Pura v Kornmehl

[2004] NSWSC 260

CITATION:	Pura v Kornmehl [2004] NSWSC 260
HEARING DATE(S):	12 & 15 March 2004
JUDGMENT DATE:	6 May 2004
JURISDICTION:	Equity
JUDGMENT OF:	Austin J
DECISION:	Judgment to be entered for plaintiff. Cross-claim to be dismissed.
CATCHWORDS:	CONTRACT - informal arrangements between parties in a romantic relationship - arrangement for parties to live together replaced by arrangement for them to separate and for him to pay her $5,000 per month for 18 months - whether parties intended to enter into legal relations - whether agreements sufficiently certain - whether valuable consideration given
CASES CITED:	Beaton v McDivitt (1987) 13 NSWLR 162 Jones v Dunkel (1959) 101 CLR 298 Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 Pettitt v Pettitt [1970] AC 777 Placer Development Pty Ltd v Commonwealth (1969) 121 CLR 353 Popiw v Popiw [1959] VR 197 Riches v Hogben [1986] 1 QdR 315 Sharp v Anderson (1994) 6 BPR 13,801 Wakeling v Ripley (1951) 51 SR(NSW) 183
PARTIES :	Natalie Pura (P/XD) Paul Kornmehl (D/XC)
FILE NUMBER(S):	SC 3167/03
COUNSEL:	R Francois (P/XD) G A Sirtes (D/XC)
SOLICITORS:	Picone & Co (P/XD) Landerer Company (D/XC)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

THURSDAY 6 MAY 2004

3167/03 NATALIE PURA V PAUL KORNMEHL

JUDGMENT

1 HIS HONOUR: This proceeding began by statement of liquidated claim, for non-payment of money allegedly due under a contract, filed on 19 August 2002 in the District Court of New South Wales. The defendant, by his notice of grounds of defence, denied that the alleged contract existed. The proceeding was transferred to this Court after the defendant filed a cross-claim seeking to set aside the alleged contract on grounds of unconscionability, duress and undue influence.

2 The plaintiff says that she made a contract with the defendant on 28 July 2001, to the effect that she would terminate her employment and move in to his apartment to live with him and look after him, and he would pay her $5,000 per month for the rest of her life. She says that on 22 September 2001, that agreement was replaced by a second agreement under which she would move out of the defendant's apartment and he would pay her $5,000 per month for 18 months. She says that the defendant paid her only $20,000, and she seeks damages for failure to pay the remaining instalments totalling $70,000, together with interest.

3 Although the plaintiff relies on the second contract and says that the first contract was brought to an end, it is necessary to make findings with respect to the first contract in order to determine whether the defendant's promise of payment under the second contract (if made) was made for valuable consideration. The defendant's claims based on unconscionability, duress and undue influence with respect to the second contract arise for determination only if the Court finds that the second contract was otherwise valid and enforceable.

The witnesses

4 To large degree, the evidence in this case is the evidence of the plaintiff and the defendant themselves. Each has attacked the credit of the other.

5 The defendant attacked the plaintiff's credit on three grounds. First, she agreed in cross-examination that she had lied about her age, understating it, in a job application form. While not meaning to condone this conduct, I do not regard the fact that a middle-aged woman has understated her age in an application for work in a competitive job market as a sufficient basis for disbelieving or discounting her evidence either generally or in respect of unrelated matters.

6 Secondly, in her letter of 24 October 2001 the plaintiff claimed she had taken on a financial commitment to give herself a little more security, whereas in truth, she was only exploring the prospect of doing so and had not committed herself. Clearly the claim of a financial commitment was a misstatement, but the plaintiff answered questions on the subject directly and without evasion in her cross-examination, and the misstatement was not relevant to her claim in this proceeding. Once again I do not regard the misstatement as a sufficient ground for disregarding or discounting her evidence on the crucial matters.

7 Although neither of these matters destroys the plaintiff's credit, and they do not do so when considered together, they clearly are a basis for careful assessment of her evidence (cf Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705, 719 per Heydon JA). I have endeavoured to do so. On the whole, however, I have not found any adequate reason for disbelieving the evidence she gave in her affidavits and in the witness box.

8 Thirdly, the plaintiff sent a memorandum to her employer in which she suggested she would have to leave her work at Holden if her hours changed. The defendant criticised this conduct and said it reflected poorly on the plaintiff's credit. But in fact Holden did not change her working hours, she continued to work for them and when she left, her employer said he was sorry to see her go. I regard for this matter as having no significance with respect to the plaintiff's credit.

9 On the other hand, the defendant's evidence was unsatisfactory in serious ways. In cross-examination he denied telling the plaintiff that he loved her. Then he was taken to a note which he left for her in his apartment, saying "My Darling Natalie, I do love you very much!! [Signed] PK". He offered a series of extraordinary explanations:

"I might have written it down like you do with any girlfriend."
"If I write to somebody, to my niece I love her or I write to my aunt I love her so this does not mean anything to me."
"In Holland - … if you have a friend or a girlfriend, you write that but it does not mean anything."
"I was with a girl three weeks ago and told her the same story. I am from Holland and that is the way we live. If you like someone you say, 'I love you'."

10 The defendant denied in cross-examination that the plaintiff stayed with him on the weekend after they returned from their overseas trip on 28 July, because "it was finished when we got off the plane". However, later he admitted that he took her out "once or twice" after they returned. Then he admitted that the plaintiff came over for the long weekend beginning on 3 August, and they went together to lunch with Mr and Mrs Khedoori, dinner with Mr and Mrs Morton, and then dinner with Mr Silvers. He agreed it was "possible" that they went to lunch at the Sheraton on the Park on the public holiday Monday, and that they then went to David Jones to buy an electric blanket because the blanket was not working on the plaintiff's side of the bed. Having given this evidence, he then apparently resiled saying, "after the trip I didn't go with her anywhere". Yet he did not deny that on the Tuesday after the plaintiff resigned from Holden, he went with her together to Mr and Mrs Khedoori and to Mr and Mrs Saloman, and that on the following Friday she had dinner with his family. This evidence was contradictory, more than once.

11 On many occasions in cross-examination, the defendant said "it's possible", even to uncontroversial or even incontrovertible matters. He said, early in his evidence, that his stroke had taken a lot away from his memory of things that had happened in the past. Some of his answers in cross-examination appeared to me to be confused. More often, he gave the evidence he wanted to give without regard to the cross-examiner's questions, constantly recounting his version of the events surrounding the plaintiff's departure from his Darling Point apartment after his stroke, even where the questions were clearly referring to events before his stroke. I agree with the submissions of counsel for the plaintiff, that the defendant demonstrated he was capable of understanding and answering questions during cross-examination, but on certain topics he was evasive or non-responsive and his the memory loss appeared to be selective.

12 Having regard to these matters, and my observation of the demeanour of the parties in the witness box, I have decided to prefer the plaintiff's evidence to the defendant's evidence where there is a conflict between them and no external corroboration.

13 Rohan Pura, the plaintiff's son, has given evidence of various conversations he had with his mother, and some with the defendant, which generally confirm his mother's version of the events. That evidence is not and could not be tendered to prove the truth of what his mother told him, but only the fact that she had conversations with him of specified content at contemporaneous times. I do not regard it as having any significant weight. I take the same view regarding the evidence of Anita Kornmehl, the defendant's daughter, to the extent that it records conversations between her and her father which confirm his evidence.

Commencement of the relationship

14 The plaintiff is 66 years of age. Prior to the events in contention, she had a secretarial job at Holden. The defendant, who is wealthy, is 83 and has retired from active work. They first met one another socially in about 1991, with their respective spouses. They resumed contact with one another at the end of 2000, by which time the defendant had been separated from his wife for about seven years and the plaintiff had been a widow for a little over six months. They were brought into contact with one another by mutual friends, Vera and Henry Khedoori. Thereafter they formed a romantic relationship.

15 The plaintiff gave evidence that the defendant pursued her enthusiastically, whereas the defendant's evidence was that he was lonely and looking for company, and was pleased to met someone to go out with regularly on a casual basis. She listed various social engagements which they attended as a couple in January and February 2001, and said that similar occasions occurred through the first half of 2001. She said the defendant arranged a cocktail party for 50 people in his Darling Point apartment, telling her, "I would like to have a party at home so that I can show you off to my friends and I can meet your friends". She said that by that time they had become very fond of one another.

16 Her evidence is supported by photographs, and the evidence includes the note mentioned above, in which at some time in the first half of 2001 he emphatically proclaimed his love. The plaintiff's son gave evidence that in about mid-March 2001 he had a conversation with the defendant, in which the defendant said, "I love your mother and want her with me".

17 It seems to me that the evidence as a whole shows that the defendant was, indeed, enthusiastically pursuing the plaintiff during the first half of 2001 and gave the appearance of being infatuated with her. She said she fell in love with him.

18 The plaintiff was living at Wahroonga, a considerable distance from the defendant's residence. In about April 2001 the defendant gave her a key to his apartment at Darling Point and to the security garage door there. His oral evidence was that he did so, in effect, out of chivalry. He said he did not like the idea that she would have to wait for him outside his apartment if they had arranged a date and he was delayed. In his affidavit he said he did so because he is hard of hearing.

19 The plaintiff gave a different version, claiming that he told her he was giving her the key because he wanted her to know that she was "the only woman" in his life, and so that she could come in freely at any time and be reassured by listening to any messages on his answering machine. My view of the evidence is that he gave her a key not merely out of chivalry or because he was hard of hearing, but as part of his enthusiastic pursuit of her favours.

20 The defendant also gave evidence that he told the plaintiff she could stay over occasionally on the weekends. He said that at about this time, they commenced a sexual relationship, and from approximately April to June 2001 she stayed in his apartment on most Saturday nights. The plaintiff said they were together every weekend for from March to September 2001 except for one weekend. I shall return later to the question whether their relationship continued after they returned from overseas on 28 July, but it is at least clear that they spent nearly all of their weekends together from about March 2001 until their departure for overseas in June 2001.

21 The plaintiff added that they were away together for a week in Port Douglas in April and a week in Melbourne in June 2001. Those trips were not denied at the defendant.

The overseas cruise

22 In February 2001 the defendant told the plaintiff that he had booked passage for two on a luxury cruise of the Baltic Sea leaving from Europe on 21 June 2001. He asked her to come with him. After reflection, she agreed to do so. She gave evidence that, as the departure day grew near, on one occasion the defendant said to her:

"I love you. I want you to give up your job at Holden. We certainly don't need the money. I want to travel with you, do things together we cannot do if you are working. We should be together. Give up your job and I will of course, look after you financially. We will have a wonderful life together."

23 She said they agreed with one another that the overseas trip would give them the opportunity to see if they got on well and really wanted to spend the rest of their lives together.

24 The defendant said that this conversation did not take place, and he specifically denied asking the plaintiff to live with him, or offering to look after her financially. He said he remembered being told by her that she was giving up her job, but he denied asking her to do so. My findings as to this evidence are set out later.

25 Their overseas trip was from 21 June to 28 July 2001, in Holland, on the cruise ship and in the United States. The plaintiff has not given direct evidence about their relationship during the trip, except to the effect that the relationship continued until September 2001. The defendant's evidence is quite different. He said that he formed the view, during the trip, that he and the plaintiff were not compatible in the long-term, and that he decided he would slowly bring their relationship to an end over the ensuring few weeks. He said he did not tell the plaintiff of his decision during the trip because he did not want to ruin the holiday. He said that when they returned from overseas she asked him whether they could live together, and he said no, that they would talk about it again in the next few weeks. He said he was trying to avoid confrontation. He said that up to the time of his stroke on 24 August the plaintiff repeatedly asked him whether she could move in, and each time he said, "No, we will discuss it again later".

26 I reject this evidence by the defendant, because is inconsistent with other evidence (including his own) which indicates that the relationship between the parties continued during the period from 28 July to 24 August 2001. That evidence is set out later.

The alleged first agreement

27 The plaintiff says that when they returned to Sydney on 28 July 2001, the defendant told her he had a wonderful time with her on their holiday and that he wanted her to give two weeks notice to Holden, and then move in with him at Darling Point.

28 The plaintiff claimed that the defendant then said:

"Of course, when you leave work, I will make sure you are financially secure. I will put $5,000 every month into your account for the rest of your life, if you give up working forever so that you can be with me and look after me in my old age. We will look after each other and it will be better for each of us to be together than to be alone. Even a dog doesn't like to be alone."

According to her evidence, she replied:
"I think that is fair. I would be happy to go along with that."

She said that two days later, he said her:
"Natalie I repeat, I want you to come to live with me. Why don't we start with four days a week for a couple of months to get used to each other and then by Christmas we should be together full time."

According to her evidence, she replied:
"I would very much like that."

She claimed he then said:
"I want you to give up work at Holden, give them two weeks' notice because I want us to go to Canada in a couple of months’ time. I can't travel alone, I want you with me so that we can travel and enjoy each other's company without having to worry about taking leave from work and all that sort of thing. We don't need your money. I will obviously look after you from now on."

29 The defendant denied that any such conversations took place, or that he asked her to give up her job or live with him, or that they ever discussed spending the rest of their lives together. He denied that they agreed to live together for four days per week or that they planned to be together full time by Christmas 2001. He said they agreed to spend time together during the weekends, nothing more. He said she decided herself that she would give up her job at Holden.

30 Annette Casey, a witness on behalf of the plaintiff, gave evidence that in about August 2001 she was invited to a cocktail party at the defendant's apartment in Darling Point. She said that during the course of the evening she was introduced to the defendant, who said, "now that Natalie is coming to live with me, I want her friends to be my friends". She told the defendant that "Natalie has always been very strong about continuing to work for the financial security", and she said the defendant replied, "I will look after Natalie now".

31 Another of the plaintiff's witnesses, Heather Honigstock, gave evidence of a conversation she had with the plaintiff and the defendant in a coffee shop at Rose Bay. She said the defendant told her:

"Did you know that Natalie is coming to live with me very soon? I told her to give up her job and move in. We are very happy. I will be looking after her."

She said that the plaintiff responded:
"I'm not going to work any more, he told me to resign. I am going to live with Paul. I'm moving in straight away."

32 The plaintiff said that the defendant told her that he wanted to ask his solicitor, John Landerer, to draw up a form which she would sign, waiving any future claim against his estate. She said she agreed to sign the document, but was never asked to do so. The defendant's evidence is that he asked Mr Landerer to prepare the document but did not ask the plaintiff to sign it.

33 I have decided to accept the evidence of the plaintiff and her witnesses on these matters, in preference to the evidence given by and on behalf of the defendant. First, I rely on my assessment of the witnesses and in particular my assessment of the credit of the plaintiff and the defendant. Secondly, I place some weight on the corroboration of the plaintiff's version of the conversations given by the evidence of Ms Casey and Ms Honigstock. Their evidence was not challenged or explained by the defendant, and I accept it. It supports the conclusions that the defendant asked the plaintiff to move in with him, and that he intended to look after the plaintiff financially. The witnesses do not refer to financial arrangements in specific terms, but they give evidence of conversations in which the defendant said he would look after the plaintiff, after reference had been made to the plaintiff giving up work.

34 There are two other pieces of evidence that provide a measure of reinforcement for my conclusion. One is that, when the plaintiff eventually resigned, her employer sent her an e-mail in which he said, "I wish you and Paul all the very best in your future together - may your lives lead to great happiness and fulfilment." The other is that on 3 September 2001, when the defendant was in hospital, $3,000 was transferred from him to her, suggesting some financial responsibility on his part.

The alleged gift of the Honda Civic motor vehicle

35 The plaintiff gave evidence that a near-new Holden Barina motor vehicle was offered to her by her employer for the very low price of $11,500, and she agreed to take it on approval, and drove the car home on 3 August 2001 for the weekend. She said that when the defendant saw the car, he told her not to buy it, because he wanted her to take the Honda Civic that his daughter Yvonne was driving, and his daughter would acquire a Mercedes. She said she told the defendant that she would be very happy with the Barina, but if he insisted, she would go along with his plan. She said that on 9 August 2001 the defendant told her that Yvonne had agreed to update to a Mercedes and therefore he was giving the plaintiff the Honda. She thanked him.

36 The defendant's evidence about the Honda motor vehicle is that he suggested that the plaintiff acquire it instead of the Barina, to save money but not as a gift. He said that later, he agreed to give it to her to meet one of the demands she made for agreeing to leave his apartment.

37 I shall return to this evidence later, but as I have decided to reject it, I should say now that I accept the plaintiff's evidence concerning the gift of the motor vehicle. The Honda vehicle was valued for insurance purposes in May 2001 at $16,968.

The alleged gift of the computer

38 The defendant said that he bought a computer for his daughter for $2,950, and it was delivered to the Darling Point apartment, and that he gave it to the plaintiff after she demanded it (among other things) in return for agreeing to move out.

39 The plaintiff said that when he discovered she was thinking of asking her son for his old computer, the defendant offered to get one for her, and said that he ordered the computer from hospital in September 2004, for delivery to Darling Point for her use.

40 Once again, as I have decided to reject (for the reasons set out later) the defendant's evidence as to the circumstances of the plaintiff's departure, I accept the plaintiff's evidence that the computer was a gift to her.

The relationship during the period from late July to 24 August

41 As I have mentioned, the defendant gave inconsistent evidence as to his relationship with the plaintiff during this period. He said "it was finished" when they arrived in Sydney at the end of their trip. And yet he admitted to several social functions, including a busy time over the long weekend early in August, and conceded that other social engagements were "possible". It seems to me more likely than not that the relationship between the parties continued during this period, and continued to be an intimate relationship in the course of which the plaintiff spent weekends with the defendant.

42 There is no direct explanation for the parties waiting for a while, after arranging to live together, before steps were taken to give effect to the arrangement. But in my opinion it does not weaken the plausibility of the plaintiff's case that she waited for a little over a week before giving two weeks notice of resignation to her employer, or that she moved only when her employment terminated. Nor do I find it implausible, given the age of the parties, that they arranged for their living together to be on a four-day per week basis for an initial period.

43 The plaintiff gave evidence of a conversation on 31 July 2004, at a charity dinner, during which the defendant told her, "the sooner you leave work the better". The plaintiff said that on 13 August 2001, she gave two weeks notice of resignation to Holden, and finished work with them on 24 August 2001. On that day she packed her belongings. She deposes to a telephone conversation with the defendant in which she declined his dinner invitation, telling him that she was moving in the next day and needed to pack. On the following day, Saturday 25 August, she drove to the defendant’s home to move in with him. I accept the plaintiff's evidence on these matters.

The defendant's stroke

44 On 25 August, when she arrived at the Darling Point apartment intending to move in for four days per week, the plaintiff found a note from the defendant’s son, Jim, indicating that the defendant had taken ill. She discovered that the defendant had a stroke on the previous evening and was in St Vincent’s Hospital.

45 The defendant was in intensive care for about a week and then was moved to a private room. He said he was very ill and felt confused, that his facility for recollecting names disappeared and he lost his peripheral vision temporarily. He said he found since his stroke that his memory of events prior to and since the stroke became significantly worse than it had been. This evidence, so far as his physical condition and memory are concerned, is consistent with the evidence given by the plaintiff and the defendant's doctor, and I accept it, although I did not accept that his feeling of confusion continued after he returned home.

46 The plaintiff stayed in the Darling Point apartment, which is just a few minutes drive from the hospital, and visited the defendant there, bringing him articles of personal apparel and medicines, sitting with him, holding his hand and wiping his brow. The plaintiff said she visited him twice a day, but defendant said she visited him in hospital once a day for about 20 minutes, and when he first saw her after the stroke he could not remember her name and his memory of their relationship had become vague. He claimed he repeatedly said to his daughters when he was in hospital, "I don't want this woman visiting me".

47 It is unnecessary for me to make findings as to the frequency of the plaintiff's visits. The defendant may have temporarily forgotten the plaintiff's name and details of their relationship, although he now claims to have a clear recollection of certain matters. If he said to his daughters that he did not want the plaintiff to visit him, that must have been a temporary state of mind, because he voluntarily allowed her to collect him from the hospital and they went together to the Darling Point apartment.

48 In her oral evidence, one of the defendant's witnesses and his friend, Mrs Silvers, said she was visiting a friend at St Vincent's Hospital when the defendant was there, and she heard him ask the plaintiff, "How did you move into my house?" I have decided it would not be safe to rely on this evidence. Mrs Silvers did not include it in her affidavit, and was not able to give a convincing explanation for omitting it.

The relationship in the period from 8 to 22 September

49 The plaintiff said that on 8 September 2001, when she brought the defendant home from hospital, she detected a change in his attitude to her, which she attributed to the negative influence of the defendant's children. She decided to stay with him in the Darling Point apartment full time, rather than for four days a week, because, she said, he was in such a condition that he could not live alone.

50 The defendant said he was shocked and upset to find that the plaintiff had moved into his apartment while he was in hospital, claiming that he had never agreed to this. He said he needed solitude and rest. He said within a day of coming home, he asked her, "when are you leaving?", and she just looked at him. He said that every day thereafter he repeatedly asked her to move out but she refused to do so. He claimed that she did nothing around the house, and that he was forced to do his shopping when he returned from hospital because she had not done so. The defendant's evidence on these matters is connected with his evidence concerning the second agreement. I shall assess those matters together.

The plaintiff's condition in September 2001

51 The plaintiff denied the defendant's claim that he was in "a frail and weakened state" when he returned home from hospital. In cross-examination she said, "mentally he was fine; physically he wasn't". She noted his inability to remember some names, and loss of peripheral vision which prevented him from driving, but she said he was able to look up a telephone number in the phone book and had numerous lengthy telephone conversations, and was able to deal with some business matters. She gave an example. On the other hand, she said she picked him up from the floor twice, reminded him to take his medication, and drove him to pathology and doctors’ appointments.

52 Counsel for the defendant attacked the plaintiff's evidence on this subject, on the ground of inconsistency. I disagree. If one tracks through the evidence bearing in mind the distinction that the plaintiff drew between mental and physical frailty, I believe the evidence is coherent.

53 The defendant's doctor has written a report confirming that on his discharge from hospital, the defendant's short and long-term memory was impaired, as was his peripheral vision. The doctor said the defendant was also depressed and tearful occasionally, but the doctor was pleased to hear that there was going to be some additional help at home. He said that the defendant "certainly needed supervision with the various aspects of everyday living". He saw the defendant again on 2 October 2001, noting that the defendant was living alone again and there was a reduction in his concentration and he was slightly confused. The doctor discussed with the defendant's daughter various strategies to improve the defendant's quality of life at home.

54 The parties and Anita Kornmehl substantially agree that the plaintiff and Ms Kornmehl had a conversation after the defendant returned home, in which Ms Kornmehl expressed her view that it would be unwise for her father to have sex, and the plaintiff said she had asked the doctor, who said it would be fine. The doctor's report tends to corroborate this.

The alleged second agreement

55 The plaintiff said that their relationship deteriorated after the defendant returned home, and on 22 September 2001 they quarrelled. According to the plaintiff, the defendant said:

"Oh, you are not happy? You want to go? I can get you a truck and two men to help you."

She said she replied:
"Paul, I don't need a truck and two men, I am packing tomorrow."

She alleges that the defendant then said:
"We can stay friends. We'll probably talk on the phone every day and even go out occasionally."

She said that after further discussion, he said to her:
"Because I lost you your job, I will be transferring for the next 18 months into your account $5,000 per month to tide you over."

She said she replied:
"Paul, I think it is only fair and very necessary given that I gave up my job at your request and I agree to this arrangement."

56 The defendant denied these conversations.

57 The plaintiff's evidence is that on the following day, Sunday 23 September, she went with the defendant as his request to a book launch at the Jewish Museum, and the atmosphere between them was friendly. On Monday 24 September, she said, she drove the defendant to his doctor as his request, then returned to the Darling Point apartment to finish her packing, and she moved back to Wahroonga.

58 The defendant said that about two weeks after he had come home from hospital, he had become desperate to reclaim his apartment and felt quite helpless to remove the plaintiff from it. He said he had a conversation with the plaintiff in which he told her she must leave, and she demanded a car, the new computer, and $90,000. He tried to bargain with her but eventually agreed. He said he did not recall having a discussion as to how the $90,000 was to be paid, although it could have been by monthly payments of $5,000 for 18 months. He said he was desperate to get the plaintiff out of his apartment and would have said or agreed to anything to get her to leave. He said she left either that day or perhaps the day after.

59 I have decided to prefer the plaintiff's evidence on these matters to the evidence of the defendant. First, I take into account the matters going to the credit of the plaintiff and the defendant as witnesses, discussed above.

60 Secondly, the defendant's evidence depends, in part, on his assertion that he never consented to the plaintiff moving into the Darling Point apartment, and at all times after she did so, he wanted her to leave. That is inconsistent with the evidence, which I have accepted, that the plaintiff telephoned him on 24 August to tell him she would be moving in on the following day, and he did not object. It also sits oddly with two other matters. One is the evidence of the parties and Ms Kornmehl that the plaintiff and Ms Kornmehl had a discussion, after he returned home following the stroke, about whether the defendant should have sex with the plaintiff. The other is the doctor's report, noting that the defendant had "company at home" when he returned from hospital and that when the plaintiff and the defendant came to his surgery there may have been some discussion about the resumption of sexual relations.

61 Moreover, the defendant's evidence is implausible in two ways. The defendant allowed the plaintiff to collect him from a hospital and drive him to the Darling Point apartment, they shopped together, and they had at least one social engagement together, on 22 September. And even if one accepted the defendant's evidence as to his weakened and vulnerable state (and I do not, for reasons discussed below), it is just implausible that he was able to do nothing to give effect to a desire for the plaintiff to leave. One would have thought, for example, that a few words to his daughter Anita would have set appropriate steps in train.

62 Thirdly, Mrs Khedoori, though a witness for the defendant, gave evidence in cross-examination that she said to the plaintiff after the parties had separated:

"Anita rang me and said her father is a man who keeps his word. She said you will get the money he's promised you."
That tends to confirm that a promise was made, and contains no suggestion of pressure.

63 Fourthly, the defendant's personal assistant made some handwritten endorsements on the written confirmations of transmission which imply that there was an agreement for the payment of $5,000 per month for 18 months. That evidence is dealt with later. The defendant and his daughter both denied that the personal assistant had authority to make the handwritten endorsements. They did not call the personal assistant to give evidence. I was asked to draw an inference under the principle in Jones v Dunkel (1959) 101 CLR 298 that her evidence would not have assisted the defendant. However, there is some evidence tending to explain why the personal assistant was not called to give evidence for the defendant, namely that she was dismissed from employment by Anita Kornmehl. I am left with evidence that the personal and assistant made the endorsements, and the unsupported assertions by the defendant and his daughter she had no authority to do so. There is no evidence that she was reprimanded for acting outside her authority, or even of any communication with her on the subject. One would have expected an employer to react in such a fashion if an employee acted without authority on such a sensitive matter. I conclude, on balance, that the personal assistant had authority to make the endorsements.

64 Fifthly, the defendant's evidence with respect to the second agreement is partly based upon assertions of fact that I have rejected: namely, that he never asked the plaintiff to live with him, and that he considered the relationship between them to be over after they returned from their overseas trip; and consequently, his assertion that he never made the first agreement. Once it is accepted that the first agreement was made, it becomes significantly more likely that the plaintiff's version of the second agreement is correct. She had an entitlement to live with the defendant and to be looked after financially, and if (as the parties agree) he required her to leave, it is likely, and proper, that she would have insisted on some financial compensation.

65 I have therefore decided to accept the evidence of the second agreement given by and on behalf of the plaintiff. I conclude that the plaintiff and the defendant agreed, on about 22 September 2001, that at his request they would terminate the first agreement, she would move out of the Darling Point apartment, and he would pay her $5,000 per month for 18 months. The agreement to terminate the first agreement was not expressly articulated, but was necessarily implied from the parties words and action.

Payments to the plaintiff

66 The defendant caused amounts of $3,000 and $2,000 to be deposited to the plaintiff's bank account on 28 September 2001. The documentary notification of the first transfer, or perhaps on a "with compliments" slip that was sent to the plaintiff with it, was endorsed by hand, "from PK to Natalie as agreed first of 18 payments per month". The notation of the second payment was endorsed by hand, "from PK to N Pura as agreed additional $2,000 per month for 18 months". The defendant said he instructed his personal assistant to make these two payments only after a number of requests for payment from the plaintiff.

67 On 18 October 2001, another $15,000 was electronically transferred to the plaintiff's bank account. The documentary notification of the transfer was endorsed by hand "from PK to N Pura - final payment". The defendant said that when the plaintiff demanded more money, he left it to his daughter Anita to bring the matter to an end, and was advised by Anita in October 2001 that she organised to make a final payment to the plaintiff of $15,000.

68 It appears that the handwritten endorsements on the transmission confirmations were made by the defendant's personal assistant. The defendant gave evidence that he did not instruct his personal assistant to make any of those notes.

Later correspondence

69 The plaintiff wrote to the defendant on 24 October 2001, complaining that he had made a commitment for $5,000 per month for 18 months and asking him to withdraw the "final payment" instruction to the bank. There was no written reply. The defendant said he did not read this letter or the subsequent one mentioned below, because he did not want to be upset and damage his health.

70 Counsel for the defendant submitted that this letter, the most contemporaneous account of the separation of the parties, indicated that the promise of payment was made on the day after the parties had agreed to separate, and that I should prefer this account to the one given in the plaintiff's affidavits. I do not agree. In my opinion the letter does not specifically locate the promise at a time after the parties argued and agreed to separate, and is in fact rather jumbled. I accept the plaintiff's oral evidence that the defendant made his financial promise more than once, not only when they agreed upon the separation but also on the next day. In addition to the various factors specified in my findings as to the second agreement, I regard it as highly implausible that the plaintiff, having made the first agreement and having given up her employment, would have agreed to leave the defendant without making a financial arrangement.

71 There is evidence of a subsequent argument between the parties on the telephone, and conversations between Mrs Khedoori and the defendant and her daughter, but they were after the parties separated and (except to the extent previously noted) seem to me of little or no weight. The plaintiff collected the Honda motor car on 4 October 2001, together with the computer.

72 On 15 June 2002 the plaintiff wrote to the defendant again, asserting that the defendant owed her payments of $5,000 per month for 14 months, totalling $70,000, and threatening legal proceedings unless payment of that amount was made within 10 days. There was no written reply, and no further payment. However, on 10 July 2002 the defendant's solicitors wrote to the plaintiff's solicitors asserting, inconsistently with the defendant's affidavit evidence, that there was no arrangement or agreement whatever, whether procured by pressure or not.

73 In her letter dated 15 June 2002, the plaintiff claimed that the defendant's promise was "$5000 per month tax-free". She was cross-examined about this, and gave confusing evidence. To the extent that, in the witness box, she purported to add to the evidence in her affidavit by asserting that the defendant had used the words "tax-free" on 22 September 2001, I reject her evidence. I accept that she understood and expected, as a result of the events of 22 September, that the payments would be without any deduction for income tax. But I do not accept that anything was said at the time about tax. She did not make this claim in her earlier and more contemporaneous letter dated 24 October 2001, or in her affidavit.

The plaintiff's subsequent employment

74 After breaking up with the defendant, the plaintiff registered with an employment agency called Adecco Centrecom Australia Pty Ltd, which found employment for her as a personal assistant for one-day per week with AMP Ltd Epping from 3 December 2001 to 4 June 2002, but no work subsequently. She said she has applied for about two dozen positions without success. As at the date of her affidavit, 25 February 2003, she was working half days for an 87-year-old psychiatrist, but has been unable to obtain full-time employment. She has provided documentary support for her employment evidence.

Legal status of first agreement

75 Given my findings of fact, it seems to me to follow that at some time late in July 2001, after the plaintiff and defendant returned from their overseas trip, they entered into a binding contract, by which the defendant agreed that if the plaintiff terminated her employment and moved in to live with him and look after him, he would pay her $5000 per month for the rest of the life.

76 Counsel for the defendant submitted that, even if (as I have) I disagreed with him with respect to the facts, I should not find that there was a binding contract, for two reasons: first, there was no intention to create legal relations; and secondly, the arrangements were too uncertain.

77 In my judgment the evidence shows an intention on the part of the plaintiff and the defendant, at the time of the conversations, to enter into a binding agreement. there was no disagreement in submissions as to the applicable law. Counsel for the defendant referred to the observations of Windeyer J in Placer Development Pty Ltd v Commonwealth (1969) 121 CLR 353, 367 and Lord Diplock's statement in Pettitt v Pettitt [1970] AC 777, 882, for general statements of principle. However for present purposes it is convenient to begin with Sharp v Anderson (1994) 6 BPR 13,801, 13,808-9, where Santow J usefully summarised the factors that courts have found pertinent in ascertaining the intention of the parties. I shall assess the evidence in the present case by reference to each of those factors.

78 The first factor is "to how many people the statement was made". Here, it is significant that the defendant made a statement indicating a financial commitment (though not specifically quantified), in the presence of Ms Casey and Ms Honigstock on separate occasions, as well as making several statements to the plaintiff herself.

79 The second factor is "whether there is a statement in writing". There is no written statement in this case, but that is understandable having regard to the personal relationship between the plaintiff and the defendant at the time.

80 The third factor, and to my mind the most important in the present case, is "the substantial consideration offered for the promise". Santow J refers to Wakeling v Ripley (1951) 51 SR(NSW) 183,187, where the plaintiffs left secure employment in England to move to Australia in reliance on the testator's promise, consequences so serious (according to Street CJ) that it would seem obvious they were anxious to have a definite agreement (see also Riches v Hogben [1986] 1 QdR 315, at 329 per Williams J) . Here, the consequences to the plaintiff were not quite as substantial as in Wakeling's case, but were nevertheless quite serious. Her arrangements with the defendant required her to give up her employment at the age of 64, although she had intended to work until she was about 70. As her later experience showed, it is difficult for a woman of that age to find suitable new employment. While she had some independent means, it is clear from the evidence that giving up her employment was a substantial step her to take.

81 The third factor is "the number of times the statement was made" and "the language used by the parties". Here, a statement of commitment by the defendant was made several times to the plaintiff, and on separate occasions to Ms Casey and Ms Honigstock. The language used, though appropriate to domestic rather than commercial circumstances, was in my view language indicating a binding commitment on his part.

82 The fourth factor is "the context, formal or in formal, in which the promise was made". Here the context was that the parties had just spent about five weeks together on their overseas trip, and on their return to Australia, they were facing resumption of their separate residential arrangements. The defendant proposed a change of lifestyle for the plaintiff so that they could eventually live together on a full-time basis.

83 The fifth factor is "the nature of the relationship between the parties". Here the parties were commencing on a de facto relationship, in circumstances where it would have been natural for them to seek to protect their legal and financial positions. It is relevant that the defendant thought it appropriate to have a document prepared which would exclude the plaintiff from claiming against his estate. That indicates that the arrangement was seen by the defendant as one having legal consequences: compare Popiw v Popiw [1959] VR 197, 198.

84 The final factor mentioned by Santow J is the certainty of the terms of the arrangement. It appears from the plaintiff's evidence that if she were to leave the defendant she would cease to be entitled to be paid by him, but if he were to require her to leave, her entitlement would continue. The defendant submitted that the agreement was uncertain as to the extent of the care required, but I disagree. An agreement by which a woman undertakes to live in a personal relationship with a wealthy, 83-year-old man and care for him implies that she will give him such care as would be reasonable in the circumstances, having regard to his needs, their relationship and his financial capacity to obtain health-care assistance. The defendant also submitted that if the agreement was "care-dependent", it would come to an end up on the defendant's death, notwithstanding the plaintiff's contention to the contrary. Again, I disagree. The consideration he supplied to her, in exchange for her caring for him in a personal relationship, was intended to give her financial security for the rest of her life. My conclusion is that the contract, in its domestic circumstances, was not so uncertain as to be void.

85 In my opinion the first agreement was a valid agreement supported by valuable consideration. In Beaton v McDivitt (1987) 13 NSWLR 162, 168, Kirby P said:

"By our law, consideration is an essential requirement for an enforceable contract. Without consideration, a promise is unenforceable at law. The modern theory of consideration has arisen from the notion that a contract is a bargain struck between the parties by an exchange. By that modern theory, consideration must be satisfied in the form of a price in return for the promise of a quid pro quo . The price can be in the form of an act, forbearance or promise."

86 The plaintiff’s consideration was her promise to move in and live with the defendant and look after him, after she had resigned from her job. It is a misconstruction of the contract to say that the consideration was merely the plaintiff's decision to give up her job, therefore it is not necessary for me to consider whether consideration of that kind would satisfy the law.

Legal status of the second agreement

87 In entering into the second agreement, the parties intended to alter the legal relationship they had created by the first agreement. Given that the parties intended the first agreement to have legal effect, it cannot be seriously argued that they had no similar intention when making the second agreement.

88 There is no basis for contending that the second agreement lacks certainty. She was to move out, and he was to pay her a precise sum of money each month for 18 months. His promise was supported by valuable consideration. Since the first agreement was a legally enforceable contract, release from that agreement was valuable consideration supplied by the plaintiff for the second agreement: JW Carter and D Harland, Contract Law in Australia (4th edition, 2002), at [350] to [355].

The second agreement - vitiating factors

89 In his amended cross-claim the defendant asserted that the second agreement was procured in circumstances of unconscionability, or as the result of an exercise of undue influence, or by duress. In my opinion of the factual foundations for the cross-claim have not been made out.

90 I accept that the plaintiff was at the time of the second agreement a person of advanced years, who had been discharged from hospital only 15 days earlier after having suffered a stroke. He was suffering from some memory loss and for a time, poor peripheral vision. He was physically rather frail. But it appears on the evidence that, except for an element of memory loss, he was mentally alert and capable of making financial decisions.

91 Having observed the defendant in the witness box, and in the light of the evidence, I do not regard him as a person who would be easily overborne, or who would succumb readily to pressure. He seems to be, by personality, a determined and independent man.

92 I have rejected the defendant's evidence that he wanted the plaintiff to leave his apartment from the moment he discovered she was there. I prefer the plaintiff's evidence that he asked her to leave only once, on 22 September, and they then reached an agreement under which she left. But even if it were true that he had wanted her to go at all relevant times, the evidence would not support his claim that he was prepared to accede to her demands in order to regain exclusive possession of his apartment, in circumstances where he was distressed, anxious and frustrated at her refusal to leave. The evidence would not establish that he was overborne by his desire to reclaim possession and his right to privacy, and that he did not and could not exercise an independent will. It would not establish that the plaintiff was in a position of ascendancy over him, or that she imposed legally significant pressure on him by refusing to leave.

93 Therefore, in my view, the second agreement was not vitiated by unconscionability, undue influence, duress or pressure.

Conclusions

94 The plaintiff has established her entitlement to enforce the second agreement, and she has proven that (except for the sum of $20,000 paid in September and October 2001) the defendant breached the agreement by failing to pay her $5,000 per month for the 18 months beginning when she left the Darling Point apartment late in September 2001. The period of 18 months having well and truly expired now, she is entitled to receive, as a liquidated sum, the balance of $70,000, plus interest calculated from the times when the respective payments fell due.

95 Counsel for the defendant said his client would not necessarily accept that $70,000 plus interest was the correct measure of damages, because (he said) the payments were to be made in compensation for the plaintiff sacrificing her wages, but there was no adequate evidence of the wages she had sacrificed. I think this submission misconstrues the agreement. The defendant promised to pay specific monthly amounts, not to pay only such amounts as would compensate the plaintiff for her lack of wages.

96 In my view, therefore, the plaintiff is entitled to judgment for $70,000, plus interest calculated in the manner I have indicated. There is no substance to the cross-claim, which should be dismissed. I shall direct the plaintiff to make appropriate interest calculations and bring in short minutes of orders, and stand the matter over to hear argument with respect to the form of orders and costs.

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Last Modified: 05/07/2004