30 Eastbourne Avenue, Clovelly
53 In 1988 the deceased and the appellant contracted to purchase this property (Eastbourne Avenue) for $665,000. It was a spacious residence that was renovated before the couple moved into occupation in February 1991. The appellant's evidence that the property was in very poor condition when acquired (Black 1197) is borne out by the extensive and expensive renovations that were done before the couple moved in (Ex 11).
54 Title was acquired as tenants in common as to two-thirds by the deceased and as to one-third by the appellant.
55 The contract for sale is dated 30 November 1988 and names the purchasers as:
MICHAEL JACOB BAR-MORDECAI of 212 Clovelly Road, Clovelly, Medical Practitioner and EVELINE HILLSTON of the same address, Business woman.
56 The purchasers' solicitor is named in the contract as Blessington Judd & Co. Mr Freeman of that firm gave evidence as to (limited) recollection of his involvement in this and other transactions for the deceased. During the relevant period he delegated much of his conveyancing work to two junior solicitors. Neither of them gave evidence, although this was not subject to adverse comment by the respondent. The upshot is that the court was left to draw inferences from the conveyancing documents and the file notes produced in evidence (Blue 730-735, 761-763).
57 Settlement was effected on 5 December 1988, five days after exchange of contracts. The urgency originated from the vendors, but is part of the background of the transaction as between the deceased and the appellant.
58 The ten per cent deposit of $66,500 was paid to the vendors' solicitor. The $600,000 balance was advanced by the ANZ Bank on bridging finance secured by mortgages over the subject property and the deceased's Forestville property (Blue 1055).
59 The appellant's evidence at trial was that the deceased effectively paid for Eastbourne Avenue, because she discharged the ANZ bridging loan by selling bonds worth $400,000 and realising $200,000 from the sale of the Forestville property (Black 1199ff). This was consistent with the pleadings (see below) and was accepted by Bryson J who held that the deceased paid the whole of the purchase price, with the consequence that the conferral of the one-third interest on the appellant was a gift (at [22]).
60 This finding was inevitable in light of par 23 of the amended statement of claim which pleaded that the deceased paid the total consideration for the purchase of Eastbourne Avenue. That allegation was conditionally admitted in par 14 of the amended defence which pleaded, in part, that:
The transfer by the deceased of one third interest as tenant-in-common in the whole of the Clovelly home to the defendant was made:
(i) Freely and independently by the deceased uninfluenced by the defendant;
(ii) With the fully informed consent of the deceased;
(iii) After receiving independent advice in the absence of the defendant;
(iv) Out of the deceased love and affection for the Defendant as a consequence of their de facto husband wife relationship that existed since 24.8.1983 and
(v) In consideration for the defendant paying the mortgage instalments on the Clovelly home on behalf of the deceased and the Defendant jointly, in the context of the de facto husband wife relationship, he as the earning member of the nuclear family unit.
61 In this Court the appellant endeavoured to resile from this formal admission. He sought leave to amend par 14 to plead that he paid the purchase price, in effect because he paid the instalments on the mortgages taken out to assist in the acquisition of the property. He also pointed to evidence of expenditure he had incurred in extending and renovating the property in the 1989-91 period before the couple moved in. Some of this evidence had not been led at trial or had been rejected at trial. Its admission on appeal was disputed by the respondent.
62 The trial evidence showed that Eastbourne Avenue remained subject to successive bank mortgages, despite the deceased having realised $600,000 or thereabouts to pay for the balance of the purchase price in the year following acquisition.
63 The ANZ bridging loan - made to the appellant and the deceased jointly - remained in place until late 1989. It was originally intended to last two months. In October 1989 it was replaced by a Citibank mortgage securing $350,000 over Eastbourne Avenue.
64 The Citibank account remained in debit at around $300,000 throughout the deceased's lifetime. After her death, the joint account was closed with moneys advanced to the appellant by Citibank, on his own account, secured over the surgery (Blue 932, 1947, 1949). That loan was itself discharged out of the proceeds of sale of the surgery that was ordered by Bryson J.
65 Bryson J held (at [76]-[77] that the purchase of Eastbourne Avenue used up the capital resources which until then had been the deceased's main source of income. The limited exception was the Mount Street apartment.
66 Between 1988 and 1990 Eastbourne Avenue was extended (by building a third floor) and extensively renovated. There were tenants at various times before the couple took up occupation in February 1991.
67 The renovations and home improvements were extensive (Ex 11), apparently costing something in the vicinity of $170,000 (cf Blue 310, 622-9). Whether the source of payment for them was the ANZ mortgage and/or moneys advanced by the appellant through his company remains uncertain. Attempts by the appellant to prove his direct contributions were repeatedly rebuffed at trial, when affidavits, lists of payments and bundles of cheque butts were rejected on various grounds that are the subject of challenge in this Court.
68 The appellant also sought leave to tender fresh evidence showing that he contributed indirectly to the purchase of Eastbourne Avenue. This was evidence that his company made payments on his behalf towards the ANZ Mortgage which continued over the property until November 1989 (notwithstanding the original intent to have bridging finance for less than two months) and later towards the Citibank mortgage which succeeded the ANZ Mortgage in 1989 and financed its discharge ([88]-[90]).
69 This evidence was available at trial and it does not establish the proposition for which it is tendered. At most, it would show a substantial contribution made by the appellant to the joint expenses of the couple in the period after acquisition. This is relevant to the de facto relationship issue and it may cast indirect light upon the undue influence issues. But the mortgage payments are too late to throw doubt upon the characterisation of the initial gift that Bryson J accepted and that was common ground at trial.
70 The appellant was cross-examined on this topic. He agreed that the transaction was in effect a gift of a one third interest in the property "in terms of the husband/wife relationship certainly" (Black 1199). He also agreed that the funding for settlement came entirely from the deceased; coming from the sale of Forestville, from $400,000 bonds belonging to the deceased and from a cash account she had at the ANZ Bank (Black 1199-1202. See also Ex L (Blue 378) and Bryson J's analysis of the deceased's instruction to and conversations with her accountant, Mr Selinger (at [185]-[189])). It may also be relevant that the deceased worked without remuneration in the medical practice.
71 It would be unjust now to permit the appellant to resile from this position. Leave to amend the Defence and to tender this fresh evidence should be refused. The deceased put up the money to acquire the appellant's one-third interest in Eastbourne Avenue. This is not to deny that the gift was surrounded by arrangements as to who would pay for the extensive renovations that were planned from the outset. Nor is it to deny the possibility that the gift was a genuine outpouring of the deceased's affection for the appellant (but that is to move towards the ultimate issue on undue influence, a topic to which we shall return).
72 Mr Freeman's file notes are silent as to whether legal advice was sought by or given to the deceased as to this (gifting) aspect of the transaction. The impression gained is that the solicitor was instructed that the purchase would be effected as between the two purchasers in the way that it was, and that Mr Freeman did not look behind those instructions. He knew at some stage that the appellant and the deceased lived together and that the deceased worked in the surgery (Blue 728-9), but it is unclear whether he knew this in 1988.
73 The conveyancing file was opened on 24 November 1988 showing the deceased as the client (Blue 761). The cover sheet contains telephone numbers for the deceased and the appellant, the latter being presumably his surgery number. By 28 November 1988 Mr Freeman was writing letters indicating that he regarded the deceased and the appellant as the purchasers (Blue 762-768). This of course demonstrates no more than that he received instructions to that effect. As indicated, the contract exchanged on 30 November 1988 disclosed the two purchasers. It would seem that Mr Freeman had simply been instructed that the property was to be acquired by the purchasers as tenants in common, as to one-third share for the appellant and two-third share for the deceased (see Blue 762, 765).
74 The appellant said in evidence that the deceased had done all the arrangements with Mr Freeman. "I wasn't involved at all" (Black 1192). Mr Freeman's records, such as they are, do not corroborate this. Indeed they suggest the contrary in that the letter confirming instructions was sent to the appellant (Blue 765).
75 There is, however, direct evidence about the deceased's attitude to the acquisition of Eastbourne Avenue in a note she gave to her accountant, Mr Selinger, in October 1990. He was preparing her tax return and perhaps doing other work for her. The note (Ex L) gave the following explanation about the purchase of the property, its renovation and the receipt of rental in the 1989-1991 period:
The property was purchased on 5th Dec 1988 by myself and Dr Michael Bar-Mordecai. Initially I paid $665,000.00 to the vendor, which was the total price of the building. Doctor undertook to complete the building and carry out all necessary repairs and improvements, which at the time were estimated to cost up to $250,000.00. The contract drawn by Mr Freeman, solicitor provided that I was to own 2/3 and doctor 1/3 of the building. Doctor obtained a personal loan from ANZ Bank for above amount, with a mortgage on the building. Later this loan was transferred to the Citibank, and has increased to $350,000.00. I, too, invested some more capital in the building, the total of my investment now amounting now to $734,000.00 (you will probably check these figures any way when doing my balance sheet).
The building was almost completed by October 1989 and was rented on the 12/10/89 for $900.00 weekly. It remained rented to the 30/5/1990, when the tenants left. All the rent for this period (minus some minor deductions made by the tenants for repairs) was banked into my account, the Key Saving A/c of the Commonwealth Bank Clovelly, though 1/3 belonged to the doctor.
After the tenants left some more repairs and improvements were carried out by doctor. It was rented again on the 5th August, 1990, for one year, at the same rent of $900.00 per week. This time the rent is being banked in full into doctor's account with the City Bank, though 2/3 belong to me.
I wish to add that all expenses for building a third floor, repairs, improvements, swimming pool and spa etc have been paid for solely by doctor, so that I have no expenses to show or claim.