Smith v Smith

No judgment structure available for this case.

CITATION: Smith v Smith [2004] NSWSC 663

HEARING DATE(S): 20/07/04, 21/07/04

JUDGMENT DATE:
28 July 2004

JURISDICTION:
Equity Division

JUDGMENT OF: Barrett J

DECISION: Declaration that defendant holds undivided one-half share in property upon trust for plaintiff. Order that defendant transfer interest to plaintiff. Order for possession. Leave to issue writ of possession.

CATCHWORDS: EQUITY - unilateral mistake - whether elements exist - unconscionable dealing - intervention by equity even though affected party may have given consent - party affected by profound deafness and unfamiliarity with business and financial affairs - also heavily reliant on husband nearing death - dependence transferred to daughter who took unconscionable advantage

LEGISLATION CITED: Conveyancing Act 1919, s.66G

CASES CITED: Blomley v Ryan (1956) 99 CLR 362
Bridgewater v Leahy (1998) 194 CLR 457
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447
Huguenin v Baseley (1807) 14 Ves Jun 273
Leibler v Air New Zealand Ltd (No 2) [1999] 1 VR 1
Louth v Diprose (1992) 175 CLR 621
Sande v Medsara Pty Ltd [2004] NSWSC 147
Shehata v Hussein [2004] NSWSC 617
Taylor v Johnson (1983) 151 CLR 422
Turner v Windever [2003] NSWSC 1147
Tutt v Doyle (1997) 42 NSWLR 10

PARTIES :
Pauline Therese Smith - Plaintiff
Helen Jane Smith (now Vocalan) - Defendant

FILE NUMBER(S): SC 3428/04

COUNSEL: Ms J A D Needham - Plaintiff
Defendant in person

SOLICITORS: Eakin McCaffery Cox - Plaintiff
Defendant in person

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

WEDNESDAY, 28 JULY 2004

3428/04 – PAULINE THERESE SMITH v HELEN JANE SMITH

JUDGMENT

1 The plaintiff, Pauline Therese Smith, is a woman aged 61 years. The defendant, Helen Jane Smith (now Vocalan), is her daughter aged 29 or 30. The proceedings involve a house property at Wyoming of which the plaintiff and the defendant are registered proprietors as tenants in common in equal shares. The property was purchased under a contract made on 15 January 2004. Completion occurred on 4 February 2004. The purchase moneys were provided out of the proceeds of sale of a house property at Ryde. Contracts for the sale of that property were exchanged on 22 December 2003. Completion of the Ryde sale occurred at the same time as completion of the Wyoming purchase on 4 February 2004.

2 The vendors under the contract for the sale of the Ryde property were the plaintiff and her husband, Trevor James Smith (whom I shall call “Mr Smith”). Mr Smith died on 20 January 2004 from cancer diagnosed at Easter 2003. He was very ill and on morphine in the weeks leading up to his death. He had been forced by his illness to give up his employment as a cleaner in November 2003 and thereafter spent some time as an in-patient at Concord Hospital before returning home to the Ryde property where he remained until his death.

3 Mr Smith and the plaintiff were registered as proprietors of the Ryde property as joint tenants. They were parties, as vendors, to the contract for the sale of that property. The plaintiff’s right of survivorship in respect of the Ryde property was acknowledged by registration of a notice of death on 2 February 2004, whereupon she became the sole registered proprietor of that property. The plaintiff alone then conveyed the Ryde property to its purchasers upon completion. The full proceeds became payable to the plaintiff accordingly. Part of those proceeds was applied in meeting the balance of purchase moneys payable under the contract for the purchase of the Wyoming property.

4 The series of events I have just described may be stated in chronological form as follows:

22 December 2003 – Contracts for sale of Ryde property by plaintiff and Mr Smith exchanged.

15 January 2004 – Contracts for purchase of Wyoming property by plaintiff and defendant as tenants in common in equal shares exchanged.

20 January 2004 – Death of Mr Smith.

2 February 2004 – Registration of notice of death in respect of Ryde property whereby plaintiff became sole registered proprietor.

5 I should interpolate here that the deposit payable upon exchange of contracts for the purchase of the Wyoming property was funded out of the deposit received under the contract for the sale of the Ryde property, by way of partial release with the consent of the purchasers of the Ryde property; also that Mr Smith’s will named the plaintiff as sole executrix and beneficiary. He has obtained a grant of probate.

6 The plaintiff, the defendant, the defendant’s partner (now her husband) and the defendant’s two children moved into the Wyoming property shortly after completion of the purchase on 4 February 2004. The plaintiff left about two weeks later, on 19 February 2004. She went to stay with one of her sisters. There is conflicting evidence as to whether this followed a dispute or altercation between the plaintiff and the defendant and, if so, as to its cause. There is no need for me to make any findings on that.

7 On 23 February 2004, the plaintiff’s solicitor, Mr Eakin of Eakin McCaffery Cox (who is related to the parties and has been the family solicitor for a number of years), wrote to the defendant saying, among other things:

“Your mother’s instructions are that when you signed the Wyoming contract she thought that you were doing so as your father’s attorney. You have no beneficial interest in the Wyoming property. You are a bare trustee for your mother who wants the half-share in your name transferred to her.”

8 Mr Eakin’s request of 23 February 2004 that the defendant transfer her interest in the Wyoming property to the plaintiff was repeated in letters from Mr Eakin dated 25 February 2004 and 19 March 2004. The defendant did not comply.

9 By her summons filed on 11 June 2004, the plaintiff seeks as principal relief:

Conveyancing Act

(b) a declaration that the defendant holds her interest in the Wyoming property subject to a constructive trust in favour of the plaintiff as to the whole of the defendant’s interest;

(c) a declaration that the half share of the defendant in the proceeds of sale be held by the trustees in trust for the plaintiff.

10 In the alternative and in the absence of an order appointing trustees for sale, the plaintiff seeks declaration (b) above and declarations and orders causing the half share in the Wyoming property held by the defendant to be transferred to the plaintiff. Ms Jane Needham of counsel, who appeared for the plaintiff, made it clear that, if that relief was granted, the plaintiff would also wish to have an order for possession of the property.

11 An order for expedited hearing was made on 2 July 2004. I heard the proceedings on 20 and 21 July 2004. Expedition was granted because the plaintiff has paid a holding deposit on a retirement village unit which she might lose if unable to progress the purchase by 20 August 2004.

12 I should record at this point that the plaintiff has been profoundly deaf since birth. As her evidence makes clear, she relies entirely on lip-reading in her attempts to understand the spoken word and has mixed success, depending on the extent and nature of the facial movements of the relevant person when speaking. She also communicates by hand signing. She was accompanied by an Auslan interpreter while in court, including while giving evidence. “Auslan” is a contraction of “Australian Sign Language”. The interpreter, after being sworn, explained that the Auslan system is one that does not involve literal translation word for word. The only method of achieving that degree of precision is the extremely laborious and time-consuming signing process of actually spelling out each word letter by letter. Auslan, by contrast, involves signs which convey concepts or ideas in summary form rather than exactly equivalent meanings. The interpreter further explained that the plaintiff would be using “a particular style of Auslan, which is the old Auslan which means older signs with a little bit of spelling”.

13 The plaintiff has the power of speech but her speech is exteremely laboured and slow. When the oath was administered to her, it was a major effort for her to articulate the words “I do”. That response took an inordinately long time, compared with the same response from a person with normal speech. The plaintiff therefore gave evidence entirely through the Auslan interpreter. The plaintiff is apparently able to read and was shown documents in the witness box which she appeared to absorb before being questioned about them.

14 I should also record a particular observation I made about the interaction between the plaintiff and her Auslan interpreter, both while the plaintiff was giving evidence and later in the body of the court when the interpreter continued to keep her informed of what was being said as the proceedings progressed. The plaintiff watched the interpreter as the interpreter signed to her and, in doing so, nodded almost continuously to the interpreter. I took this to be an acknowledgement by the plaintiff of having understood what the interpreter was attempting to convey. In the witness box, this nodding occurred during the interpreter’s signing of each question, even in cases where the response, when it came, was an emphatic negative.

15 The plaintiff and Mr Smith were married for 39 years. He was also deaf. The defendant is not so afflicted. It was conceded that Mr Smith, while living and before being incapacitated by the illness from which he died, looked after all business and financial affairs of himself and the plaintiff and that the plaintiff had never had occasion to involve herself in such matters. She also looked to her husband for support in communication, he adopting the role of keeping her informed of matters of which she needed to know. I gathered that he, although sharing her handicap, was more proficient at communication than she is.

16 The plaintiff’s case is that a constructive trust of the undivided interest in the Wyoming property of which the defendant is proprietor arises in favour of the plaintiff on one or more of several bases. The first is that the plaintiff did not know of or consent to the defendant’s becoming a party to the contract for the purchase of the property or the transferee of the interest that accrued to her as one of two tenants in common in equal shares; and that the plaintiff therefore entered into the contract under a mistake and did not intend to contract in the form in which she appeared to contract. The second basis is that, if the plaintiff did, impliedly or otherwise, consent to the defendant’s becoming a co-purchaser with her under the contract, she did so in circumstances making it unconscionable that the defendant should retain the resultant benefit. The third basis is that, in signing the contract as purchaser in her own right rather than as attorney for her father, Mr Smith, the defendant was in breach of a fiduciary duty owed by her as attorney.

17 Before examining the events surrounding the purchase of the Wyoming property, I should refer to some matters of background. The defendant says that, in mid-2003, Mr Smith and the plaintiff were worried about debts and feared that they might lose the Ryde house which they then owned free of mortgage or other encumbrance. The plaintiff, in cross-examination, seemed to deny that there were any money worries of this kind, saying that the only debt was one in respect of their car. There is, however, evidence of an overpayment of Centrelink pension and a possible need to refund, the amount being of the order of $30,000. I am prepared to accept that worries about debts did exist.

18 The defendant also says that these concerns gave rise to an idea that the Ryde house should be transferred to the defendant (or, on one version, to the defendant and her now husband) as a protective measure – a measure, I infer, that would not have involved any change in beneficial ownership. However, that idea was not pursued. The defendant said she thought it would cause problems with her brother, the only other child of the plaintiff and Mr Smith.

19 By mid-2003, the family was aware that Mr Smith had cancer. It was not known, however, that he had only a few months to live, although it was clear that he would need care and that, when he died, the plaintiff also would need care. These considerations, plus the concerns about debts, led to a decision to sell the Ryde property and to buy something less expensive. A meeting with Mr Eakin in July 2003 attended by the plaintiff, Mr Smith and the defendant was a catalyst in this decision. The plaintiff was told by Mr Smith shortly before his death that he had asked the defendant to promise to look after the plaintiff after his death and that she had agreed to do so. It was put to Mr Eakin that a desire of the plaintiff and Mr Smith to give the Ryde house to the defendant was discussed at the July 2003 meeting. He denied this.

20 After the decision to sell the Ryde property had been made, the plaintiff began to look at villa homes in the same area. The defendant often went with her. The defendant eventually said words to the effect that better value for money was to be had by buying a property on the Central Coast. According to the plaintiff, the defendant said that she would like to live with the plaintiff at the Central Coast and to look after her and keep her company. The plaintiff says that she replied that that sounded like a good idea. Mr Smith was initially not keen on the idea of moving to the Central Coast. Eventually, Mr Smith accepted the proposal and a house large enough to accommodate four adults (the plaintiff, Mr Smith, the defendant and the defendant’s partner) and the defendant’s two children was sought. This resulted in a decision to buy the Wyoming property.

21 The defendant alleges that her parents said in late December 2003 that they wanted to put the new house in the defendant’s name to “secure” the property for the plaintiff – or, as the defendant said in her evidence, “to secure a property for my mother to live in so that she would not get pushed into a retirement village”. On 3 January 2004, however, the defendant sent to Mr Eakin an email referring to the plaintiff’s name being “on the deed”. The relevant part of the email was as follows:

“We have found a house on the central coast, 36 Malison Ave Wyoming – with Geoff Ward Real Estate in Wyoming. We have had a Building & Pest Report completed by Newton Developments Building Consultants which looks good and I will arrange for a plumbers report and electrician to inspect the place next week.

We have put in an offer for $394 999, and if the reports are clean and my mum & dad are happy we will contact you and make that appointment for the contracts to be exchanged. We were also hoping to use the 1st home buyers grant though will this be possible with my mothers name on the deed?”

22 The defendant alleges that she, her partner Ruel Ramirez Vocalan, the plaintiff and Mr Smith discussed the Wyoming purchase on 4 January 2004. At that time, the plaintiff and Mr Vocalan had gone to live at the Ryde property to help care for Mr Smith. The defendant says that, on 4 January 2004, the four of them had a conversation about putting the Wyoming property in the defendant’s name alone to get the first home owner’s grant from the government or in the names of herself and the plaintiff as co-owners. The defendant says that the plaintiff and Mr Smith said on that occasion that “they wanted to put it [the new property] in my name alone to try and get the first home buyer’s grant”. The defendant’s evidence is that Mr Smith said at the end of the conversation, “You have won” – from which she understood that her parents were giving her the Wyoming property. She says that they then all hugged one another. The plaintiff denies that any of this happened – or, at least, that she was aware of its having happened. She specifically denied the hugging.

23 On 5 January 2004, the selling agents for the Wyoming property sent to Eakin McCaffery Cox a sales advice in respect of that property showing the purchasers as the plaintiff and Mr Smith, “Attention: Pauline & Trevor (daughter Helen)”. A revised version correcting the vendor’s address but otherwise unchanged was sent on 6 January 2004. The first version was accompanied by the first page of a standard form contract (marked “draft”) in which the plaintiff and Mr Smith were shown as purchasers and neither the joint tenancy box nor the tenancy in common box was completed. Because it was the defendant who, with the plaintiff, had looked at properties on the Central Coast, I infer that it was the defendant, with the concurrence of the plaintiff, who identified the purchasers to the agents in that way. In fact, the defendant gave specific evidence on this in cross-examination (James Morgan was the estate agent):

“Q. So, on or about the 29th [December 2003] you saw James Morgan and at that point your parents were to be the purchasers of the property?
A. Yes, we had - well, we had discussed it and when I was talking about the situation with James Morgan, because he had nothing in writing to say either way, he said it was best to put it in their names.

Q. And that was notwithstanding the fact that you have given evidence that in late 2003 that there had already been discussions about buying a property solely in your name?
A. Yes.

Q. Despite that the sales advice that went to Eakin, was in the name of your parents?
A. Yes.

24 On 7 January 2004, the defendant sent an email to Lisa Marigliano, a solicitor employed by Eakin McCaffery Cox, which read in part as follows:

“I was thinking we could make an appointment for my parents and I to come in and sign all the paper work with you as they would appreciate a face to face exchange on if not before the 19th January? The new house is to go into my name – Helen Jane Smith and I would like to opt for the governments first home buyers grant if I can.”

25 Ms Marigliano’s reply of 8 January 2004 read in part as follows:

“Apart from the issue about the release of deposit, the contract is fairly straightforward. I will summarise the principal contract terms and property information for you in a letter, shortly. I’ll also give you information about the first home owner grant.”

26 Ms Marigliano testified that she had deliberately refrained from commenting in her reply on the defendant’s statement that the new house was to be in the defendant’s name. She did this because she wanted input from Mr Eakin. Ms Marigliano was, at the time, a solicitor of less than four years standing, whereas Mr Eakin was a senior practitioner who supervised her work. He was, in the relevant part of January 2004, away from the office on holiday although in touch periodically by email and telephone. Ms Marigliano forwarded the defendant’s email of 7 January 2004 to Mr Eakin with a view to his commenting on the part about the new property being bought in the defendant’s name and what she thought might be an inappropriate way of seeking to obtain the first home owner’s grant. Mr Eakin afterwards spoke to Ms Marigliano and, in her words, “said to me that he thought it was best for the property to go solely into Pauline’s [the plaintiff’s] name”. I infer that Ms Marigliano had not received this opinion from Mr Eakin before responding on 8 Jauary 2004 to the defendant’s email of 7 January 2004.

27 On 12 January 2004, the defendant phoned Ms Marigliano to arrange an appointment to attend at the office of Eakin McCaffery Cox in connection with the Wyoming purchase. The defendant’s evidence is that she knew at that point that her father was expected to live for only a matter of days. He was too ill to go to the solicitors’ office. Ms Marigliano made a brief file note of this 12 January 2004 conversation in which she recorded, among other things:

“Both names as purchaser.”

28 Mr Vocalan swore an affidavit in which he said, among other things:

“10. Whilst in the Ryde house, Helen, myself, Trevor and Pauline discussed and made plans for our future. As the house was put on the market, we had decided to all move in together at the next house to be purchased. Taken into consideration was the price, size and location of the next property. Helen had set out to find this house. After narrowing down the search to a few suitable locations Helen, Pauline and I inspected these properties.

11. The Wyoming property was chosen. Two storey, 4-5 bedrooms, close to shops, amenities and public transport.

12. Helen had taken Trevor to see the house, but Trevor passed over before we moved into this house.”

29 It is highly significant that this account does not refer to any conversation among the plaintiff, Mr Smith, the defendant and Mr Vocalan of the kind that the defendant says took place on 4 January 2004 and 12 January 2004. I refer to the following passage in Mr Vocalan’s cross-examination:

“Q. I put it to you that there never was a discussion about giving you, or giving Helen the Ryde house?
A. There was never a discussion about myself. It was only a discussion about a dying father's wish to have his last days debt free, burden free. So I think it was one of his solutions. I was never in any way shape or form offered, nor did I interject any of myself into those matters.

Q. I put it to you there was never any discussion about Helen owning the house at Wyoming either?
A. No, that's, that's false.

Q. Because you don't even mention it in your affidavit?
A. Yes, I did not mention it because obviously I am only going off what I have been through. Like I said I know my wife already had that in there, so I did not say that.

Q. Are you saying that you were not there for the conversation?
A. May I say again that I did not feel, because Helen already was, or is going to already say that in her affidavit. Obviously I was there and therefore, I could back up anything that you have questions about it.

Q. But the most important aspect --
A. I also wasn't there for the legal signing of the document.

Q. Yes. You said in your affidavit that there were discussions about the purchase of the new house, and you talk about the price, the size, the location of the property and the fact it was to be a family home. But what you don't say is that there was a conversation that Helen would own the house?
A. The ownership?

Q. Firstly, do you agree with that, that there is no mention in there?
A. I did not mention that in there.

Q. I put it to you you didn't mention it because it didn't happen?
A. I will tell you that is false.

Q. On 12 January, do you recall a meeting with your future parents in law, on the night before the document was signed?
A. Documents for?

Q. The documents for the purchase of the Wyoming house, for the signing of the contract?
A. There was a meeting.

Q. Do you recall a meeting?

HIS HONOUR: Q. The previous evening?
A. Sorry?

NEEDHAM: Q. 12 January?
A. I am not too sure about that.

Q. So you don't recall any?
A. I am not too sure about the date.

Q. What about putting your mind to when it would have been - just after you moved into the Ryde house?
A. Sorry?

Q. It would have been just after you moved into the Ryde house?
A. Yes.

Q. Does that help?
A. Well, there was many ongoing conversations. I mean particularly because the house - they were so distressed. They had no idea that their house was being sold. It was only when they actually saw it in the newspaper. I felt like, what's going on. We are only trying to do our best, which Helen was like already dealing with all her father's business, and I was also trying to help her mother in her business, actual every day affairs. We were, spent every last cent of our own money, helping the parents out. So a lot went on in that very short period of time. I also know - I have also known the plaintiff for almost 15 years.

Q. Just answer the questions. You don't need to go into any more detail. You had a number of conversations with Pauline and with Trevor and Helen, about the family living together in the new house?
A. Yes.

30 While Mr Vocalan here adopted the line that there had been discussion about the defendant’s owning the new house, he never gave any outright evidence that he had been party to conversations as described by the defendant.

31 Ms Marigliano prepared a letter dated 13 January 2004 advising generally on the proposed Wyoming contract. The letter was addressed to “Mr Trevor & Mrs Pauline Smith”. Under a sub-heading “Purchaser”, there appeared:

“Your name on the contract is noted as Pauline Therese Smith. Please let me know if there are any spelling errors or if it is not your full name.”

32 The plaintiff and the defendant went to see Ms Marigliano at Eakin McCaffery Cox’s office on 13 January 2004. Accounts of events at the meeting were given by the plaintiff, the defendant and Ms Marigliano. I begin with Ms Marigliano’s account as it emerged in the course of examination in chief (omitting some objections and disallowed questions):

Q. Do you remember how long the, I guess, the meeting was before we signed the contract?
A. Oh it could, I don't recall but it could be anywhere from 45 minutes, an hour, around that sort of time.

Q. And did you go through every page of the contract with my mother and I?
A. Not every page but most pages, yes.

Q. And did you see me translate what you had said to my mother?
A. Yes.

Q. Did you hear me, or was I just mouthing the words?
A. I could hear you repeating what I said to your mum and I could see you mouthing them (indicated) slowly.

Q. And to the best of your knowledge, do you believe that I translated everything you said to my mother?

OBJECTION

NEEDHAM: I object.

HIS HONOUR: It could be an appearance, I suppose.
Q. Did Ms Vocalan, to you, appear to translate everything that you said to her mother?
A. Yes.

Q. Did you explain in detail to us the difference between joint tenants and tenants in common?
A. Yes I did.

Q. And did you suggest to my mother that it would be better to be on the contracts as tenants in common rather than joint tenants?
A. I don't remember.

…

SMITH: Q. What did my mother say to you in questions of shares of the property, in which way to go?
A. When you said that you wanted to buy the property jointly, I did suggest that if you wanted to insist to have your name on the title, for whatever reason, it might be best to put you on there as only a very small ownership. For example 1% or 20 or 30, whatever percentage and I recall that you translated that to Pauline and she said - oh, you - you translated to Pauline 'do you want to have a split ownership' of less than 50 per cent, for example, 20 or 30 or 40 or would you want to have 50 per cent.

HIS HONOUR: Just stopping you there --
Q. At that point, any response you got, came through Ms Vocalan, is that right?
A. No when Helen was speaking with Pauline, Pauline then responded directly to both of us by nodding and saying yes (witness indicated). If I can rephrase the answer, trying to remember exactly what you said, you explained the scenario of having the option of having a small percentage of the ownership, and you said 'do you want to own it - half' as in 50 per cent and she said 'yes'.

SMITH: Q. And do you recall any discussions with my mother about changing her will?
A. Yes.

33 It is also relevant to quote an exchange at a later stage in the examination in chief of Ms Marigliano:

“Q. Was there anything that you did to ensure that my parents wanted my name to be on that contract?

HIS HONOUR: I am not quite sure what that question means, was there anything --

DEFENDANT: Q. If Lisa did, or did she try to get some confirmation from my parents that my name was to be on that contract?
A. I didn't speak with Trevor but on the day that you and Pauline came into the office, I explained to Pauline that Helen's name would be on the contract as the purchaser, in accordance with the discussion that we had on that day and Pauline said, yes, and to me it appeared that she agreed that Helen's name would be on the contract as a purchaser, as equal tenants in common.

Q. Was it emphasized at that time that I would own half the house?

OBJECTION. EMPHASISED.

HIS HONOUR: I am not sure about emphasised. Was it said?

DEFENDANT: Q. Was it said?
A. Yes.

Q. I guess, finally on the point of actually signing the contract, did you at any stage see me mouth to my mother, without words, that I am signing for Dad?
A. I didn't see that.

34 I quote next from the cross-examination of Ms Marigliano (the “letter” referred to at the beginning being her letter of 13 January 2004 addressed to the plaintiff and Mr Smith referred to at paragraph [31] above):

“Q. It wasn't until after you had explained that letter, that Helen said to you that she wanted her name on the contract. Isn't that correct?
A. No, it was at the time that we came to that point about who was to be the purchaser.

Q. What did Helen say?
A. She said something like, ‘We both wanted our names - we want both of our names to be on the title’.

Q. What did you say to that?
A. I think I said, ‘Well, that's not necessarily a good idea. Why do you want to do that?’

Q. What did she say to you?
A. Helen said that she wanted to be on the title, so she could have some control over the property. She felt concerned about people in the family who might take advantage of her mother, or the property and she wanted to being able to look after her mother and have some level of control.

Q. You suggested at that point, did you not, that the best way to do that was to have a one percent share in the property for Helen?
A. A one percent or some other smaller amount, yes.

Q. Because if it were just to have some level of security for Pauline, she wouldn't have needed a 50 percent equity in the property would she?
A. Yes.

Q. What did Helen say to that?
A. I don't recall what she said. But she was insistent that she buy as an equal owner.

Q. What did you then do?
A. I ensured that Helen had communicated that part of the conversation to Pauline. It looked to me as though Pauline was following what was being said to her and she said yes. I also suggested that by doing it that way it would result in an unequal distribution of Pauline's assets after she died, in the event that her Will did split up her assets equally. By having Helen have half of the property in advance, she would again then get the other half after Pauline had died and that wouldn't be fair. So she might want to change her Will.

Q. You were speaking, I put it to you, mainly to Helen, having a conversation with Helen at this point when the issue of ownership came up?
A. I was speaking to Helen and to Pauline, looking at both of their faces.

Q. You don't know Auslan?
A. No.

Q. You weren't attempting to sign to Pauline anything that you were saying to her?
A. No.

Q. So everything you said to Pauline had to go (unless she could lipread) through Helen?
A. Yes.

Q. To be translated?
A. Yes.

Q. Without being critical of you at all, you couldn't be sure whether the message was getting through, could you?
A. I couldn't be sure.

Q. After you had the conversation with Helen about being a co-purchaser with her mother, you then crossed Trevor's name off the property, off the contract?
A. Yes.

Q. Did you turn your mind to contacting Trevor to see whether that was what he wished?
A. No.

Q. Did you turn your mind to Helen having a power of attorney for her father?
A. No.

Q. I assume that at that point the contracts were signed by Helen and Pauline?
A. Yes.

Q. What happened directly after that?
A. We just probably finished talking about the purchase contract and I bundled up all the papers and put them to the side, and we talked then about the sale of the Ryde property.

35 Several matters emerging from Ms Marigliano’s evidence should be noted. First, she said that, as far as she knows, the plaintiff “can’t speak – communicate verbally”. From this I infer that Ms Marigliano did not hear the plaintiff say anything at the meeting and relied, for conclusions she drew as to the plaintiff’s state of mind, on gestures and facial expressions. Second, Ms Marigliano heard the defendant repeating to the plaintiff what Ms Marigliano said, mouthing the words as she spoke them slowly. I infer from this that the words Ms Marigliano spoke were repeated by the defendant in a way she thought – no doubt on the basis of long experience – would cause them to be recognised by the plaintiff. This appeared to Ms Marigliano to relate to everything she said. Third, Ms Marigliano perceived the plaintiff to agree, “by nodding and saying yes”, to a question to the effect of whether she wished the defendant to have a 50% interest rather than an interest of any smaller percentage (with several smaller percentages having been mentioned by way of example); also that, in Ms Marigliano’s words, “it appeared to me that she [the plaintiff] agreed that Helen’s name would be on the contract as a purchaser, as equal tenants in common”. Fourth, Ms Marigliano described the defendant as “insistent that she buy as an equal owner”. Fifth, Ms Marigliano conceded that she “couldn’t be sure” that the message she was seeking to convey to the plaintiff “was getting through”. Sixth, that she did not see the defendant mouth to the plaintiff, at the point when the defendant signed the contract, the words “I am signing for Dad”. Seventh, however, the defendant did, at a later point in the meeting, sign a document for Mr Smith under the power of attorney he had executed in her favour. This was the transfer of the Ryde property (both the plaintiff and Mr Smith necessarily being transferors) to which attention was turned after the papers to do with the Wyoming purchase had been bundled up and put to one side. Ms Marigliano did not see the defendant mouth, “I am signing for Dad” when the defendant signed the Wyoming contract; she was not asked whether that occurred when the defendant signed the Ryde transfer which she did, without question, sign as Mr Smith’s attorney.

36 I go next to the plaintiff’s evidence in cross-examination about the meeting on 13 January 2004 with Ms Marigliano:

“Q. Isn't it true that it was on 13th January, after this meeting, that we went to see Lisa at her office?
A. I can't remember. In the night, after the meeting, I just can't remember what day, I only remember Helen and I went to see Lisa, the solicitor, about the house. Lisa was talking about showing the document. Lisa was - Helen was sitting there and I was sitting beside her and Lisa was over there. That was the positions. And they were talking, but I missed a lot. I missed out without an interpreter there.

Q. Isn't it true that on 13 January, when we went to sign the contracts with Lisa, that this was the first time that you had met Lisa?
A. That was the first time I met Lisa in the room. Lisa was talking to Helen and Helen told me, please, would you sign the contract? And Helen said - Tim said my house, before I actually signed, and then I signed and then Lisa gave the - and Helen said, "I sign for daddy", and I was reading her lips, concentrating on her lips. She signed and that was it. I did not know about the half share of the land at Gosford council.

Q. Isn't it true that when Lisa went through each page of the contract, that I interpreted these points in two or three different ways?
A. Helen is not a professional interpreter.

Q. Why didn't--

HIS HONOUR: Wait a minute. She has not finished.

WITNESS: There was signing and lip reading.

DEFENDANT: Q. If you couldn't understand what I was saying, why didn't you ask Lisa or Tim for an interpreter for the contracts?
A. Is that the solicitor's job, that it is his role to call an interpreter for me? I arrived. There was no interpreter. That was it.

Q. Do you remember how long we were there for?
A. Roughly, a short time.

Q. Do you remember Lisa Marigliano explaining to you the difference between joint tenants?
A. I don't know. No, I don't know what that means.

Q. Or do you remember Lisa explaining the difference between the Wyoming contract and signing as tenants in common?
A. I cannot watch and lip read her lips. I missed a lot. I just didn't understand. Helen was listening and Lisa was explaining everything more to Helen about Wyoming, the home at Wyoming.

Q. Do you remember any discussion with Lisa about changing your will?
A. What was that?

Q. Do you remember any discussion with Lisa about changing your will?
A. No. No. I missed that. Only we talked about the house, house, house. That's it.

Q. So you don't remember that Lisa had explained to you that as tenants in common in equal shares that I would own half the house?
A. No. I did not know about half the land ownership. I had no idea.

Q. Isn't it true that it was not at the end of the discussions, before signing the contract, but at the beginning that Lisa explained that your name must be on the deed?
A. Lisa brought paper and I could see that where I had to sign, but before I signed - then Helen signed, but talking about half share of the land. I missed a lot of the discussion because there was no interpreter help.

37 This account is consistent with that given in the plaintiff’s affidavit. It follows cross-examination in which the plaintiff explained that she had first discovered the co-ownership situation in relation to the Wyoming property from a letter or notice from Gosford Council received at the property after she had gone to live there. She said that this upset her very much. The passage I have quoted also followed cross-examination in which the plaintiff showed herself to be confused about signing documents and meetings in relation to documents. She was under the impression that she had gone to see Ms Marigliano (“Lisa”) on 22 December 2003 to sign a contract. She corrected this later to say that she had signed a contract for the sale of the Ryde property at Concord Hospital on 18 December 2003 at the same time as Mr Smith signed it. It was then put to her that she had in fact signed the Ryde contract at an estate agent’s office in Epping with an employee of the agent (“Natalie” or “Nathalee”):

“DEFENDANT: Q. Isn't it true that it was in fact the 18th of December that I took the contract for dad to sign at the hospital and it was not until 22 December that he signed the contracts for the Ryde house in front of Natalie Tuifino at the offices of Mikhael Mikhael in Epping?
A. I can't understand.

HIS HONOUR: Q. The estate agent?
A. Yes. I can't remember the 22nd of December - wait a minute. No. It is all mixed up.

DEFENDANT: Q. So do you remember it was Nathalee and not Lisa that went through the contract for the sale of the Ryde house with you?
A. Nathalee. I don't understand. Can you repeat it again?

Q. Do you remember that you signed the contracts for the Ryde house on 22nd of December at Nathalee's office in Epping?
A. I can't remember the date, the 22nd December.

38 After an adjournment, cross-examination on the same subject continued:

“Q. Before the recess we were talking about the contracts for the Ryde house. Did you understand what you were signing for the Ryde house?
A. You mean the contract?

Q. Yes?
A. The solicitor, Lisa, was talking and talking and talking and I didn't understand.

Q. Can I interrupt. This is for the Ryde house, not for the Wyoming property?
A. Oh, I see. I'm sorry.

Q. Do you remember signing the contract at the Epping Real Estate?
A. Meaning before the Ryde house was sold?

HIS HONOUR: Q. The contract for the sale of the Ryde house?
A. What was the question?

DEFENDANT: Q. Did you understand what you were signing--
A. It was for selling the Ryde house. Trevor and I both signed. What was written in the contract was blank. There was a blank sheet. Trevor was in a hurry. He didn't have time and he had to go to work. There wasn't time.

Q. So, at this time you were in fact talking about the sales inspection report, an exclusive agency agreement that was blank and you signed?
A. Yes, it was blank.

HIS HONOUR: Q. What we need to know, what she is being asked about is not the contract that was signed for the agent, but the contract actually to sell the house to the people who bought it?
A. Do you mean the Ryde house was transferred, the contracts transferred to the Wyoming house?

DEFENDANT: Q. No. I was trying to establish if you remembered that it was Nathalee and not Lisa that took you through the contract for sale for the Ryde house and if you understood that?
A. Nathalee is the real estate agent for selling the house.

39 At that point, the defendant gave up her attempts to adduce evidence from her mother about her understanding of the various documents she signed and in whose presence she signed them. It is clear that the plaintiff was profoundly confused about the various papers and meetings and their purpose.

40 To complete my review of the events of 13 January 2004 at the office of Eakin McCaffery Cox, I must refer to the defendant’s evidence. There is no need to review that evidence in any detail. It is sufficient to say that it is borne out by Ms Marigliano’s account.

41 I turn next to the defendant’s evidence about the reasons why she was given – or was entitled to keep (a different concept) – a one-half interest in the Wyoming property. Her main contention is that her parents agreed that she should have the interest. But that assertion runs into difficulties when subjected to analysis. She initially relied upon an alleged willingness of both parents that she, the defendant, should be the sole owner of the Wyoming property. She regarded this as the outcome of the family meeting at which she says her father said, “You have won”, and the family members hugged one another (an event denied by the plaintiff and not referred to by Mr Vocalan). By the time she commenced email communication with Mr Eakin on 3 January 2004, however, she acknowledged that the plaintiff’s name would be “on the deed”. This was inconsistent with any belief that the defendant alone was to be the owner. When the defendant spoke with the selling agent a few days earlier, on 29 December 2003, she accepted that the defendant and Mr Smith would be the purchasers. This was inconsistent with the defendant’s having any interest at all. On 7 January 2004, the defendant made to Ms Marigliano by email an unequivocal statement that the “new house is to go into my name”. On 12 January 2004, however, there was another change, with the defendant saying to Ms Marigliano on the telephone words that made her records the note, “Both names as purchaser”. The defendant raised the matter of co-ownership when she and the plaintiff went to see Ms Marigliano on 13 January 2004. She repeated, at that point, that both she and the plaintiff were to be purchasers. Ms Marigliano said that that was “not necessarily a good idea”, and later raised the matter of proportions. In response, the defendant was “insistent that she buy as an equal owner”.

42 This chronology makes it inherently improbable that the defendant, in insisting upon becoming the owner of a half share, was in reality giving effect to some agreed family arrangement. She did not maintain any consistency. Had there been such an agreed family arrangement, its terms would have been fixed in the defendant’s mind. It would also have emerged in some way from the defendant’s husband’s affidavit where, in reality, there was silence on the matter. The existence of a fixed arrangement would not have allowed the defendant to start with the proposition that she was to be sole owner, move to the position that the plaintiff and Mr Smith were to be the owners, and then eventually adopt and insist upon a configuration that saw her and the plaintiff as co-owners in equal shares. That sequence demonstrates, to my mind, that the defendant simply went for what she thought she would be able to get, without reference to any settled family plan.

43 After Mr Eakin had written to her on 23 February 2004 demanding that she transfer her interest in the Wyoming property to the plaintiff, the defendant engaged in a somewhat strange correspondence in which she addressed her mother through Mr Eakin. Her letters concentrate at length on a number of grievances she bore towards her parents, some of them related to money she believed to be her due out of a grandparent’s estate which, in her view, her parents had taken for themselves. The defendant demonstrated deep-seated preoccupation with particular items of property. Her grandfather’s war service medals were one. She also believed that her father had given her his car before he died and that it should have been delivered to her. She regarded these apparent injustices as a reason for refusing to convey her interest in the Wyong property to the plaintiff. She confirmed having claimed her father’s superannuation of some $28,000. She said explicitly that she could claim this because she had paid $590 to have rubbish removed from the Ryde property, as well as rendering care and help to her parents.

44 The last part of the evidence to which I think it necessary to refer is the defendant’s testimony in cross-examination about the reliance placed upon her by the plaintiff which also contains her final asserted reason or justification for becoming the owner of a half share of the property:

“Q. I think you have agreed with me that your mother was looked after by your father for all of her life?
A. For 39 years.

Q. And when your father became ill you stepped into the role?
A. I tried to help her, yes.

Q. And you tried to pick up the pieces in - you tried to step into that role by looking after your mother's financial affairs?
A. Well at that time my father was still alive, so it was on behalf of my father. I'd already started acting as correspondence nominee for my mother in September with her Centrelink business, and I didn't just - I guess I couldn't - it was impossible for me to step into the role of my father when he became ill, because that's her partner. She depended on not only me but on, um, two friends that lived nearby, Les Herbert and Nola Martin. We depended on my mother's family her sisters and her mother for support, and we also depended on my mother's deaf friends to help her and they also came to help pack up the house.

Q. All right, I am not asking about anybody else, I am asking about you. Your mother wasn't in the position to protect her own interests while her husband was dying, was she?
A. (Witness nods) I don't know, I - we were all trying to do our best.

Q. She needed somebody to help her through the properties transactions, didn't she?
A. Yes.

Q. And you stepped in to that role?
A. It was not only me that was helping, other people helped.

Q. In relation to the property transfer you went to the meeting with Ms Marigliano?
A. Yes.

Q. And you were the one that was there telling your mother what the contract was all about?
A. Yes.

Q. And at the time her husband was dying?
A. That's correct.

Q. And she was selling her home of some 15 years partly to pay off debts and, of course, she has the very great disadvantage that she is deaf?
A. That's correct.

Q. And you take a fairly low view of your mother's ability to undertake financial transactions, don't you?
A. It's not a low view it's just - it's just the way my father did all of the work for them throughout their 39 years. Since the 39 years ATMs have been invented. My mother didn't know how to use the ATM. My father did all the forms for the house. When my father was dying, not only the family - but we were all trying to help her, to adjust her to use the ATM machine.

Q. But you wrote to Tim Eakin to say that your mother was not fit to handle the estate, didn't you?
A. I had discussions with my brother who, I guess, had passed over to me informally what - I had been helping with the family, and he had said to me that my mother - all that the other side would argue, that my mother had diminished capacity, and therefore I started using this term.

HIS HONOUR: Q. Who is 'the other side'?
A. Sorry, my mothers sisters and her lawyers.

NEEDHAM: Q. And you say you were acting to stop her being exploited, is that correct?
A. I tried.

Q. And you saw that by putting your name on the title, whether that be fully or half share, as it turned out, was a way of helping that property out of your aunts and grandmother's hands?
A. It was what we had all decided at the time, I didn't decide alone.

Q. But you say and please listen to the question; that by putting your name on the title was a way of keeping the property out of the hands of your relatives?
A. It wasn't the property - I don't think that they were after - they were liquidating the property. I believe it was a way to help my mum like - so that she wouldn't have to go to a retirement village, if she didn't want to, and the remainder of the cash wouldn't go to my mother's family.

Q. So the answer is yes, they were trying to keep the proceeds of the sale of the house away from the family?
A. That's what we agreed upon.

45 In addressing the plaintiff’s claims, it is important to concentrate on the effect of the events of 13 January 2004 at Ms Marigliano’s office in relation to the crossing out of Mr Smith’s name, the substitution of the defendant’s name, the specification of the plaintiff and the defendant as tenants in common in equal shares and signing of the contract in that form by the plaintiff and the defendant, coupled with exchange of contracts and subsequent completion of the purchase with funds belonging solely to the plaintiff. The effect was, of course, to cause value to pass from the plaintiff to the defendant. The defendant supplied none of the funds necessary to purchase the Wyoming property. The funds came wholly from resources which, after Mr Smith’s death, were exclusively owned by the plaintiff and, before his death, were owned by the plaintiff and Mr Smith together. The Ryde house was substantially the only asset of the plaintiff and Mr Smith. After his death and the completion of the sale of that property, the proceeds were substantially the only asset of the plaintiff. The events to which I have referred, if seen as operating to vest beneficially in the defendant an undivided one-half share in a property purchased for $390,000, was to divest value to the extent of $195,000 and to place that value in the hands of the defendant. At the contract stage (that is, the point at which the contract for the purchase of the Wyoming property came into being with the plaintiff and the defendant as co-purchasers) the deprivation was such that, upon completion in the fashion proposed (that is, out of the proceeds of the Ryde sale), Mr Smith would be denied any enjoyment at all of his property and its proceeds, to the extent that those proceeds were applied in effecting the new purchase - while the plaintiff would cease to enjoy any right of survivorship in relation to the new property. In the events as they happened, with Mr Smith’s death occurring between contract and completion and his will benefiting the plaintiff alone, the plaintiff was deprived immediately of value to the extent of half the value of the Wyoming property.

46 Such a transaction and transfer of wealth will be unexceptionable if the donor had and implemented a conscious intention of benefaction towards the donee. They might be unexceptionable if they are, in any event, productive of what can be seen, on objective analysis, to be benefits and advantages to the donor because of matters of context beyond the gift itself. If neither of those explanations or justifications is available, they are likely to represent unjust deprivation.

47 The first basis advanced by the plaintiff for claiming the defendant’s interest in the Wyoming property is unilateral mistake. The alleged mistake upon which the plaintiff relies is a mistake attending the agreement between the plaintiff and the defendant to contract with the vendors as co-purchasers. That agreement, the plaintiff says, was actuated by a misapprehension on the plaintiff’s part that the defendant, in signing the contract, was doing so on behalf of Mr Smith so that the plaintiff’s co-purchaser was him, not the defendant.

48 In the case of unilateral mistake, where the actuating misapprehension is said to have operated upon one party but not the other, rectification is generally not permissible. There is, however, an exception where the party not under the misapprehension is guilty of fraud, whether actual, constructive or equitable. The relevant principle was stated by Mason ACJ, Murphy and Deane JJ in Taylor v Johnson (1983) 151 CLR 422 at 432-433 as follows:

"The particular proposition of law which we see as appropriate and adequate for disposing of the present appeal may be narrowly stated. It is that a party who has entered into a written contract under a serious mistake about its contents in relation to a fundamental term will be entitled in equity to an order rescinding the contract if the other party is aware that circumstances exist which indicate that the first party is entering the contract under some serious mistake or misapprehension about either the content or subject matter of that term and deliberately sets out to ensure that the first party does not become aware of the existence of his mistake or misapprehension. ... In such a situation it is unfair that the mistaken party should be held to the written contract by the other party whose lack of precise knowledge of the first party's actual mistake proceeds from wilful ignorance because, knowing or having reason to know that there is some mistake or misapprehension, he engages deliberately in a course of conduct which is designed to inhibit discovery of it."

49 In his recent judgment in Sande v Medsara Pty Ltd [2004] NSWSC 147, Burchett AJ referred to cases in which the Court of Appeal of this Court and the Court of Appeal of Victoria have applied the Taylor v Johnson principle. Those cases are Tutt v Doyle (1997) 42 NSWLR 10 and Leibler v Air New Zealand Ltd (No 2) [1999] 1 VR 1. The comments of Burchett AJ in relation to them were as follows:

Tutt v Doyle

Taylor v Johnson

Leibler v Air New Zealand Ltd (No. 2)

‘His Honour found...that, when the parties executed the shareholders' agreement not long afterwards, the one was continuing to labour under the mistake that cl. 10.9 had not been deleted but merely amended and the other remained aware that the former was labouring under that mistake. His Honour found further that although cl. 10.9 had been solely for the benefit of the respondents and had been deleted by the respondents' own solicitors (albeit by mistake), the appellants ought to have drawn the mistake to their attention and, not having done so, had acted unconscionably. In short, his Honour made all the findings of fact necessary to sustain an order for rectification... .’

Taylor v Johnson

50 The cases to which I have referred were cases in which equitable remedy by way of rescission or rectification was granted to redress unconscionability emerging from or founded on unilateral mistake. There is no reason why other equitable remedies should not be available where the elements justifying relief exist. The essential elements are, first, that one person enters into a contract under a serious mistake about its content in relation to a fundamental matter; second, that the other party is aware that circumstances exist indicating that the first person is entering into the contract under a serious mistake about the content or subject matter of that aspect of the contract; and, third, that the second party deliberately sets out to ensure that the first party does not become aware of the existence of the mistake, either by positive acts or omitting to bring it to their attention.

51 In the present case, the first question is whether the plaintiff, when agreeing on 13 January 2004 to become co-purchaser with the defendant of the Wyoming property, knew that the effect of what she was doing was to put the defendant in a position where she would become the owner of an undivided one-half interest in the property. The plaintiff’s evidence is that she did not know and did not understand that; and that she was shocked and upset when she later found that the defendant owned such an interest. The defendant’s evidence is that Ms Marigliano explained the matter fully to the plaintiff. Ms Marigliano corroborates this, although her corroboration is somewhat dulled by her statement that, on her understanding, the plaintiff “can’t speak – communicate verbally”. If the evidence stopped there, the plaintiff might be seen to have failed at the first step in seeking to make out a case of unilateral mistake. But there is, in this case, an unusual factor to be taken into account. I refer to the plaintiff’s deafness and the uncertainty there must be as to what she received and comprehended when a trained and experienced interpreter was not available to assist. Things Ms Marigliano heard the defendant relay to the plaintiff by distinct, mouthed speech may not have been understood. And, particularly in light of the plaintiff’s habit of nodding when things are being relayed to her, Ms Marigliano may well not have appreciated that things the plaintiff appeared to comprehend were, in reality, not comprehended at all. The passages of cross-examination at paragraphs [36] to [38] above would reinforce this possibility.

52 There is, however, no need for me to come to any firm conclusion on this first aspect of the plaintiff’s unilateral mistake case because I am satisfied that the plaintiff fails at the second stage of the inquiry – that is, the need to show that the defendant was aware of circumstances indicating that the plaintiff was acting under a serious mistake as to the identity of her co-purchaser. The defendant’s evidence is that Ms Marigliano explained the matter of the defendant’s half-ownership to the plaintiff and that the plaintiff appeared to understand. This is consistent with Ms Marigliano’s evidence. Objectively, therefore, the defendant must be taken to have been unaware of (and to have had no reason to suspect the existence of) any relevant mistake under which the plaintiff was in fact labouring. That being so, the plaintiff’s unilateral mistake case cannot succeed.

53 The second basis on which the plaintiff puts her constructive trust claim in respect of the defendant’s interest in the property is that the circumstances in which the defendant obtained the interest make it unconscionable for her to retain it as against the plaintiff. It is in this part of the case that the effective movement of value from the plaintiff to the defendant, without consideration or countervailing advantage, becomes a relevant factor.

54 The principles of equity relevant to this claim are clear. Equity will intervene where an unconscientious use of power is perpetrated by a stronger party upon a weaker. The basic principle was stated in these terms by Fullagar J in Blomley v Ryan (1956) 99 CLR 362:

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

55 Speaking of the jurisdiction of courts of equity to relieve against unconscionable dealing, Deane J made the following observations in Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447:

“The jurisdiction is long established as extending generally to circumstances in which (i) a party to a transaction was under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them and (ii) that disability was sufficiently evident to the stronger party to make it prima facie unfair or “unconscientious” that he procure, or accept, the weaker party’s assent to the impugned transaction in the circumstances in which he procured or accepted it. Where such circumstances are shown to have existed, an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable.”

56 The relationship between such unconscionable dealing and undue influence was then described by Deane J:

Union Bank of Australia Ltd v Whitelaw

Watkins v Combes

Morrison v Coast Finance Ltd

57 The relationship was described in these terms by Brennan J in Louth v Diprose (1992) 175 CLR 621:

“Although the two jurisdictions are distinct, they both depend upon the effect of influence (presumed or actual) improperly brought to bear by one party to a relationship on the mind of the other whereby the other disposes of his property.”

58 As Gaudron, Gummow and Kirby JJ emphasised in Bridgewater v Leahy (1998) 194 CLR 457, by reference to a statement of Lord Eldon LC in Huguenin v Baseley (1807) 14 Ves Jun 273, the question is not whether the putative victim knew what he or she was doing, had done or proposed to do, but how the intention was produced.

59 The real point is that equity will neither allow advantage to be taken of a person labouring under a disability nor sanction an overbearing of a vulnerable party’s judgment by a stronger party’s influence. These forces may be at work even though the person affected becomes a willing participant in a transaction which on its face shows no real sign of unfairness. The equitable wrong lies in the taking of the benefit produced by unconscionable conduct in circumstances where the person engaging in that conduct knows or is to be taken to know of the circumstances of unconscionability.

60 In Turner v Windever [2003] NSWSC 1147, Austin J pointed out that a case of unconscionable dealing involves five elements:

61 Austin J added that, once elements (a), (b) and (c) are established, and the improvidence of the transaction is shown, the plaintiff’s task is made easier by an equitable presumption to the effect that the improvident transaction was a consequence of the special disadvantage, and that the defendant has unconscientiously taken advantage of the opportunity presented by the disadvantage.

62 The first element referred to by Austin J in Turner v Windever is that, at the time of the transaction, the weaker party suffered from a special disadvantage vis-à-vis the stronger party. In the present case the plaintiff was profoundly deaf. The defendant was not. The plaintiff was entirely reliant upon others to relay to her the content of oral statements made by persons whose manner of speaking did not allow her to lip-read. The defendant was not reliant in this way. The plaintiff had, throughout her marriage of 39 years, relied on her husband to advise and help her with financial and business matters. The defendant was not reliant in this way. The plaintiff’s husband was gravely ill and expected to live only a few days. He had told her that the defendant had agreed to look after her. The plaintiff was thus in a state of extreme anxiety and isolation. In these ways, the plaintiff suffered from a special disadvantage vis-à-vis the defendant. The plaintiff had the same kind of emotional dependence on the defendant as was found in Bridgewater v Leahy (above). The defendant said quite clearly in her evidence that 12 January 2004 (the day immediately before the relevant events), “we already knew that my father was not going to be with us for very long; we learned on 9 January that he would only live for three or four days at that stage”.

63 The second element is that the special disadvantage seriously affected the weaker party’s capacity to judge or protect his or her own interests. In the present case, the plaintiff’s isolation from the spoken word, coupled with the absence of both an interpreter and the husband from whom she had for so many years derived support and help, meant that she was, during the meeting of 13 January 2004, not able to judge or protect her own interests. She believed that the defendant – the daughter who had promised to look after her – would see to her interests and was for that additional reason affected in her capacity to protect her own interests.

64 The third element is that the stronger party knew of the special disadvantage or of facts that would raise that possibility in the mind of any reasonable person. In the present case, the defendant was fully and intimately aware of her mother’s condition, both physically and emotionally, including by way of reliance on Mr Smith. The defendant knew of her mother’s special disadvantage.

65 With the first three elements thus established and the improvidence of the transaction from the plaintiff’s viewpoint being manifest, it may be presumed that the improvident transaction was a consequence of the special disadvantage; and that the defendant has unconscientiously take advantage of the opportunity presented by the disadvantage. To that extent, I perhaps need not address those matters. I nevertheless do so.

66 The fourth element is that the stronger party takes advantage of the opportunity presented by the disadvantage. In the present case, the defendant made it her business to pursue a course of obtaining for herself either full ownership of the Wyoming property or, as eventually happened, a one-half interest. She did this in circumstances where she knew that her mother would probably do and sign whatever she asked when they visited the solicitors’ office on 13 January 2004. The defendant thus took advantage of the opportunity presented by the plaintiff’s disadvantage.

67 The fifth and final element is that the taking of advantage was unconscientious. That element clearly exists in this case. The transaction was, as I have said, an improvident one from the plaintiff’s viewpoint. It was, on no view, beneficial to the plaintiff that a one-half share in the Wyoming property should accrue to the defendant through expenditure of funds that were to be received by the plaintiff and Mr Smith but were, in the events that happened, eventually received by the plaintiff alone. The defendant simply appropriated her mother’s property. Her beliefs, if they existed, about an agreed gift to her were not consistently held. And she showed, after the event, that she had harboured a resentment towards her parents over a range of matters, including matters to do with money and property she thought they had kept from her. Although she denied it, I am satisfied that the defendant’s actions in relation to the acquisition of the Wyoming property were motivated, in part at least, by a belief that her parents’ perceived unfair treatment of her justified her taking something from them – in the same way as she later sought to take her father’s superannuation as well. The notion that, by taking a half share in the property, the defendant was somehow protecting the plaintiff from her (the plaintiff’s) sisters and other relatives is one not supported by any element of the evidence. The plaintiff is seen to have needed protection from her daughter rather than anyone else.

68 The conclusion in the present case must be that the plaintiff’s special disadvantage in the course of the meeting on 13 January 2004 made her vulnerable by depriving her of the ability to give a competent and informed consent to the defendant’s becoming a co-purchaser and to appreciate where her own interests lay. The defendant knew fully of the limitations and disabilities under which the plaintiff was labouring. The defendant took unconscientious advantage of those limitations and disabilities and is not entitled to rely on any apparent assent of the plaintiff. Equity’s intervention against unconscionable dealing will not allow the defendant to retain the interest she obtained by becoming a co-purchaser with the plaintiff under the contract signed on 13 January 2004. The defendant holds that interest upon a constructive trust for the plaintiff.

69 This conclusion makes it unnecessary to consider the third basis on which the plaintiff’s case was put, namely, that, in signing the contract as a purchaser in her own right, and not as attorney of Mr Smith, the defendant was in breach of a fiduciary duty owed by her as attorney.

70 It remains to consider the appropriate relief. The plaintiff’s first claim is for an order for sale of the Wyoming property under s.66G of the Conveyancing Act. Given the conclusion that the defendant holds her interest as co-owner upon trust for the plaintiff, I do not consider it appropriate to approach the question of relief on the basis that the plaintiff and the defendant are co-owners. My findings mean that the defendant is, in equity, not a co-owner at all. Relief should be framed accordingly.

71 The declaration and orders of the court are as follows:

2. Order that the defendant

(a) transfer the said undivided one-half share to the plaintiff on or before 3 August 2004; and

(i) attend at the office of the plaintiff’s solicitors, Eakin McCaffery Cox, St Martins Tower, 31 Market Street, Sydney at 12 noon on either 2 August 2004 or 3 August 2004 (the choice to be that of the defendant), or otherwise at such time on such day not later than 3 August 2004 as may be agreed between the defendant and Timothy John Eakin;

Real Property Act

(iii) deliver the said instrument of transfer to Timothy John Eakin (or such other solicitor) forthwith upon its being executed by the defendant, together with any certificate of title in respect of the said land which is in the possession or under the control of the defendant.

3. Direct that the defendant may, when attending at the office of Eakin McCaffery Cox in accordance with Order 2(b), be accompanied by a solicitor or by any other person she wishes to advise her.

4. Grant leave to the plaintiff to apply on one day’s notice for an order under s.100 of the Supreme Court Act 1970 and such further or other relief as she may think fit if the defendant does not duly and punctually comply with Order 2.

5. Judgment and order for the plaintiff against the defendant for possession of the whole of the land in folio identifier 135/237885.

72 The plaintiff sought an immediate order under s.100 of the Supreme Court Act. For reasons canvassed in Shehata v Hussein [2004] NSWSC 617 at paragraphs [25] to [27], I do not consider it appropriate at this stage to make such an order. The defendant must first have an opportunity to comply with the order to transfer.

73 I shall hear the parties on costs at a time to be fixed.

**********

Last Modified: 08/03/2004

Key Legal Topics

Areas of Law

Equity

Legal Concepts

Unconscionable Conduct
Unilateral Mistake
Equitable Estoppel

Actions

Download as PDF Download as Word Document

Citations

Smith v Smith [2004] NSWSC 663

Most Recent Citation

Errichetti Nominees Pty Ltd v Paterson Group Architects Pty Ltd [2007] WASC 77

Cases Citing This Decision

8

Aboody v Ryan [2012] NSWCA 395

ZAGAR & HELLNER [2016] FamCA 224

Catherine Margaret Thorn, as executrix of the Estate of the late Betty McAuley v Ian Geoffrey Boyd and Dawn Kathleen Boyd [2016] NSWSC 1344

Cases Cited

12

Statutory Material Cited

1

Players Pty Ltd & Ors v Clone Pty Ltd [2006] SASC 118

Sande v Medsara Pty Limited [2004] NSWSC 147

CITATION:	Smith v Smith [2004] NSWSC 663
HEARING DATE(S):	20/07/04, 21/07/04
JUDGMENT DATE:	28 July 2004
JURISDICTION:	Equity Division
JUDGMENT OF:	Barrett J
DECISION:	Declaration that defendant holds undivided one-half share in property upon trust for plaintiff. Order that defendant transfer interest to plaintiff. Order for possession. Leave to issue writ of possession.
CATCHWORDS:	EQUITY - unilateral mistake - whether elements exist - unconscionable dealing - intervention by equity even though affected party may have given consent - party affected by profound deafness and unfamiliarity with business and financial affairs - also heavily reliant on husband nearing death - dependence transferred to daughter who took unconscionable advantage
LEGISLATION CITED:	Conveyancing Act 1919, s.66G
CASES CITED:	Blomley v Ryan (1956) 99 CLR 362 Bridgewater v Leahy (1998) 194 CLR 457 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 Huguenin v Baseley (1807) 14 Ves Jun 273 Leibler v Air New Zealand Ltd (No 2) [1999] 1 VR 1 Louth v Diprose (1992) 175 CLR 621 Sande v Medsara Pty Ltd [2004] NSWSC 147 Shehata v Hussein [2004] NSWSC 617 Taylor v Johnson (1983) 151 CLR 422 Turner v Windever [2003] NSWSC 1147 Tutt v Doyle (1997) 42 NSWLR 10
PARTIES :	Pauline Therese Smith - Plaintiff Helen Jane Smith (now Vocalan) - Defendant
FILE NUMBER(S):	SC 3428/04
COUNSEL:	Ms J A D Needham - Plaintiff Defendant in person
SOLICITORS:	Eakin McCaffery Cox - Plaintiff Defendant in person

[2004] NSWSC 663

28 July 2004

Key Legal Topics

Areas of Law

Equity

Legal Concepts

Unconscionable Conduct

Unilateral Mistake

Equitable Estoppel