Clegg v Rowlands

Factual background

1. At all times, Mr and Mrs Clegg have lived in England. Mr Clegg gave evidence on behalf of himself and his wife, and he said that all decisions about helping Ms Rowlands were joint and that his wife "knew everything".
2. In 1998, Ms Rowlands emigrated from England to Australia with her then de facto partner. In around 2003 they separated and, in late 2005, they reached a financial settlement, whereby Ms Rowlands was paid $230,000. In about March 2006, Mr Clegg offered to provide some financial assistance for Ms Rowlands to purchase a home.
3. Ms Rowlands' affidavit evidence about the conversation before the purchase of the Mount Colah property was that Mr Clegg said to her: "I would like to help you buy a house, start looking for one and get back to me". "I will help you with the mortgage repayments and you should be paid off within 4 years. Just keep it tidy". "How much can you afford to pay each week?" (to which she answered "$75")
4. However, in cross-examination, Ms Rowlands was very vague. She could not recall the detail of any conversation with her brother at any time. She did not recall Mr Clegg indicating the dollar amount of assistance he would provide for either the Mount Colah property or the Corlette property. She could not recall at what point in time she told her brother about the $230,000 settlement sum she received from her former partner, nor when she first investigated her ability to obtain a mortgage for the Mount Colah property relative to speaking to her brother about buying it. Overall, I did not consider her an impressive witness. Her inability to provide clear evidence about the matters that were important to her case inspired no confidence in her version of events. There were also inconsistencies in her own evidence and inconsistencies when compared to documentary evidence, which provide further reasons not to prefer Ms Rowlands' evidence over Mr Clegg's evidence, which, in contrast, was consistent, logical, and clear.
5. Mr Clegg's affidavit evidence of the conversation before the purchase of the Mount Colah property was that he and his wife agreed to "lend" the deposit of $52,200 so that Ms Rowlands could purchase the property. He remained unshaken in cross-examination that he had a conversation with his sister before she bought the Mount Colah property, where he said that he wanted to be "put on the deeds". It was suggested to him that he wanted to be a "mortgagee" and he agreed, but it was not clear that he understood any distinction being drawn between having his name "on the deeds" and being a "mortgagee". I consider that he had always wanted security for the money he was contributing to the Mount Colah property, and his understanding was that such security was achieved by having his name "on the deeds". At all times, he engaged solicitors and his evidence was that he told his sister to get in touch with them for the legalities, which I accept.
6. I consider it most likely that Ms Rowlands found the Mount Colah property and then discussed inter alia the amount the Cleggs would contribute to the purchase, the amount Ms Rowlands would pay towards the mortgage, and the Cleggs' obtaining an interest in the property. This would provide an explanation for why Ms Rowlands said Mr Clegg made the comment, "just keep it tidy". Whether the property was "tidy" or well-kept would not have been of any concern to him, unless he had an interest in it. It is not necessary to decide exactly what interest the Cleggs had in the Mount Colah property, because of subsequent events.
7. To demonstrate the Cleggs gifted the money for the Mount Colah property, Ms Rowlands placed emphasis on a letter Mr Clegg wrote on 17 March 2006 to Ms Rowlands' mortgagee bank, which stated, "I have gifted the sum of $52,200 to Jane Rowlands which is non-returnable". Mr Clegg's evidence was that the purpose of the letter was to ensure that Ms Rowlands could obtain a mortgage to fund the purchase of the property and that the bank would not lend her money if the deposit sum was a loan. He was not challenged on that evidence, and I accept it. Consistent with this, Ms Rowlands' evidence was that Mr Clegg communicated with her mortgage broker in obtaining the mortgage. To the extent any issue of onus arises, I am satisfied Mr Clegg has discharged his burden to establish that this $52,200 was lent rather than given: Gray v Gray [2004] NSWCA 408 at [16] (Young CJ in Eq, with whom Sheller and Bryson JJA agreed); Schmierer v Taouk [2004] NSWSC 345 at [59] (White J).
8. On 5 May 2006, Ms Rowlands completed on the Mouth Colah property with the following funds, for a total purchase fund of $543,048.50, including stamp duty: 1. $192,760.50 from Ms Rowlands' funds; 2. $298,088 from an ANZ loan; 3. $52,200 from the Cleggs.
9. After settlement, until September 2011, Mr Clegg provided Ms Rowlands $147,914.97 in about 56 separate payments, which she used towards the Mount Colah mortgage repayments. Ms Rowlands accepted that this money decreased the principal owing by up to $40,000. In September 2011, Mr Clegg stopped providing funds because he was frustrated that Ms Rowlands had not included the Cleggs on title. However, his evidence was that he knew that the mortgage was ahead "by a few years" when he stopped paying, so he was not concerned about the bank seeking a mortgagee sale.
10. In December 2011, Ms Rowlands stopped making any payments herself towards the mortgage. Her evidence was that she could not afford the mortgage without Mr Clegg's help so there was no point.
11. Ms Rowlands' evidence was that, in about April 2012, during a phone call, Mr Clegg asked her to note his interest in the Mount Colah property in her will. He denied he made such a request and I accept he did not. On 3 May 2012, Ms Rowlands made a will that included Clause 3: I DECLARE that I have a debt owing to my brother ROGER CLEGG and that this debt is to be paid back to ROGER CLEGG and after this debt is paid back to ROGER CLEGG I GIVE DEVISE AND BEQUEATH one half of the profit of the sale of my house at [Mount Colah] to my brother ROGER CLEGG.
12. In cross-examination, Ms Rowlands said she considered it "fair" that she would leave her brother part of the property when she died, and she would not have "done him down". However, she also accepted that she had not discussed being entitled to keep the money the Cleggs had provided until she died. I note that, because the Mount Colah property has been sold, that part of the Will would be ineffective.
13. Counsel for Ms Rowlands submitted that the use of "debt" in the Will could not entitle the Cleggs to enforce a loan because the "debt" was not identified with any precision and, had the Cleggs' payments been "loans", then the limitation period for recovery of most of them would have expired. However, what is significant about that evidence and Clause 3 of the Will is that Ms Rowlands accepted Mr Clegg had provided money she described as "a debt" which was to be repaid, and she bequeathed him "one half of the profit" of Mount Colah. This is inconsistent with Ms Rowlands' allegation that the Cleggs had "gifted" her money.
14. By September 2012, the Mount Colah mortgage was in default because no one had been making any repayments. While Ms Rowlands had ceased making mortgage payments by December 2011, she had accumulated at least $22,650 in savings. Her evidence was that she decided to sell the Mount Colah property, but Mr Clegg's evidence was that he suggested she sell because she could not afford the mortgage. His attitude appeared to be that his sister lived above her means and should downsize. Mr Clegg's affidavit evidence was that he discussed the sale with his sister and said: If you can find a smaller property then it could be paid off with no mortgage but as long as we were put on the deeds. He indicated that he was explaining to Ms Rowlands that "we wanted to have our interest shown legally. Up to that time our interest had not been noted in any way".
15. Consistently with Mr Clegg's account, in September 2012, Mr Clegg's English solicitor, Mr Jeremy Case, contacted Mr Henry Packham, a Sydney solicitor, enquiring how the Cleggs could protect their interest in the Mount Colah property. Without full details of the agreements between the siblings, Mr Packham provided high level advice about mortgages in one email.
16. Further, under cross-examination, Mr Clegg explained what he was proposing to Ms Rowlands: Q. And you knew that there was a good chance that [Mount Colah] would be sold, if she continued to live there but didn't keep making payments. A. It wasn't going around like that. … Q. And why is that? A. Because I told her that if she found a smaller place, I'd pay it off and mortgage free. Q. And that's when the idea of buying Corlette came up, was it? A. I told her, we'll look for a place, yes.
17. Ms Rowlands put the Mount Colah property up for sale and started looking for alternatives. On 14 November 2012, the Mount Colah property was sold for $610,000. At this time, Ms Rowlands had the assistance of a firm of solicitors for her sale and later purchase.
18. On 30 November 2012, knowing of the Mount Colah sale price and able to know the approximate mortgage payout, Ms Rowlands exchanged contracts on a property in Corlette, a beach suburb of Port Stephens in New South Wales, with settlement due on 25 January 2013. The purchase price was $417,000. I do not accept she told Mr Clegg about this specific property before purchase or asked if he would contribute the difference between the proceeds of sale of the Mount Colah property and the purchase price. Instead, I accept that Mr Clegg had told Ms Rowlands to find a property where no mortgage would be needed, and that "she had committed us to supporting her because she knew she did not have enough money to complete. We either had to contribute to the purchase or let her lose her deposit."
19. Ms Rowlands had paid the deposit in instalments: 1. On 29 November 2012 - $1,050; 2. On 21 December 2012 - $22,650 from her savings that she kept for "emergencies"; and 3. On 22 December 2012 - $18,000 she borrowed from a friend.
20. The fact that the deposit was paid without Mr Clegg's support is more consistent with his version of events than Ms Rowlands'. I consider it was only after Ms Rowlands had committed to purchasing the Corlette property that the siblings reached an agreement that the Cleggs would be recorded on title and would provide the additional funds needed so that Corlette would be "mortgage free". In late December 2012, Mr Clegg provided Ms Rowlands with a cheque for $45,000, which she used to repay her friend and replenish her savings. The parties knew that another $66,000 was required from the Cleggs to complete the purchase.
21. On or about 8 January 2013, Mr Case contacted Mr Packham for him to ensure the Cleggs were on the title of the Corlette property. This is consistent with Mr Cleggs' evidence of the agreement that had been made that they would be "on the deeds".
22. On 10 January 2013, Mr Packham wrote to Ms Rowlands' solicitors, including the following: [I am instructed that the property] is to be purchased in the joint names of Mr and Mrs Clegg and Jane Rowlands; Mr and Mrs Clegg wish to be joint owners rather than mortgagees. They are putting in to the property the following sums (all in Australian Dollars). Up to 31/12/12 $250,000 To be paid before 21 January 2013 $66,000 They wish to have a 3% increase year on year on this figure of $316,000. I am instructed that the total price for the new house is to be $417,000 and therefore Mr and Mrs Clegg are looking for the Real Property Register to show that they are entitled to a share in the property in proportion that $316,000 (as augmented by the 3% year on year) compares to the original purchase figure of $417,000. They have sought advice on this and I need to know what stage the purchase has reached so I can better advise them.
23. On 10 January 2013, Ms Rowlands' solicitors responded to Mr Packham's request concerning title: It would be extremely difficult to add Mr & Mrs Clegg to the Contract at this late stage. Of note, the response did not deny the siblings' agreement that the Cleggs would be on title.
24. On 18 January 2013, Mr Packham emailed Ms Rowlands' solicitors a draft Declaration of Trust and Transfer and Caveat "for your approval" which would be required at settlement when the Cleggs provided the further funds. Mr Packham noted: My clients require that after the transfer into your clients [sic] name has been completed that the Folio Identifier be deposited with me. I will not be registering the transfer but will hold that until the arrangement in the decn of trust is complete.
25. Ms Rowlands' affidavit evidence was that, on about 23 or 24 January 2013, she called her brother and obtained an oral assurance. Her evidence was she asked, "would you at least agree that if I sell again the funds will be transferrable to the next property", to which she said her brother said, "yes". Mr Clegg denied this conversation. His denial is consistent with the later documentary evidence, and I accept it.
26. On 24 January 2013, Ms Rowlands' solicitor emailed Mr Packham: I refer to our telephone discussion yesterday regarding making the loan from Clegg to my client Rowland transferrable. My client has spoken to your client and advised that your client is agreeable to this. Please submit the amended Declaration of Trust as soon as possible for our client to sign prior to settlement. I confirm settlement is scheduled to take place on Tuesday 29 January 2013 at 2pm…
27. Later that evening, Mr Case emailed Mr Packham: Mr and Mrs Clegg will take your advice and decline to agree the amendment suggested BUT they would like you to make it clear that when Mrs Rowlands does wish to move again they will want to give her all the financial support she needs and they can and she can so rest assured. Please phrase this as kindly as possible.
28. On 25 January 2013, Ms Rowlands' solicitor emailed Mr Packham: I have now had the opportunity to discuss the e-mail [from Mr Case] with our client. Our client has advised that her brother, your client, agrees to make provision for same in the Declaration of Trust. Our client is contacting her brother again to verify this.
29. On 29 January 2013, two days before settlement of the Corlette property took place, various emails were exchanged between Ms Rowlands' solicitor and Mr Packham. At 10.51am, Ms Rowlands' solicitor emailed Mr Packham: Settlement is now taking place tomorrow at 2pm… Our client has instructed that she will not sign the Declaration Trust unless it states in the Agreement that the funds are transferrable. We have advised her that she has to tell her brother to tell his solicitor this. Please provide us with the amended Declaration Trust for client to sign.
30. Ms Rowlands' evidence was that she had requested this amendment to the declaration because she "didn't feel safe anymore" and "felt very vulnerable". Ms Rowlands said she "probably" discussed those feelings with Mr Clegg, but Mr Clegg was not asked about this in cross-examination.
31. Mr Packham responded at 11.10am: I note this but I have no instructions as yet. I suggest that you put some wording to me as this is outside my original brief and you know what exactly she wants. Given that this was brought up after she bought the property without clarifying it with her brother and sister in law it seems an issue for her (and unfortunately for you).
32. At 12.20pm, Ms Rowlands' lawyer responded: I have just spoken with our client and she has advised again her brother is OK to have a clause in the deed to reflect that the amount is transferrable to another property. I suggest the following being added at the end of clause 2. "If the Trustee disposes of the land for another purchase then such amount is transferrable to the new land." Please advise if this is acceptable. My client is in Sydney for a few hours and then will have to leave to travel up to Corlette.
33. At 12.37pm, Mr Packham responded: Okay add that in then.
34. At 12.39pm, Ms Rowlands' lawyer responded: Thank you
35. At 2.53pm, Mr Packham responded: I am sorry I have reflected on this and the Declaration must stay the same or your client must get an e-mail direction to me from her brother and sister in law. My instructions are clear. Your client is putting me in a spot that she made for herself and I am not getting her out of it by putting my head on the block instead.
36. The Declaration of Trust is expressed to have been made on 25 January 2013, however it was signed by Ms Rowlands sometime after 29 January 2013 and was witnessed by a notary public.
37. Relevantly, the Declaration of Trust provided, what can be summarised as follows: 1. Ms Rowlands declared that she held the Corlette property on trust as to 757/1000ths for the Cleggs and the rest for herself as tenants in common; 2. That division of title was calculated on the basis that the Cleggs provided $316,000 of the funds towards the $417,000 purchase price of the Corlette property; 3. Ms Rowlands had exclusive right of occupancy of the Corlette property. The Cleggs were not entitled to occupation and instead were entitled to 3% simple interest per year on the $316,000, payable on disposal of the Corlette property; 4. Ms Rowlands was required to keep the property insured and in good repair; 5. The Cleggs were entitled to lodge a caveat to protect their interest; and 6. The deed bound the parties' executors and administrators.
38. The signed copy of the Declaration included in handwriting and crossed out: "If the Trustee disposes of the land for another purchase then such amount is transferrable to the new land." In light of the email correspondence above, it is likely this addition and crossing out occurred on 29 January 2013. Ms Rowlands accepted in cross-examination that she had seen the handwritten annotation crossed out before she signed the document.
39. Ms Rowlands claimed that she did not understand what she was signing when provided with the Declaration of Trust and Transfer, and variously: 1. If she had known, she would not have signed them; or 2. She had no choice but to sign them because she needed the $66,000 to complete the Corlette purchase.
40. I do not accept that evidence. I consider she always understood her brother wanted to be on title or have security for his contributions to her homes. I consider that Ms Rowlands understood the substance of the Declaration of Trust because: 1. Her solicitors indicated in their emails to Mr Packham that they had discussed the document with her; and 2. She wanted to make a change to it, and she said the documents made her feel "vulnerable"; she must have considered their effect to reach those conclusions.
41. Mr Clegg's evidence in cross-examination was: Q. As far as you were concerned she just had to sign that document [Declaration of Trust] if she wanted the $66,000 otherwise it wouldn't be paid across, is that right? A. Yeah, it wouldn't be paid across because there was no security, I had no security, she didn't put us on the deeds again. Q. So, if she didn't sign that document‑‑ A. That's why we had to do it. Q. So, if she didn't sign that document the money wasn't being paid across. That's right, is it? A. No, because she hadn't put us on the deeds again. Sorry, I needed some security. She done it once before and she's doing it again. She's not ‑ you know, you can't trust her.
42. I accept, as Mr Clegg stated, that he did not intend to contribute to the Corlette property if he did not have security. He had wanted to be put on title, but because Ms Rowlands did not do that, he sought her signature on the Declaration of Trust instead if he was to assist at settlement. It appears he was always prepared to assist his sister financially, providing his contribution was recorded on title. He did also provide the 24 January 2013 email assurance that he would help in the future if he could.
43. On 1 February 2013, at settlement of the Corlette property, the signed Declaration of Trust and Transfer were provided to Mr and Mrs Clegg's agent in return for a cheque for $66,824.96. In fact, only $66,000 was required to complete the purchase. Mr Packham paid the extra $824.96, which was in fact intended by the Cleggs to pay his fees. There is no evidence that Ms Rowlands ever refunded that extra money, even though Mr Packham said he sought its return.
44. In February 2013, after Ms Rowlands was registered on title of the Corlette property, she provided a signed Caveat to Mr Packham recording that Mr and Mrs Clegg's interest in the property was by way of "constructive trust" said to have arisen as "the Caveator has contributed money to the purchase of the land".
45. In each of 2014, 2015 and 2016, Mr Clegg requested a copy of the insurance certificate for the Corlette property (in apparent compliance with the Declaration of Trust requirement to keep the property insured). The letter of 22 January 2014 stated: Jane, can you send us a copy of the house insurance certificate after renewal. If you are not prepared to do this, you can buy our share in the property. Roger and Heather Clegg. On each occasion, Ms Rowlands provided the insurance documentation sought, without questioning the Cleggs' entitlement to such information or challenging their asserted interest in the property. I also note that, in her affidavit, Ms Rowlands indicated that she was not in a position to "buy out" Mr Clegg's share of the property, which is contrary to her assertion that he did not have any interest in the property.
46. On 8 March 2017, Mr Clegg wrote to Ms Rowlands raising the possibility of a sale of the property.
47. After no response was received, on 27 March 2018, Mr Clegg wrote to Ms Rowlands indicating that he would pass the matter over to his solicitors.
48. In September 2018, Mr Clegg asked Mr Packham to assist in recovering their interest in the property. On 25 November 2019, Mr Packham wrote to Ms Rowlands of the Cleggs' intention to register the Transfer. At some time after that, Mr Packham lodged the Transfer with NSW Land Registry Services through PEXA.
49. On 13 January 2020, the Transfer was registered on title.
50. On 13 March 2020, a new edition of the Certificate of Title was issued, which now shows ownership as tenants in common: 1. 76/100ths held by Mr and Mrs Clegg; 2. 24/100ths held by Ms Rowlands. The Cleggs' uncontested evidence was that the reason for the difference between this division of title into 100 parts and the terms of the Transfer, which divided title into 1000 parts, was that the NSW Land Registry Services would only accept a division of 100 parts. However, Mr and Mrs Clegg accepted that their interest is actually held in accordance with the Declaration of Trust and signed Transfer.
51. On 27 March 2020, the Cleggs filed a Summons seeking orders for the appointment of a trustees under section 66G of the Conveyancing Act 1919 (NSW). They also filed consents to act as trustee from Mr Christopher Palmer and Mr Liam Bailey. Such orders would only be made if I am persuaded that Ms Rowlands' cross-claim fails.
52. Therefore, the real issue is whether the Cleggs took unconscientious advantage of any special disadvantage of Ms Rowlands in having her sign the Declaration of Trust and Transfer before providing her with the additional funds required for the purchase of the Corlette property.

Unconscionable conduct

1. Ms Rowlands relied upon the statement of legal principles for "catching and unconscientious bargains" from J D Heydon, M J Leeming and P G Turner, Meagher, Gummow and Lehane's, Equity: Doctrines and Remedies (5th ed, LexisNexis, 2014) at [16-010]: The jurisdiction is a branch of the general equitable jurisdiction in fraud. It is raised 'whenever one party to a transaction is at a special disadvantage in dealing with the other party because illness, ignorance, inexperience, impaired faculties, financial need or other circumstances affect his ability to conserve his own interests, and the other party unconscientiously takes advantage of the opportunity thus placed in his hands'. … It will be seen that the essence of these situations is (a) parties who meet on unequal terms, (b) the stronger party takes advantage of this, (c) to obtain a beneficial bargain. When this is shown by the weaker party, the onus will pass to the stronger party to show that the conduct was fair, just and reasonable… Some expansion in these principles occurred in Amadio's case, where the majority of the High Court (Mason, Wilson and Deane JJ) held that it was sufficient to attract their operation that instead of actual knowledge of the plaintiff's special disadvantage in relation to an intended transaction the defendant was merely aware of the possibility that the situation might exist or of facts that would raise that possibility in the mind of any reasonable person; in either case equity will intervene if the defendant takes unfair advantage of a superior bargaining power or position by entering into that transaction… Mason J in Amadio's case was at pains to emphasise that the mere circumstance that there was some difference in the bargaining power of the parties was not enough; 'the disabling condition or circumstance [must be] one which seriously affects the ability of the innocent party to make a judgment as to his own best interests'… Those decisions also confirmed that what was required was a precise examination of all of the salient facts, rather than seeking to place the case into any particular category; as Gleeson CJ said in Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd, although categories may be adopted as a convenient method of exposition of an underlying principle, they may be misunderstood and so come to supplant the principle.
2. Ms Rowlands' case is based in unconscionable conduct as a matter of equitable doctrine rather than "notions of unconscientious conduct in some loose sense where all principles are at large": Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 at 324 (Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ). While Ms Rowlands had contractual capacity, it is still possible that she laboured under a special disability: Bridgewater v Leahy (1998) 194 CLR 457 at 491 (Gaudron, Gummow and Kirby JJ).
3. Below I consider whether: 1. When signing the documents in January 2013 (being the relevant time for the inquiry), Ms Rowlands suffered a special disability, and 2. If she did, whether the Cleggs, with actual or constructive knowledge about the special disability, took advantage of that fact, such that their conduct was unconscientious.

Special disability?

1. In Blomley v Ryan (1956) 99 CLR 362 at 405, Fullagar J outlined some examples of special disability, including "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." However, the adverse circumstances constituting a special disability such that one party is placed at a serious disadvantage vis-à-vis the other "may take a wide variety of forms and are not susceptible to being comprehensively catalogued": see, eg, Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 474 (Deane J).
2. Ms Rowlands formulated her special disability in various ways.
3. First, in oral opening, counsel for Ms Rowlands framed her special disability as follows: [T]he primary factor that gave rise to the special disadvantage was financial need. It's not only the primary but, I say, stands alone showing special disadvantage. In the circumstances of this case, the financial need led to a position where the defendant - it seriously affected the defendant's ability to make a judgment as to her own interests.
4. Secondly, in her written opening submissions, Ms Rowlands' case also included that in early 2013 she was suffering a special disadvantage in dealing with the Cleggs because of her emotional condition, her ill-health at the time that had caused her to stop working, including anxiety, depression, lower back problems, and other conditions, her difficulty meeting her mortgage repayments, the concern about not having accommodation and having to move areas.
5. Thirdly, another formulation was based on 'assurances': 1. By the 24 January 2013 email sent by Mr Case to Mr Packham (set out above at [32]), Mr and Mrs Clegg had assured Ms Rowlands that the advances they had provided could be used for another property and intended that she should rely on that assurance in signing the Declaration of Trust and Transfer, and she did so rely; 2. That assurance was repeated on the telephone between Mr Clegg and Ms Rowlands with a promise of an amendment to the Declaration of Trust before she signed it to the effect that the sums advanced could be transferred to another property if Ms Rowlands wanted to move; 3. Mr Clegg also told Ms Rowlands that she could live in Corlette forever; 4. When signing the Declaration of Trust, Ms Rowlands was distraught, was relying on the assurance and promise of an amendment and had no choice but to sign, and these combined circumstances amounted to a "special disadvantage", such that Ms Rowlands' signature was obtained by unconscionable conduct.
6. This was amended in closing submissions, when counsel for Ms Rowlands also accepted that the "assurance" and conversations were not binding, but appeared to expand Ms Rowlands' special disability to include "ignorance and inexperience": … because of [Ms Rowlands'] ignorance and inexperience [she was] led to believe this assurance meant something … It was ignorant and naïve to rely on these things as they had no real meaning. The assurance and other things said to [Ms Rowlands] around that time were not binding in any way and the decision of [Ms Rowlands] to sign the deed and transfer thinking the assurance could be relied upon by her demonstrates her ignorance and inexperience meant she did not have the ability to make a judgment as to her own best interests and she was unable to conserve her own interests.
7. For the reasons that follow, I am not persuaded that Ms Rowlands suffered from any disability that meant she was unable to act in her own best interests or make a worthwhile judgment as to what is in her best interests: Amadio at 462 (Mason J); ACCC v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51 at 74 (Gummow and Hayne JJ). This is for the following reasons.

Physical disability

1. While Ms Rowlands complained that she suffered from a sore shoulder and back and some other medical issues, that is not sufficient to demonstrate that she was suffering a special disability that rendered her in a position of vulnerability vis-à-vis the Cleggs. No medical evidence was relied on to demonstrate the effect of Ms Rowlands' medical conditions on her ability to act in her own best interests and her physical or psychological vulnerability in early 2013.

Financial hardship

1. I focus on Ms Rowlands' primary case that she was suffering a special disability in the form of financial hardship. I note that parties in a position of financial hardship can in fact play the role of the "stronger party" taking advantage of special disability: see, eg, Louth v Diprose (1992) 175 CLR 621 at 639 (Dawson, Gaudron and McHugh JJ).
2. I was not taken to any authority that explained when "financial hardship" will be such, that it effects the ability of a person to make a decision in their best interests. It was submitted that Ms Rowlands' special disability bore similarities with a party, Ashley, in Robb J's decision in Anjoul v Anjoul [2021] NSWSC 592. I do not consider the facts of that case analogous to the case here. In Anjoul, the special disability that Ashley was found to have suffered was a "seriously reduced physical, emotional and psychological condition" (at [342]). In that case, Ashley signed a deed in favour of Jerry giving him an interest in her home in reliance upon a representation by Jerry to the effect that the purpose of the deed was to protect the property from being seized by the NSW Crime Commission, and that Jerry would never leave Ashley and her two children without a home. Further, it was at a time when her husband had been arrested on drug charges and was in prison.
3. Ms Rowlands did not have a generalised "financial disability". Instead, she made choices prior to January 2013 that led to her accepting the documentation she signed. I have found that Ms Rowlands: 1. Agreed to accept the Cleggs' contributions to Mount Colah and be put "on the deeds" for their contributions; 2. Decided to sell Mount Colah when she and the Cleggs had stopped making mortgage payments, knowing she could not pay the mortgage herself; 3. Chose to purchase the 4-bedroom Corlette property for herself and her dogs using the Mount Colah proceeds of sale, but without a mortgage in place or other borrowings to complete the purchase. However, I note that Ms Rowlands paid the deposit from her own savings and a loan from a friend, and there was no evidence about whether she could access sufficient funds from sources other than the Cleggs; 4. Asked the Cleggs to contribute the necessary further funds for the Corlette property, and agreed that they would be "on the deeds"; 5. Did not organise for the Cleggs to be recorded on title of the Corlette property, but nevertheless continued to want their financial assistance to complete the purchase; 6. Agreed to sign the documentation to obtain that financial assistance.
4. These findings are consistent with other evidence. Ms Rowlands' affidavit evidence about being presented with the Declaration of Trust was that: I recall being upset that my brother did not trust me and I recall crying at that appointment [with her solicitors]. However, I always felt vulnerable when talking to Roger about anything, in fact when he stopped making payments in 2011, I never asked why. I knew that settlement was coming up and felt that I could not do anything about it. This complaint that her brother "did not trust me" would seem to suggest that she was aware that her brother wanted an interest in the Corlette property, and he should "trust" Ms Rowlands to honour that without legal documentation, which is contrary to her case that the money was gifted.
5. Rather than her assertion of being unable to do anything, Ms Rowlands' evidence was she called her brother and, without arguing about the need for the Declaration of Trust, she asked if he would agree that the money could be used for a future property, and he said, "yes". That suggests that she did not feel vulnerable when talking to her brother, and she sought a change to the documentation.
6. When asked why she sought the amendment in the Declaration of Trust, Ms Rowlands' answer was: "Because I ‑ I didn't feel safe anymore. I just felt very vulnerable." However, her affidavit said that "[m]y dealings with Roger had been honourable in the past … so I signed the documents in good faith". While that may be a reference to the "assurance" (considered further below), signing on an assumption of honourable relations is contrary to the notion that she was feeling vulnerable. I consider the documentation was proffered by the Cleggs to have their contributions legally regularised in circumstances where Ms Rowlands had continued to avoid doing so, despite her agreement with her brother.
7. Further, at no time prior to Mr and Mrs Clegg commencing proceedings, did Ms Rowlands complain to them or anyone about the documentation she had signed. Even when she received a letter from Mr Packham in September 2018 suggesting ways the Cleggs could recover their interest in the Corlette property and she went to see lawyers, she did not instruct them to send a letter in rebuttal, nor commence proceedings to vindicate the position she asserted in her cross-claim at the trial. Similarly, Ms Rowlands objectively acted as if Mr and Mrs Clegg held an interest in the property by sending insurance certificates when requested, without complaining that they had no entitlement to such documentation.

Assurances

1. I do not accept that Mr Clegg gave any oral assurances that Ms Rowlands could live in Corlette forever or that she could transfer the Cleggs' funds to another property if Ms Rowlands decided to move. I also reject that the 24 January 2013 assurance could properly be read the way submitted; it was a promise by a brother to a sister to assist if a need arose and it was possible.
2. Further, there was no evidence that Ms Rowlands was naïve or inexperienced and I do not accept she was. The language of the email assurance was clear and was provided in the context of refusing the amendment to the Declaration of Trust, which was the legal document.
3. I do not consider there was any special disability as alleged.

Knowledge of the special disability?

1. If, contrary to my conclusions above, Ms Rowlands suffered a special disability, Ms Rowlands would need to establish that the Cleggs knew of the facts that would raise that possibility in the mind of any reasonable person: Amadio at 467 (Mason J). Below I consider whether the Cleggs knew of Ms Rowlands' claimed: 1. poor health, including but not limited to Ms Rowlands' advanced age and several medical conditions; 2. financial hardship in the sense of dependence upon the Cleggs to live in the properties she had chosen; 3. reliance on the assurances.
2. Physical disability: Mr Clegg's evidence was that he did not know if Ms Rowlands was "bad, ill", he did not know anything about it and "nobody's told me about it". I accept this unchallenged evidence. The evidence therefore demonstrates that Mr Clegg not only knew nothing about the existence of Ms Rowlands' health conditions; he knew nothing about the effect of those conditions on Ms Rowlands: Amadio at 462 (Mason J).
3. Financial hardship: Before or at the time Ms Rowlands signed the 2013 documents, Mr Clegg knew that: 1. Ms Rowlands had ceased working before 2013; 2. He had stopped making mortgage payments to the Mount Colah property; 3. There would be sufficient proceeds of sale of the Mount Colah property to pay off the remaining mortgage, but not to fund the purchase of the Corlette property; 4. Ms Rowlands had funded the deposit on the Corlette property without his assistance; 5. Ms Rowlands had asked him for financial assistance to purchase the Corlette property; 6. Ms Rowlands had not included the Cleggs "on the deeds" for Mount Colah or listed them as joint purchasers for the Corlette property.
4. However, there was no evidence that Ms Rowlands informed Mr Clegg of all her financial circumstances; his evidence was she "never said much". She could not recall when she told him of her property settlement with her de facto. Ms Rowlands arguably had other financial options rather than obtaining the Cleggs' assistance; she may have organised finance through friends, as she in fact did for the Mt Colah deposit, or raised money by renting rooms in the 4-bedroom Corlette property. I do not consider that Mr Clegg knew that Ms Rowlands was suffering "financial hardship" that led her to sign the documentation without being able to protect her own interests.
5. Assurances: It was never suggested to Mr Clegg that he knew his sister relied upon assurances about an entitlement to transfer the use of the Cleggs' funds towards any future purchase. Further, on a simple reading of the emails and the fact the proposed amendment to the Declaration of Trust was rejected, I do not consider the Cleggs ought to have contemplated Ms Rowlands would have placed any reliance on the expectation she claims she made.
6. Therefore, I am not persuaded that Mr Clegg was aware of facts that would raise the possibility that Ms Rowlands was suffering a special disability.

Unconscientious conduct of the Cleggs?

1. Even if I am wrong, and Ms Rowlands suffered a special disability which the Cleggs knew or ought to have known, I do not consider that she has demonstrated that the Cleggs took unconscientious advantage of it. As the High Court noted in Thorne v Kennedy (2017) 263 CLR 85 at 103 (Kiefel CJ, Bell, Gageler, Keane and Edelman JJ), this unconscientious conduct can be described as "victimisation" or "exploitation".
2. If I had been satisfied that Ms Rowlands suffered a special disability, which the Cleggs knew or ought to have known, the onus would then have been cast upon the Cleggs as the stronger party to show that the transaction was fair, just and reasonable: Amadio at 474 (Deane J).
3. I have found that the Cleggs considered that they had invested in the Mount Colah property and were entitled to be on title. They were only prepared to outlay money to assist Ms Rowlands for the Corlette property if they were given security. Had they been included on title as requested from the outset, then the Declaration of Trust and Transfer and Caveat would have been unnecessary. Because Ms Rowlands' lawyer indicated in early January 2013 that it was too late and difficult to retrospectively include the Cleggs as co-owners as had been agreed, the Cleggs instead proffered the alternative documents.
4. Mr Clegg was not taking advantage of Ms Rowlands; rather, he was seeking to ensure that she did not take advantage of him again by failing to document his contributions on title. I do not consider that was an unreasonable or unjust position to take.
5. Similarly, the refusal to agree to the amendment to the Declaration of Trust did not amount to unconscientious conduct. Ms Rowlands rejected the offer of funds for the Corlette property with the Cleggs on title. The Cleggs then made an alternative offer, namely that they would provide further funds if Ms Rowlands agreed to their terms in the documentation, which she did.
6. Ms Rowlands' counsel submitted that she did not have independent legal advice prior to signing the documents and therefore it could not be demonstrated that the documents were "just". However, Meagher, Gummow and Lehane have noted (at [16-030]), "independent advice is not necessary to uphold a transaction".
7. Further, as far as the Cleggs' solicitors knew, Ms Rowlands was receiving legal advice. They had been corresponding with Lane & Lane Lawyers in the lead up to settlement of the Corlette purchase. There was some contest during the hearing about whether Lane & Lane Lawyers were staffed by conveyancers or lawyers and whether the Cleggs' solicitor, Mr Packham, was aware that he was corresponding with conveyancers. However, having engaged a solicitors' firm, Ms Rowlands had the opportunity to seek specific legal advice on the documents. Further, the documents were not sprung upon her with any urgency as they were sent on 18 January 2013, eleven days prior to their signing. There is nothing to suggest that Ms Rowlands was denied the possibility of independent advice.
8. I am not persuaded that the Declaration of Trust is "unjust" in circumstances where the Cleggs always wanted "security" for their funds and Ms Rowlands was obtaining exclusive use of the particular property she wanted.
9. Because Ms Rowlands' cross-claim has failed, I will not declare the Declaration of Trust and Transfer void ab initio.

Other relief?

1. Because I have made the above findings, it is not necessary for me to consider the alternative submissions made by the Cleggs concerning constructive or resulting trusts or various forms of estoppel. In that regard, however, I do note that Ms Rowlands submitted that she was not able to deal with any of those claims, including because she would have served further evidence.
2. Ms Rowlands pleaded that the Transfer was digitally signed and lodged through PEXA without a "client authorisation" and therefore it was "unauthorised" and entitled her to "recover her estate lost".
3. Mr Packham caused the PEXA transfer based on the Transfer signed by Ms Rowlands and given to him in early 2013; he prepared the PEXA client authorisation, rather than obtaining one from Ms Rowlands. Mr Packham considered the 2013 Transfer provided him with sufficient authority, because that was a document that could have been physically lodged with the Land Titles Office at the time it was signed. Ms Rowlands did not join the Registrar General or indicate the specific relief sought.
4. Beyond Mr Packham's evidence that this practice was common, I was not provided with any evidence about conveyancing practice or the Registrar General's attitude to these types of situations where there is a signed Transfer but no signed PEXA client authorisation. The Cleggs could have sought an additional order that Ms Rowlands provide "client authority" for the PEXA registration of the Transfer. However, Ms Rowlands has failed in her cross-claim to have the 2013 documentation set aside and the Transfer has already been registered. I will not make any order in relation to the Transfer.

Section 66G application

1. Section 66G of the Conveyancing Act 1919 (NSW) provides that the Court may, on an application by a tenant in common, appoint trustees and order a sale. The relief is discretionary.
2. Ms Rowlands submitted in opening that the discretion ought not be exercised because of an inconsistent contractual arrangement, citing Ngatoa v Ford (1990) 19 NSWLR 72 at 77, where Needham J stated: … in my opinion the existence of some contractual obligation with which an order for the appointment of trustees on the statutory trust for sale would be inconsistent is one such matter which may have that result.
3. However, I have not found that the Cleggs agreed that their funds could be used by Ms Rowlands indefinitely for the Corlette property or an alternative property.
4. There is no other reason to refuse the s 66G order in circumstances where the Cleggs are registered as tenants in common with Ms Rowlands and the Cleggs have consents to act as trustee from two reputable liquidators. I do not consider it would be inequitable to grant the relief: see eg Ross v Ross [2010] NSWCA 301 at [36]. I will therefore make the orders sought.
5. Ms Rowlands' counsel submitted that the s 66G order could be delayed to allow his client to effect a sale. The Cleggs' counsel did not have instructions to agree to this course, but accepted it might lead to cost savings. Therefore, I will grant the parties leave to approach my Associate within 7 days of the orders, should they seek alternative agreed orders concerning the process of sale.

Orders

1. I order that: 1. Leave is granted to the parties to jointly approach my Associate within 7 days of these orders, should they have agreed on alternative orders for the purposes of the sale of the land comprised in Certificate of Title Folio 131/1077381 (the Land). 2. Should the leave granted in order 1 not be exercised, then: 1. Christopher John Palmer and Liam Bailey of Level 9/66 Clarence Street Sydney (the Trustees) be appointed trustees of the Land as trustees for statutory sale under section 66G of the Conveyancing Act 1919 (NSW). 2. The Land be vested in the Trustees subject to any incumbrances affecting the entirety of the Land but free from incumbrances (if any) affecting any undivided share or shares therein to be held by the Trustees upon statutory trust for partition under Division 6 of Part 4 of the Conveyancing Act 1919 (NSW). 3. Upon completion of the sale, the Trustees: 1. Pay any properly incurred legal fees to any solicitor or conveyancer; 2. Pay any properly incurred commission due to the real estate agent who affects the sale; 3. Pay any statutory duties or charges; 4. Pay the Trustees' charges at rates specified in the consent to act as trustee for each of them; 5. Pay the Plaintiffs the amount obtained by the following formula: $316,000 multiplied by 3% multiplied by [the number of days between 29 January 2013 and the date of completion] divided by 365; 6. Pay any other costs properly related to the sale; 7. After orders (2)(c)(i)-(vi), pay the remainder to the parties in their registered proportions. 1. The Cross-Claim is dismissed. 2. The Defendant pay the Plaintiffs' costs of the Summons and Cross-Claim as agreed or assessed.

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