner gave evidence that she understood, from what Mr Gunner had told her, that Mr Gunner had always acted alone; that is, never with a partner.

6. During their 19 years together, Mr Gunner also arranged for some properties to be purchased in Mrs Gunner's name. One of those properties was a property at Tinonee. That property was purchased in 1998. It was Mr and Mrs Gunner's home from that date until Mr Gunner died, and remains Mrs Gunner's home to this day.

7. Included in Mr Gunner's property portfolio were the following:

1. 909 Old Bar Road, Old Bar, acquired in 1996;

2. 79-87 Malton Road, Beecroft, acquired in 1994;

3. 33-35 Rupert Street, Mt Colah, acquired in 1953;

4. 132 Clontarf Street, North Balgowlah, acquired between 1952 and 1960; and

5. 134 Clontarf Street, North Balgowlah, acquired in 1988.

8. The Old Bar, Beecroft, Mt Colah and 132 Clontarf Street properties were vacant land at the date of Mr Gunner's death.

9. There is a house erected on 134 Clontarf Street. Mr Gunner lived in that house from the time he purchased it in 1988 until 1993. From December 1990, Mrs Gunner also lived there. Thereafter, the house was vacant for some time. It was then occupied by a tenant, Ms Glynis Conlon. In the circumstances I describe below, Mr and Mrs Lawrence moved into the 134 Clontarf Street property in September 2006. They have lived there since, rent free, and assert an entitlement to remain in occupation “for as long as they want”. By her cross-claim, Mrs Gunner seeks (amongst other things) possession of that property.

Disposition of Mr Gunner's estate on his death

10. On or about 21 January 1998, Mr and Mrs Gunner made mutual wills, appointing the other as both sole executor or executrix and sole beneficiary. Those wills were revoked by Mr and Mrs Gunner's marriage in August 1999. Accordingly, Mr Gunner died intestate.

11. On 10 December 2009, this Court granted letters of administration to Mrs Gunner in respect of Mr Gunner's estate. By a transmission application lodged with Land and Property Information NSW in February 2010, all of the real estate previously registered in the name of Mr Gunner (including the five properties referred to above) was transferred to Mrs Gunner.

12. In the circumstances I describe below, Mrs Gunner sold the Beecroft property by contracts exchanged in February 2011 and eventually settled (after some dispute) in February 2012. Mrs Gunner sold the 132 Clontarf Street property by contracts exchanged in March 2011 and settled in May 2011. Mrs Gunner sold the Mt Colah property in mid 2014. She remains the registered proprietor of the Old Bar and 134 Clontarf Street properties.

The plaintiffs' case – the alleged agreements

13. By their amended statement of claim, Mr and Mrs Lawrence claim that "in or about 2004" Mr Lawrence and Mr Gunner made agreements in relation to each of the Old Bar, Beecroft, Mt Colah, 132 Clontarf Street and 134 Clontarf Street properties. Each of the agreements is alleged to have been made "in conversations" between Mr Lawrence and Mr Gunner at Mr and Mrs Gunner's home at Tinonee.

14. For convenience, I will refer to these alleged agreements as the "Old Bar Agreement", the "Beecroft Agreement", the “Mt Colah Agreement", the "132 Clontarf Street Agreement" and the "134 Clontarf Street Agreement". I do not mean to suggest, by adopting this language, that I accept that any such agreements were made between Mr Lawrence and Mr Gunner. Indeed, for the reasons I set out below, I do not.

15. Mr and Mrs Lawrence also claim an entitlement to occupy 134 Clontarf Street on the basis of a letter sent to them by Mrs Gunner on 27 January 2012, and an alleged conversation with Mrs Gunner on 18 March 2009.

16. I will deal with each of these agreements in turn.

The Old Bar Agreement

17. As to the Old Bar property, Mr and Mrs Lawrence plead that "in or about 2004" Mr Lawrence and Mr Gunner "made an agreement" that:

1. Mr Lawrence would "take over and carry on the development" of the property;

2. this development would include a subdivision;

3. Mr Gunner would not pay Mr Lawrence wages for his work, but on the completion of the subdivision and sale of the subdivided lots:

1. Mr Gunner would give Mr Lawrence two lots from the subdivision; and

2. Mr Lawrence and Mr Gunner would share the "profits of the venture” equally where the profits were the “sale prices of the remaining lots” less (a) the costs and expenses of the development (other than the costs of Mr Lawrence's time, labour and equipment) and (b) an agreed value of the property of $750,000; and

4. other than the "cost of [Mr Lawrence's] time, labour and equipment", Mr Gunner would pay all the costs and expenses of the development.

18. Mr Lawrence alleged that he and Mr Gunner had the following conversation concerning Old Bar in late 2004:

Mr Gunner:   "The original [Development Approval] for the property at 909 Old Bar Road has lapsed. We must lodge a new plan of subdivision. We should get 14 to 18 lots from the subdivision. I can pay for the subdivision, but I need help doing the work. If you do the work to get council approval for the subdivision and then manage the subdivision, I will give you two lots on completion of the subdivision. We then share the profits on the sale of the remaining lots after paying my costs, including the cost of the land.

Mr Lawrence:   What is the cost price for the land?

Mr Gunner:   What do you propose?

Mr Lawrence:   What do you propose?

Mr Gunner:   $700,000 to $800,000.

Mr Lawrence:   Are you happy with a cost price for the land of $750,000?

Mr Gunner:   Yes."

The Beecroft Agreement

19. As to the Beecroft property, Mr and Mrs Lawrence plead an agreement made "in or about 2004" to the same effect as the Old Bar Agreement, with the value of the property agreed to be $1.2 million for the purpose of calculating the "profits of the venture". Under this alleged agreement, Mr Lawrence was to receive one lot (rather than two lots) from the subdivision and would also assist Mr Gunner in defending a claim brought against Mr Gunner by the owner of neighbouring land (a Mr Neil Handley).

20. Mr Lawrence gave evidence of the following conversation with Mr Gunner concerning the Beecroft property which occurred “prior to 5 March 2005”:

Mr Gunner:   "How many lots do you think we will get out of a subdivision of the [Beecroft] property?

Mr Lawrence:   Five lots.

Mr Gunner:   I need your help with the dispute concerning Neil Handley. If you deal with the dispute, do the work to get council approval for the subdivision and then manage the subdivision. I will give you one lot on completion of the subdivision. We then share the profits on the sale of the remaining lots after paying my costs in paying for the subdivision, including the cost of the land.

Mr Lawrence:   What is the cost price of the land?

Mr Gunner:   I propose $1.2 million.

Mr Lawrence:   Fine. You have to take into consideration the right of carriageway that will cost $600,000 to construct as to the s 88B instrument.

Mr Gunner:   Fine."

The Mt Colah Agreement

21. As to the Mt Colah property, Mr and Mrs Lawrence plead an agreement made "in or about 2004" to the same effect as the Old Bar Agreement, with Mr Lawrence to obtain two lots from the subdivision and the agreed value of the Mt Colah property to be $1.8 million.

22. Mr Lawrence gave evidence of the following conversation with Mr Gunner, which also occurred "prior to 5 March 2005":

Mr Gunner:   "How many lots do you think we will get out of a subdivision of the land?

Mr Lawrence:   About 16 lots.

Mr Gunner:   I will pay for the subdivision. If you get council approval for the subdivision and then manage the subdivision, I will give you two lots on completion of the subdivision. We then share the profits on the sale of the remaining lots after paying my costs, including the cost of the land.

Mr Lawrence:   What is the cost price of the land?

Mr Gunner:   I propose $2 million.

Mr Lawrence:   Fine."

The 132 Clontarf Street Agreement

23. As to the 132 Clontarf Street property, Mr and Mrs Lawrence plead an agreement made "in or about 2004" to the same effect as the Old Bar Agreement, save that Mr Lawrence was to obtain one lot (being “lot 1” facing Clontarf Street) with the agreed value of the property to be $2 million.

24. Mr Lawrence gave evidence of the following conversation with Mr Gunner, which he said occurred "in the second half of 2004":

Mr Gunner:   "How many lots do you think we will get out of the subdivision on 132 Clontarf Street?

Mr Lawrence:   If we can use part of 134 Clontarf Street, we can get seven lots of the subdivision.

Mr Gunner:   I will pay for the subdivision. If you clear the land, do the work to get council approval for the subdivision and then manage the subdivision, I will give you one lot on completion of the subdivision. We then share the profits on the sale of the remaining lots after paying my costs, including the cost of the land.

Mr Lawrence:   What is the cost price of the land?

Mr Gunner:   What do you think it is worth?

Mr Lawrence:   What do you propose?

Mr Gunner:   $1.8 million to $2 million.

Mr Lawrence:   I am happy with $2 million.

Mr Gunner:   Fine."

The 134 Clontarf Street Agreement

25. Mr and Mrs Lawrence plead a further agreement, again made orally between Mr Lawrence and Mr Gunner "in or about 2004", concerning 134 Clontarf Street as follows:

1. Mr Lawrence would take steps to evict the tenant occupying the property at the time (Ms Conlan);

2. following eviction of the tenant, Mr and Mrs Lawrence could move into the property, renovate it and remain in occupation "for as long as they want";

3. during occupation, Mr and Mrs Lawrence would pay council and water rates;

4. Mr and Mrs Lawrence would have the option of purchasing the property at market value; and

5. such "market value" was to be the average of market appraisals obtained by each of Mr Lawrence and Mr Gunner.

26. Mr Lawrence gave evidence of the following conversation with Mr Gunner "in the second half of 2004":

Mr Gunner:   "I have a tenant in 134 Clontarf Street. She is complaining about the state of the property. I want to evict the tenant. One reason I want to evict her is because this will help with the subdivision of 132 Clontarf Street. Another reason is so that I can…stay in the house when I visit Sydney to see my properties or get treatment at hospital.

Mr Lawrence:   I will make enquiries about how to evict the tenant."

27. Mr Lawrence said he made enquiries as to how to evict the tenant and "reported back" to Mr Gunner, who then said words to the effect "please take steps for the tenant to be evicted".

28. Mr Lawrence said he then had a conversation with Mr Gunner as follows:

Mr Gunner:   "Once you get the tenant out of 134 Clontarf Street, you and Valerie can move in. This will put you on site when you clear the land and then do the subdivision work at 132 Clontarf Street. Also, you can then look after 134 Clontarf Street.

Mr Lawrence:   Valerie and I are happy in our home in Davidson. We won't move into 134 Clontarf Street unless there is a permanent arrangement. I don't want you to be able to kick us out.

Mr Gunner:   You can stay there for as long as you like. When the subdivision of 132 Clontarf Street is complete, you can buy 134 Clontarf Street at today's value from your share of the profit. In the meantime, Valerie and you will have to pay council rates and water rates."

29. Mrs Lawrence alleged that, at around this time, she had the following conversation with Mrs Gunner:

Mrs Gunner:   “You and Wayne can move into our house at Balgowlah. Sara [Pearson; Mrs Lawrence’s daughter] and Darryl [Ms Pearson’s husband] can then move upstairs in the Davidson house.

Mrs Lawrence:   Wayne has told me that he will not move into the Balgowlah house unless it is permanent.

Mrs Gunner:   I have spoken with Norm. You and Wayne can stay in the Balgowlah house for as long as you like.”

30. Mrs Gunner disputes the existence of any of these agreements and disputes that she had the conversation alleged by Mrs Lawrence.

The alleged agreement of 27 January 2012

31. Mr and Mrs Lawrence also claim an entitlement to occupy 134 Clontarf Street by reason of an agreement said to be constituted in a letter sent by Mrs Gunner to them on 27 January 2012. I discuss the events of 27 January 2012 below (at [259] to [268]).

The alleged agreement of 18 March 2009

32. Mr and Mrs Lawrence claim that they entered into a further agreement with Mrs Gunner on 18 March 2009; the day after Mr Gunner died.

33. Mr and Mrs Lawrence plead that alleged agreement as follows:

"Shortly after the death of [Mr Gunner]:

(a) [Mrs Gunner] asked [Mr Lawrence] to continue the work [Mr Gunner] had asked [Mr Lawrence] in or about 2004 to undertake in respect of the Old Bar Property, the Beecroft Property, the Mount Colah Property, and 132 Clontarf Street;

(b) [Mr Lawrence], to the knowledge of [Mrs Gunner] continued to carry on the work."

34. Mrs Gunner denied making any such agreement with Mr and Mrs Lawrence.

The relief sought in relation to the alleged agreements

35. Mr and Mrs Lawrence claim damages for breach of contract on the basis of each of the Old Bar, Beecroft, Mt Colah, 132 Clontarf Street and 134 Clontarf Street Agreements, and/or equitable compensation in respect of the “subdivision developments” that have been sold by Mrs Gunner (the Mt Colah, Beecroft and 132 Clontarf Street properties). Mr and Mrs Lawrence also seek a “constructive trust in respect of” the Old Bar property “or alternatively equitable compensation”.

36. They also seek specific performance of the alleged 27 January 2012 agreement concerning 134 Clontarf Street; namely, that Mrs Gunner transfer that property to Mrs Lawrence.

37. Mr and Mrs Lawrence further allege that upon Mr Gunner's death "or upon the grant of probate [sic]" to Mrs Gunner:

1. Mrs Gunner, "as executor [sic] of [Mr Gunner's] estate", was "bound by and had a duty to perform" each of the Old Bar, Beecroft, Mt Colah, 132 Clontarf Street and 134 Clontarf Street Agreements and;

2. each of those agreements is “enforceable" against Mrs Gunner "including for breach of contract or specific performance".

38. Mr and Mrs Lawrence allege:

"Pursuant to s 45 of the Probate and Administration Act 1898 (NSW), upon the grant of probate to [Mrs Gunner], all real estate held by [Mr Gunner] in trust vested from the date of [Mr Gunner's] death in [Mrs Gunner], subject to the trusts and equities affecting the same."

39. Section 45 of the Probate and Administration Act 1898 (NSW) is in the following terms:

"All real estate held by any person in trust or by way of mortgage, and vesting as aforesaid under this part, shall as from the death of such person vest in the person's executor or administrator, subject to the trusts and equities affecting the same."

40. Mrs Gunner disputes that any of the properties was the subject of any trust or equity in favour of Mr Lawrence, and thus that s 45 of the Probate and Administration Act is relevant to the issues in these proceedings. For the reasons I discuss below (see [409] and [410]), I agree.

Aspects of the course of the proceedings

41. Mr and Mrs Lawrence commenced these proceedings by statement of claim filed on 5 September 2012. Earlier that year, on 21 February 2012, Mrs Gunner commenced proceedings against Mr and Mrs Lawrence in the Consumer, Trader and Tenancy Tribunal (“CTTT”) seeking possession of the 134 Clontarf Street property. On 12 September 2012, following commencement of these proceedings, and with the consent of Mr and Mrs Lawrence, the CTTT proceedings were transferred to this Court to be heard with and abide the outcome of these proceedings.

42. When the proceedings commenced, Mr and Mrs Lawrence were represented by Mr Charles Hockey, solicitor, who had also appeared for them in the CTTT.

43. On 27 June 2013 Mr Hockey filed a notice of ceasing to act. Thereafter, until very shortly before the commencement of the hearing before me on 24 November 2014, Mr and Mrs Lawrence were self-represented. Mr Lawrence appeared on his own and Mrs Lawrence’s behalf on various interlocutory applications before the Court.

44. In late March 2014, the Chief Judge in Equity asked me to case manage the proceedings. On 3 April 2014, I set the matter down for hearing before me commencing 24 November 2014. Thereafter, the proceedings were listed before me regularly. On those occasions, Mr Lawrence appeared for himself and Mrs Lawrence, and Mr Hourigan of counsel appeared for Mrs Gunner.

45. Several days before hearing commenced, Mr and Mrs Lawrence served an “Outline of Submissions”. By then, they were represented by Mr Kingsley Liu of The People’s Solicitors. Although Mr Liu signed the Outline of Submissions, they were prepared by Mr and Mrs Lawrence themselves. Indeed, the document concluded with the statement “prepared by the Plaintiffs, and signed by their solicitor”.

46. At around that time, Mr Collins QC (who appeared with Mr Hourigan for Mrs Gunner at the hearing) circulated opening submissions on behalf of Mrs Gunner. In those submissions, Mr Collins said that “the whole of Mr Lawrence’s extravagant story is in issue in these proceedings”.

47. When the proceedings were called on for hearing on 24 November 2014, Mr King, of counsel, appeared (for the first time) for Mr and Mrs Lawrence.

48. Mr Collins cross-examined Mr Lawrence for the best part of five days.

49. It was clear from the tone and length of that cross-examination that, indeed, Mr Lawrence’s credit, and evidence generally, was in issue.

50. Mr Collins did not, however, put to Mr Lawrence in terms that the conversations he said he had with Mr Gunner, said to give rise to the Old Bar, Mt Colah, Beecroft, 132 Clontarf Street and 134 Clontarf Street Agreements, did not take place.

51. The rule of practice known as the rule in Browne v Dunn (1893) 6 R 67 (HL) is a rule of fairness requiring that “if a court is to be invited to disbelieve a witness, the grounds upon which the evidence is to be disbelieved should be put to the witness in cross-examination so that the witness may have an opportunity to offer an explanation” (J D Heydon, Cross on Evidence, (Looseleaf Edition, LexisNexis Butterworths) at [17435]).

52. In Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1, Hunt J (as his Honour then was) said of the relevant practice at 22 to 23:

“Firstly, it gives the witness the opportunity to deny the challenge on oath, to show his mettle under attack (so to speak), although this may often be of little value. Secondly, and far more significantly, it gives the party calling the witness the opportunity to call corroborative evidence which in the absence of such a challenge is unlikely to have been called. Thirdly, it gives the witness the opportunity both to explain or to qualify his own evidence in the light of the contradiction of which warning has been given and also, if he can, to explain or to qualify the other evidence upon which the challenge is to be based.”

53. In this case, the second and third matters to which Hunt J referred do not arise. Mr Lawrence’s position was that there were no witnesses to his conversations with Mr Gunner. He was therefore not in a position to call corroborative evidence or to fear direct contradiction of what he claimed Mr Gunner had said.

54. Further, the rule of practice does not apply “where the witness is on notice that the witness’s version is in contest”. Such notice can come from the other side’s opening or the “general manner in which the case is conducted” (Cross on Evidence at [17445] (citations omitted)).

55. No fair reader of Mr Collins’s cross-examination could accuse him of being “willing to wound, and yet afraid to strike” (per Wells J in Reid v Kerr (1974) 9 SASR 367 at 374, adopting the language of Alexander Pope).

56. Mr Collins could not have the benefit of instructions from Mr Gunner as contradictor to Mr Lawrence’s account of events. In all the circumstances, I do not see that any unfairness was caused to Mr Lawrence by reason of the course that Mr Collins took.

The course of events – overview

57. The critical questions for me to determine in these proceedings are whether, as Mr Lawrence contends, he entered the Old Bar, Beecroft, Mt Colah, 132 Clontarf Street and 134 Clontarf Street Agreements with Mr Gunner and whether, as both Mr and Mrs Lawrence claim, they entered the further agreement with Mrs Gunner on 18 March 2009.

58. An examination of the objectively established course of events points to the high improbability of the existence of the agreements with Mr Gunner for which Mr Lawrence contends; or, alternatively, to the conclusion that Mr Lawrence has never had a genuine belief that whatever conversations took place in or around 2004 formed the basis of any partnership, joint venture or other agreement which provided a foundation for any legal entitlements on his part.

59. Leaving aside the objective improbability of Mr Lawrence’s case, many of the events that occurred prior to and over the course of proceedings reflect adversely on his credit, as well as that of Mrs Lawrence. An understanding of why that is so is best revealed by an examination of the events themselves. For that reason, I will defer detailed analysis of Mr and Mrs Lawrence’s credit until after consideration of the course of events.

60. I record at this stage of the judgment however that, unlike Mr and Mrs Lawrence, I found Mrs Gunner to be a calm, credible and reliable witness. Mr and Mrs Lawrence gave evidence of numerous events and conversations that Mrs Gunner disputed. There were many inconsistencies between the evidence given by Mr and Mrs Lawrence, and also Mrs Lawrence’s daughter, Ms Sara Pearson, on the one hand, and the corresponding evidence given by Mrs Gunner on the other; very often in circumstances where the witnesses could not have been mistaken about what really happened. For reasons which will emerge from my discussion of what occurred, my conclusion is that to the extent that there is any inconsistency between the evidence given by Mr Lawrence, Mrs Lawrence or Ms Pearson on the one hand, and Mrs Gunner on the other, I should prefer Mrs Gunner’s evidence.

61. Thus, in what follows, where I set out Mrs Gunner’s recollection of events and conversations, I prefer that recollection to the recollections of Mr and Mrs Lawrence and Ms Pearson, to the extent that they differ from that of Mrs Gunner. Because of the overall view I have come to as to the credibility and reliability of the evidence given by Mr and Mrs Lawrence, and to a lesser extent Ms Pearson, I do not find it necessary to address, separately, each and every one of these inconsistencies.

62. I will deal with the credit of each of Mr and Mrs Lawrence, Ms Pearson and Mrs Gunner further below (see [328] to [398]).

The absence of a contradictor

63. Leaving aside questions of credit and of improbability arising from Mr and Mrs Lawrence’s conduct after Mr Gunner died, there are other aspects of Mr and Mrs Lawrence’s claim which cause me to approach their case with caution.

64. The plaintiffs' case depends, entirely, on acceptance of Mr Lawrence's evidence concerning his conversations with Mr Gunner. The agreement he alleges he reached with Mrs Gunner on 18 March 2009 to "continue on the same as your agreements with Norm" is contingent on there being, in fact, an agreement with Mr Gunner that could be "continued" (leaving aside, for the moment, any other difficulties that may be associated with this part of the plaintiffs' case).

65. Mr Lawrence did not assert the existence of any of the Old Bar, Beecroft, Mt Colah, 132 Clontarf Street or 134 Clontarf Street Agreements until May 2012 (that is, more than three years after Mr Gunner's death), and only then in the course of the proceedings commenced by Mrs Gunner in the CTTT to which I have referred.

66. There is no note or memorandum of the alleged agreements. There is no alleged witness to the agreements. Each agreement is alleged to have been made orally between Mr Lawrence and Mr Gunner “in or about 2004”, in conversations at Mr and Mrs Gunner's Tinonee home when both Mrs Lawrence and Mrs Gunner were either “in the kitchen” or “out of the house on a walk”. Initially, Mr Lawrence's evidence was that Mrs Gunner knew nothing of Mr Lawrence's alleged agreements with Mr Gunner (although, in cross-examination, when the implications of this evidence were explored, Mr Lawrence sought to retreat somewhat from this position. I deal with this further below).

67. Thus, there can be no direct contradictor of Mr and Mrs Lawrence’s case.

68. At the time of the alleged agreements, Mr Gunner was 80 years of age and, to Mr and Mrs Lawrence's knowledge, seriously unwell with a limited life expectancy. Mr Gunner was diagnosed with chronic lymphatic leukaemia in late 2002 and was, by 2004, unwell and suffering severe hearing problems.

69. Mr Lawrence gave no evidence of having made any complaint between 2004 and Mr Gunner's death in 2009 concerning inactivity by Mr Gunner in relation to the developments the subject of the alleged agreements, nor of having had any communication at all with Mr Gunner in that period concerning the progress of any of the developments.

70. There is no evidence that Mr Lawrence ever described himself to any outside person as a partner or joint venturer of Mr Gunner. Although Mr Lawrence kept a detailed diary recording daily activities, he made no contemporaneous mention in that diary of any agreement with Mr Gunner. There is no evidence of any partnership account or formal record of any work done by Mr Lawrence as a partner, nor of any funds allocated to or monies borrowed for the subdivisions the subject of the alleged agreements. Mr Lawrence made no claim on Mr Gunner's estate.

71. In these circumstances, authority, and indeed common sense, requires that, quite apart from any questions of credit, Mr and Mrs Lawrence’s case be examined with great care: see the cases summarised by Hallen J in Fulton v Fulton [2014] NSWSC 619 at [117] to [125].

Circumstances said to point to the probability of Mr and Mrs Lawrence’s case

72. As I have mentioned, Mr Lawrence claims that his agreements with Mr Gunner were made “in or about 2004”.

73. Mr King pointed to three circumstances which, he submitted, pointed to the probability of Mr Gunner entering into agreements with Mr Lawrence of the kind alleged at that time.

74. They were:

1. the history of property dealings between Mr Gunner and Mr Lawrence prior to 2004;

2. the revelation of Mr Gunner’s affliction with leukaemia; and

3. Mr and Mrs Lawrence’s alleged residence in what the parties described as the “Blue House” at Tinonee.

75. I will deal with these matters in turn.

The alleged history of property dealings between Mr Lawrence and Mr Gunner prior to 2004

76. Prior to 2004, Mr Gunner and Mr Lawrence did have some property dealings. However, none of those dealings could be described as a partnership, and none involved the subdivision of property. As I have said, Mrs Gunner’s evidence was that she understood from Mr Gunner that he never acted with partners (see [5] above).

77. In or about 1992, Mr Lawrence and Mr Gunner had effected what the parties described as a “land swap” whereby Mr Lawrence transferred to Mr Gunner a property he owned at Gloucester in exchange for a property Mr Gunner owned in North Balgowlah. That transaction involved no work, input or joint profit to either Mr Lawrence or Mr Gunner.

78. Mr King submitted that, in 1998, there had been a “property deal” between Mr Gunner, Mr Lawrence, and Mr Lawrence’s son, Mr David Lawrence. Whatever that “deal” was, it resulted in Mr Lawrence suing Mr Gunner for $38,000, claiming that he and his son had in 1997 painted the inside of the house at 134 Clontarf Street and carried out other significant work.

79. Mr King also submitted that there was evidence of an agreement between Mr Lawrence and Mr Gunner concerning a development in Seaforth. However, Mrs Gunner’s evidence, which I accept, was that the only thing that Mr Lawrence did in respect to that property was to make a telephone call to a surveyor involved in the project.

80. I do not find that these circumstances point to the probability of the correctness of Mr Lawrence’s case.

Mr Gunner’s affliction with leukaemia

81. Mrs Gunner gave evidence that Mr Gunner was diagnosed with leukaemia in October or November 2002. She said she told Mrs Lawrence of that diagnosis on the same day.

82. That evidence is inherently probable. It was common ground that Mrs Gunner and Mrs Lawrence, as identical twin sisters, were extremely close at around this time and spoke on the telephone on a daily basis (and often several times a day). It seems very likely that, as she says, Mrs Gunner passed on to her sister the very serious news of her husband’s affliction with leukaemia as soon as she knew of it.

83. However, Mr King submitted that:

“The true position is that the illness revealed by Frances to Valerie in late 2003 was the context for Mr Gunner making the project development agreements.”

84. Thus, Mr King submitted that the revelation of Mr Gunner’s illness in “late 2003” provided an explanation for Mr Gunner entering into the agreements with Mr Lawrence “in or about 2004” of the kind alleged.

85. This submission was evidently based on Mrs Lawrence’s evidence that when Mrs Gunner told her of Mr Gunner’s illness, Mrs Gunner said:

“You and Wayne must come up to Tinonee. Norm needs a lot of help. Wayne must look after Norm’s business. You must help me look after Norm.”

86. Mrs Gunner denied making this statement to her sister.

87. In cross-examination, Mrs Lawrence said Mrs Gunner told her of Mr Gunner’s condition in May 2003 (not, as Mr King submitted, in “late 2003”).

88. I do not accept this evidence. I see no reason to doubt Mrs Gunner’s evidence that she learned of Mr Gunner’s leukaemia diagnosis in October or November 2002, nor that she told her sister immediately.

89. In those circumstances, the timing of that revelation provides no support for Mr Lawrence’s contention that he entered into the relevant agreements with Mr Gunner in around 2004.

Mr and Mrs Lawrence’s alleged residence in the “Blue House”

90. Mr King submitted that, following revelation of Mr Gunner’s medical condition, Mr and Mrs Lawrence moved from their then residence at Braemar and lived for two years at the “Blue House” (on a property adjacent to Mr and Mrs Gunner’s residence at Tinonee).

91. Mr King submitted that this pointed to the probability of the existence of the agreements for which Mr Lawrence contended as, he submitted, there was no other reason why Mr and Mrs Lawrence would take up full time residence in the Blue House.

92. Mr and Mrs Gunner did rent the property at 67 Beauly Road, Tinonee, on which the Blue House was erected, from December 2004.

93. Mrs Gunner gave the following evidence:

“…Norman told me that he did not want Valerie and Mr Lawrence to come up and stay at our Tinonee home so he said he would agree to lease the property next door for them for 12 months and Norman and I paid the rent of $300 per week and we agreed to and did pay the bond.

…I paid the bond money for 67 Beauly Rd, Tinonee. It cost $1,200.00. …I did not sign any lease agreements, Valerie and Mr Lawrence went to Ray White in Taree and signed the agreement.

…After the lease was signed, Valerie and Mr Lawrence stayed at 67 Beauly Road only a few times each year during the two year lease.”

94. I accept that evidence. Mr and Mrs Lawrence’s occasional occupation of the Blue House provides no support for Mr Lawrence’s contentions.

95. For those reasons, I do not consider that any of the three circumstances to which Mr King pointed offer any support for the existence of the alleged agreements.

The course of events

Events leading to Mr and Mrs Lawrence’s occupation of 134 Clontarf Street

96. As I have set out above, Mr Lawrence alleges that "in the second half of 2004" he entered into the 134 Clontarf Street Agreement with Mr Gunner, pursuant to which he and Mrs Lawrence could stay there “for as long as they want".

97. On 9 February 2005, Mr Lawrence wrote a letter to the CTTT "[a]cting as Power of Attorney for Norman Gunner". The letter sought an urgent hearing for Mr Gunner's application for an order that the then tenant, Ms Conlon, vacate the property.

98. Mr Lawrence stated that before sending letters to the CTTT he asked Mr Gunner to "sign off on them".

96. Mr Lawrence's letter includes:

"If the matter is now put over for a further 10 weeks to the hearing date, and then the tenant seeks a further 3 months as indicated this will cause substantial concern to the landlord because of his medical condition. Mr Gunner being 80 years of age and suffering from a life threatening disease of leukaemia and as advised to the Tribunal on 8 February 2005, that Mr Gunner is now required palative [sic] care 2 to 3 times per week under the supervision of a palative [sic] nurse, it is imperative that Mr Gunner puts his affairs in order prior to passing away. Mr Gunner is disturbed and worried as to the wellbeing of his wife not being able to obtain possession of their home."

100. On 29 March 2005, Mr Lawrence, again acting as "Power of Attorney for Norman Gunner", wrote to the "Tenant Advocate" acting for Ms Conlon as follows:

"I would firstly like to advise you that the landlord Norman Gunner is 80 years old and is suffering from chronic leukaemia and is currently on Chemotherapy and his life expectancy is unknown but his doctor has told him to put is [sic] affairs in order.

…the landlord was to obtain possession of his only home in Sydney on 18 January 2005. And since that date the landlord has been waiting possession of the property."

101. The clear import of these letters is that Mr Gunner required possession of the 134 Clontarf Street property, described as "his only home in Sydney", for his own use.

102. Mr Collins submitted this to be irreconcilable with Mr Lawrence’s claim to have entered into the 134 Clontarf Street Agreement “sometime in 2004” because an element of that alleged agreement was that Mr and Mrs Lawrence would have life tenure at 134 Clontarf Street; whereas the above correspondence asserted that Mr Gunner required possession of the same property for his own use.

103. However, by February 2005, Mr and Mrs Gunner had been living at the Tinonee property for some six years. Mrs Gunner did not suggest in her evidence that, in February 2005, she and Mr Gunner were planning to move to 134 Clontarf Street on a full time basis (although Mrs Gunner did say that Mr Gunner said “we may have to move back [into 134 Clontarf Street] to deal with my illness”). It may be that Mr Gunner asked Mr Lawrence to assert to the CTTT that Mr Gunner wished to move back to 134 Clontarf Street as a ploy to evict the tenant. As Mr Collins accepted in final submissions, it may be that Mr Gunner was “putting his best foot forward”.

104. For those reasons, I do not think that Mr Lawrence’s correspondence of February and March 2005 is, itself, necessarily inconsistent with his claims concerning the 134 Clontarf Street Agreement.

105. So far as concerns Mr and Mrs Lawrence’s occupation of 134 Clontarf Street, Mrs Gunner gave a very different account of events to that given by Mr and Mrs Lawrence (set out at [26] to [29] above). For the reasons I have set out above, I prefer Mrs Gunner’s account of events.

106. Mrs Gunner said that from about mid 2005 Mrs Lawrence frequently asked her whether Mr Gunner would permit Mr and Mrs Lawrence to move into 134 Clontarf Street.

107. At that stage, Mr and Mrs Lawrence were living in a property that they owned in Davidson, together with Ms Pearson and her husband Darryl Pearson.

108. Mrs Gunner said that Mrs Lawrence stated:

"Wayne and I really need to move out of the house. Sara and Darryl do not get on with Wayne and all the stress is affecting Sara's health. Sara and Darryl have nowhere else to go so I have convinced Wayne that we should find somewhere else to live."

109. Initially Mr Gunner refused, saying:

"I do not think it is a good idea. We may have to move back to deal with my illness and in any event after my earlier dealings and difficulties with Wayne and David, I am concerned that we may have difficulty in getting Wayne out."

110. Mr Gunner's reference to his "earlier dealings and difficulties with Wayne and David" was evidently a reference to the dispute which had arisen earlier in relation to work performed by Mr Lawrence's son (see [78] above).

111. Nonetheless, Mrs Lawrence persisted with her request that Mr Gunner permit she and Mr Lawrence to move into 134 Clontarf Street.

112. In late 2005 or early 2006 Mr Gunner relented and, according to Mrs Gunner, said to her:

"Okay then, but [I] am warning you that you will have trouble. We may need the house and if we don't need it I want to sell it. Tell them they can stay there but only for 6 months and they must pay all the outgoings including Council rates, water and sewerage rates and water use and land tax."

113. Mrs Gunner then telephoned Mrs Lawrence and that the following conversation took place:

Mrs Gunner:   "Norman has said it's ok for you and Wayne to move into 134 Clontarf Street but only for six (6) months if you pay all the rates, water use, land tax and your own telephone and electricity.

Mrs Lawrence:   Yes, that is fine.

Mrs Gunner:   We are not sure if we may need the house because of Norman's illness or if we will sell it so Norman does not want you there any longer than six months. Also, Norman said that if you want to live in the house rent free Wayne must carry out some repairs.

Mrs Lawrence:   Ok. What work does he want Wayne to carry out?

Mrs Gunner:   Repaint the pool, build a balcony and other general repairs. He wants the property in a good state to sell.

Mrs Lawrence:   Ok. I will let Wayne know."

114. Mr and Mrs Lawrence moved into 134 Clontarf Street in or about September 2006. As I have said, they remain in occupation of the property and, by reason of the 134 Clontarf Street Agreement, assert an entitlement to continue to reside in the property, rent free, for life.

115. Mrs Gunner said that in about March or April 2007 Mrs Lawrence telephoned Mrs Gunner and the following conversation took place:

Mrs Lawrence:   "We need an additional 6 months in the house to sort out our living arrangements. Sara and Darryl are still in our house and we are not sure what to do.

Mrs Gunner:      I will discuss it with Norman."

116. Mrs Gunner then had the following discussion with Mr Gunner:

Mrs Gunner:   "Valerie called me and asked if they could stay in the house for a further 6 months. She said they still haven't sorted out any other arrangements and Sara and Darryl are still living in their house at Davidson.

Mr Gunner:   I warned you this would happen. I do not agree but if you are going to let them you should at least get them to sign a six month lease otherwise you will have trouble getting them out. I have already told you that I do not trust Wayne."

117. Mrs Gunner said that Mr Gunner prepared a lease but Mr and Mrs Lawrence refused to sign it. Mrs Lawrence said to her:

"Wayne and I will not sign a lease. If you want us to vacate you will have to give us at least six months' notice."

The events of 18 March 2009

118. Mr Gunner died on 17 March 2009, after a long illness.

119. Much time at the hearing was spent on the question of what role Mrs Gunner played in Mr Gunner’s death. Mr and Mrs Lawrence, and Ms Pearson, claimed that Mrs Gunner deliberately delayed calling the ambulance which, ultimately, transported Mr Gunner to the Manning Rural Referral Hospital where he died. That matter is not relevant to any issue in the proceedings other than the question of the credit of Mr and Mrs Lawrence and Ms Pearson. I deal with that matter later in these reasons (see [332] to [336] below).

120. For the moment, I will simply record that Mr Gunner was admitted to the Manning Rural Referral Hospital at 4.45pm on 13 March 2009. He died at the hospital at 8.15pm on 17 March 2009.

121. As I have mentioned, Mr and Mrs Lawrence allege that the very next day, Mrs Gunner asked Mr Lawrence to "continue the work" that Mr Gunner had "asked" Mr Lawrence to do in relation to the Old Bar, Beecroft, Mt Colah and 132 Clontarf Street properties.

122. Mr Lawrence gave evidence that:

"We arrived at [Mr and Mrs Gunner's home at Tinonee] in the morning [of 18 March 2009]. Shortly after we arrived, Frances [Mrs Gunner], Valerie [Mrs Lawrence] and I were in the lounge room. Frances walked up to me, hugged me and said words to the effect:

'Wayne, you do not have to worry. Everything will continue on the same as your agreements with Norm. I am proceeding forward with the subdivisions'."

123. Mrs Lawrence gave a similar account.

124. Mrs Gunner denied saying anything to this effect.

125. She said, and I accept, that although Mr and Mrs Lawrence did arrive at Tinonee on 18 March 2009, only Mrs Lawrence came into the house. Mrs Gunner said:

“Valerie left Mr Lawrence outside and came into the house alone and asked if she could make Mr Lawrence a cup of tea, as he was leaving to go straight back home to Sydney”.

126. That being so, the statement that Mr and Mrs Lawrence assert Mrs Gunner made to Mr Lawrence could not have been made.

127. A further difficulty with this aspect of Mr and Mrs Lawrence's case is that it was Mr Lawrence’s contention that, during Mr Gunner's life, Mrs Gunner was not told of the alleged arrangements between Mr Lawrence and her late husband.

128. In their Outline of Submissions of 19 November 2014 (which, as I have stated, was prepared by the plaintiffs themselves and, for some reason, signed by their solicitor) the plaintiffs said:

“Over the years Norman depended more on Wayne and did not discuss any business with the defendant”.

129. In an affidavit Mr Lawrence swore:

“On the occasions that Norman and I spoke with each other [about ‘developments we were working on’ and ‘potential developments’], neither Valerie nor Frances was part of the conversation, the majority of our conversations were about matters concerning property developments.”

130. Later in the same affidavit Mr Lawrence said:

“In the second half of 2004 and in 2005, on the occasions that Valerie and I visited Norman and Frances in Tinonee, Norman and I spent a lot of time together. We often sat together on the back veranda of [the Tinonee property] talking with each other. On many of these occasions, Valerie and Frances were elsewhere, for example in the kitchen cooking a meal or out of the house on a walk”.

131. In a later affidavit, Mr Lawrence said:

“The evidence will show that [Mrs Gunner] had no involvement in the subdivision at Old Bar or any involvement between Norman Gunner and [Mr Lawrence].”

132. In cross-examination, Mr Collins took Mr Lawrence to the passage I have set out at [130]. The cross-examination continued:

Q.   “Is that true?

A.   Yes.

Q.   And, in general, what I suggest that you’re endeavouring to convey to his Honour is that, so far as you were concerned, Frances Gunner didn’t know any of the details of her husband’s business affairs, particularly those that were concerned with you?

A.   She would have had knowledge of that, yes.

Q.   But isn’t your position that she didn’t know the details of her husband’s business affairs?

A.   No, that’s not correct.

Q.   You’ve never said anything along those lines?

A.   It’s – she would have known about his business affairs, but what I’m saying here in my affidavit, which is different to the submissions, is, I’m saying on many occasions Valerie and Frances were elsewhere, for example, cooking in the kitchen or outside on a walk.

Q.   I understand that completely. But what I’m suggesting is that you told his Honour that Mrs Gunner didn’t have any knowledge of her husband’s business affairs, particularly those that you say involved you?

A.   Are you saying this [is] in the submissions?

Q.   No, I’m just asking you generally, Mr Lawrence. Don’t worry about the submissions for a moment, we’ve seen what you’ve said there. ‘Norman didn’t discuss any business with the defendant’. That’s in the submissions, isn’t it?

A.   Yes.

Q.   Paragraph (x) page 4. That’s true, isn’t it, so far as you’re concerned?

A.   Well, I may have left a word out, it’s a submission and these submissions were prepared in a big hurry, just collating everything together and making one for notes for the solicitors to look at. So they were notes. They were submissions, but they were given to them to go them [sic] and everything like that. I may have left a word out here and there.”

133. Later Mr Lawrence said:

“Well, she must have had some sort of knowledge of the subdivisions, but what I’m saying to you is, that when me and Norm were discussing everything, we did it ourselves and they were in the kitchen or out the back walking. Frances was never sitting there with us to actually discuss the things we discussed about the four subdivisions.”

134. When asked about the passage I have set out at [131] Mr Lawrence said:

“I shouldn’t have used the words ‘the evidence will show’.”

And that:

“I’ve made a mistake”.

135. This evidence provides an example, in my opinion, of Mr Lawrence’s preparedness to give such evidence as he thought would advance his case at a particular time. He first asserted that Mrs Gunner was ignorant of his alleged arrangements with Mr Gunner, no doubt to eliminate Mrs Gunner as a potential contradictor. When confronted with the tension between that position and his assertion that on 18 March 2009 Mrs Gunner asked him to “continue” those arrangements (implicit in which assertion was the proposition that Mrs Gunner did know of the arrangements), he was forced to dissemble.

136. Mr Collins put this aspect of the matter to Mr Lawrence in cross-examination:

Q.    “That being the state of things, you have given evidence in your affidavit that on 18 March 2009, the day after Norman died, you were in the lounge room at [the Tinonee property], and shortly after you arrived Frances walked up to you, hugged you and without any further ado just said, ‘Wayne, you do not have to worry, everything will continue on the same as your agreements with Norm. I am proceeding forward with the subdivisions.’ Remember giving that in your evidence, paragraph 210 in your affidavit of 30 May 2013?

A.    Correct.

Q.    This piece of evidence you've given concerns the lady who in the seven passages I've read to you you have told his Honour knew nothing of Norman's business arrangements at all and certainly nothing about the so-called partnership arrangements. Correct?

A.    Correct.

Q.    And this is the lady whom you told his Honour was always by chance either in the kitchen or out walking with her sister whenever you had an important conversation with Mr Gunner about property matters.

A.    Yes.

Q.    It just so happens, does it, that with monotonous regularity, whenever there was an important discussion between you and Norman, the two sisters were out walking?

A.    That's usually what happened.

Q.    That's fantastic, isn't it?

A.    Yes.

Q.    What I'm suggesting also is that it would not be possible for Mrs Gunner to go up to you and say everything will continue on the same as your agreements with Norm because on your own evidence she knew nothing whatever about them. Correct?

A.    She said she would carry on all the arrangements the same.

Q.    Please listen to my question. I'm saying it's not possible that she could have said such a thing because in your own evidence in the seven passages I've just read to you you've been at pains to tell his Honour that she knew nothing whatever about them.

A.    I stick to what I've said there.

Q.    But you'll agree with me, won't you, that if she said that, and we'll come to that issue I can assure you, if she said that she was talking about something of which she knew precisely nothing.

A.    She didn't know nothing. She knew she had the Beecroft properties. She knows what happened with the Beecroft properties. She knows about the Court case and everything, but she doesn't know every intricate little thing about it.

Q.    On your evidence here in this court she didn't know anything about the alleged agreements that you had with Norman about alleged partnerships. Correct?

A.    Me and Norman-

Q.    Please answer that important question.

A.    If you could ask me again.

Q.    On your own evidence here she didn't know anything about the details of your alleged partnership agreements with Norman Gunner, did she?

A.    The only way she would have known was through Valerie.

Q.    I beg your pardon?

A.    The only way she probably would have known, if she did know, it would have been through Valerie.

Q.    But Valerie was out walking too.

A.    She was.”

137. I do not accept Mr or Mrs Lawrence’s evidence about the events of 18 March 2009, and in particular that Mrs Gunner said anything to the effect alleged by Mr and Mrs Lawrence. This is significant in light of the emphasis placed by Mr and Mrs Lawrence on the alleged events of 18 March 2009.

Events thereafter

138. Mrs Gunner gave evidence that shortly after Mr Gunner’s death, she said to Mrs Lawrence:

"I'm going to list all the properties in Sydney for sale. I can't afford to keep them. The land tax is over a hundred thousand dollars a year for those properties alone. You and Wayne will have to move out of 134 Clontarf Street."

139. As I have said, letters of administration in respect of Mr Gunner's estate were granted to Mrs Gunner on 10 December 2009. By late February 2010, all of the properties formerly registered in Mr Gunner’s name had been transferred into the name of Mrs Gunner.

140. In January 2010, Mrs Gunner engaged Mr Robert Chapman, the principal of the Ray White franchise in Taree, to manage her properties.

141. Mrs Gunner later appointed Mr Chapman to be her enduring guardian. I will return to this below.

142. Mrs Gunner gave evidence, which I accept, that between March and June 2010, Mrs Lawrence told her on numerous occasions:

“Wayne would like to help you with the marketing of the Sydney properties. He said he would arrange for advertising and deal with all enquiries so you don’t have to deal with any agents”.

143. At around this time, Mr Lawrence, in telephone calls between Mrs Lawrence and Mrs Gunner, offered to engage a firm of surveyors, Rygate & Company Pty Ltd, to survey some of Mrs Gunner’s properties, including the Beecroft property. Mrs Gunner accepted this offer.

144. In May 2010, Beecroft was put to auction. The property was passed in at $450,000.

145. In July 2010, Mrs Gunner agreed to allow Mr Lawrence to take over marketing of the properties. She said, and I accept:

“As a result of Valerie’s persistent requests and bearing in mind the assistance of Mr Lawrence in obtaining the Rygate surveys, for which I was grateful, and as the agents appointed at that time had not sold the Sydney properties, on or about July 2010, I allowed Mr Lawrence to assist me with marketing the properties for sale and in particular placing advertisements in various new prints [sic]. The advertisements were paid for by me.”

146. In cross-examination, Mr Lawrence accepted that at around this time, he had taken over from Mrs Gunner as the first point of contact in relation to the sale of the various properties owned by Mrs Gunner, including Beecroft.

Mr Lawrence's dealings with Mr Mirosevich

147. Mrs Gunner called Mr Dennis Mirosevich to give evidence.

148. Mr Mirosevich is a property developer who had dealings with Mr Lawrence concerning the Beecroft property. Mr Mirosevich impressed me as an honest witness. He presented as deeply aggrieved by the conduct of Mr Lawrence, but also of Mrs Gunner (concerning Mrs Gunner's rescission of a contract to sell the Beecroft property to a company, SLN Developments Pty Ltd, in which Mr Mirosevich and his wife were shareholders. I will return to this below). In the witness box, he was deeply critical of his treatment, as he saw it, at the hands of both Mr Lawrence and Mrs Gunner, and deeply upset at the predicament in which such conduct had placed him. Nonetheless, I have no reason to doubt that his account of his dealings with Mr Lawrence was truthful and accurate.

149. Mr Mirosevich and Mr Lawrence had had commercial dealings concerning a property at Magnus Street, Nelson Bay. That property was owned by Minsden Pty Ltd, a company associated with Mr Lawrence. At some time in 2008, a company associated with Mr Mirosevich, Dennis Homes Pty Ltd, contracted to purchase the Nelson Bay property from Minsden for $900,000.

147. Mr Mirosevich also had dealings with Mr Lawrence in early 2010. Mr Mirosevich was working for Ray White Real Estate in Port Stephens at that time. That firm acted for Mr Lawrence in relation to the sale of a property Mr Lawrence owned or had an interest in.

148. In September 2010 Mr Lawrence asked Mr Mirosevich for his opinion of the Beecroft property. Mr Lawrence said to Mr Mirosevich:

"I have a property at Beecroft that I would like you to give me a valuation for."

152. Mr Mirosevich considered the matter and told Mr Lawrence that he thought the Beecroft property "was likely to be worth $1.5 million".

153. Mr Mirosevich subsequently became aware that the Beecroft property was owned by Mrs Gunner. Shortly thereafter he had this conversation with Mr Lawrence:

Mr Lawrence:   "Would you be interested in buying and developing the site?

Mr Mirosevich:   The better approach would be, given that you have indicated to me that you have an interest in the property, to enter into a joint venture agreement with you and Mrs Gunner so that I could then borrow against the Beecroft Property and develop the site with the profits to be shared.

Mr Lawrence:   Frances is desperate to sell as she has a tax bill that she needs to pay to the ATO."

154. In or about October 2010, Mrs Lawrence telephoned Mrs Gunner. The following conversation took place:

Mrs Lawrence:   "Wayne has received a good enquiry from the ads for the sale of the Beecroft property.

Mrs Gunner:      How much are they willing to pay?

Mrs Lawrence:   I don't know. Wayne is talking to a man named Dennis."

155. In November 2010 Mr Mirosevich arranged for a Mr Ian Lazar from Tripod Funds Management Pty Ltd to commission Alcon Lupton & Associates to conduct a valuation of the Beecroft property. Alcon Lupton & Associates provided a valuation dated 23 November 2010 which assessed the value of the Beecroft property at $1.5 million. Both Mr Mirosevich and Mr Lawrence received a copy of the valuation.

156. Between October and December 2010 Mrs Gunner regularly asked Mrs Lawrence how Mr Lawrence's negotiations for the sale of the Beecroft property were progressing. Mrs Lawrence replied saying words to the effect:

"Wayne is still discussing the sale with Dennis. Things take time."

157. In about December 2010, Mrs Lawrence telephoned Mrs Gunner and said:

"Wayne said I should call you and let you know that Councils were re-zoning vacant blocks in the area and that if properties do not have existing development approvals they will turn them into parks and other public open space and so you should sell the Beecroft Property quickly."

158. A short time later, in January 2011, Mr Lawrence came to Mr Mirosevich's office and the following conversation took place:

Mr Lawrence:   "Frances has to sell the Beecroft property urgently. She has a tax problem and she needs a quick unconditional sale. What is it worth to a buyer as an unconditional quick sale without a development approval?

Mr Mirosevich:   Given Council's negative attitude towards the development and that there is no guarantee that a substantial subdivision will be approved, I don't think any developer would be prepared to buy it for a price above what it is worth as a single residential block of land.

Mr Lawrence:      What do you think that would be?

Mr Mirosevich:   $600,000.00

Mr Lawrence:   Do you have anyone that would sign an unconditional Contract and pay $600,000.00?

Mr Mirosevich:   At $600,000.00, I am sure I would because at that price there is no risk."

159. Shortly thereafter Mr Mirosevich again suggested to Mr Lawrence that a joint venture be undertaken between he, Mr Lawrence and Mrs Gunner.

160. The following conversation then took place between Mr Mirosevich and Mr Lawrence:

Mr Lawrence:      "No, I told you before, I will not work with Frances.

Mr Mirosevich:   Fine, I'll work with Frances and share my profit with you.

Mr Lawrence:   You don't know Frances. No one can deal with Frances. She is not all there and can't deal with the requirements of property development. She just needs the property sold unconditionally so she can pay her tax bill.

Mr Mirosevich:   Ok. How would the arrangement work? What are you proposing?

Mr Lawrence:   You will purchase the property in your SLN Developments company and I will take a 51% shareholding in your company and in return I will use my property at Nelson Bay as security to help raise the money to buy and develop the property.

Mr Mirosevich:   Ok, you can also be a director of SLN Developments. How much is your Nelson Bay property worth?

Mr Lawrence:   No, I will not be a Director, I am never a Director. The way I operate is that I become a majority shareholder and put money into the project. My Nelson Bay property is worth about $900,000."

161. Mr Mirosevich said that he and Mr Lawrence then:

"…set about formalising our agreement which included transferring to Mr Lawrence 51% of the shares in SLN Developments and finalising documentation including Minutes of Meeting, setting out what was agreed between myself and Mr Lawrence and his wife Valerie".

162. The “Minutes of Meeting” of 21 January 2011 prepared by Mr Mirosevich recorded an agreement between Mr Lawrence and Mr Mirosevich that:

1. SLN Developments would be used to "undertake business deals involving" Mr Lawrence and Mr Mirosevich;

2. Mr Mirosevich would be the sole director and secretary;

3. no other directors or secretaries could be appointed without shareholder approval;

4. Mr Lawrence would acquire a 10 per cent shareholding in the company and Mrs Lawrence a further 41 per cent shareholding;

5. SLN Developments would purchase the Beecroft property for $600,000;

6. profits from the development or on-sale of the property would be divided between Mr and Mrs Lawrence and Mrs Mirosevich on an agreed basis.

163. In late January 2011, Mrs Lawrence telephoned Mrs Gunner and told her that Mr Lawrence "had negotiated a deal to sell the Beecroft property". The following conversation took place:

Mrs Lawrence:   "Wayne has sold Beecroft.

Mrs Gunner:      Oh finally. To that Dennis? What is he willing to pay?

Mrs Lawrence:   $600,000.00 with a 12 month delayed completion.

Mrs Gunner:      What? The property is valued at $1.8 million.

Mrs Lawrence:   Wayne said that potential buyers were concerned about the possibility of Council re-zoning part of the land and that it would have a big impact on the development of the land. Wayne said you are unlikely to get a better offer."

164. On 2 February 2011 Mr and Mrs Lawrence acquired a total of 51 per cent of the shares in SLN Developments.

165. The following day, 3 February 2011, Mrs Gunner exchanged contracts with SLN Developments to sell it the Beecroft property for $600,000. The contract provided for settlement 12 months later, on 3 February 2012, and for SLN Developments and its representatives to have "full access to the property to prepare for a Development Application".

166. Mr and Mrs Lawrence did not inform Mrs Gunner of their shareholding in SLN Developments. Mrs Gunner did not become aware of their shareholding until mid 2011, in the circumstances I set out below.

167. Thus, Mr and Mrs Lawrence encouraged Mrs Gunner to sell Beecroft to a company in which they held a 51 per cent shareholding without disclosing that interest to Mrs Gunner and, so far as Mr Lawrence is concerned, without making any assertion of the existence of the Beecroft Agreement.

168. Further, Mr Lawrence (through Mrs Lawrence) advised Mrs Gunner to sell Beecroft to “Dennis” for $600,000 when he knew it had been valued at $1.5 million (albeit subject to Mr Mirosevich’s qualification at [158]).

169. I find Mr Lawrence’s conduct in coming to this arrangement with Mr Mirosevich to be irreconcilable with him having a genuine belief in the existence of the Beecroft Agreement. If Mr Lawrence believed he was entitled to enforce the Beecroft Agreement, he would surely have asserted that right to Mrs Gunner. Instead, he told Mr Mirosevich that Mrs Gunner needed to sell Beecroft to meet a tax obligation, thus implicitly accepting, indeed asserting, Mrs Gunner’s entitlement to the property. And he then sought to profit from the Beecroft land, not by asserting the existence of the Beecroft Agreement but, rather, by secretly (so far as Mrs Gunner was concerned) taking a 51 per cent interest (taking account of Mrs Lawrence’s shareholding) in the purchase of it.

170. This was shabby conduct on the part of Mr Lawrence. It reflects badly on his credit. It points to the high improbability of his case concerning the Beecroft Agreement. It is also the basis of one of the claims Mrs Gunner makes in her cross-claim against Mr Lawrence (see [538] to [551] below).

171. There were further developments concerning the Beecroft contract between February 2011 and February 2012. I deal with those developments later in these reasons.

132 Clontarf Street

172. As I have mentioned, in July 2010 Mrs Gunner allowed Mr Lawrence to place advertisements for the sale of her Sydney properties on her behalf.

173. In July or August 2010, Mr Steven Painter from Attentus Subdivision Pty Ltd responded to the advertisement. Mrs Gunner asked Mr Painter to contact Mr Lawrence to obtain documents concerning the property but said to Mr Painter:

"I would prefer that you do not discuss any of the financial aspects of the sale of 132 Clontarf Street with Mr Lawrence. All negotiations are to be directly with me."

174. In February 2011 Mrs Lawrence told Mrs Gunner that Mr Lawrence had done a "deal" with Mr Painter concerning 132 Clontarf Street.

175. Accordingly, on 16 March 2011 Mrs Gunner instructed her conveyancer to write to the solicitors acting for Attentus in the following terms:

"We have been instructed that further negotiations have been taking place between [Attentus] and Mr Wayne Lawrence, the Vendor's brother-in-law.

We have been advised that Mr Lawrence has agreed to the following:

(i)   $200,000 deposit to be paid…

(ii)   $1,400,000 to be paid…on completion.

(iii)   the balance of $600,000 is to [be] provided as Vendor Finance as the Purchaser is unable to procure sufficient funds to complete this purchase.

(iv)   the security for the Vendor finance is to be provided by Mr Wayne Lawrence NOT the Purchaser.

…

We have been instructed that our client does not agree and has not agreed to providing Vendor finance and is extremely upset that she was not involved in these negotiations.

We have been instructed that as the Purchaser is having difficulty obtaining finance, our client is prepared to proceed with this sale as follows:

(1)   reduce the Purchase Price to $1,850,000…". [Emphasis in original]

176. On 17 March 2011 the solicitors acting for Attentus replied:

"I further note that your client does not agree and has not agreed to providing Vendor finance and is upset that she was [not] involved in these proceedings. My clients regret causing any upset to your client but the situation is that they have dealt with Mr Wayne Morris [sic] for many months, initially in relation to a property in Beecroft as well as in relation to the [132 Clontarf Street] property. It was always assumed that your client and indeed yourself were being kept informed as negotiations continued.

With respect to terms on which your client is prepared to proceed with the sale, as detailed in your letter of 16 March 2011, I am instructed to advise that my client agrees to proceed with the purchase on the basis of the terms set out in that letter."

177. This evidence reveals that, unbeknown to Mrs Gunner, and without her authority, Mr Lawrence had been negotiating with Attentus for the sale of Mrs Gunner's property at 132 Clontarf Street and, as part of that negotiation, was prepared to provide his property as security for vendor finance to be provided by Mrs Gunner.

178. Leaving aside the question of Mr Lawrence’s authority to act this way, Mr Lawrence’s conduct in purporting to negotiate a sale of 132 Clontarf Street to Attentus cannot be reconciled with him having a belief in the existence of the 132 Clontarf Street Agreement. If, as he now says, he was entitled to enforce such an agreement, why would he seek to negotiate the sale of 132 Clontarf Street to Attentus, rather than insist that Mrs Gunner honour his alleged entitlements under the 132 Clontarf Street Agreement?

179. I find this conduct a further reason for scepticism concerning Mr Lawrence’s evidence.

134 Clontarf Street

180. On 9 February 2011, Mrs Gunner sent a "Notice to Vacate" 134 Clontarf Street to Mr and Mrs Lawrence in the following terms:

"I, Frances Beatrice Gunner hereby give you, Valerie Lawrence and Wayne Lawrence [notice] to vacate my premises at 134 Clontarf Street, North Balgowlah NSW 2093 in 90 days as from 10th March 2011 to 7th June 2011."

181. Mr and Mrs Lawrence’s response was, on or about 7 April 2011, to contact the Mental Health Unit in Taree seeking to refer Mrs Gunner to that unit on the basis that she was "manic".

182. The Mental Health Unit Assessment report dated 7 April 2011 includes the following:

"Frances referred by her brother-in-law Lawrence and her identical twin, Valerie, Lawrence's wife…

Frances has had 5 prior pysch admissions for mania.

It is reported that Frances has a [Bipolar Affective Disorder]

Frances married Norm some 19 years ago and her mental health was stable with Norm, and Frances did not take MH medication during this 19 year period.

However, Norm died 2 years ago.

When Norm was alive, the brother in law, Lawrence, managed Norm's affairs.

When Norm died, Frances took over the management of her own affairs. It would appear that managing her affairs has been enormously stressful for Frances.

Frances recently sold a property. After the sale was agreed, Frances then rang her conversancy [sic] person and reduced the price of the property by $200,000.

When her niece Sara was recently visiting Frances, Sara reports that Frances is very quick to abuse people for example in the supermarket, that Frances spoke of driving the car off the road to kill both of them, and when going for a walk spoke to Sara that should she kill Sara in the woods Sara would never be found.

Every indication that Frances is again manic.

…

[Mr and Mrs Lawrence are] concerned Frances may be suffering a manic phase of Bipolar illness, related to sale of property in Sydney that was divested significantly under-value."

183. Mrs Gunner was thereafter interviewed by an officer of the Mental Health Unit, who made the following observations about Mrs Gunner:

"Engaged in conversation, willing to discuss circumstances and situation, reactive and appropriate…

Logical in describing her current financial circumstances…

No thought disorder evident…

Orientated to time and place…

Good insight…".

184. The report concluded that Mrs Gunner was not suffering any mental illness or disorder and did not have an "at risk mental state".

185. The report stated:

"58 year old lady with history of Bipolar Affected Disorder, living alone after husband passed away in 2009. Currently managing several properties in the context of reducing tax burden and maintaining income from tenanted properties. Sister and brother-in-law apparently live on a property in Sydney owned by Mrs Gunner. Apart from possible elevation in mood no other apparent symptoms of mental illness, no risk of harm to self or others evidenced."

186. The report also noted that the unit had contacted Mrs Gunner's General Practitioner, Dr Trevor Banks, who reported that he had seen Mrs Gunner as recently as 31 March 2011 and that he had "no current concerns [for] Mrs Gunner's mental health state".

187. The report concluded:

"No grounds to schedule Mrs Frances Gunner at this time."

188. I find it impossible to comprehend what rational basis could possibly have existed for Mr and Mrs Lawrence to have taken the course revealed by this evidence. According to the Mental Health Unit's report, the stated basis for Mr and Mrs Lawrence's concern about Mrs Gunner's mental state was her decision to sell a property "$200,000 below value agreed upon". Presumably this was a reference to Mrs Gunner's decision to sell 132 Clontarf Street to Attentus for $1,850,000, in the circumstances to which I have referred.

189. What is clear is that, knowing full well of Mrs Gunner's decision to sell 132 Clontarf Street to Attentus, and in the face of Mrs Gunner’s demand for possession of 134 Clontarf Street, Mr Lawrence made no assertion as to the existence of the 132 Clontarf Street or 134 Clontarf Street Agreements. Rather, he and Mrs Lawrence acted as I have set out. If, as he now contends, he had reached an arrangement with Mr Gunner to the effect of the 132 Clontarf Street and 134 Clontarf Street Agreements, and if, as he says, Mrs Gunner had on 18 March 2009 agreed to continue or abide by those agreements, he surely would have agitated those matters at this point, rather than making the allegations summarised in the Mental Health Unit's report.

190. This is further evidence pointing against the probability of the existence of the agreements for which Mr and Mrs Lawrence now contend.

191. Mrs Gunner described her reaction to Mr and Mrs Lawrence's conduct in the following terms:

"I was extremely surprised, hurt, disappointed and sad that they would take such a potentially life changing step to deprive me of my freedom and my right to deal with my own affairs. I was astonished that my sister would include herself in such actions. I consciously tried in my own mind to make excuses for her on the ground of what I thought must have been her desperate financial position with Mr Lawrence."

192. Nonetheless, Mrs Gunner achieved a reconciliation with her sister.

193. Mrs Gunner gave this evidence:

"On or about mid April 2011, I received daily phone calls from Valerie in which she said that she and Mr Lawrence were in a desperate financial position and that they had not been able to sort out their living arrangements. I recall during the telephone conversations that Valerie said words to the effect:

'We are struggling for money and we cannot afford to move. Wayne will not give me any money. Can you help me out. Please let us stay.'

As a result of these calls, and the impression of desperation I got from such calls, I felt obliged to help Valerie. She is my twin sister. Accordingly, I agreed to withdraw the Notice to Vacate and allow them to stay on until I sold the property."

194. Thus, on 18 April 2011 Mrs Gunner wrote to Mr and Mrs Lawrence:

"I, Frances Beatrice Gunner, hereby cancel Letter to Vacate above premises, letter dated 9th February 2011".

195. Mrs Gunner gave this evidence:

"On or about late April/early May 2011, I continued to receive telephone calls from Valerie and of course from time to time I made calls to her. In almost all of these calls she spoke of her ‘desperate financial situation’. Even today, I recall feeling an overwhelming sense of obligation at that time to help my sister in spite of what she had done and in spite of my own and, when he was alive, Norman's feelings about Mr Lawrence."

196. That culminated in Mrs Gunner giving Mrs Lawrence two cheques for $50,000 and $100,000 dated 23 May 2011 and 17 June 2011 respectively which Mrs Gunner sent to Mrs Lawrence under cover of a note:

"Enjoy your pocket money

Lots of love

Frances, Rex and Peppi".

197. Rex and Peppi were Mrs Gunner's pets.

198. This was by no means the first cash gift that Mr and Mrs Lawrence had received from Mr and Mrs Gunner, and from Mrs Gunner after Mr Gunner’s death. Between March 2003 and July 2011, Mr and Mrs Gunner, and then Mrs Gunner, made cash gifts to Mr and Mrs Lawrence totalling $1,169,000. In addition, Mr and Mrs Gunner gave numerous gifts to Mr and Mrs Lawrence, and also to Mr and Ms Pearson. Those gifts included international business class travel, computers, motor vehicles, clothing, jewellery and, in Ms Pearson’s case, horses. I set out the detail of those gifts and their relevance to the issues in these proceedings later in these reasons (see [380] and [487] to [492] below).

Beecroft

199. Also in April 2011, Mrs Gunner mentioned her sale of the Beecroft property to SLN Developments to Mr Chapman. As I have stated (see [140] above), Mrs Gunner had, in January 2010, appointed Mr Chapman to manage her properties.

455. A further document annexed to Mr King’s submissions comprised some 110 pages and was entitled “Work Done by Wayne Lawrence”. According to that document, between 2005 and 2010 Mr Lawrence performed 9,257 hours of work referrable to one or other of the five properties in question in these proceedings, as well as work in relation to other properties owned by Mrs Gunner.

456. The “Work Done by Wayne Lawrence” document was said to be based on Mr Lawrence’s diaries.

457. Mr Lawrence claimed to have undertaken the following process to calculate the amount of work that he had done for Mr and Mrs Gunner’s benefit:

1. he identified items in his diary which he thought were related to work he had done for Mr Gunner;

2. he then wrote “Norm” or something similar at the top of the relevant page of the diary;

3. he then tried to connect those diary entries to other documents (such as, I would infer, his credit card statements or telephone accounts, extracts of which were tendered on behalf of the plaintiffs); and

4. he then endeavoured to recall what association there was between the diary entry and those documents.

459. In cross-examination, Mr Lawrence agreed that this process of reasoning on his part had the result that there was no evidence before the Court that would enable independent verification of his quantum meruit claim.

460. Even a cursory comparison of Mr Lawrence’s diaries with his “Work Done by Wayne Lawrence” document shows the latter to be an unreliable, wildly exaggerated guide to what work Mr Lawrence, in fact, did.

461. In his reply submissions, in the course of advocating Mr Lawrence’s position in relation to his diary and the “Work Done by Wayne Lawrence” document, Mr King drew attention to Mr Lawrence’s diary entry of 23 June 2006, as an example “taken at random”.

462. At the top of that diary entry, Mr Lawrence has written “Balgowlah today Norm”. That heading was made by Mr Lawrence many years after 23 June 2006, when he was engaging in the process that I have described at [458] above.

463. One part of the 23 June 2006 diary entry reads:

“Work over @ Balgowlah today fixing House”.

464. That note appears to be a reference to work done at 134 Clontarf Street.

465. There is no other entry in the diary for that date which, on its face, refers to work done at 134 Clontarf Street. Mr King submitted that three entries reading “$1404.50”, “cost of concrete – 4,000 – $169” and “black $149” related to “site works at Clontarf done that day”. However, this is not apparent from the face of the diary note.

466. Mr King concluded:

“Significantly, half of these entries record work done and services provided for the benefit of Mr Gunner and through the land work done and services provided for the benefit of [Mrs Gunner] herself”.

467. However, inconsistently with that submission, the relevant reference in the “Work Done by Wayne Lawrence” document for 23 June 2006 asserts that on that day, Mr Lawrence worked eight hours (“one day is based on 8 hour[s] on average”) at North Balgowlah (that is, at either 132 or 134 Clontarf Street) “cleaning, taking rubbish to tip”.

468. That description is also given in that document for work done on each of 20, 21, 22, 24, 25, 26, 27, 28, 29 and 30 June 2006. Each page of Mr Lawrence’s diary for those days includes Mr Lawrence’s ex post facto heading “Balgowlah today Norm” or simply “Norm”, and records many activities other than work at “Balgowlah”. Some diary entries (those for 22, 25 and 30 June 2006) contain no reference at all to work done at Balgowlah (apart from the heading “Balgowlah today Norm”).

469. Mr Hourigan, who conducted this part of the argument on behalf of Mrs Gunner, told me that there were over 1,200 days referred to in the “Work Done by Wayne Lawrence” document, and that in some 340 cases there was no corresponding contemporaneous note in Mr Lawrence’s diary of work done. Mr Hourigan told me that there were some 370 other days where there was either no corresponding entry in Mr Lawrence’s diary to a “Gunner matter” at all or entries directly inconsistent with Mr Lawrence having done work for Mr or Mrs Gunner on the day in question.

470. I have not conducted an analysis of the “Work Done by Wayne Lawrence” document and Mr Lawrence’s diaries sufficient to enable me to verify the precise figures Mr Hourigan mentioned. However, my own, more limited comparison of the documents is consistent with Mr Hourigan’s submission, as is my analysis of the “random entry” of 23 June 2006 to which Mr King referred. In those circumstances, I am not satisfied that the “Work Done by Wayne Lawrence” document is of any probative value.

471. Perhaps recognising the difficulty he faced with this kind of material, on 2 December 2014 (the seventh day of the hearing) Mr King filed in Court a notice of motion seeking, amongst other things, an order that:

“The issues of quantification of the Plaintiffs’ claims as set out in [paragraph 106 of the amended statement of claim] be referred to an officer of the Court or such other person as is appointed by the Court for assessment”.

472. During final oral submissions, which took place on 5, 6 and 7 May 2015, Mr King moved on that motion.

473. In order to consider whether there was any merit in taking that course, on 7 May 2015 I directed that the plaintiffs serve a document in the nature of a Scott Schedule setting out, in chronological order, and separately in relation to each of the Old Bar, Mt Colah, Beecroft, 132 Clontarf Street and 134 Clontarf Street properties, all of the items of work claimed by way of quantum meruit and proven in the evidence, including the items set out in the “Various Items of Work Done by Wayne Lawrence for Gunners” document together with:

1. the date of the work alleged to have been done;

2. a brief description of that work;

3. a reference to the evidence where such work is described (being either an exhibit tendered in the proceedings, a passage from the plaintiffs' affidavits which was admitted to evidence in the proceedings or a passage from the transcript); and

4. the amount claimed for each such item of work, and a reference to the evidence justifying the allocation of that amount to that item of work.

474. The Scott Schedule document produced on behalf of Mr and Mrs Lawrence in response to those directions did not, to any significant extent, take the matter further.

475. On occasion, that document did not set out the precise date of the work alleged to have been done but, rather, referred to work done in a date range (for example “2005 – 2011” or “2004 – 2009”).

476. For the most part, the document did not set out the amount claimed for each item of work, but merely stated the time said to have been spent on the work; principally by reference to Mr Lawrence’s diary.

477. Indeed, in relation to 134 Clontarf Street, and notwithstanding the issues to which I have referred with Mr King’s “taken at random” diary entry of 23 June 2006, the Scott Schedule document repeated, for the whole period of 19 to 30 June 2006, the claims for full days’ work purportedly based on Mr Lawrence’s diary entries.

478. The Scott Schedule contains almost no reference to any evidence in the proceedings that would justify the allocation of any particular hourly or daily monetary rate to the work alleged to have been done.

479. Further, there are claims for work done which, plainly, are not justified by the evidence to which reference is made.

480. For example, a claim is made for three days’ work between 13 and 15 May 2009 described as “filed the review for cost assessment re Neil Handley”. As I have mentioned at [19] above, Mr Handley was a neighbour of Mr Gunner at Beecroft who commenced proceedings against Mr Gunner in this Court. The evidence relied on to justify that claim in the Scott Schedule is Mr Lawrence’s diary. The diary does contain what appears to be a contemporaneous entry from 14 May 2009 referring to the “filing” (evidently in Court) of a “review for costs assessment”. But that day’s diary entry contains numerous other references and does not suggest that the “filing” took anything like the whole of the day. The diary entries for 13 and 15 May 2009 contain numerous entries, but make no reference to any such “filing”. The assertion that three days’ work was done is simply unsustainable.

481. In the response to the Scott Schedule, Mrs Gunner’s legal representatives have identified numerous other occasions where there is no diary entry that matches the description of the work now claimed to have been done, and where the hours claimed for work done is an obvious exaggeration and unable to be calculated from or derived from the diary entry relied upon.

482. In those circumstances, and in light of this highly unsatisfactory and unreliable material, I am not in a position to make any assessment of Mr Lawrence’s quantum meruit claim.

483. I am not prepared to accede to Mr King’s submission that Mr Lawrence’s quantum meruit claim should now be referred out for assessment.

484. Mr Lawrence has had every chance in these proceedings to make out this aspect of his case. The matter has occupied some 16 days of court time. Mr and Mrs Lawrence have filed voluminous evidence. By making the directions referred to at [473] above, I endeavoured to give Mr Lawrence a final chance to show, at least, that there was sufficiently probative material available to him to justify further consideration of his claim. He has failed to do that, and I am not prepared to allow the matter to proceed further. The notice of motion of 2 December 2014 should in due course be dismissed.

485. In any event, I see a further fundamental hurdle in the way of this claim. Mr Lawrence must show that, in all the circumstances, it would be unjust for Mrs Gunner to receive and retain the benefit of such work as Mr Lawrence has done for her, or in her interest, without reward.

486. In that regard, Mr and Mrs Lawrence have lived rent free at 134 Clontarf Street since September 2006; almost nine years.

487. Not only that, but they have received the benefit of Mrs Gunner’s extraordinary generosity over the years. I have mentioned some of that generosity above (for example, Mrs Gunner’s gift of $150,000 in May and June 2011, shortly after the dismissal by the Mental Health Unit of Mr and Mrs Lawrence’s application that she be “scheduled”).

488. Between March 2003 and July 2011, Mr and Mrs Gunner, and then Mrs Gunner, made cash gifts to Mr and Mrs Lawrence totalling $1,169,000.

489. The cash gifts were as follows:

Date	Amount
25 March 2003	$50,000
10 June 2004	$10,000
8 November 2004	$20,000
10 January 2005	$10,000
15 March 2005	$10,000
11 April 2005	$10,000
8 August 2005	$20,000
19 October 2005	$10,000
29 December 2005	$20,000
13 January 2006	$30,000
25 January 2006	$5,000
2 March 2006	$30,000
25 April 2006	$20,000
7 June 2006	$20,000
8 August 2006	$20,000
25 September 2006	$4,000
4 October 2006	$5,800
7 November 2006	$14,000
4 April 2007	$60,000
10 April 2007	$10,000
11 April 2007	$10,000
11 July 2007	$10,000
13 September 2007	$90,000
2 October 2007	$10,000
2 October 2007	$25,000
26 November 2007	$20,000
14 October 2008	$20,000
31 March 2009	$10,000
31 March 2009	$5,000
12 May 2009	$20,000
28 May 2009	$10,000
26 June 2009	$10,200
26 June 2009	$10,000
4 August 2009	$6,000
11 September 2009	$70,000
4 November 2009	$10,000
4 November 2009	$10,000
21 April 2010	$50,000
31 December 2010	$10,000
31 December 2010	$10,000
2 February 2011	$10,000
2 February 2011	$10,000
9 March 2011	$10,000
9 March 2011	$10,000
24 May 2011	$50,000
2 June 2011	$100,000
21 June 2011	$100,000
27 June 2011	$50,000
6 July 2011	$34,000
TOTAL	$1,169,000

490. In addition, Mrs Gunner paid for holidays for Mr and Mrs Lawrence (including business class airfares, five star hotel accommodation and all expenses) to New Zealand, Hong Kong (twice), Thailand, Malaysia, United States of America, United Kingdom, Fiji, Hawaii, Canada, Lindeman Island, Hamilton Island, Switzerland, France and numerous places within Australia.

491. Mrs Gunner also purchased a telephone, laptop and photocopier for Mr Lawrence, paid for the installation of air-conditioning and a cement driveway at Mr and Mrs Lawrence’s home in Davidson, and purchased motor vehicles for both Mr and Mrs Lawrence. There were numerous other like gifts.

492. In those circumstances, accepting (as Mrs Gunner does) that Mr Lawrence has done some work on the five properties for her benefit, that benefit is far outweighed by the benefits conferred by Mrs Gunner on Mr and Mrs Lawrence (and also on Ms Pearson). It therefore cannot be said that Mr Lawrence engaged in such work without reward.

493. For those reasons alone, I would have rejected Mr Lawrence’s quantum meruit claim, even if he had properly proven it.

Mrs Gunner's cross-claim – possession of 134 Clontarf Street

494. Mr and Mrs Lawrence have lived at 134 Clontarf Street, rent free, since September 2006; almost nine years.

495. Mrs Gunner’s evidence as to the circumstances in which Mr and Mrs Lawrence came to occupy 134 Clontarf Street is set out at [105] to [117] above. I accept Mrs Gunner’s evidence. It cannot be reconciled with that of Mr and Mrs Lawrence, which I reject.

496. I have also rejected the submission made by Mr King that the letter that Mrs Gunner signed on 27 January 2012 should be “enforced according to its terms” (see [259] to [268] above).

497. By his letter of 6 February 2012 (set out at [278] above), Mr Marshall reiterated Mrs Gunner’s demand that Mr and Mrs Lawrence vacate 134 Clontarf Street.

498. On 21 February 2012, Mrs Gunner commenced proceedings in the CTTT against Mr and Mrs Lawrence seeking possession of 134 Clontarf Street.

499. The basis on which Mr and Mrs Lawrence resisted that claim was their assertion of the existence of the 134 Clontarf Street Agreement.

500. For the reasons I set out above, I am not satisfied that any such agreement was made between Mr and Mrs Lawrence and Mr Gunner, or later Mrs Gunner.

501. Accordingly, I am satisfied that Mr and Mrs Lawrence have no entitlement to continue in occupation of 134 Clontarf Street.

502. By her cross-claim in these proceedings, Mrs Gunner seeks judgment for possession against Mr and Mrs Lawrence.

503. Mr King submitted that Mrs Gunner’s claim for possession is “barred” by s 119 of the Residential Tenancies Act 2010 (NSW). Section 119 is in the following terms:

“A landlord or former landlord must not commence proceedings against a tenant or former tenant of the landlord in the Supreme Court, the District Court or the Local Court to obtain recovery of possession of residential premises subject to a residential tenancy agreement.”

504. It is common ground that Mr and Mrs Lawrence occupy 134 Clontarf Street pursuant to a “residential tenancy agreement” for the purpose of s 119 (being “an agreement under which a person grants to another person for value a right of occupation of residential premises for the purpose of use as a residence”: s 13(1) of the Residential Tenancies Act. The “value” here is Mr and Mrs Lawrence’s promise to pay outgoings and to effect repairs: see [113] above).

505. However, in my opinion, by bringing a cross-claim in these proceedings, Mrs Gunner has not “commenced” proceedings contrary to the prohibition in s 119.

506. The bringing of a cross-claim in proceedings is not “commencing proceedings” in the relevant sense. A cross-claim can only be filed as part of existing proceedings.

507. Uniform Civil Procedure Rules r 6.2 deals with “how proceedings [are] commenced”, and states that:

“…a person may commence proceedings in the court by filing a statement of claim or a summons.”

508. Cross-claims are dealt with in a separate part of the rules, namely in Pt 9. Part 9 provides that a party may “make” a cross-claim in proceedings “commenced” by statement of claim or by summons (see UCPR r 9.1).

509. It is Mr and Mrs Lawrence who “commenced” these proceedings by statement of claim on 5 September 2012. By bringing a cross-claim in the proceedings “commenced” by Mr and Mrs Lawrence, Mrs Gunner has not herself “commenced” separate proceedings against Mr and Mrs Lawrence for recovery of possession of 134 Clontarf Street.

510. The proceedings that Mrs Gunner did “commence” were those in the CTTT. As I have mentioned, those proceedings were listed for hearing in the CTTT on 13 September 2012. On 12 September 2012, because of the commencement by Mr and Mrs Lawrence of these proceedings, and with their consent, the CTTT vacated the 13 September 2012 hearing date in order that the CTTT proceedings be transferred to this Court to be heard in conjunction with the current proceedings.

511. Mr King disputed “the existence of such consent or of such orders having effect” and submitted that “the making of the orders by consent or otherwise has not been proved”.

512. However, the CTTT file is now part of this Court’s records, and reveals that not only did Mr and Mrs Lawrence consent to the orders, but that on 11 September 2012 their then solicitor, Mr Hockey, forwarded the consent orders to the CTTT. The orders were signed by both him and Mr Marshall under cover of a letter which stated:

“The parties have agreed to transfer the CTTT proceedings to the Supreme Court to be heard together with [these proceedings]”.

513. The orders made by the CTTT on 12 September 2012 were as follows:

“1.   The hearing listed for 13 September 2012 is vacated.

2.   The proceedings to be transferred to the Supreme Court to be heard in conjunction with [these proceedings].

3.   The proceedings to be stayed until final determination of [these proceedings].”

514. Those orders were evidently made in reliance on s 23(1) of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) (“the CTTT Act”) which was in the following terms:

“If the parties in any Tribunal proceedings so agree, or if the Tribunal of its own motion or on the application of a party so directs, the proceedings are:

(a)   to be transferred to a court (in accordance with the rules of that court) that has jurisdiction in the matter, and

(b)   to continue before that court as if they had been instituted there.”

515. The CTTT Act was repealed by s 3(a) of the Civil and Administrative Legislation (Repeal and Amendment) Act 2013 (NSW) with effect from 1 January 2014. On that date, the NSW Civil and Administrative Tribunal (“NCAT”) came into existence and took over the functions of, amongst other tribunals, the CTTT. However, the CTTT Act was in force at the time of the 12 September 2012 consent orders and was the governing legislation on that date. There is, in any event, an equivalent provision to s 23(1) of the CTTT Act in the Civil and Administrative Tribunal Act 2013 (NSW) so far as concerns proceedings in the Consumer and Commercial Division of NCAT (see Pt 6 in Sch 4 of the Civil and Administrative Tribunal Act).

516. The CTTT’s power under s 23 of the CTTT Act (and NCAT’s power now under the equivalent provision to which I have referred) is to transfer its proceedings to a court “that has jurisdiction in the matter”.

517. I do not consider that the effect of s 119 of the Residential Tenancies Act 2010 is to prevent this Court from having jurisdiction to deal with this matter. In Whiteford v Commonwealth of Australia (1995) 38 NSWLR 100, Kirby P (as his Honour then was) (with whom Sheller JA agreed) held the predecessor to s 119 (s 71 of the Residential Tenancies Act 1987 (NSW) which was relevantly indistinguishable from s 119) creates a defence to proceedings brought contrary to the terms of the section but “should not be read as denying jurisdiction to the Supreme Court” (at 106; per Sheller JA at 114). That decision was applied by Ward J (as her Honour then was) in Celermajer Holdings Pty Ltd v Kopas [2011] NSWSC 40, in circumstances similar to those in this case; namely, where a lessor commenced proceedings against a lessee in the CTTT and where, on the lessee’s application, the CTTT proceedings were transferred to this Court (at [18]).

515. However, as Davies J observed in Aboriginal Housing Company Ltd v Kaye-Engel(No. 3) [2014] NSWSC 718, s 81 of the Residential Tenancies Act 2010 (which sets out circumstances of termination of residential tenancies) also requires consideration.

516. Section 81 of the Residential Tenancies Act 2010 is in the following terms:

“(1)    Termination only as set out in Act

A residential tenancy agreement terminates only in the circumstances set out in this Act.

(2)    Termination by notice and vacant possession

A residential tenancy agreement terminates if a landlord or tenant gives a termination notice in accordance with this Act and the tenant gives vacant possession of the residential premises.

(3)   Termination by order of Tribunal

A residential tenancy agreement terminates if the Tribunal makes an order terminating the agreement under this Act.

(4)   Other legal reasons for termination

A residential tenancy agreement terminates if any of the following occurs:

(a)   a person having superior title (such as a head landlord) to that of the landlord becomes entitled to possession of the residential premises,

(b)   a mortgagee of the residential premises becomes entitled to possession of the premises to the exclusion of the tenant,

(c)   a person who succeeds to the title of the landlord becomes entitled to possession of the residential premises to the exclusion of the tenant,

(d)   the tenant abandons the residential premises,

(e)   the tenant gives up possession of the residential premises with the landlord’s consent, whether or not that consent is subsequently withdrawn,

(f)   the interests of the landlord and tenant become vested in the one person (merger),

(g)   disclaimer occurs (such as when the tenant’s repudiation of the tenancy is accepted by the landlord).” [Emphasis in original]

520. As Davies J said, at [19]:

“Section 81…sets out the only circumstances in which a residential tenancy agreement terminates. None of those circumstances allow for an order of any court but only an order by the Tribunal”.

521. Significantly, and most unfortunately, s 81 does not confer power on a court to terminate a residential tenancy agreement, even if the CTTT or NCAT has transferred proceedings to that court pursuant to the provisions I have mentioned.

522. Section 83 of the Residential Tenancies Act 2010 provides that if the Tribunal makes an order under s 81 terminating a residential tenancy agreement, it “must also make an order for possession” of the premises specifying a date on which the order takes effect. This suggests a legislative contemplation that an order for possession may not be made unless an order for termination of the residential tenancy has already been made.

523. In Aboriginal Housing Company Ltd v Kaye-Engel, Davies J at [21] (although cf [30]) expressed the tentative view that the effect of s 81 is that the CTTT did not (and NCAT does not) have power under s 23 of the CTTT Act (and its successor) to transfer proceedings to this (or any other) Court for the reason that the Court does not have “jurisdiction” for the purpose of that section. If that is what Davies J was meaning to convey, I would respectfully disagree. Although, by reason of s 81, only the Tribunal has power to terminate a residential tenancy agreement, I do not think it follows that a court, and this Court in particular, has no jurisdiction otherwise to adjudicate on a dispute concerning a residential tenancy agreement: see [517] above.

524. My present inclination is that I should make a declaration as to Mrs Gunner’s entitlement to have the residential tenancy agreement between her and Mr and Mrs Lawrence terminated and to have an order for possession, and remit the matter to NCAT for the making of an order under ss 81 and 83 of the Residential Tenancy Act 2010 in accordance with these reasons. This was the course adopted, albeit by consent, by Davies J in Aboriginal Housing Company Ltd v Kaye-Engel.

525. The parties have, however, not had an opportunity to make submissions in this aspect of the matter; neither counsel drew my attention to ss 81 and 83, or to Davies J’s decision. I will therefore defer further consideration of this question and give the parties an opportunity to address it.

Mrs Gunner’s cross-claim – 134 Clontarf Street – land tax

526. This claim arises out of Mrs Gunner’s evidence, which I accept, that one of the bases upon which she and Mr Gunner were prepared to allow Mr and Mrs Lawrence to occupy 134 Clontarf Street was that they pay all “land tax”.

527. In her cross-claim, Mrs Gunner claims that Mr and Mrs Lawrence “wrongly failed” to pay “land tax proportional to land tax incurred by [Mrs Gunner] upon 134 Clontarf Street”. An amount of $36,713.33 was claimed as “land tax incurred upon the leased premises on a single holding basis”.

528. My attention was not drawn in final submissions to any evidence which would warrant me coming to any conclusion as to what land tax Mrs Gunner has incurred referrable to 134 Clontarf Street. Indeed, this aspect of Mrs Gunner’s claim was barely articulated in final submissions. In those circumstances, I am not able to come to any conclusion in relation to it.

Mrs Gunner’s cross-claim – 134 Clontarf Street – loss of rent

529. As I have set out above, on 19 October 2011 Mrs Gunner, through Mr Marshall, gave notice to Mr and Mrs Lawrence to vacate 134 Clontarf Street by 16 January 2012.

530. Thereafter, Mrs Lawrence made the application to the Guardianship Tribunal to which I have referred.

531. Once that matter was resolved and the sale of Beecroft to SLN Developments settled, and following execution by Mrs Gunner of the 27 January 2012 document, Mrs Gunner, again through Mr Marshall, gave notice to Mr and Mrs Lawrence to vacate 134 Clontarf Street by 17 February 2012.

532. That led to the commencement by Mrs Gunner of the proceedings in the CTTT to which I have referred.

533. In those circumstances, Mrs Gunner claims mesne profits from 28 January 2012 to date at the rate of $750 per week.

534. The submissions made on behalf of Mrs Gunner do not identify why the date 28 January 2012 was chosen.

535. The only material adduced on Mrs Gunner’s behalf to justify the claim of $750 per week was a letter sent to Mr Marshall from Mr Wayne Blackley, the principal of Blackleys Estate Agents in Seaforth, stating his opinion as to rent likely to be obtained for a property such as 134 Clontarf Street.

536. I do not consider Mr Blackley’s untestable assertion as to rent to be a sufficient basis to make an award of mesne profits.

537. In any event, I have taken into account Mr and Mrs Lawrence’s rent free occupation of 134 Clontarf Street as a basis upon which to reject Mr Lawrence’s quantum meruit claim. In light of the lack of admissible evidence as to an appropriate weekly rate, I do not consider it appropriate to make any award in Mrs Gunner’s favour in respect of this aspect of her cross-claim.

Mrs Gunner’s cross-claim – breach of fiduciary duty regarding the Beecroft property

538. I have set out above the details of Mr Lawrence’s dealings with Mr Mirosevich concerning the purchase by SLN Developments of the Beecroft property, Mrs Gunner’s purported rescission of the Beecroft contract with SLN Developments, the resolution of that dispute and the concurrent settlement on 3 February 2012 of the sale by Mrs Gunner of Beecroft to SLN Developments at the increased price of $1.2 million and the on-sale by SLN Developments of that property to Henlong for $2.178 million.

539. That evidence establishes that, in around July 2010, Mr Lawrence agreed to act on Mrs Gunner’s behalf in relation to the sale of her Sydney properties, including Beecroft.

540. Mrs Gunner trusted Mr Lawrence to act in her interests in relation to her properties. At that point, she had been widowed for a little over a year and needed to sell property to deal with a looming land tax liability. Mr Lawrence was, and is, married to her identical twin sister.

541. A relationship of trust and confidence therefore existed between Mrs Gunner and Mr Lawrence such as to impose on Mr Lawrence a fiduciary duty. In her cross-claim, Mrs Gunner claims that Mr Lawrence breached that duty.

542. In the well-known passage in Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; 156 CLR 41, Mason J (in what is said to be “generally seen as an important and correct statement of principle”: J D Heydon, M J Leeming and P G Turner, Meagher, Gummow and Lehane’s Equity: Doctrines & Remedies, (5th ed 2014, LexisNexis Butterworths) at [5.005]) said, at 96 and 97:

“The accepted fiduciary relationships are sometimes referred to as relationships of trust and confidence or confidential relations (cf. Phipps v Boardman [1967] 2 AC 46 at 127), viz., trustee and beneficiary, agent and principal, solicitor and client, employee and employer, director and company, and partners. The critical feature of these relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position. The expressions ‘for’, ‘on behalf of’ and ‘in the interests of’ signify that the fiduciary acts in a ‘representative’ character in the exercise of his responsibility…

It is partly because the fiduciary's exercise of the power or discretion can adversely affect the interests of the person to whom the duty is owed and because the latter is at the mercy of the former that the fiduciary comes under a duty to exercise his power or discretion in the interests of the person to whom it is owed…”.

543. Later, Mason J said, at 107 and 108:

“The principle…is that the fiduciary cannot be permitted to retain a profit or benefit which he has obtained by reason of his breach of fiduciary duty (Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373 at 393; Queensland Mines Ltd v Hudson (1978) 52 ALJR 399 at 401). A fiduciary is liable to account for a profit or benefit if it was obtained (1) in circumstances where there was a conflict, or possible conflict of interest and duty, or (2) by reason of the fiduciary position or by reason of the fiduciary taking advantage of opportunity or knowledge which he derived in consequence of his occupation of the fiduciary position.

…

Any profit or benefit obtained by a fiduciary in either of the two situations already described is held by him as a constructive trustee (Keith Henry & Co Pty Ltd v Stuart Walker & Co Pty Ltd (1958) 100 CLR 342 at 350). …Once it is established that the fiduciary is liable to account for a profit or benefit which he has obtained there can be no objection to his being held to account as a constructive trustee of that profit or benefit. It can make no difference that it was not his duty to obtain the profit or benefit for the person to whom the duty was owed. What is important is that the advantage has accrued to him in breach of his fiduciary duty or by his misuse of his fiduciary position. The consequence is that he must account for it and in equity the appropriate remedy is by means of a constructive trust.”

544. Following his discussion with Mr Mirosevich in September 2010 concerning the Beecroft property (see [151] – [153] above), Mr Lawrence, through Mrs Lawrence, told Mrs Gunner he had received a “good enquiry” (see [154] above) and, in December 2010, told Mrs Gunner that she should sell Beecroft “quickly” because “councils were re-zoning vacant blocks in the area” (see [157] above). In late January 2011, Mrs Lawrence told Mrs Gunner that “Wayne has sold Beecroft” for $600,000, and that because of “council re-zoning” which would have a “big impact on development of the land”, Mrs Gunner was “unlikely to get a better offer” (see [163] above).

545. That led to Mrs Gunner agreeing to sell Beecroft to SLN Developments for $600,000.

546. Mr and Mrs Lawrence persuaded, or at least encouraged, Mrs Gunner to sell the Beecroft property to SLN Developments for $600,000 without disclosing their shareholding in SLN Developments (acquired the day before exchange of contracts). Nor did they disclose that, only months before, the property had been valued by Alcon Lupton & Associates at $1.5 million.

547. In those circumstances, Mr and Mrs Lawrence have made a profit where there was the clearest conflict between their interests as majority shareholders in SLN Developments (in acquiring the Beecroft property as cheaply as possible), and their duty to act in Mrs Gunner’s interests (to obtain, on her behalf, the best price reasonably obtainable). They did not disclose to Mrs Gunner their clear interest in the transaction. No question arose of Mrs Gunner giving her informed consent to Mr and Mrs Lawrence’s position of conflict. They deliberately kept her in the dark.

548. The profit that Mr and Mrs Lawrence have made is the $315,000 paid to them in the circumstances which I have set out at [294] to [298] above.

549. The fact that Mr Lawrence caused his share of the profit to be paid to Minsden, effectively his alter ego in the circumstances, is, in my opinion, beside the point (for example see Palmer J in Pedersen v Larcombe [2008] NSWSC 1362 at [497]). The only basis on which Mr and Mrs Lawrence could claim to have a “profit” from the on-sale of the Beecroft property by SLN Developments to Henlong was as shareholders in SLN Developments. That is the capacity in which they received the $315,000 to which Mr Misosevich referred.

550. I do not accept Mr King’s submission that the $315,000 received by Mr and Mrs Lawrence was comprised in part of $300,000 belonging to Minsden by reason of the rescission of the Nelson Bay contract with SLN Developments. For the reasons I have set out at [297] above, I have concluded that two amounts of $300,000 were paid out of the proceeds of SLN Developments’ on-sale of Beecroft to Henlong. One amount of $300,000 was paid to Walker Hedges & Co (Mr Lawrence’s then solicitors, who were evidently acting for Minsden on the Nelson Bay sale) on settlement of the Beecroft sale. The second amount was paid to Mr Lawrence (albeit, at his direction, also to Minsden) after settlement, and following Mr Lawrence’s conversation with Mr Mirosevich set out at [295] above.

551. Mr and Mrs Lawrence hold that $315,000 on constructive trust for Mrs Gunner and must now account to her for it.

Mrs Gunner’s cross-claim – Old Bar property agreement

552. In or about 31 December 2009, Mrs Gunner engaged Mr Lawrence to do some clearing work at the Old Bar property.

553. Mrs Gunner accepted that between December 2009 and July 2010, Mr Lawrence undertook “part of the clearing works”.

554. On 21 April 2010 Mrs Gunner paid Mr Lawrence $50,000 on account of that work. Mrs Gunner claims that, without her authority, Mr Lawrence arranged for subcontractors to “assist with the clearing works”. Mrs Gunner paid those subcontractors an additional $54,406 for the work that they did.

555. Mrs Gunner claims that Mr Lawrence “failed to complete any substantial part” of the clearing works within a “reasonable period” and that, accordingly, she has suffered loss and damage in the sum of the $50,000 that she paid Mr Lawrence on account of that work.

556. Mrs Gunner did not allege that there has been a total failure of consideration; indeed, Mrs Gunner accepted that Mr Lawrence did part of the work for which he was paid.

557. In those circumstances, I cannot see a basis to award Mrs Gunner damages in the amount of the $50,000 that she paid Mr Lawrence, in the absence of evidence that the work he did was of no value.

558. For those reasons I am not prepared to accept this aspect of Mrs Gunner’s cross-claim.

Mrs Gunner’s cross-claim – Old Bar property equipment

559. Mrs Gunner claims that she purchased equipment to assist Mr Lawrence with the clearing of the Old Bar property, including a tractor slasher, a tractor blade with associated hydraulics, and a tractor mulcher attachment.

560. In her cross-claim, Mrs Gunner claims $32,200 “due to the failure” of Mr Lawrence to return to her that equipment.

561. The basis on which Mrs Gunner made this claim was not developed in submissions on her behalf and I am not satisfied that the claim has been made out.

Mrs Gunner’s cross-claim – Deutz tractor maintenance and repair

562. This claim relates to a tractor which, according to Mrs Gunner’s cross-claim, was in Mr Lawrence’s possession and which, at her cost, was transported to the Old Bar property and repaired and modified.

563. Again, this claim was not developed in submissions. My attention was not drawn to evidence that would support any particular award in Mrs Gunner’s favour arising out of these matters.

Conclusion

564. For these reasons, I am not prepared to accept any part of Mr and Mrs Lawrence’s case.

565. The amended statement of claim should be dismissed.

566. So far as concerns Mrs Gunner’s cross-claim, my present inclination is to grant Mrs Gunner declaratory relief to the effect set out at [524] above and remit the matter to NCAT for the making of orders terminating the residential tenancy agreement and for possession. However, as I have stated at [525], I will hear the parties further on this question.

567. I also propose to enter judgment in Mrs Gunner’s favour against Mr and Mrs Lawrence in relation to the $315,000 profit made by Mr and Mrs Lawrence from the sale of the Beecroft property.

568. Otherwise, I propose to dismiss Mrs Gunner’s cross-claim.

569. I will hear submissions from the parties as to what orders should be made to give effect to these reasons and as to costs.

**********

Decision last updated: 16 July 2015