Darmanin v Cowan [2010] NSWSC 1118 | Case summary

Darmanin v Cowan [2010] NSWSC 1118 | Case summary | Zoe

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Agricultural and Rural Finance Pty Ltd & Anor v John Edward Atkinson & Ors [2010] NSWSC 635 Allcard v Skinner (1887) 36 Ch D 145; [1886-90] All ER Rep 90 Allied Pastoral Holdings Pty Ltd v FCT [1983] 1 NSWLR 1; (1983) 44 ALR 607 Attorney-General (NSW) v World Best Holdings Ltd [2005] NSWCA 261; (2005) 63 NSWLR 557 Australasian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 Australian Broadcasting Corporation v XIVth Commonwealth Games Limited (1988) 18 NSWLR 540 Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 214 CLR 51 Australian Competition and Consumer Commission v Oceana Commercial Pty Ltd [2004] FCAFC 174 Balfour v Balfour [1919] 2 KB 571 Ball-Guymer v Livantes (1990) 102 FLR 327 Bank of Credit and Commerce International SA v Aboody [1990] 1 QB 23 Barnes v Addy [1874] 9 Ch App. 244 Barrier Wharfs Limited v W Scott Fell & Co Limited (1908) 5 CLR 647 Baulkham Hills Private Hospital Pty Limited v G R Securities Pty Limited (1986) 40 NSWLR 622 Baumgartner v Baumgartner (1987) 164 CLR 137 Bennett v Horgan (unreported, NSWSC, 3 June 1994) Blomley v Ryan (1956) 99 CLR 362 Bovaird v Frost [2009] NSWSC 337 Brandi v Mingot (1976) 12 ALR 551 Bridgewater v Leahy [1998] HCA 66; 194 CLR 457; 158 ALR 66; 72 ALJR 1525 Browne v Dunn (1893) 6 R 67 (HL) Brusewitz v Brown [1923] NZLR 1106 Buckpitt v Oates [1968] 1 All ER 1145 Bulstrode v Trimble [1970] VR 840 Chalmers v Pardoe [1963] 1 WLR 677 Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 Commissioner of State Revenue v Uniqema Pty Ltd (2004) 9 VR 523; 2004 ATC 4579; (2004) 56 ATR 19; [2004] VSCA 82 Commonwealth of Australia v McLean (1996) 41 NSWLR 389; (unreported, NSWCA, 31 December 1996) Coward v Motor Insurer's Bureau [1963] 1 QB 259 Crosthwaite v Elizabeth City Corporation (1989) 51 SASR 105 Crowe v Commonwealth Bank of Australia [2005] NSWCA 41 Elders Rural Finance Ltd v Smith (1996) 41 NSWLR 296 Elkofairi v Permanent Trustee Co Ltd [2002] NSWCA 413 Eon Metals NL v Commissioner of State Taxation (WA) (1991) 91 ATC 4841 Ermogenous v Greek Orthodox Community [2002] HCA 8; (2002) 209 CLR 95 Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 Film Bars Pty Limited v Pacific Film Laboratories Pty Limited (1979) 1 BPR 9251 Ford by his Tutor Beatrice Ann Watkinson v Perpetual Trustees Victoria Limited [2009] NSWCA 186; (2009) 75 NSWLR 42 Frances Madge Johnson by her tutor Karen Elisabeth Smith v Andrew Robert Stuart Johnson [2009] NSWSC 503 Frederick John Jones v Jennifer May Moss [2007] NSWSC 969 Georgeski v Owners Corporation SP49833 [2004] NSWSC 1096; (2004) 62 NSWLR 534 Giumelli v Giumelli [1999] HCA 10; 196 CLR 101; 73 ALJR 547 Goldsworthy v Brickell [1987] Ch 378 Graham Evans Pty Ltd v Stencraft Pty Ltd [1999] FCA 290 Hartigan v International Society for Krishna Consciousness Incorporated [2002] NSWSC 810 Heaton v Luczka (unreported, NSWCCA, 3 March 1998) Henderson v Miles (No 2) [2005] NSWSC 867 Hill v Hill [2005] NSWSC 863 HML v R [2008] HCA 16; (2008) 235 CLR 334; (2008) 245 ALR 204 Ho v Powell [2001] NSWCA 168; (2001) 51 NSWLR 572 Holland v Hodgson (1872) LR 7 CP 328 Huguenin v Baseley (1807) 14 Vesey Jnr 273; 33 ER 526 Janson v Janson [2007] NSWSC 1344 Jiwira v PIBA [2000] NSWSC 1094 Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 CASES CITED : Jones v Padavatton [1968] EWCA Civ 4; [1969] 2 All ER 616 Katsilis v Broken Hill Pty Co Ltd (1977) 18 ALR 181 Knox v Knox (16 December 1994, unreported, Young J) Kowalczuk v Accom Finance Pty Ltd (2008) 252 ALR 55 Kriezis v Kriezis [2004] NSWSC 167 Lactos Fresh Pty Ltd v Finishing Services Pty Ltd (No 2) [2006] FCA 748 Leigh v Taylor [1902] AC 157 Lopwell Pty Ltd v Clarke and Ors [2009] NSWCA 165 Louth v Diprose [1992] HCA 61; (1992) 175 CLR 621 Maher v Honeysett and Maher Electrical Contractors Pty Ltd [2007] NSWSC 12 Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; 52 NSWLR 705 Malsbury v Malsbury (1979) 1 BPR 9550 May v Ceedive Pty Limited [2006] NSWCA 369 Maynard v Moseley (1676) 3 Swan 651 McKay v McKay [2008] NSWSC 177 Mighell and Anor v Gargoura and Ors [2009] NSWSC 248 Mizzi v Reliance Financial Services Pty Ltd and Ors [2007] NSWSC 37 Morris v Morris (1982) 1 NSWLR 61 Muschinski v Dodds (1985) 160 CLR 583 N H Dunn Pty Limited v L M Ericsson Pty Limited (1979) 2 BPR 9241 National Dairies WA Limited v Commissioner of State Revenue (WA) [1999] WASCA 152 Nattrass v Nattrass [1999] WASC 77 O'Rorke v Bolingbroke (1877) 2 App Cas 814, Owen and Gutch v Homan (1853) 4 HLC Palinkas v Palinkas [2009] NSWSC 92 Palumberi v Palumberi (1986) NSW ConvR 55-287 Parker v Clark [1960] 1 All ER 93 Pasternacki and Solka-Pasternacki (as Executors of the Estate of the Late Mary Nagy) v Correy [2000] NSWCA 333 Pennie v Pennie [2010] NSWSC 565 Perpetual Trustee Company Limited v Albert and Rose Khoshaba [2006] NSWCA 41 Perpetual Trustees Vic Ltd v Bodiroza [2009] NSWSC 861 Precision Plastics Pty Ltd v Demir (1975) 132 CLR 362 Quek v Beggs (1990) 5 BPR 11,761 (NSW SC) R T & Y E Falls Investments Pty Limited v The State of New South Wales & ors [2001] NSWSC 1027 Raffaele v Raffaele [1962] WAR 29 Re Gonin (deceased) [1979] Ch 16 Reid v Smith (1905) 3 CLR 656 Riz v Perpetual Trustee Australia Ltd (2008) NSW ConvR 56-198; [2007] NSWSC 1153 Royal Bank of Scotland v Etridge (AP) [2001] UKHL 44 Schaefer v Schumann [1972] AC 572 Scheps v Cobb [2005] NSWSC 455 Seymour v Australian Broadcasting Commission (1977) 19 NSWLR 219 Shearer v Manly-Warringah District Rugby League Football Club (unreported, NSWSC, 7 November 1989) Sirtes v Pryor [2005] NSWSC 1082 Spina v Permanent Custodians Ltd (2009) 14 BPR 26,923 Talevski and Anor v Talevski and Anor [2007] NSWSC 945 Tanner v Tanner [1975] 1 WLR 1346 Taylor v Streicher [2007] NSWSC 1006 Teen Ranch Pty Ltd v Brown (1995) 87 IR 308 Thomas v Hollier (1984) 53 ALR 39 Todd v Nicol [1957] SASR 72 Tory v Tory [2007] NSWSC 1078 Unsted v Unsted (1947) 47 SR (NSW) 495; (1947) 64 WN 183 Wakeling v Ripley (1951) 51 SR (NSW) 183 Watkins v Combes (1922) 30 CLR 180 West v AGC (Advances) Ltd (1986) 5 NSWLR 610 West v Mead [2003] NSWSC 161; (2003) 13 BPR 24,431; Whereat v Duff (1973) 1 ALR 363; (1973) 47 ALJR 540

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09/288822 TRACY-LEE DARMANIN V SIMONE COWAN & ROBERT COWAN JUDGMENT 1 HER HONOUR: In these proceedings Ms Darmanin seeks the recovery of moneys expended by her in relation to the construction and fitting out of what has variously been described as a cottage and as a relocatable or portable home. The dwelling (to which I will neutrally refer for convenience as the cottage) was built in late 2007 on steel piers or railings on part of a 30 acre property owned by the second defendant, Mr Cowan, in Glenorie. Mr Cowan and his wife, the first defendant, live in the main residence on the Glenorie property with their children. 2 Ms Darmanin lived with her daughter in the cottage for about 6 months from January 2008 to June 2008, having lived temporarily with the Cowans in their own home during the construction of the cottage. She vacated the cottage, some months after the Cowans' demand that she do so, following the breakdown of the relationship between the parties. The cottage is now the subject of a demolition order from the local Council, the operation of which order (I am told) has been suspended pending the determination of these proceedings. The cottage has been unoccupied since it was vacated in mid 2008. 3 This is clearly an unfortunate situation for all parties. What is in issue between them, in essence, is who should bear the cost of what transpired to be an unsuccessful attempt by the Cowans to assist Ms Darmanin with a place for her and her daughter's accommodation at a time when it was recognised by them that she was unwell. From the Cowans' perspective, having offered their assistance to Ms Darmanin, they are now being asked to pay for the costs of the cottage built when she accepted that offer of assistance (without account being taken of costs expended by them in that exercise). From Ms Darmanin's perspective, had she not acted upon the offer of assistance by the Cowans' she would not now face the loss of what her Counsel (Mr Crossland) describes as her life savings, having expended them in the construction of a building that now seems to be of little or no benefit to any party. (The residual value of the cottage depends primarily on its relocatability. If not relocatable, its value depends on whether the Council enforces the demolition notice issued in respect of the cottage - since there might otherwise be some scope to derive rental income from the cottage if it remains on the land). 4 Counsel for the Cowans, Mr Ward, says that this is a case of nothing other than Christian charity. He metaphorically likens his clients' position to that of frogs placed in tepid water slowly brought to the boil. His clients gave evidence that, as their friendship with Ms Darmanin broke down, they were intimidated by her behaviour. By that stage, my impression is that they found themselves unable to avert the situation in which they are now placed. Mr Crossland's response is that the presence of the best of intentions is no defence to the claim of unconscionability. 5 Ms Darmanin's claim for relief is put in two ways. Her principal claim (broadly described as a claim of unconscionability) is that it would be unconscionable for Mr and Mrs Cowan to have the benefit of the "value" of the cottage (for which Ms Darmanin paid) or, in the alternative, that it would be unconscionable for them not to compensate Ms Darmanin for her expense in building the cottage. Reliance was placed for this claim almost exclusively on the judgment of McLelland J (as his Honour then was) in Morris v Morris (1982) 1 NSWLR 61. There, his Honour applied a principle analogous to that which had been applied by the Privy Council in Chalmers v Pardoe [1963] 1 WLR 677 and found it to be unconscionable and inequitable for the defendants to retain the benefit of expenditure by the plaintiff of money on their property free of any obligation of recoupment to him. In Morris v Morris, his Honour held that the property was impressed with an equitable charge for the amount of the plaintiff's expenditure and interest. 6 The second way in which Ms Darmanin's claim is put is predicated on an agreement which she alleges was entered into by her with the Cowans in relation to the cottage in about mid 2007, under which agreement she says she was entitled to occupy the cottage for a specified period of time (pleaded as 8 years but said in submissions to be 6 years). That agreement is said to be one which is unjust, for the purposes of s 7 of the Contracts Review Act 1980 (NSW), and one which arose out of the unconscientious conduct and undue influence on the part of the Cowans. Ms Damanin contends that it should be set aside and that she should be reimbursed for her expenditure, and recover interest and costs. 7 Although reliance is placed, in both of the ways in which her claim is put, on Ms Darmanin's mental health at the relevant time(s) (she having had a history of depressive illness and having been diagnosed in about April/May 2007 with bipolar disorder), it is submitted for Ms Darmanin that a finding in relation to her mental health is not necessary for the purposes of her principal claim. That claim, as articulated by Mr Crossland, turns on the making of a promise that Ms Darmanin could stay in the cottage for a period of some 6 or 8 years, a promise of which it is said there could not have been any reasonable certainty of fulfilment at the time it was made, and which was relied upon by Ms Darmanin in making the said expenditure). 8 Ms Darmanin has quantified the moneys spent by her on construction of the cottage, including appliances and fittings (though some of those have already been removed by her), variously at $78,000 and at $82,000 (though in her affidavit deposing that the costs were more than that), plus interest from 15 November 2007 and costs. 9 The agreement on which Ms Darmanin bases her alternative claim (which is denied by the Cowans) is that pleaded in paragraph 30 of the Amended Statement of Claim by reference to the terms of the 'proposal' described in paragraph 18 of the pleading. (Although paragraph 30 actually refers to paragraph 17 that reference was acknowledged by Mr Crossland to be a typographical error.) 10 The proposal forming the basis of the alleged agreement, in summary, was that if Ms Darmanin sold a property then owned by her at Gymea she could use the net proceeds of sale to pay for the construction of a residence on the Glenorie property and she could live there for 8 [or 6] years rent-free; that during construction she could live at the Cowans' residence without paying rent; that the Cowans would provide care and support for Ms Darmanin and her daughter and would arrange payment of all aspects of the construction and completion to habitability of the new residence. 11 There is also said to be an implied term of that agreement, namely that, in exchange for permitting Ms Darmanin to build the residence and remain living in it for 8 [or 6] years, the Cowans would have the sole benefit and ownership of the residence after that period. No basis for the implication of such a term was identified in the pleading or in the submissions. I can only assume that the implication is said to follow from the "rent-free" basis of Ms Darmanin's occupation (ie that an agreement for occupation of the cottage to be rent-free assumes that otherwise rent would be payable to the owner) and/or the fact that there was no provision in the alleged agreement for what was ultimately to happen with the cottage. However, it does not seem to me that this necessarily follows. The payment of "rent" for the use of the land on which the cottage sits would not of itself require an assumption that the cottage was to be or become the property of the Cowans (for example, the arrangement might have been described as "rent-free" simply because no fee was to be paid for having the cottage temporarily placed on the land, similarly to the pitching of a tent or location of a caravan in someone's backyard). 12 The actual period during which Ms Darmanin claims she was (contractually) entitled to reside rent-free in the cottage on the Cowans' land (and before she says the sole benefit and ownership was to revert to the Cowans), though pleaded in precise terms as 8 years, is one about which (as already noted) there was some imprecision. Mr Crossland submitted at the outset of the hearing that "on one view of things" the time period might have been a 6 year period but submitted that this made no great difference to the nature of the agreement between the parties. (While this may well be the case when looking at the nature of the agreement, it seems to me that if there is uncertainty as to an essential term of an agreement, such as the duration of the arrangement, this is something that may be of great relevance to the question whether any such agreement was made or whether any such agreement was intended to have legal effect.) 13 As I understand it, the length of the claimed rent-free occupation period is the product of the calculation of the period at the culmination of which, at a notional rental of $250 per week, the notional rent would exceed the total expenditure on the cottage (though for this purpose the total expenditure seemingly includes items of fitout which Ms Darmanin apparently considered it was open to her to remove when she ultimately vacated the cottage). Where the figure of $250 per week came from, however, is a matter of dispute between the parties. 14 The Cowans deny that there was any legally binding agreement and say that the arrangement pursuant to which Ms Darmanin was permitted to build the cottage on the Glenorie property was a domestic or social arrangement under which Ms Darmanin would be permitted to live in a caravan or relocatable home on the property for a 'few years' rent-free (subject to payment of electricity charges). The Cowans say that their only desire was to assist Ms Darmanin in a cost responsible way to preserve her very limited resources at a time of emotional or psychological distress. They deny that they have received any benefit from the construction of the cottage and deny that it was ever intended or agreed that the cottage should become their property. The Cowans say that the cottage was to belong to Ms Darmanin, who was to be free to move the cottage whenever she chose. 15 The Cowans have requested that Ms Darmanin remove the cottage from the property. She has not done so. Ms Darmanin accepts that she did try to sell the cottage and it appears that she made some enquiries as to the removal of the cottage, in that she has referred to a cost of over $30,000 to move the cottage (T22.13). In the witness box, Ms Darmanin's explanation for the fact that the cottage had not been removed was that she has no money to do so and she has nowhere for it to go (not that it does not belong to her). She says that the cost involved in its removal is because "it wasn't really built as a moveable cottage". In February 2008, Ms Darmanin suggested that the Cowans borrow funds to pay her back for the cost of construction of the cottage on the basis that they could derive rental from the cottage (Again, inconsistent with the notion that the Cowans already had an entitlement to do so on the basis that the cottage was theirs). The Cowans did not agree to do so but were at that stage prepared to allow the cottage to remain on their land so Ms Darmanin could herself receive rental from the cottage (at least until she had recouped her expenditure on the cottage). Due to the Council's intervention that course does not seem open to the parties. Issues 16 There are a number of factual disputes between the parties as to the circumstances in which the arrangements between them came into existence and as to the substance of those arrangements, as well as to the relocatability of the cottage. I will consider those when reviewing the factual background to the dispute. The claims before me, broadly, are as follows:

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(ii) Ms Darmanin's alternative claim that there was a binding agreement in the terms alleged by Ms Darmanin and that this agreement should be set aside as unjust under the Contracts Review Act or otherwise for unconscientious conduct or because it was procured by undue influence ("the contractual claim"). 17 In particular, Mr Crossland relies on the admission in paragraph 32 of the Cowans' Amended Defence that they knew, at the time of the arrangements in question, that Ms Darmanin was suffering emotional or psychological distress; the alleged implied admission (said to be contained in the same paragraph) that although there was an agreement between them the Cowans had no intention to be legally bound thereby; and an admission said to be contained in a letter dated 20 February 2008 to Ms Darmanin confirming the alleged agreement as set out in that letter (this last being said to be the critical evidence in Ms Darmanin's case). Summary 18 In summary, for the reasons set out below, I am of the view that Ms Darmanin's claim fails in each of the ways in which it is put. 19 As to the unconscionability claim, I find that the promise made to Ms Darmanin (in reliance on which I accept she expended funds in the construction of the cottage) was one which contemplated no more than the temporary placement of a relocatable home on the Glenorie property and that there was no benefit to the Cowans in the arrangement entered into with Ms Darmanin, nor is there any benefit now retained by them (unconscionably or otherwise) as a result of Ms Darmanin's expenditure. I find that there is no unconscionability or inequity in Ms Darmanin not now being reimbursed by the Cowans for the expenditure she incurred in the construction of the cottage. 20 As to the contractual claim, I find that the arrangement between the parties was one which fell short of a binding legal agreement. Had I found otherwise, I would nevertheless not have found that the agreement was unjust for the purposes of s 7 of the Contracts Review Act. I further find that there was no undue influence by the Cowans or Amadio unconscionability (Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447) in relation to the arrangements entered into with Ms Darmanin (whether or not those arrangements constituted a binding agreement). 21 I therefore propose to dismiss Ms Darmanin's claim. However, I consider it would be appropriate to allow Ms Darmanin a final opportunity to remove or sell the cottage (and so obtain whatever benefit remains of her investment in the dwelling). As there is a question as to when the Council's demolition order may become operative once final orders are made in these proceedings, I consider the best course would be to dismiss the proceedings but to stay the order dismissing these proceedings for a period of, say, 6 weeks in order to allow Ms Darmanin a final opportunity of that kind (following which the cottage, if not removed, could in my view be treated as having been abandoned by Ms Darmanin). I will hear any submissions both as to this aspect of the final orders and as to costs, at a time convenient to Counsel. Background Facts Friendship between Ms Darmanin and Mrs Cowan 22 Ms Darmanin and Mrs Cowan first met when they were at primary school together. It seems that they lost touch for some time after Ms Darmanin left school (during which period Ms Darmanin worked as a dental nurse, moved to Queensland for a couple of years, and then returned in New South Wales to work again as a dental nurse). 23 Ms Darmanin has no formal qualifications other than her Year 10 School Certificate. Since 2003, Ms Darmanin has worked off and on as a dental nurse for Dr William Zafiropoulos, variously in his own dental practice or in a dental practice in which he worked. Her role in that period has included the promotion of (as I understand it, quite costly) cosmetic procedures to patients. It was suggested by Mr Ward that this was a quite responsible role on Ms Darmanin's part, which may or may not be the case. In early 2007, just prior to the events that have given rise to these proceedings, Ms Darmanin was working with Dr Zafiropoulos in a practice in Menai. In around 1999/2000, Ms Darmanin and Mrs Cowan renewed their acquaintance. Ms Darmanin's financial position 24 In about 2002/3, Ms Darmanin purchased a unit in Gymea. She financed the $460,000 purchase price through the combination of a $360,000 home loan and the proceeds of sale of another property in Punchbowl (her equity in the Gymea property at that stage thus being in the order of $100,000). 25 In early 2007, Ms Darmanin borrowed about $70,000 from the Bank of Queensland on the security of her Gymea property. She says that she had intended to purchase a dental surgery (though there was no evidence that she had made any enquiries in relation to any particular surgery or that she had considered the feasibility of such a purchase from a business point of view) but instead spent the money on mortgage repayments, jewellery and expensive clothes (para 13 of her affidavit of 13 August 2009). (There is no suggestion that Ms Darmanin no longer retains value in the personal property acquired with those funds. Therefore the suggestion that she has lost her "life savings" may be somewhat overstated.) 26 In October 2007, in the circumstances considered later in this chronology, Ms Darmanin sold her Gymea property and paid for the construction of the cottage the subject of these proceedings. She now lives in rented accommodation. Ms Darmanin's mental health 27 Ms Darmanin's affidavit of 13 August 2009 outlines a history of depressive illness from the age of 20 (thus for about the past 18 years) though this was seemingly not the subject of any formal diagnosis until around mid 2007. Ms Darmanin describes the period from about December 2006 as one in which she suffered from her third major episode of depression. She was hospitalised suffering from depression in around April or May 2007 at which time Ms Darmanin says she was formally diagnosed with type 2 bi-polar disorder. Broadly, that account is confirmed by the clinical psychologist called to give evidence for Ms Darmanin (whose account was apparently drawn by her from information provided to her by Ms Darmanin's referring general practitioner). 28 Although the diagnosis of her condition in mid 2007 is described in her pleading (para 10) as a diagnosis of manic depressive disorder, the expert evidence adduced by the Cowans in these proceedings (from Dr Roberts) was to the effect that this and the term bipolar disorder are interchangeable.) 29 There is no dispute that at around mid 2007 Ms Darmanin was very unwell. According to Mrs Cowan, Mr Bruce Blackmore (a friend of Ms Darmanin to whom Ms Darmanin habitually refers as "uncle" but who is not related to her) contacted her and told her he was worried about Ms Darmann and that Ms Darmanin had a 'bad depression'. Mrs Cowan was either asked or offered assistance. Mrs Cowan says that she was not aware of Ms Darmanin's hospitalisation at the time (which suggests that the friendship between the two may not have then been as close as it became from mid 2007 onwards). 30 According to Ms Darmanin, during a telephone conversation with Mrs Cowan around this time, the latter suggested that if Ms Darmanin was 'that bad' she should come over (to Glenorie) so that Mrs Cowan could look after her. Mrs Cowan says that Mr Blackmore drove Ms Darmanin to the Glenorie property, (Ms Darmanin says that she drove herself there but that Mr Blackmore followed in his car) and that Ms Darmanin spent 4 or 5 days there (Ms Darmanin says 2-3), while Ms Darmanin's daughter was minded by others. 31 Mrs Cowan described Ms Darmanin as being in a "dazed and stupefied" state at that time (24 May 2010 affidavit). This is consistent with Ms Darmanin's recollection that she was like a 'zombie'. It is not disputed that Mrs Cowan made an appointment for Ms Darmanin to see a doctor at that stage. According to Mrs Cowan, Ms Darmanin's state improved with the medication at least to the extent that Ms Darmanin was able at the end of that time to drive herself to her parents and then home and to cook for herself and her daughter. 32 Apart from the minor discrepancies noted above, the recollections of Mrs Cowan and Ms Darmanin to this point are broadly consistent. 33 Around this time and after Ms Darmanin's short stay with the Cowans in mid 2007, it seems that there was regular contact between Mrs Cowan and Ms Darmanin (with a number of telephone calls a week between the two and visits by Ms Darmanin on occasion to the Glenorie property). Mrs Cowan referred in the witness box to her concern as to Ms Darmanin's state of mind and referred to Ms Darmanin being 'heartsick' at the fact that her daughter had to attend before and after school care while Ms Darmanin worked, that being suggested as being a cause of Ms Darmanin's bouts depression. (Although Mr Crossland suggested that this was something of a recent invention by Mrs Cowan, it not having been referred to in her affidavit, it is consistent with the fact that the arrangement between the parties, on whichever version is accepted, was one that involved Mrs Cowan agreeing to assist in the care of Ms Darmanin's daughter.) The Cowans' knowledge of Ms Darmanin's illness 34 There is a dispute as to what was known by the Cowans of Ms Darmanin's illness at this time. In her pleading, Ms Darmanin alleges that in about mid 2007 the Cowans became aware that she was having psychological difficulties of a serious depressive nature (paragraph 11) or alternatively that she had been diagnosed with a depressive illness (paragraph 13). Ms Darmanin further alleges (paragraph 12) that at about that time the Cowans became aware that she had been "formally diagnosed with a manic depressive illness". 35 In her affidavit of August 2009, Ms Darmanin deposes to having told Mrs Cowan of the bipolar diagnosis (paragraph 15). Mrs Cowan emphatically denies that she was told that Ms Darmanin had bipolar disorder (though she accepts that she was aware that Ms Darmanin had suffered or claimed to have suffered bouts of depression). In paragraph 50 of her affidavit, Mrs Cowan says that what Ms Darmanin referred to was 'my depression' or 'my serious depression'. 36 Ultimately, other than any issue as to Mrs Cowan's credit or the reliability of Ms Darmanin's recollection as a witness, it does not seem to me to matter whether Mrs Cowan was told by Ms Darmanin in April/May 2007 (or at any other relevant time) that she had, or had been diagnosed with, bipolar disorder or that she had a manic depressive illness (formally diagnosed or otherwise) or was simply aware that Ms Damanin had suffered from bouts of depression. 37 That is because it is by no means clear that Mrs Cowan, as a lay person, (or her husband for that matter) had any understanding of the ramifications of a depressive illness or manic depressive illness such as bipolar disorder beyond those which they were able to observe from Ms Darmanin's outward behaviour. (Mrs Cowan's description of Ms Darmanin's state at the time focussed on her inability to cook, clean or care for herself or her daughter, indicating that it was in relation to those matters that she perceived Ms Darmanin as unwell.) 38 That is not surprising. Dr Samson Roberts, a consultant forensic psychiatrist called to give evidence by the Cowans, (to whose evidence Mr Crossland raised a Makita objection, referring to Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; 52 NSWLR 705 on the basis that Dr Roberts had not had any face to face consultation with Ms Darmanin in order to assess her mental state - an objection which I deal with below) gave evidence (in summary) as to the nature of bipolar disorder and its symptoms. 39 Dr Roberts' evidence was that bipolar disorder is a disorder of mood characterised by one or more manic or mixed episodes, usually accompanied by major depressive episodes (hence the description 'bipolar'). It is a relapsing and remitting condition. Each episode, he said, is of insidious onset, variable severity and variable duration. There are episodes of illness generally interspersed with periods of "wellness". Dr Roberts observed that many patients continue to function at normal or near normal level with limited overt manifestations of impairment aside from periods of very severe mood disturbance. Dr Roberts confirmed the difference between hypomania and mania and indicated that the presence of grandiose delusions and disorder of thought form would attract a diagnosis of Mania or Manic Episodes in accordance with DSM IV criteria. While Dr Roberts noted that there would be cognitive impairment in areas relevant to attention, problem solving and memory as a feature of bipolar disorder he emphasised that to identify with certainty the nature and severity of problem solving deficits would require sophisticated neuropsychological testing. 40 Dr Roberts explained that it is not common for lay people to recognise the emerging symptoms of the manic or hypomanic phases of bipolar disorder; that during the quiescent phases of the disorder a person may appear to be behaving normally even though there was scientific evidence that there would be ongoing subtle cognitive defects at that time; and that a lay person with no special understanding of the disorder would not be expected to appreciate the subtle effects of the disorder on a person's cognitive thought processes at a time when the person might otherwise appear to be behaving normally. As a general observation Dr Roberts said that he would not expect a lay person to be cognisant of the intricacies of psychological assessment in bipolar disorder; nor would subtle deficits in problem solving (as might potentially impact on financial transactions) have been objectively noticeable. Memory and concentration difficulties per se would not, in his experience, alert a lay person to the cognitive defects associated with the disorder. 41 As to the question of credit, Mrs Cowan was adamant that she had not been told of the bipolar diagnosis. Ms Darmanin was equally adamant that she had. According to Ms Darmanin's evidence in the witness box, the basis on which Ms Darmanin was so sure that she had told Mrs Cowan of the diagnosis was because she said that Mrs Cowan had told her that her brother suffered from it. Not only was any familial experience of the disorder denied by Mrs Cowan in the witness box -T 40 - (who cannot have had forewarning of the assertion since it did not appear in Ms Darmanin's affidavit and who, to my observation, seemed genuinely bemused by the suggestion that anyone in her family suffered from the disorder) there was no evidence that anyone did. That assertion, made so dogmatically by Ms Darmanin in the witness box, almost with the air of playing a trump card, in the absence of anything to suggest that it accords with the facts, casts doubt in my view on the reliability in general of Ms Darmanin's recollection of events. 42 In particular, it suggests a tendency on the part of Ms Darmanin to embellish her evidence in somewhat similar fashion to other evidence, such as the overstatement made by her in her affidavit that everything was left in the cottage intact when she vacated it - para 47 (though she conceded in the witness box that some items had been removed) and the embellishment she seems to have employed when assessed by her the clinical psychologist she consulted in November 2007, Ms Vicki Easson. 43 For example, in Ms Easson's report she recorded information that presumably could only have been conveyed to her by Ms Darmanin to the effect that Ms Darmanin's 'naturopath landlord' (who she indicated was Mr Cowan) was trying to persuade her to come off her medication, when there is no suggestion that either of the Cowans was a naturopath or was attempting to persuade Ms Darmanin to come off her medication. Since it seems that it was Mrs Cowan who had taken steps to facilitate the prescription of medication or a change of medication in mid 2007 rather than the contrary (both she and Ms Darmanin gave evidence of her taking Ms Darmanin to see a doctor), and Mr Blackmore deposed to Mrs Cowan expressing a concern to him at one stage that Ms Darmanin might not be taking her medication, and since there is no evidence that either Mrs Cowan or her husband is a naturopath (and there is no suggestion that anyone else was in the position of landlord at that time to whom this could be a reference), this casts some doubt on the reliance which can be placed on Ms Darmanin's account of events in general. 44 I note, however, that Ms Darmanin's version of the 'bipolar' conversation was supported by Mr Blackmore, who recalled that he had been present during a conversation between the two women in which the word 'bipolar' had been mentioned by Mrs Cowan. Mr Blackmore says that he is sure that he heard the word 'bipolar' because he had not known what bipolar meant until it was mentioned - T 26.23 - (though there is nothing in his account of the conversation that records any description of what it meant - simply the usage of the word). He did not agree that the person mentioning the word was Ms Darmanin (though there seems no reason why she would not have used the word, especially since her own evidence is that she had used it in her conversation with Mrs Cowan in relation to the diagnosis). Mr Blackmore's evidence in this regard went no further than the one conversation, at a time that was not made clear. 45 Without any disrespect to Mr Blackmore, I think it equally likely that his recollection that the word was used in a conversation of this kind by Mrs Cowan was influenced by the fact that, with hindsight, it is known that Ms Darmanin had suffered from bipolar disorder. I cannot be satisfied that any reference by Mrs Cowan in the conversation to which he refers was not more than a general reference to Ms Darmanin's depression or depressive illness. 46 Ms Darmanin herself said that 2007 was a 'blur' to her and that she did not recall much of 2007 (para 14 of her affidavit). I consider in general that Mrs Cowan's account of the events of 2007 (and that of her husband) is more likely to be reliable than that of Ms Darmanin (whose tendency to grandiosity was noted by her psychologist, Ms Easson).

[13]

47 Therefore, I do not consider that Mrs Cowan's denial that she had been told of a diagnosis of bipolar disorder reflects adversely on her credit. That said, for the reasons outlined above, I do not consider that anything turns on the disputed evidence on this issue (other than as an indication that care must be taken before accepting Ms Darmanin's account of events). Even if Mrs Cowan (and her husband) had known the depressive illness was categorised as a bipolar disorder I am not convinced that this would have led to any particular realisation as to the defective impact that could have had on Ms Darmanin's thought processes at those times when she appeared well or (as seemed to be the case towards the end of 2007) when she ceased taking medication and may have started to display symptoms towards the more manic end of the bipolar spectrum. 48 Thus, I find that, as at April/May 2007, what the Cowans were aware of was that Ms Darmanin was suffering some form of depressive illness and was sufficiently unwell to be unable, for a period of time, to care for the physical wellbeing of herself or her daughter. What I do not accept is that they were aware that this illness was something that was present, and could continue adversely to affect Ms Darmanin's judgment or cognitive thought processes, even after she had appeared to recover or behave more normally (ie once she had moved out of the 'dazed and stupified' state she seemed to have been in during the 4 or 5 day period in which she stayed with the Cowans in mid 2007). Ms Darmanin's ability to manage her affairs as at mid 2007 and alleged reliance on the Cowans 49 Insofar as it is alleged that, by mid 2007, Ms Darmanin's ability to manage her affairs (and make decisions as to financial matters) was significantly impaired, I accept Dr Roberts' evidence that the latest scientific research would suggest that there is a continuing impairment to some subtle degree even during quiescent stages of a bipolar disorder. Thus, over the period from mid 2007 onwards, it seems reasonable to assume that Ms Darmanin suffered some cognitive impairment although the degree of that impairment may have fluctuated. (I note that Ms Easson did not see Ms Darmanin until November 2007 and so (like Dr Roberts) cannot express a view based on direct observation at that stage but said that it was likely that Ms Darmanin was entering a hypomanic phase in the three months leading up to her first consultation.) 50 Insofar as it is alleged that the Cowans knew by the middle of 2007 that Ms Darmanin's ability to manage her own affairs was so impaired, I accept that the Cowans were on notice that Ms Darmanin was suffering from a depressive illness and unable to manage at least her personal affairs at the time she stayed with them in mid 2007 (and this surely would have extended to her financial affairs). As noted above, what I am not satisfied about is that the Cowans were cognisant of a significant degree of impairment in this regard after Ms Darmanin responded to the medication and started to resume a more active life. 51 It is alleged by Ms Darmanin that by mid 2007 she was "heavily reliant" on Mrs Cowan for emotional and practical support and that she was "heavily reliant" on both the Cowans for practical support. At least in relation to the question of emotional support it seems to me not unlikely that Ms Darmanin was to a degree reliant on Mrs Cowan's friendship and assistance. However, there is nothing to suggest that Ms Darmanin was not also reliant (at least once she left the Glenorie property) on others, such as Mr Blackmore and her employer Dr Zafiropoulos, for emotional and practical support at this time. Nor is there anything to suggest (as seems to be asserted) that Mrs Cowan encouraged Ms Darmanin to rely on her and her husband (to the exclusion of others or otherwise) for such support, as opposed to simply offering assistance where she could. 52 To the extent that Ms Darmanin's affidavit asserts that there was no one other than the Cowans who were giving her advice during the relevant period, this again seems to me to be an exaggeration. Not only does Mr Blackmore seem to have offered at least some support during this period, (contacting Mrs Cowan for assistance and accompanying Ms Darmanin to the Cowans in mid 2007 and visiting her on the property) but there is also evidence that, at least at the time Ms Darmanin entered into the legal arrangements for sale of her Gymea property, she had discussed the sale price with her employer. 53 The statement by Ms Easson that Ms Darmanin had limited social support seems to be solely based on what Ms Darmanin told her. I would be inclined to count Ms Darmanin's evidence on this point as self-serving (particularly when Ms Darmanin also said that 'lots' of people had spoken against the idea of the cottage or, to use her words, had said "this is crazy" and she should not be doing this T 21 - suggesting at the very least that she had discussed this proposal with more than simply the Cowans). 54 At some point in 2007, Ms Darmanin went back to work for Dr Zafiropoulos and did so through to about October 2007. It seems (having regard to the evidence of the real estate agent, Mr Bill Anastasiadis, who acted on the sale of the Gymea property, that on at least one occasion Ms Darmanin had referred to discussions with her employer as to the final sale price offered by the purchaser) that Ms Darmanin also placed reliance during this period on his advice. I am thus of the view that the alleged reliance placed on the Cowans has been overemphasised by Ms Darmanin. Suggestion that Gymea property be sold 55 Ms Darmanin says that it was when she was staying at the Glenorie property in April/May 2007 that the suggestion of the sale of the Gymea property was first raised (and this does not seem to be disputed). However, she says (at paragraph 18 of her affidavit) that Mrs Cowan suggested that she sell her house. Mrs Cowan, on the other hand, says that Ms Darmanin told her that she was not able to continue working, was suffering depression and, as she would have no income, she would have to sell her townhouse (para 6, 24 May 2010 affidavit). Mrs Cowan denies suggesting that the premises be sold (para 8). 56 It seems to me not implausible that, at a time when Ms Darmanin was in a zombie-like state and unable to look after her daughter, she expressed concerns to Mrs Cowan about her ability to continue working and to meet her mortgage repayments. (Although Ms Darmanin gave evidence that she had not missed any repayments, the likelihood of so doing must surely have occurred to her if she were unable to continue working. She had apparently already used additional borrowings to meet her repayment obligations in early 2007.) The knowledge Mrs Cowan had of Ms Darmanin's financial position can only have come from Ms Darmanin herself. Had Ms Darmanin not expressed concerns about her ability to continue to work and meet mortgage repayments, there would be no logical reason for a sale of the property to come up at all (in other words, if all Ms Darmanin had needed was a place to stay for a while then there would have been no logic to a suggestion that the house be sold). 57 There is nothing to suggest that Mrs Cowan had any knowledge of, or interest in, Ms Darmanin's financial affairs prior to that point such as might lead me to conclude that the suggestion of a sale of the property emanated originally from Mrs Cowan. Similarly, despite the submission by Mr Crossland that the Cowans were 'shepherding' Ms Darmanin out of her Gymea property (and wanted to have a cottage erected on their land), there is nothing to suggest that there was any motivation for personal gain on the part of the Cowans in what occurred and, insofar as I am asked to infer this, I am not satisfied on the evidence before me that I should do so. 58 I do not accept Ms Darmanin's evidence on this issue. Initial offer 59 Mrs Cowan acknowledges that she said to Ms Darmanin that she could purchase a "moveable home" and place it on their property but was clear that it was always to be Ms Darmanin's property. Mrs Cowan says that she said to Ms Darmanin "after you feel better you could sell the portable home" - para 10 of her affidavit. (In the witness box, though not in her affidavit, Mrs Cowan explained that her thought process was to assist Ms Darmanin to find out why she was having bouts of depression.) 60 The original offer or suggestion, which Mrs Cowan acknowledges she made, is broadly consistent with Ms Darmanin's recollection of the conversation (as it appears at paragraph 23(f) of Ms Darmanin's affidavit) and is consistent with the evidence as to a caravan having previously been located on the Glenorie property (as a temporary measure to accommodate some workers). 61 The portability of any dwelling to be placed on the Glenorie property was accepted by all parties to have been a feature of the initial discussion. It was suggested by Mr Crossland, in his cross-examination of the Cowans, that the use of the adjective "relocatable" was something which had been adopted for the purpose of creating an impression as to the nature of the accommodation which had been contemplated by the parties and that this terminology had not been used in discussions between the parties. In effect, as I understood it, Mr Crossland was suggesting that the Cowans were seeking to put a label on the dwelling that would assist in their argument whereas that had not been the term used in the discussions between the parties. Mrs Cowan conceded that in what I would call everyday parlance (conversations with her children and the like) the cottage was referred to as "Tracy's home" or "Tracy's cottage" but insisted that in discussions as to the arrangements between the parties the reference was to a relocatable (or moveable) home. I note that Ms Darmanin herself refers to a conversation where the home was referred to in similar terms (para 23(f) of her affidavit). I do not think that the Cowans can be criticised for referring to the cottage as a relocatable home when the initial offer was in those terms and I accept that they have at all times considered that what was to be placed on the land should be relocatable. (I do not see this as a case of deliberately appending a label to something and then using that label as an aid to construction.) 62 Where the respective accounts seem to diverge at this point is as to whether there was any consensus reached at that stage in relation to the proposal and as to whether by then it was contemplated that there should be a more permanent cottage (as opposed to a mobile home) on the land. 63 Mrs Cowan contends that after the offer was made the subject was not raised again until some time later (around September 2007) (and she says this was after Ms Darmanin had considered the possibility of renting elsewhere). Mrs Cowan recalls a conversation in which Ms Darmanin asked her if the offer was still open (something which Ms Darmanin denies). 64 Ms Darmanin contends instead that there was a discussion (which she seems to put as around mid 2007) with Mr Cowan in which he said that he did not like the thought of a portable home on the land and that he suggested that there be a cottage. Mr Cowan, however, was fairly blunt in the witness box as to his views about the arrangement and I have difficulty accepting that he made any proposal at all about a cottage on the property (the thrust of Mr Cowan's evidence, which I considered was said with genuine feeling, was that his wife had prevailed upon him to accept that Ms Darmanin should be permitted to stay on the property and to accept the view expressed by Ms Darmanin, with which his wife agreed, that a caravan would be too small for Ms Darmanin and her daughter; and that he had only reluctantly agreed). 65 As to the timing of the discussion about a cottage, as opposed to a caravan or 'portable home' (assuming for present purposes that there is a difference between the latter and a cottage, which seems to me to be moot), had it occurred in April/May 2007 then it would seem to me to be surprising that nothing seems to have been done at that stage to consider what kind of cottage would be suitable. The evidence is that steps to identify a suitable home to place or build on the land did not take place until about September 2007 (after Mrs Cowan says that Ms Darmanin raised the offer with her again). 66 There was also a dispute as to whether anything was said at that stage (mid 2007) as to who was to own the cottage (or portable home). Mrs Cowan, as noted above, said that she had said to Ms Darmanin that when she felt better she would be able to sell the 'portable home'. That seems to me to be consistent with the arrangement being one to assist Ms Darmanin with temporary accommodation, in circumstances where Mrs Cowan had made clear that there was insufficient room in her own house to do so (and makes sense of the motivation being to achieve a cost responsible solution - since it contemplates that there will be a residual value in the structure so that Ms Darmanin would have the benefit both of a period of rent-free accommodation and then of the sale of the structure). Ms Darmanin's version on this seems to be limited to what is said in paragraph 23 (p) of her affidavit (which I consider in due course). 67 Ms Darmanin's evidence was that she would not have sold the property had she not had the offer from the Cowans (as she would have had nowhere to live). Ms Darmanin denied having asked in September if it was still all right for her to stay on the Glenorie property for some time, but did not deny having looked at rental properties, which seems consistent with her having made a final decision to move to Glenorie only some time later in 2007 after she had seen what was available on the rental market (in which case the conversation attributed to her by Mrs Cowan makes sense as a matter of logic). 68 Although there is some doubt as to when (accepting that it was asked) the question was raised by Ms Darmanin as to whether it was still all right if she still stayed on the property for some time, (and in particular, some emphasis was placed by Mr Crossland on the fact that Mrs Cowan conceded in the witness box that the Cowans' 'offer' could have been made before the Gymea property was sold suggesting that this meant that the sale of the property was in reliance on the offer made by Mrs Cowan), it does not seem to me that much turns on this for present purposes, since even after the Gymea property was sold Ms Darmanin was not in my view committed to proceeding with the construction of the cottage. It would have been open to Ms Darmanin at that point to take some different decision in relation to her future accommodation (and to have used the net proceeds of sale in a different fashion). 69 What seems more relevant to me is that if the question was raised by Ms Darmanin (and I accept Mrs Cowan's evidence that it was), it indicates to me that Ms Darmanin well understood the temporary nature of the arrangement and it explains the underlying logic of the arrangement as one in which Ms Darmanin would spend what would otherwise have been rent on an asset in which she could live for a while and then either sell in due course or relocate once she was able to resume working and caring for her daughter. 70 Whether or not the Cowans' offer was accepted by Ms Darmanin before the decision by Ms Darmanin to sell the Gymea property, it certainly seems to be accepted by the Cowans that the possibility of temporary accommodation on their land was discussed before the Gymea property was put on the market and, a fortiori, before the sale was completed. Significantly, in light of the agreement on which Ms Darmanin now relies, Ms Darmanin acknowledges that the initial proposal or offer was that she would be able to reside in a caravan or portable home - an offer which both underscores the temporary nature of the accommodation being made available and is inconsistent with the suggestion that it was intended that the Cowans were to obtain any rights to the temporary residence in question. Involvement of Ms Darmanin in sale process 71 There was also a dispute as to the level of involvement Ms Darmanin had in the sale process in respect of the Gymea property. In around July 2007, thus about two months or so after the initial suggestion in relation to the caravan/portable home, Mrs Cowan made enquiries (she says at Ms Darmanin's request) as to suitable real estate agents to market the Gymea property. It is not disputed that Mrs Cowan made the initial arrangements for the agents to make appraisals of the property and that she was present when the various prospective agents were interviewed. 72 Mrs Cowan accepts that it was she who recommended that Mr Anastasiadis be appointed as real estate agent. It is not suggested that there was any personal motivation in her so doing or that there was any previous business or social relationship between the Cowans and Mr Anastasiadis. He is the principal of the Ray White Real Estate agency at Gymea and has been a real estate agent for approximately 20 years. 73 In Mr Anastasiadis' affidavit of 26 May 2010 he recounts his recollection of the marketing/sale process insofar as it relates to each of Ms Darmanin and Mrs Cowan. He refers to an initial meeting with the two, following an enquiry in April 2007 in relation to a marketing appraisal. Some weight was placed by Mr Crossland on the seeming inconsistencies between the events as described in Mr Anastasiadis' affidavit and his account of those events when cross-examined in the witness box - in particular, what was the initial 'meeting' (the witness referring to that as a telephone call and suggesting that telephone discussions constituted 'meetings') and as to how much of a role Mrs Cowan had (he saying that she had 'more' of a role in the initial 'meeting' when the initial contact was solely with Mrs Cowan). I formed the impression that Mr Anastasiadis had simply been imprecise in his language on those aspects and that the respective accounts were broadly consistent. 74 Another example of imprecision in Mr Anastasiadis' evidence was in his answer to questioning about the statement he had attributed to Mrs Cowan, which was that "Tracy's had a hard time and is not well". Mr Anastasiadis suggested in the witness box that she may have had a cold at the time but when pressed it became clear that he was using this as an example and that he was not suggesting that he recalled that she had actually had a cold at the time. From that, I infer that he did not recall having seen or heard anything to suggest that there was a major problem with her health at the time. In general, I found Mr Anastasiadis to be an honest witness, perhaps inclined to speculate at times such as in relation to this issue. 75 I would accept Mr Anastasiadis' evidence that he did not notice anything about Ms Darmanin to cause him concern as to her capacity to give instructions as vendor in relation to the sale, since I think it likely that a real estate agent who was concerned as to the mental capacity of a vendor to commit to a sale of the property would be concerned to protect his or her own position before proceeding to take instructions for the sale of the property. However, again, I place little reliance on such evidence because there is nothing to tell me that as a lay person he would have been in a position to realise the impact of bipolar disorder on Ms Darmanin's thought processes even if he had understood her to be suffering a manic depressive illness and (other than the conclusion expressed by Ms Easson as to the emerging hypomania in the 3 months prior to her seeing Ms Darmanin) it is not suggested that Ms Darmanin was exhibiting symptoms of mania or hypomania in the period July-August when the property seems to have been marketed and sold (it having a 3 month settlement date according to Ms Damanin and the completion date being October 2007). 76 More relevantly, however, what Mr Crossland's cross-examination of Mr Anastasiadis did cast doubt on was his evidence that Ms Darmanin had been 'actively involved' in negotiating the commission in relation to the sale (something Ms Darmanin denied). With respect to Mr Anastasiadis, it seems as if there was hardly any "negotiation" of the commission at all, at least if negotiation is used in the sense of parties making offers and counter offers. When pressed on this issue, it became apparent that the low rate of commission (favourable to the vendor), which was the very feature of the sale which enabled Mr Anastasiadis to recall the transaction out of the many in which he was involved over and since that period, was one which Mr Anastasiadis was happy to offer in order to increase the agency's listings in the area and the only negotiation as such seems to be that he put forward a lower figure by way of commission than he ordinarily would have done and this was accepted. Even treating 'negotiation' as an imprecise use of language (and assuming that what he may more likely have meant was 'discussion'), Mr Anastasiadis could not point to any real discussion of the commission with Ms Darmanin. Therefore I place no weight on his evidence that Ms Darmanin had 'actively' negotiated the commission (though I do not think that Mr Anastasiadis' evidence on this issue casts doubt on the balance of his evidence - it seemingly being a product of being focussed on his own perceptive of events in this regard). 77 Mr Anastasiadis also recalled that Ms Darmanin had been firm in the price she wanted for the property. However, I place little weight on that factor since it is by no means clear whether, even if she had demonstrated a firmness in this regard, this was something impressed upon her by others such as the Cowans or Dr Zafiropoulos or was indicative of her mental capacity. 78 I accept Mr Anastasiadis' evidence that Ms Darmanin had told him on one occasion (when he was seeking instructions as to an amount offered for the property) that she wanted to speak to her employer (someone whose name he did not recall though he remembered it was a Greek sounding name). Mr Anastasiadis' recollection is that after the initial telephone call and meeting at which Mrs Cowan was present he did not meet or deal with her at all. That evidence seems to me to be consistent with the faith Ms Darmanin placed in Dr Zafiropoulos ('he knows everything about my life' - para 14 affidavit) and some discussion was broadly conceded by Ms Darmanin in the witness box. The relevance of this is that it indicates that, at least in relation to the sale, Ms Darmanin was not wholly reliant on Mrs Cowan or her husband (nor can she have been "heavily reliant" on them if she was seeking final approval or advice from Dr Zafiropoulos). 79 Finally, although it was suggested that Mr Anastasiadis would be expected to have difficulty remembering this out of all the transactions in which he had been involved over the relevant time, I accept that the lower commission rate is something that might well have caused Mr Anastasiadis to remember this transaction. I note that he also recalled Ms Darmanin saying that she needed to sell the property because of debts, which strikes me as information of a kind a real estate agent might be more likely to remember (since it might have had an impact on the sale he or she might need to achieve and/or on the attitude the vendor might have to prospective offers). Mr Anastasiadis was not challenged on that aspect of his evidence. 80 Ms Darmanin's evidence was that she was undecided as to whether to sell the Gymea property up until the time that she signed the contract (and that this was why the real estate agent had brought the papers to her work place to sign). (If so, this seems inconsistent with there being any binding arrangement or agreement in place in relation to the cottage at this stage other, perhaps, than one which gave Ms Darmanin the option whether or not to proceed.) Had Ms Darmanin been as heavily reliant as she claims on the Cowans for emotional and/or practical support at this stage, one would have expected Ms Darmanin to have told Mr Anastasiadis that she needed to confer with the Cowans (not her employer) in relation to the final sale price. Jones v Dunkel inference 81 I note that Mr Ward submitted that I should draw an adverse inference from the failure of Ms Darmanin to adduce evidence from Dr Zafiropoulos (Ms Darmanin's response to questions as to his availability being that he was in Sydney but that he had enough problems of his own and that he was in and out of court - a rather cryptic explanation). In response, Mr Crossland submits that no Jones v Dunkel inference should be drawn since there were numerous lay witnesses to speak to the outward appearance of Ms Darmanin's mental state. 82 A Jones v Dunkel inference ([1959] HCA 8; (1959) 101 CLR 298, at 312, 320-321) is open to be drawn in relation to an unexplained failure to call evidence in relation to a particular issue (such as Ms Darmanin's mental state) only if the evidence otherwise before the court is sufficient to give rise to an inference as to a matter which calls for explanation by her. The rule in such a case would permit evidence in relation to that matter to be given greater weight, and an inference or inferences more readily to be drawn, when the party who might have called evidence to the contrary has chosen not to do so (see Davies AJA in Ho v Powell [2001] NSWCA 168; (2001) 51 NSWLR 572; HML v R [2008] HCA 16; (2008) 235 CLR 334; (2008) 245 ALR 204, at [302]; [303]; Brandi v Mingot (1976) 12 ALR 551, at 559-60; Jones v Dunkel; Katsilis v Broken Hill Pty Co Ltd (1977) 18 ALR 181, at 197). Thus in Commonwealth of Australia v McLean (1996) 41 NSWLR 389 (although see the unreported version of this judgment as it was not reported entirely, NSWCA, 31 December 1996), Handley and Beazley JJA noted that the rule typically applies to strengthen or weaken an inference otherwise available on the evidence, for the benefit of the party not in default. 83 I such an inference arises it permits the court to infer that the uncalled evidence or missing material would not have assisted the party in question, not that the uncalled evidence was in fact damaging to his or her case. Thus it allows for the more ready acceptance of evidence which might have been contradicted (but which was not). 84 Here, I accept that there is evidence from a number of lay witnesses as to their observation of Ms Darmanin's mental condition, as well as evidence from Ms Easson, and that whatever Dr Zafiropoulos might have said as to his observation of Ms Darmanin's mental health it is not likely to have taken the matter much further than the other lay witnesses' evidence. 85 However, what Dr Zafiropoulos would have been well placed to answer is the evidence of Mr Anastasiadis to the effect that Ms Darmanin had said she needed to consult with him in relation to the sale price. That is evidence which, if disputed by Ms Darmanin, one might have expected her to adduce from her employer (who she says was so familiar with her life and her financial commitments). There was evidence as to an unsuccessful attempt by the solicitors acting for the Cowans to speak with the dentist. Ms Darmanin's account of why he was not there to give evidence was rather cryptic ("He has got his own issues at the moment" T12.50; "He is in and out of court as well at the moment" - T13.32). 86 In the circumstances, it seems to me that there is nothing to contradict Mr Anastasiadis' evidence as to the conversation with Ms Darmanin in which she mentioned her employer as someone with whom she would have to speak in relation to the final sale price and that it would have been open to Ms Darmanin to call Dr Zafiropoulos to refute the suggestion that she had turned to him for some form of advice or recommendation had that been incorrect. (Ms Darmanin herself appeared to concede that she had discussed the final sale price with her employer - saying "The reason why I discussed it with my boss is I was so unwell that the real estate agent actually came to my work to ask me to sign it… that's why I spoke to my boss because they were actually at my work to sign the paperwork" - T 15.50.) 87 I would thus draw a Jones v Dunkel inference to the effect that Dr Zafiropoulos could not have assisted Ms Darmanin's case and therefore that Ms Darmanin did at least discuss with her employer the final offer made for the purchase of her Gymea property (and thus I am not satisfied that Ms Darmanin has established heavy reliance, let alone that she was wholly reliant, on the Cowans for advice or support in that regard). What I cannot draw from the absence of any evidence from Dr Zafiropoulos is an inference as to what advice he may or may not have given during that discussion or as to how often Ms Darmanin may have discussed the proposed sale with him. Nevertheless, the limited inference that I think can and should be drawn casts real doubt on the assertion of Ms Darmanin that she was under pressure from the Cowans to sell the Gymea property (in the witness box she said "I am sure if I wasn't put under pressure it wouldn't have ever been sold" - T16.8). This seems to me again to bear the hallmark of exaggeration on Ms Darmanin's part. 88 I should also note that although there was evidence from Dr Roberts as to what conclusion one might draw as to Ms Darmanin's state of mental health (or that of someone suffering from bipolar disorder) by reason of the fact that she was employed by Dr Zafiropoulos over the period through to October 2007, ultimately I do not draw any inference from the fact of Ms Darmanin's employment over this period (other than to infer that she cannot have been in as zombie-like a state at that time since at the very least she was capable of attending the dental surgery during her work hours). Conclusion as to circumstances of Gymea sale 89 While I am not satisfied that the decision to sell the Gymea property was one made solely in reliance on the offer made by Mrs Cowan and nor do I accept that it was one made at Mrs Cowan's initial suggestion or behest, I accept that the decision to sell the Gymea property was made by Ms Darmanin in the knowledge that there was an option of residing on the Glenorie property in a caravan or portable home if Ms Darmanin chose to take up that option down the track. 90 I am not satisfied that Ms Darmanin was put under any pressure by the Cowans to sell the Gymea property; nor am I satisfied that this was their idea. I think the far more likely explanation is that Ms Darmanin realised that she would have difficulty meeting her mortgage payments if she continued to be too unwell to work and that she sought assistance from the Cowans to arrange the sale. 91 Nor am I satisfied that Ms Darmanin had no one advising her other than the Cowans in relation to the sale (as she has asserted). Further, I note that although Ms Darmanin emphasised in the witness box that but for the pressure she would not have sold her home, it is not the sale of the Gymea property with which Ms Darmanin now takes issue - rather, it is the fact that the net proceeds were used to build a cottage the benefit of which is not now available to Ms Darmanin as a practical matter unless she is able to relocate the cottage to another block of land. Completion of Gymea sale 92 The property was sold with completion taking place in October 2007. The net proceeds of sale received on completion by Ms Darmanin were in the order of $78,000. It seems to me that it is not until around this time that the final decision by Ms Darmanin to proceed with the cottage can logically be said to have been made - in the sense that there does not seem to have been anything to commit Ms Darmanin to the construction of the cottage until after the proceeds of sale had been received, by which time Ms Darmanin had been well enough to have worked for Dr Zafiropoulos for some time since her depressive episode in April/May 2007 (albeit on a part time basis and noting that Ms Darmanin said her work had not been satisfactory - T 13) and at which stage Ms Darmanin would have had at least one alternative accommodation option (namely renting a property for some time). (I note that she had formerly shared accommodation with Mr Blackmore and that such an option might have been available as well.) 93 I consider it likely, having regard to Dr Roberts' evidence, that Ms Darmanin would not have been perceived by lay persons, such as the Cowans, in October 2007 as being as unwell as she was in April/May 2007 when she was, in Mrs Cowan's words, in a dazed and stupefied state. Terms of the arrangement re cottage 94 The critical issue in this case (on both of the ways in which Ms Darmanin pleads her claims) is what were the terms of the arrangement pursuant to which Ms Darmanin then took up residence with the Cowans. Leaving aside whose suggestion it was that Ms Darmanin should sell the Gymea property in the first place (though my conclusion is that it was more likely to have been Ms Darmanin's), and accepting that both sides agree that the initial offer was that Ms Darmanin could reside on the Glenorie property in a caravan or portable home, how is it said that the more complicated tenancy agreement asserted by Ms Darmanin originated? 95 Ms Darmanin's account seems to be that, at or about the time of the initial suggestion, Mr Cowan said that he did not like the thought of a portable home or caravan and suggested a cottage (para 23(g) of her affidavit). I have indicated above the difficulty I have accepting that Mr Cowan made any such suggestion. However, the agreement as pleaded (one which it is alleged was made in mid 2007) goes further than this and includes an arrangement by which the period of occupation is determined by reference to a notional rent calculation. There is nothing at around this time at around this time to suggest that anyone had raised the question of a notional rental for a structure the design of which had not yet been considered in any detail and which had not then been built. Ms Darmanin deposes in para 23(p) of her affidavit of 13 August 2009 to a conversation to the following effect:

[14]

I had a conversation with Simone in which she said words to the effect: 'You will spend $X on the house so let us say you can live in for 8 years rent-free. You can think of the money spent on the house as rent in advance' . (my emphasis) 96 This statement of Mrs Cowan, said to have been accepted or relied upon by Ms Darmanin, gives rise to the alleged agreement on which Ms Darmanin bases her contractual and that Mr Crossland submits is unconscionable (T 144). 97 At the outset, even if such a statement was made it is by no means apparent to me that a person to whom that statement was made would have understood it to be a promise to permit that person to live on the property until a notional rent equalled the amount expended on the cottage. On its face, a statement of this kind seems to be indicating that if Ms Darmanin stayed on the Glenorie property, and was not paying the rent which she would otherwise have had to do had she rented elsewhere, then after a period of occupation she would be in no worse position than if she had paid rent elsewhere (an advantage to Ms Darmanin assuming she then retained the asset to sell or relocate) and thus she could 'think' of the money spent building the cottage as equivalent to the rent she would otherwise have had to spend if she had lived elsewhere; in effect a notional amortisation of the cost of the cottage. 98 Significantly, even on Ms Darmanin's version of the conversation, there was no particular value placed on the amount to be expended on the cottage (it being referred to as $X) or as to the likely rental amount to be assumed for the purposes of the calculation (or how either of those figures were to be determined) even though they were to form an essential part of the calculation of how long she could remain on the property. Nor was there any discussion apparently as to a cap on the expenditure to be factored into the equation. Therefore, on Ms Darmanin's version of the agreement there would be no way of knowing in advance of completion of the cottage just how long Ms Darmanin was to be permitted to reside there rent-free or when the Cowans were to have sole use and entitlements to the cottage. Browne v Dunn 99 Mr Crossland submits that on an issue as important as this conversation, if Ms Darmanin's account were not to be accepted, Mr Ward should have put to Ms Darmanin that this was evidence which should not be accepted and thus given her an opportunity to explain her affidavit evidence. Mr Crossland submits that, as Ms Darmanin was not cross-examined on this issue, her account of the conversation as set out in paragraph 23(p) of her affidavit account should stand (T 143.35; T 144.4). 100 True it is, from my review of the transcript and my recollection of the cross-examination, that Ms Darmanin was not expressly taken to this sub-paragraph in cross-examination and it was not expressly put to her that this account was mistaken or untrue. However, the terms on which Ms Darmanin occupied the cottage (and whether it was pursuant to a binding agreement) were clearly in issue. As noted earlier, the evidence as to conversations regarding the possibility of Ms Darmanin living (whether in a cottage, relocatable home or caravan) on the Glenorie property is that they largely (if not solely) occurred before completion of the sale of the Gymea property. The conversations are variously described as occurring in mid 2007 and as late as September 2007 (and, according to Mrs Cowan, after the sale of the plaintiff's house in Gymea there was another conversation regarding Ms Darmanin coming to stay on the Cowan's property). 101 Insofar as any weight can be placed on the order in which the events are set out in paragraph 23 of Ms Darmanin's 13 August 2009 affidavit, reference is made to representations made in mid October 2007, i.e. before the settlement of the Gymea property (specifically in subparagraphs (f), (g)), then there is a reference to the sale of the Gymea property in October 2007 (at subparagraph (n)), before Ms Darmanin then (in subparagraph (p)) refers to the alleged conversation regarding the 8 years rent-free and thinking of the expenditure of money as rent in advance. 102 Representations to the effect of Ms Darmanin's ability to live on the property rent-free for 8 years are particularised at subparagraph (b) and (c) of paragraph 18 of Ms Darmanin's Amended Statement of Claim. However, there is no pleading of any representation to the effect that the expenditure on the home could be considered as "rent in advance". (I note that paragraph 20(c) of the Amended Statement of Claim does contain an allegation as to the Cowans having directed how the proceeds of sale of the Gymea property should be spent but there is no mention that such expenditure was in lieu of or referable to rent. There is a reference in the particulars at paragraph 25 to the fact that the Cowans encouraged Ms Darmanin to believe that at the time that she agreed to expend such sums on the house, she would be able to live on the property - but again no mention of a belief that such expenditure was referable to a rent-free period.) Further, there is no express mention in the Amended Statement of Claim of any representations made after the completion of the Gymea property sale in or after October 2007. 103 In the Amended Defence, relevantly, paragraphs 18(b) and (c) are denied, as is paragraph 30. In Mrs Cowan's affidavit of 24 May 2010, Mrs Cowan refers (at paragraph 16) to a conversation on or about September 2007 regarding Ms Darmanin coming to live on the property which occurred after the sale of the Gymea property (see also her affidavit dated 1 September 2009, placing this conversation in September/October after the sale of the Gymea property - paragraph 8; and affidavit dated 29 September 2009, at paragraph 8). Likewise, Mr Cowan refers to conversations on the same topic occurring in October 2007 (at paragraph 7 of his affidavit of 29 September 2009 and paragraph 6 of his affidavit of 20 May 2010). 104 In her affidavit of 1 September 2009, Mrs Cowan deposes that paragraph 23 of Ms Darmanin's affidavit of 13 August 2009 is "simply not correct" and that the words attributed to her and her husband are not correct (paragraph 54) (see also paragraph 38 of her affidavit of 29 September 2009 to the same effect). 105 In her affidavit of 24 May 2010, Mrs Cowan (at paragraph 53) addresses sub-paragraph 23(p) of Ms Darmanin's 13 August affidavit and states "I specifically deny the assertions at paragraph 23(p) that it was asserted that large amounts of monies were to be taken from the residue of the plaintiff's sale of her town house". 106 In a short written submission served prior to the hearing ("Statement of Real Issues"), Mr Ward foreshadowed the Cowans' submission that there are "multiple conflicting affidavits" and questioned whether Ms Darmanin could be believed on any significant point on her evidence. In another document provided prior to hearing, titled "Outline of Defendant's submissions", Mr Ward submits that the affidavits of Ms Darmanin and the facts alleged within them have been "significantly contradicted" by the evidence of the Cowans' and other independent parties. 107 In summary, both the Amended Defence and the affidavits and submissions provided before hearing contain an alternative and contradictory version of the various conversations and representations said by Ms Darmanin to constitute the agreement in relation to the cottage and there is both an express denial of the truth of the words attributed to the Cowans in sub-paragraph 23(p) and a general attack on the truthfulness of Ms Darmanin. It is difficult to accept that Ms Darmanin was not squarely put on notice of the challenge being made to her evidence in this respect (and had the opportunity to address that challenge in an affidavit in response or by adducing other evidence or by testing the Cowans on this point in their cross-examination). Thus I see no unfairness requiring remedy that could flow from the failure to cross-examine on this point sufficient to raise the application of the rule in Browne v Dunn (1893) 6 R 67 (HL).

[23]

The rule does not apply where the witness is on notice that the witness's version is in contest. The notice may come from the pleadings, or a pre-trial document indicating issues, or the other side's evidence, or the other side's opening; it may come from the general manner in which the case is conducted; it may come from the way an earlier trial between the parties on the same issues was conducted. In general, however, this exception to the rule should only operate where the issue is a fairly clear and obvious one. Even where there has been an exchange of affidavits or statements, a cross-examiner must put to the witness any non-obvious implications which the cross-examiner proposes to submit can be drawn from the evidence. (footnotes omitted) (my emphasis) 115 Given that Ms Darmanin must have been clearly on notice that both her version of the conversations and her allegation as to the existence and terms of the agreement were in issue, (and the Cowans are not seeking to draw any non-obvious inferences from the evidence in question) there seems to me to have been no relevant unfairness in Ms Darmanin not being taken in cross-examination to her account of the conversation set out in that particular paragraph. 116 The situation is not one where an issue to which Ms Darmanin's evidence relates (the conversation to which she deposes in para 23(p) of her affidavit) has not otherwise been addressed by contradicting evidence of the Cowans. Rather, this is a situation where, having both led evidence to address the question as to the terms of the cottage arrangement, it appears that the parties have not directly engaged with each other's evidence in cross examination (aside from denials in pleadings and affidavits) though the issue and the contention surrounding it has been squarely raised. Therefore I do not consider that the rule has been infringed. 117 If, contrary to my conclusion on this point, there was some unfairness to Ms Darmanin in the fact that she was not cross-examined on this sub-paragraph, and thus the rule has been infringed, I do not accept that this would mean that Ms Darmanin's account of the conversation should stand. While it may be that one could not say in isolation that the conversation as set out in paragraph 23(p) was inherently incredible (to use the words of Gibbs J in Precision Plastics Pty Ltd v Demir) so as to suggest that there would not have been any potential purpose served by putting the truth of that conversation to her, when Ms Darmanin's account is taken into consideration with other evidence, including the admission by Ms Darmanin that the events of 2007 were a "blur" - T 17.49 and the lack of any evidence as to the source of the notional rental, Ms Darmanin's account becomes difficult to accept. 118 The suggestion that Ms Darmanin has a detailed recollection of the matters in that sub-paragraph (independent of any recollection subsequently derived from the terms of the 20 February 2008 letter, which I consider below) but does not have a detailed recollection of other matters lacks credibility. I also note (though do not suggest that this alone would have been decisive) that Dr Roberts' evidence is that a person suffering a condition such as this would be likely to have a less reliable memory than others who do not. 119 (I note in passing that in Shearer v Manly-Warringah District Rugby League Football Club (unreported, NSWSC, 7 November 1989), Young J, as his Honour then was, expressed the view that when a witness cannot recall anything of a conversation "other than that little bit of it which is particularly important to him, one is usually safe in discarding his evidence as being unreliable evidence", in a case where his Honour described the witness' evidence in the witness box as "extraordinarily vague".) 120 In Seymour v Australian Broadcasting Commission (1977) 19 NSWLR 219 (at 225), Glass JA explained that where an infraction against this rule has occurred, the remedy is essentially a matter in the discretion of the trial judge. Whilst it has been recognised that a court may be inclined to disregard a submission on the evidence which was not tested by putting questions to the party best able to deal with it (Precision Plastics Pty Ltd v Demir (at 370)), it has been otherwise considered that such a step would be extreme. Glass JA in Seymour made clear his view that that it would be to go too far to contend that evidence which would otherwise be relevant to a conclusion for which one party contends should be disregarded because its implications have not been put to the party against whom the inference is to be drawn. Consequently, Glass JA was of the view that a trial judge would be entitled to refuse to accede to a submission that such an approach should be taken (see also Crosthwaite v Elizabeth City Corporation (1989) 51 SASR 105, where comment was similarly made as to the extremity of such action). 121 In Cross on Evidence, considering some of the consequences which it was recognised may flow from a failure to follow the rule in Browne v Dunn (at [17460]), the authors note that whether the court does accept unchallenged evidence is a matter for it and that though there may be a very good reason for accepting a witness evidence, particularly if it is uncontradicted by other evidence, "there is no requirement that the court must accept the evidence not the subject of cross-examination; this is particularly so if the evidence is contradicted by other evidence", citing Newton J in Bulstrode v Trimble [1970] VR 840, at 848.

[25]

124 In circumstances where I have real doubts as to the reliability of Ms Darmanin's recollection of events, for the reasons adverted to above (and as discussed further below) and where her relatively detailed recollection of this conversation (on a point critical to her case) is inconsistent with her evidence that 2007 was a blur to her and the vagueness of her recollection of other conversations around that time, I would not consider it safe to accept her version of the conversation even if unchallenged. As it is, her version of the conversation is challenged in the material before the court (albeit in general terms) and although Ms Darmanin was not cross-examined on her account of the conversation in relation to the notional rental, I do not accept that there is any unfairness to her as a result. Thus I do not consider that an application of the rule in Browne v Dunn obliges me to accept Ms Darmanin's account at face value. Conclusion as to alleged terms of arrangement 125 I have found that there was no infringement of the rule in Browne v Dunn and that even if there were this does not mean that I should automatically accept Ms Darmanin's version of the conversation to which she has deposed in paragraph 23(p) of her affidavit. Turning then to whether, having regard to all of the evidence, I should accept Ms Darmanin's account of the terms on which she came to occupy the cottage, I note that the conversation recorded in paragraph 23(p) of Ms Darmanin's affidavit is inconsistent with the initial offer (which Ms Darmanin acknowledges was made to her) that there be a portable home (and temporary occupation by Ms Darmanin - for a few years) on the site. It is also inconsistent with the Cowans' stated intention to assist Ms Darmanin in a cost responsible way (since at the end of the alleged fixed period of occupation, if not before, Ms Darmanin would have no accommodation and no asset). What is consistent both with the Cowans' stated intention and with the original proposal by Mrs Cowan is that the accommodation would be temporary and that Ms Darmanin would retain ownership of whatever was put (at her expense) on the Glenorie property (such that she could move if it suited her, or if things did not work out, or would have a saleable asset at the conclusion of her occupation of the property). 126 Mr Crossland places great weight, for the assertion that the agreement was as recorded in paragraph 23(p) of Ms Darmanin's affidavit, on the terms of the Cowans' letter of 20 February 2008 (written after the relationship between the parties had broken down) as confirming the initial agreement in terms broadly consistent with those pleaded and as deposed to by Ms Darmanin. 127 I consider the proper construction to be placed on that letter later in these reasons. I do not accept that it amounts to any admission on the Cowans' part adverse to their case. Rather, even if (which Mrs Cowan denies) the reference to "original" is properly to be read as referring to the arrangements before Ms Darmanin moved into the cottage, I would read this letter (in the context of the evidence as to the discussions at that time) as referring to an arrangement or agreement that Ms Darmanin could place a dwelling on the property and occupy it for a few years (and treat the cost of expenditure on the cottage as, in effect, the equivalent of rent that she would have to pay elsewhere - a notional amortisation of her expenditure on the cottage). I note Mrs Cowan's explanation that she intended in the letter to refer not to any arrangement reached between the parties in 2007 but to a verbal agreement made in early 2008 when it was agreed that Ms Darmanin would vacate the property. That explanation also seems to me to be plausible, being consistent with what occurred in early 2008. Whichever of those is the proper construction to be placed on the letter, which was drafted by Mrs Cowan and settled by a lawyer with whom the Cowans briefly consulted, neither supports Ms Darmanin's assertion as to an agreement in mid 2007 which contained the terms set out in paragraph 23(p) of her affidavit. 128 Furthermore, in my view the behaviour of the parties towards the end of October 2007 (when Ms Darmanin seems to have exerted her will in respect of the construction and fitout of the cottage in disregard of the concerns raised by the Cowans) and in early 2008, when Ms Darmanin requested, in effect, that the Cowans buy her interest in the cottage, seem to me to be far more consistent with the Cowans' version of events than with there being an agreement in advance that the cottage would ultimately belong to the Cowans. Selection of cottage 129 In this regard, I note that Ms Darmanin was involved in the selection of the cottage from the start, something that would not have been necessary had the Cowans simply agreed to have built on their land (at her expense) a dwelling that she could occupy rent-free for a considerable period of time. Mrs Cowan took Ms Darmanin to inspect a relocatable home over the road (about September 2007) (which Mrs Cowan says Ms Darmanin said was too small but Ms Darmanin says was a design she did not like); she took Ms Darmanin to look at cedar span cottages (a form of kit home); she took Ms Darmanin to Bondi to acquire secondhand building materials; she introduced Ms Darmanin to a builder friend (Steve Conn) and she or Mr Cowan arranged for Ms Darmanin to meet with an electrician (Steve McClure). 130 Ms Darmanin says that had Mr Cowan said to her "How about putting a cottage on the land for you to live on" and that Mrs Cowan had said "Lets get Stephen [Conn] to build it. Its cheaper" (para 23(g) of her August 2009 affidavit). However, the idea that it was Mr, not Mrs, Cowan who suggested that there be a cottage on the land is inconsistent with his reported reluctance (evident in his responses in the witness box) to have more than a very temporary arrangement and inconsistent with the evidence of the manner in which he had previously been prepared to allow persons to stay on his land, namely in a caravan. I think it more likely that any discussion as to what was to be placed on the land was one between the two women. I accept Mr Cowan's evidence that, while he had accepted their view that a caravan was too small, he still understood the proposal to be for temporary accommodation. 131 Up to this point it might perhaps be thought that this conduct was equally consistent with the Cowans affording Ms Darmanin the courtesy of a say in the plans for the accommodation to be built on their land (albeit retaining final control over what was to become their property). However, it is what happened during the course of construction that confirms to my mind whose home it was always intended to be. Construction of cottage 132 In October 2007, Ms Darmanin moved into the Glenorie property and lived there with her daughter for about six months while the cottage was built. Mrs Cowan says Ms Damanin was "subdued" at the time and said that "to my eye she was suffering from depression", by which Mrs Cowan said she meant a lack of energy. 133 Ms Darmanin did not have much involvement in the construction process at the outset and correspondingly, as asserted by Ms Darmanin, the Cowans did have a good deal of involvement in the organisation of the construction at the outset. However, that changed during the course of construction. Ms Darmanin says that in late October 2007 she could not move or think (though she resumed working part time for Dr Zafiropoulos in about mid December 2007 and, according to Mrs Cowan and not denied by Ms Darmanin, she was in the meantime able to socialise with her friends) and had no input into the cottage design, just the occasional conversation with the builder. Ms Darmanin deposed to a comment by Mrs Cowan suggesting that there was some resentment at the fact that Ms Darmanin was doing nothing (which is consistent with Mrs Cowan having a measure of resentment on the part of the latter that Ms Darmanin was able to do other things, such as working/socialising, while the Cowans were arranging the construction of the cottage on her behalf). 134 However, others involved in the construction, whose evidence there is no reason not to accept, (Mr Conn and Mr McClure) attested to the fact that during the course of construction (which took 4-6 weeks), Ms Darmanin did have more involvement in the decision making - particularly, in relation to the increased size of the cottage and as to the number of power points. 135 According to Ms Darmanin, she was also involved in some physical work for the cottage (which also points to an increased involvement at that stage) even to the point of exaggerating or misdescribing the work she carried out - in her affidavit she says that in November 2007 she was digging a trench (contrary to the evidence of Mr Vaughan who had been responsible for that work); but in the witness box she explained that she had been confused and, instead of digging a trench with a trencher she had jack-hammered some rocks in the trench.

[26]

136 According to Mr Conn, who gave evidence and was cross-examined, during the course of the building construction Ms Darmanin gave him instructions to increase the size of the dwelling so that there was a full first story extension (rather than a small loft). According to Mr McClure, who also gave evidence and was cross-examined, Ms Darmanin also made a number of changes to the electrical requirements for the cottage (increasing the cost). There was no suggestion that the consent of the Cowans was sought to any of those amendments (or even that they knew what was happening day to day in relation to the building of the cottage - although it is clear that at some point prior to the construction being complete they were aware of the fact that the cottage had a second storey). 137 Ms Darmanin denies that she gave instructions in relation to the extension and says that she was never shown any plans. However, it seems to me that the fact she was shown no plans is not conclusive, insofar as it does not seem that there were ever any detailed plans of the kind one would expect for a residential development requiring Council approval. Mr Conn agrees that he had no instructions in relation to the actual design being relocatable. I accept Mr Conn's evidence that Ms Darmanin requested the second storey extension. It seems to me that what happened was that Mr Conn was initially asked to build a home to replicate, in effect, a cedar span kit home of a particular design - and did so. Both Mrs Cowan and Ms Darmanin were involved in the decision to build that kind of cottage. I accept that this was on the basis of a belief or assumption, at least on the part of the Cowans, that a kit home was one which was relocatable (as was the home that had been inspected over the road). Whether or not the parties turned their minds to the relocatability of the cottage when instructions as to its design was being considered, the initial offer (on which Ms Darmanin proceeded) related in my view to no more than temporary accommodation on the land). Cost of construction 138 On the sale of the Gymea property a sum of $78,693.70 was deposited into Ms Darmanin's account. It seems to be accepted that out of those funds Ms Darmanin paid $50,000 to the builder, Mr Conn, (by cheques drawn on 16 October and 26 November 2007), around $5,000 to the electrician, Mr McClure, $2,000 on secondhand building materials from the Bondi site and $1,500 on a hot water tank. In her affidavit she says that she paid $20,000 for tiles and bathroom accessories (part of which may be included in a $13,000 withdrawal in November/December for building materials). Invoices in respect of various cost items were in evidence. At least at the point when the Cowans were seeking to achieve a resolution of the situation after the breakdown of their relationship with Ms Darmanin, they were prepared to accept that Ms Darmanin had spent about $78,000 (almost all of the net proceeds of sale from the Gymea property) on the construction and fitout of the cottage. Requirement for Council approval 139 It is alleged (but the Cowans deny) that they knew or should have known that there was a risk that the residence would be an illegal construction and would be subject to a demolition order from the local Council. It seems to me that on either version of the relevant conversation about the height of the building, all parties were aware of the possibility that Council approval might be necessary. (Although Mr Crossland suggested that the consequences of lack of approval should be borne by the Cowans, since Ms Darmanin was not the landowner and had no legal obligation to obtain consent, it seems to me that this factor has a neutral impact since all parties suggest that the possibility was considered and nothing was done by anyone in relation to that issue. However, for the reasons I set out below, I think the presence of the cottage was not shown to be a benefit to the Cowans even had the demolition notice not been issued.) 140 The cottage is a two bedroom cottage (the second bedroom forming part of the loft extension) with kitchen, bathroom and veranda. Both parties agree that during the course of construction, the issue of Council approval for the structure was raised. The Cowans say that they raised with Ms Darmanin their concern that the increased height of the cottage would be a problem. (Mr Cowan said that there had previously been problems with the neighbours when there was a caravan on the land and he was concerned that the building would be visible to them because of the increased height. The principal concern that Mr Cowan had thus seems to have been that the neighbours would complain - not necessarily a concern that Council might order the demolition of the cottage.) In paragraph 26 Mrs Cowan's affidavit dated 24 May 2010, Mrs Cowan deposes to a conversation between herself and Ms Darmanin, in Mr Cowan's presence, in which Ms Darmanin told the Cowans that she had ordered a second storey loft and had changed the floor plans to make the downstairs area bigger and be properly tiled. Mrs Cowan deposes to the fact that both her and her husband responded to Ms Darmanin with words to the effect "a relocatable home has to be able to be relocated. There is no council approval for this. This is becoming a very significant structure", to which Mrs Cowan states that Ms Darmanin replied "I will deal with that later if I need to". (Mrs Cowan accepted that she could have taken this issue further with Ms Darmanin but said that by that time Ms Darmanin had stopped listening to her - para 26 of her affidavit - and she was intimidated by her tantrums). 141 Ms Darmanin on the other hand says that it was she who raised the question of Council approval with the Cowans prior to construction of the residence and they told her not to worry about that issue. I find this impossible to accept. The suggestion that Ms Darmanin raised the question of Council approval with the Cowans is inconsistent with her evidence that she had little or nothing to do with the plans for the cottage and very little involvement at the outset. A focus on such practicalities is inconsistent with Ms Darmanin's approach to other questions in relation to the cottage (such as where it was to be located on the property) and her apparent lack of concern otherwise to document the arrangements. 142 Mrs Cowan could not recall that she made a specific protest against the loft beyond the general caution as stated above. Mrs Cowan indicated that she had been too scared to say too much to Mrs Darmanin because of her "temper tantrums", by which Mrs Cowan explained that Ms Darmanin would be very disrespectful. Mrs Cowan then went on to explain that both she and her husband agreed at that time that the situation was "out of control", and that "maybe I should have been stronger but I felt it wasn't worth more unpleasantness and loud scenes" (at paragraph 27 of Mrs Cowan affidavit dated 24 May 2010). November/December 2007 143 According to Ms Darmanin, in December 2007 she started coming off her medication. (Ms Easson puts this as occurring in January 2008, though comments that it may be that Ms Darmanin was reducing her medication earlier than that. Ms Darmanin accepted that she would have had no reason not to be frank about this with her psychologist, so it seems to me safest to assume that Ms Darmanin was still on medication for the period during which the cottage was under construction.) Meanwhile, in November 2007 she had commenced consultation with Ms Easson, a clinical psychologist. 144 Ms Darmanin had eight consultations with Ms Easson from November 2007 to July 2008. It is not clear why those consultations ceased. Ms Easson seems to have adopted somewhat of a counselling role. In her report in these proceedings she recounts advice given to Ms Darmanin in relation to various matters (including advice seemingly given some time in November 2007 that the cottage idea was an 'unsafe' or unwise idea - attributed by Ms Easson to the absence of a written agreement) and expressed her conclusions as to how others would have perceived Ms Darmanin's behaviour based on what Ms Darmanin had told her of events. 145 Construction of the cottage was complete towards the end of 2007 and Ms Darmanin moved into the cottage (after a Christmas trip to Byron Bay) in either December 2007 or January 2008. Breakdown in parties' relationship 146 Not long after Ms Darmanin moved into the cottage, relations broke down between her and the Cowans. (It seems likely that issues were building up before then, having regard to comments of the kind which Ms Darmanin deposes were made by Mrs Cowan as to her doing nothing while she was at the Glenorie property and Ms Easson's comments based on her consultations in November 2007.) There were apparently a number of instances in February 2008 in which Ms Darmanin contacted the police with complaints about the Cowans. Mr and Mrs Cowan apparently felt intimidated by Ms Darmanin (or by the fact that she had contacted the police more than once) and did not want to confront her (see Mrs Cowan's affidavit para 26/27 which refers to Ms Darmanin's tantrums and her perception of the situation as out of their control, as described above). (Ms Easson, in her report, commented that Ms Darmanin could not appreciate the effect she was having on the owners of the land and Mr Conn referred to Ms Darmanin's aggression at times, which supports the observations made by the Cowans). 147 The situation must have deteriorated fairly rapidly since an oral request for Ms Darmanin to leave the property was made in or about January/February 2008. There was then some discussion the detail of which is not set out in the respective affidavits. However, Ms Darmanin accepts that at the time of the oral request she agreed to leave and that she then made some attempt to find a buyer for the cottage. 148 It is alleged that Ms Darmanin did not foresee the breakdown in the relationship and that it was reasonable in all the circumstances (particularised by reference to the 'encouragement' by the Cowans for her to believe they would remain friendly with her) that she did not foresee the breakdown in the relationship. (By the same token, there is, however, nothing to suggest that the Cowans should have foreseen the breakdown.) As to the alleged 'encouragement' by the Cowans that they would remain friendly with Ms Darmanin, there is no evidence of this unless (which I do not accept) this can simply be inferred from the offer that she reside on the property for a few years. Even if there had been some pledge of lifelong friendship, I doubt that it could be said that it would be 'reasonable' not to consider the possibility that the friendship might nevertheless come to an end. That said, I accept that Ms Darmanin's condition may have precluded any such insight. 149 Mrs Cowan attributes the breakdown in the relationship to Ms Darmanin's flirtatious behaviour with her husband. Whatever the cause, it seems difficult to suggest that either side should have foreseen in mid 2007 the ultimate breakdown of the relationship within such a short period. (Nor is the cause of the breakdown something falling within the concept of attributable blame for the purposes of the principle relied upon in Morris v Morris.) Insofar as it is put that it was unconscionable for the Cowans to promise temporary accommodation because there was no certainty of fulfilment of the promise, it is hard to see why a similar lack of certainty would not affect any promise dependent on social or domestic arrangements proving successful (one need do little more than refer to the divorce rate for an example of this) - indeed, this may well underlie the reluctance of courts to infer that parties intend to enter into legal relations in the context of promises made in a domestic or social promise. In any event, the unconscionability claim is pleaded by reference to the retention of the alleged benefit received from the reliance by Ms Darmanin on the promise, not the making of the promise in the first place. 20 February 2008 letter 150 By mid February the Cowans were seeking legal advice. Mrs Cowan prepared a draft letter (a copy of which is Exhibit 1) on about 18 February 2008. That letter, as settled by their lawyer, was sent to Ms Darmanin on or about 20 February 2008. Much weight is placed by Mr Crossland on this letter as confirming the terms of the 'original verbal agreement' pursuant to which Ms Darmanin came to build and occupy the cottage in the first place. Mrs Cowan explained in the witness box that her reference to the 'original verbal agreement' was intended by her to be a reference to an agreement reached with Ms Darmanin after the oral request was made that she leave the property (which was, in effect, that she could either take away the cottage or it could be rented out and she would receive the rental until her expenditure on the cottage was recouped). 151 Exhibit 1 (the draft letter dated 18 February 2008 prior to amendment by the Cowans' solicitor) read, relevantly, as follows (with the words which were deleted from the final version as sent italicized): You have been here since the 10 th of October 2007 and we have not charged you rent for living on the property, we are more than happy if you arrange for removal of all your possessions including the cottage , as we do not need the hassle. Although if this is not an option for you, you will be required to leave and you will be paid $250.00 per week from the rent of the cottage until the money you have spent is paid back to you, which was the original verbal agreement and a statutory declaration was made but due to situations never signed.

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A new statutory declaration can be drawn up as security if this arrangement is to take place…. A tenet [sic] will be found and you will receive rent money to a nominated bank account. 152 It can be seen that the rental arrangement was proposed as an alternative to the removal of Ms Darmanin's possessions. This corresponds in essence to that which Ms Darmanin pleads was the agreement entered into in relation to the cottage in mid 2007. $250 per week for 6 years equates to somewhere in the order of $78,000 (hence the 6 year period now put forward by Mr Crossland as opposed to the eight year period pleaded). 153 However, Mrs Cowan denied that there was any such rental agreement at the outset and said that this letter was referring to the agreement as to how the relationship was to be brought to an end (ie referring to the discussions in January after Ms Darmanin was asked to leave the property). That she was referring in her cross-examination to a later agreement is clear from her answer at T 6.37, when she said it was the agreement "that she asked me to purchase the property". It seems to me that the 20 February letter is consistent with the Cowans' understanding being that the cottage remained Ms Darmanin's property and was to be removed by her but that if she wished to do so it could be left on the property and she could recoup her expenditure from the rental. 154 Any discussion about rental prior to the cottage being built, according with Mrs Cowan (and I accept her evidence as to this) was that Ms Darmanin could occupy the cottage on the land without any rent (for the use of the land). Understandably, Ms Darmanin could have understood that to mean that the expenditure by Ms Darmanin on the building of the cottage could be thought of as rental (since it would otherwise have been necessary for her to rent property elsewhere). 155 There is nothing to suggest that at that stage any consideration was given to what amount could be expected to be received for the cottage if it were to be rented or as to how the figure of $250 per week was derived. Nor was there any evidence on which I could conclude that there was any agreement as to an upper limit on the expenditure, such that a calculation of that kind could have been known at the outset. (According to Mrs Cowan the figure of $250 per week was one that was mentioned by Ms Darmanin in February 2008 in the context of her suggestion that the Cowans borrow the money to pay her back what she had spent on the property and then rent it out - and the reference to a period of occupation of 8 years was in the context of a conversation after Ms Darmanin had moved into the cottage to the effect that she might live there for 8-10 years, marry a millionaire and leave the Cowans the cottage, a conversation which has the flavour of grandiosity about it). 156 The far more likely explanation of events leading up to the 20 February letter seems to me to be that put forward by the Cowans - namely that, when the relationship broke down and Ms Darmanin asked the Cowans to buy the cottage from her and then rent it out themselves, the alternative suggestion made by the Cowans was that a tenant be found for the cottage and that Ms Darmanin could recoup her expenditure in that fashion. (This was before the Council issued the demolition notice, thus making the alternative solution problematic.) 157 Ms Darmanin does not deny that she asked the Cowans to buy the cottage from her (a request inconsistent with the proposition that the cottage was to belong to the Cowans after a period of time but which is consistent with the reference in Mrs Cowan's initial draft letter to the removal by Ms Darmanin of all her possessions "including the cottage"). 158 The deletion of the words "including the cottage" from the final draft does not in my view change the import of the letter - Ms Darmanin was being asked to remove her possessions and, only as an alternative, the Cowans would be prepared to permit the cottage to be rented out for a period. The latter can only have been a real alternative if the former contemplated that the cottage would itself be removed as part of Ms Darmanin's possessions. Subsequent conduct 159 The cottage has remained unoccupied since Ms Darmanin vacated the cottage in June 2008. By letter dated 24 May 2010, the Cowans' solicitors wrote advising that: "Your client is free, at any time, to attend upon the defendants' property and remove her cabin. If that removal requires (as our clients believe) partial demolition, that is the removal of the loft, then that will be acceptable." 160 There was some criticism of the Cowans, during the course of Mr Crossland's submissions, by reference to the fact that there had been no attempt for them to obtain tenants over the period from June 2008 to date. However, in circumstances where the Council issued a demolition notice on 19 June 2008 (modified 31 July 2009), it does not seem to me that the Cowans can be criticised for having left the cottage vacant; nor was there any evidence to suggest that when the initial arrangement was reached in mid 2007 it was ever contemplated that the Cowans would rent out the cottage (whether to Ms Darmanin or anyone else). Mrs Cowan has obtained a quotation for the demolition which puts the cost at $9,000. (Ms Darmanin referred in her evidence to a likely cost of over $30,000 to relocate the cottage although it is not clear on what that belief is based.)

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163 Ms Easson's report, prepared in the context of the current litigation, sets out various background matters, no doubt from instructions provided by Ms Darmanin but also with reference to the medical history provided by the referring general practitioner. She commented on Ms Darmanin having "limited social support" (though she does not seem to have been in a position to test that). She said that Ms Darmanin was hypomanic on presentation. She referred to the fact that Ms Darmanin by January 2008 was cutting back on medication and suggested that this had been encouraged by her 'naturopath landlord'. 164 Interestingly, Ms Easson says Ms Darmanin spoke about having the floors put in (in November 2007) and that she warned Ms Darmanin about the landlord (though without knowledge of the landlord) and the inadvisability of building on the property at Glenorie. Although that warning cannot have been given at the earliest before the first consultation in November, taken at face value it would suggest that some kind of warning was given before the building was complete (since otherwise there would be no point advising against the action of building on the property). If so, this suggests that Ms Darmanin was not only not wholly reliant on the Cowans for support at this stage but also that whatever advice might have been given to her earlier, she would still have proceeded with the project. (Mr Blackmore gave evidence that he regarded the cottage as suitable for Ms Darmanin.) 165 Ms Easson said that Ms Darmanin was unable to see the "obvious resentments building up between herself and the property owner", though it is not clear on what this was based. She formed the view that Ms Darmanin was aggressive and contemptuous at work (on the basis of Ms Darmanin's account of what occurred at work). She referred to conduct of Ms Darmanin while in Thailand over the Christmas period in which she said Ms Darmanin had exercised poor judgment (giving access to her credit card to a man she had met there). (Ms Easson rated Ms Darmanin's judgment skills as very low (3 out of 10), though there was no indication as to the basis on which that scale operated.) 166 Ms Easson's conclusion was that Ms Darmanin was "clearly unwell" when she came to Glenorie (presumably referring to her arrival in October 2007 after completion of the sale of the Gymea property) and became more hypomanic between November 2007 and July 2008 (generally describing this as an increase in flamboyance). Ms Easson described Ms Darmanin as gullible, grandiose and irritable (and as being 'all over the shop', jumping from topic to topic). She considered that Ms Darmanin had poor judgment, poor risk assessment skills, needed constant management by a psychologist and a mental health care case manager. Ms Easson said that as a result of Ms Darmanin having possibly already started to reduce her medication (there referring to Ms Darmanin's stated intention to do so and reported urges to do so from her "naturopath landlord") it was likely that in the three month period before meeting with Ms Easson, ie from August to November 2007 Ms Darmanin's mood would have become more elevated and that her insight was probably diminishing. (If so, then the quiescent period in her illness would seem to have been relatively brief - from sometime after May 2007 to August 2007.)

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167 Dr Roberts was asked to review Ms Easson's report and, in particular, was asked what notice the Cowans would have had of the vulnerability of Ms Darmanin and, specifically, the effect of depression so far as a person's ability to manage their own affairs. Dr Roberts reviewed the pleading and affidavits. He did not assess Ms Darmanin. I do not place any weight on Dr Roberts' evidence as going to Ms Darmanin's actual mental state at the time (since he did not review her then or later) except insofar as his evidence as an expert corroborates or confirms the conclusions of Ms Easson as to what condition a person exhibiting the symptoms she observed of Ms Darmanin might be suffering. 168 However, I did find Dr Roberts' evidence helpful in explaining the nature of the condition known as bipolar disorder (to which I referred earlier) and, in particular, his experience of the perception a lay person might be expected to have of the cognitive ability of a person of whom they were told he or she had bipolar disorder. Of necessity, Dr Roberts' evidence is hypothetical in that regard. I did not understand him to be suggesting that he was in a position to assess the Cowans' actual state of knowledge at the time, or lack thereof. Rather, I understood Dr Roberts' evidence as going to the common understanding of lay persons in relation to this disorder, based on his experience in dealing with the families of those suffering from bipolar disorder or depressive illness. Given that Dr Roberts regarded it as not common even for a lay person in a long term relationship with someone suffering from a bipolar disorder to recognise the symptoms of emerging mania, it is difficult to see how the Cowans could be expected to have done so (Ms Darmanin having resided with them only briefly). 169 Dr Roberts' evidence was that memory and concentration difficulties per se would not in his opinion render a lay person suspicious of the possibility that a person suffering from a depressive illness would have engaged in decision making in the absence of adequate consideration of the consequences of such a decision. 170 Dr Roberts observed that the nature of Ms Darmanin's condition (which he described as unstable bipolar disorder) would be expected to render the sufferer's memory of events less reliable than that of others who do not suffer from conditions impacting upon their cognitive functioning. 171 I place no weight on Dr Roberts' observation that if Ms Darmanin was performing work duties to a satisfactory standard that would be inconsistent with assertion that she was so impaired as not to understand the nature of agreements entered into by her because there is no evidence from which I could conclude whether Ms Darmanin was or was not performing her work duties satisfactorily. 172 Similarly, although Dr Roberts noted that Ms Easson did not involve acute mental health services in Ms Darmanin's case, that does not enable me to conclude anything in relation to Ms Darmanin's mental condition at the time Ms Easson saw her, without knowing more about Ms Easson's practice in that regard. 173 In summary, I consider that the medical evidence establishes that Ms Darmanin suffered from a recognised mental condition which was likely to have impaired her cognitive thought processes to a varying degree over the period from April/May 2007 onwards, that degree varying on the state of her condition at any particular time. To the extent that it appears her illness may have been in a quiescent period during that time, I accept that there may still have been subtle defects in her cognitive ability at that time. I consider that in April/May 2007 her judgment was likely to have been significantly impaired. As her condition, to all outward appearances, improved thereafter (after she responded to the medication and was physically able to attend the work place), any defects in her cognitive thought processes are likely to have been more subtle and by no means obvious to a lay person in the position of the Cowans. 174 I would thus accept that Ms Darmanin was under a disability during the period in which she made the decisions to sell the Gymea property and to build the cottage on the Cowans' property. However, whether that constitutes a special disadvantage or disability for the purposes of the Amadio doctrine of unconscionability is something I consider later. Moreover, I do not accept that the Cowans were aware of any ongoing impact Ms Darmanin's illness may have had after she appeared to have recovered from the severe bout of depression which had led to her hospitalisation in April/May 2007 (nor, indeed, is it possible to assess the level of any ongoing subtle deficits in Ms Darmanin's cognitive thought processes in that period in the absence of the kind of neuropsychological testing to which Dr Roberts referred.) (b) Credibility 175 Counsel for both sides put the credibility of the respective principal witnesses in issue. 176 Mr Ward points to the inconsistency between Ms Darmanin's evidence on various matters compared with that of persons independent of the dispute - for example, the different accounts between Ms Darmanin and the real estate agent (Mr Anastasiadis) concerning Ms Darmanin's involvement in the sale process or negotiation of commission; the difference between the evidence of the contractor (Mr Vaughan) and Ms Darmanin concerning Ms Darmanin's involvement in digging the trench; the different accounts of the builder (Mr Conn) and Ms Darmanin concerning the involvement of Ms Darmanin in giving instructions in relation to what Mr Conn saw as variations in the construction of the cottage (but which might more accurately be seen simply as requests from Ms Darmanin in relation to matters such as the additional height of the cottage, since it does not seem that there were any detailed plans of a kind from which one might have building 'variations' of the ordinary kind). 177 In respect of the digging of the trench, Ms Darmanin's explanation was that she had misdescribed the price of equipment she had operated and that what she had used on the property was a jackhammer. That seems to have been accepted by the Cowans and I draw no adverse inference from what appears to have been a mistake by someone unfamiliar with the building equipment. (It seems that the mistake occurred because Ms Darmanin had reference to the invoices she paid to hire the equipment, if I understood her correctly but in any event she described in the witness box, with gestures, what she meant in relation to the work she did.) It does, nevertheless, provide support for the conclusion that at least in the period October 2007 to the completion of the cottage, Ms Darmanin's physical efforts and outward behaviour were not as they had been in mid 2007 - dazed and stupefied and presumably incapable of operating heavy machinery. 178 The inconsistency between Ms Darmanin's testimony and Mr Anastasiadis (as to her involvement in "negotiation" of the commission) also casts no adverse reflection on Ms Darmanin because it seems to me that "negotiation" is too high a description to put on what seems in fact to have occurred (namely that Mr Anastasiadis in effect seems readily to have proffered a lower commission rate in his own interest in order to secure the listing, rather than that lower figure being a product of any spirited negotiation). If there is, and it does not seem to me having regard to Ms Darmanin's evidence implicitly accepting that she had spoken to 'her boss' there ultimately was, any inconsistency between them as to whether Ms Darmanin had referred the final purchase offer to Dr Zafiropoulos, I prefer Mr Anastasiadis' recollection on that issue as it seems more likely to accord with the evidence Ms Darmanin gave as to her relationship with Dr Zafiropolous and Mr Anastasiadis had no reason to colour his evidence. 179 The other inconsistency to which Mr Ward referred was as between Ms Darmanin's and Mr Conn's evidence in relation to the way in which certain alterations to the cottage, namely the second storey (or extension of the loft), tiling and additional kitchen window came about. The critical alteration was as to the extension to the cottage and I accept Mr Conn's evidence that it was Ms Darmanin who requested that. Ms Darmanin's suggestion that all she said was to the effect that she wanted a larger bedroom for her daughter (she being elsewhere reported to have said words to the effect "is that that all there is?") seems to me insufficient to explain why a builder would then incur costs (for which he might not be recouped) in taking it upon himself to enlarge the building, nor is there any evidence that Mrs Cowan or her husband requested the extension and no logical reason for them to do so (particularly given Mr Cowan's evidence as to the problem they had previously had with their neighbours when the caravan was on their land). 180 Mr Conn's evidence, which I accept, was that he was approached by Mr Cowan to build a cottage using the design of a kit home but that Ms Darmanin (who he said was sometimes quite aggressive - a comment not inconsistent with Ms Easson's observation as to Ms Darmanin's likely behaviour with her work colleagues) had requested variations to the loft, tiling and an extra window in the kitchen. I accept that Mr Conn understood his original instructions (admittedly from Mr Cowan not Ms Darmanin) to build a single level cottage with a loft extension (for storage). 181 The cottage as built was a two storey building with the 'loft extension' now covering the entire first floor of the cottage. Someone must have requested that additional space and I find it illogical to suggest that it was either of the Cowans who did so. I accept their evidence that they were concerned at the increased height of the building and expressed that concern to Ms Darmanin who chose to ignore it and that by the time they appreciated the extent of the addition to the building they were reluctant to enter into further confrontation with Ms Darmanin to press the issue. Ms Darmanin's greater involvement in the building work as it progressed is consistent with the instructions to alter the design of the cottage from that of the kit home in question is consistent with the timing of the alteration (and with the Cowans not immediately being aware that there was any change - Mrs Cowan saying that she was not inspecting the work every day) and the manner in which the Cowans say that Ms Darmanin did not listen to their concerns as to the height of the cottage is consistent with the airy manner in which, in the witness box, Ms Darmanin explained that choosing chandelier fittings for the cottage was just "what you do when you have bipolar" - T20. Ms Darmanin explained that the only reason why "we" could spend more money on the cottage was "because we actually saved money" (on the second hand materials) (T 19). There is no suggestion that this mirrored Mrs Cowan's thought processes or that she had any involvement in the decision to spend more money on the cottage. I accept Mrs Cowan's evidence that she was trying to assist Ms Darmanin to minimise expenditure on the cottage.

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182 The most glaring inconsistency emerges, I think, from Ms Darmanin's own evidence. On her own admission she was unable to recall much of 2007 and it was a blur to her. Her evidence is vague as to the timing and content of various conversations (including, for example, her comment that she cannot recall agreeing to pay electricity charges but must have done). Yet she purports to recall, with relative precision, the conversation in which she says it was agreed that she could occupy the cottage for the period of time it took for a notional weekly rental to equal the expenditure by her on the cottage (that being the critical conversation for the purposes of her claim) and that the cottage was to belong to the Cowans. That seems to me to stretch credibility. 183 In the absence of anything to confirm Ms Darmanin's version of events (and I do not accept that the 20 February letter does so, for reasons which I have outlined) I cannot accept Ms Darmanin's evidence on this point. It is inconsistent with the basis on which the initial offer of hospitality was put; it is inconsistent with the concerns Mr Cowan had expressed in relation to that offer, with no obvious reason as to why he would have changed his view; it is inconsistent with the deference given to Ms Darmanin's wishes in relation to the type of cottage or dwelling to be placed on the property; it is inconsistent with the fact that Ms Darmanin seems to have asserted (and been allowed to assert) a degree of control over building and fitout decisions at least during the latter part of the construction process; and it is inconsistent with the behaviour of the parties after the relationship broke down (to which I will turn shortly). 184 I think Ms Darmanin's evidence needs to be approached with caution given that (whether due to the nature of her illness or otherwise) there seems to be a tendency on her part to embellish her account of events, I refer in this regard to her assertion that a relative of the Cowans had bipolar disorder (unsupported by any evidence to that effect) and her apparent instructions to her psychologist that a 'naturopath landlord' was encouraging her to go off her medication, when there was no evidence that her 'landlord' at the time (the Cowans if this be seen as a tenancy arrangement) either was a naturopath or was encouraging her to come off her medication. The conflicting version of the circumstances in which Ms Darmanin's daughter changed schools (ie whether this was at Ms Darmanin's insistence or at Mrs Cowan's insistence) is another example. It seemed to me that Mrs Cowan's version of events in this regard was the more likely, particularly given the logical explanation by Mrs Cowan in the witness box as to why she did not support the move (it being a Steiner school and Ms Darmanin's daughter being unused to such a school - even apart from the additional cost of such a move) - T41. Ms Darmanin's version seems to be an attempt to put responsibility for her (perhaps, in hindsight, unwise) decisions onto others. 185 Mr Crossland submits, however, that I should prefer Ms Darmanin's version of events. He portrays the Cowans as having 'shepherded' Ms Darmanin out of her Gymea property and submits that the Cowans wanted the cottage on their land (T137.29). There is nothing, other than Ms Darmanin's assertion, that suggests to me that this was the case. There is no evidence that the Cowans sought to gain any benefit from the arrangement other than to assist Ms Darmanin. There was no attempt by them to rent the property out after Ms Darmanin left nor was there any suggestion that they had intended to do so or that they otherwise had need of any additional accommodation on the land for their own purposes. Further, it seems to me that had the Cowans intended there to be a permanent cottage on their land it is more likely than not (having regard to the concerns they expressed when the extended size of the cottage became apparent) that steps would have been taken to obtain any necessary approvals for the works and that they would have insisted on their own wishes being followed in relation to design and size. 186 The flavour of Mr Crossland's submissions is that there was some sort of premeditated design on the part of the Cowans to manufacture a situation whereby Ms Darmanin sold her Gymea property, built the cottage on their land and then was forced to vacate the cottage so as to give them an asset they otherwise would not have had. If that is indeed what is suggested, then I do not accept that there is any evidence to support such a conclusion. 187 Having regard to the above, on the question of credibility I find that the Cowans' version of events is the more credible and I find that the Cowans are the more reliable witnesses in their recollection of events than Ms Darmanin (whose evidence I treat with great caution). (c) Relocatability of cottage 188 A matter which was much in dispute in the hearing was whether the cottage as built is relocatable, ie whether it can physically be removed from the Glenorie property. This becomes relevant when considering what benefit it is that the Cowans are now said unconscionably to be seeking to retain. There was no expert building evidence as to this issue. 189 Mr Vaughan, the contractor who had carried out some works on the cottage and had dug the trench to which I referred earlier about which there was some dispute, expressed confidence that the cottage is relocatable though noting that the first floor would need to be removed (para 17 of his affidavit of 20 May 2010). Mr Conn, the builder, gave evidence that being a kit home the cottage was 'possibly' relocatable. In cross-examination, issue was taken with the fact that he had handwritten the word 'possibly' before swearing the affidavit (indicating some qualification or hesitation as to the position in that regard). When tested on that issue, it seemed to me that the qualification Mr Conn was making was that the design specifications (such as they were) had not included that it was to be relocatable, ie the cottage was not specifically designed for that purpose. Mr Conn's evidence was that he had not been expressly instructed that it was to be 'relocatable'. Nevertheless Mr Conn considered that it could be moved (albeit that a professional removalist might be required and that the roof might need to be taken off for that purpose). Mr Conn said that the reason it was "possibly" relocatable was because of the expense involved - nothing to do with the size or the nature of the structure (T 132). 190 As to the logistics of the removal, the cottage is resting on or attached to steel piers or railings so I understand that there is likely to be no difficulty with the lifting of the cottage onto a truck for removal. (The suggestion that the steel piers were for the purpose of avoiding flooding due to the shape of the site was rejected by the Cowans and there was no evidence to support this.) There was evidence from the Cowans that a truck had previously been able to gain access to the site (when moving Ms Darmanin's effects into or out of the cottage). 191 There is therefore no evidence that it is physically impossible to remove the cottage (and the fact that Ms Darmanin quoted a figure as to the likely cost of removal when she gave her evidence suggests that it is possible to do so). I accept the evidence of Mr Vaughan and Mr Conn and find that, on balance, it is likely that the cottage could be removed albeit at additional cost than might have been the case had it been built as originally commissioned by Mr Cowan. 192 Insofar as there is any question as to what the intention of the parties was at the relevant time, I am satisfied that it was that the cottage was to be relocatable. I accept the Cowans' version of the initial communications where that differs from Ms Darmanin's. 193 The relevance as to whether the cottage is relocatable as a matter of fact lies in the assertion by Ms Darmanin that the Cowans have gained (and will unconscionably retain) a benefit if they are not ordered to reimburse her for the cost of its construction. If the cottage remains the property of Ms Darmanin (and could be removed if she were to choose to do so) then any benefit obtained by the Cowans by reason of it being left on the property is surely a consequence of her decision to abandon it and it is difficulty to see any unconscionability arising as a result. 194 Therefore, unlike, for example, the situation in Morris v Morris, here there is a real question whether the cottage has ever become part of the Cowans' land so as to represent a benefit to them. It seems to me that the cottage is akin to the demountable building considered by Austin J in Jiwira v PIBA [2000] NSWSC 1094 (at [251]) not to be a fixture (and hence not to have become part of the land) (though I note that in that case there was more consistency between the parties in the description of the building as demountable). The cases which have considered the status of an item of property as being a fixture or otherwise seem to me to be instructive in this regard (see for example Barrett J in Georgeski v Owners Corporation SP49833 [2004] NSWSC 1096; (2004) 62 NSWLR 534 (at [56]) and Austin J in Jiwira (at [251]) as well as National Dairies WA Limited v Commissioner of State Revenue (WA) [1999] WASCA 152 (from [13])). Those cases have applied the principle as stated by Jordan CJ (with whom Davidson and Nicholas JJ agreed) in Australasian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700 (at 712-713) that:

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The question whether a chattel has become a fixture depends upon whether it has been fixed to the land, and if so for what purpose. If a chattel is actually fixed to the land to any extent, by any means other than its own weight, then prima facie it is a fixture; and the burden of proof is upon anyone who asserts that it is not; if it is not otherwise fixed but is kept in position by its own weight, then prima facie it is not a fixture; and the burden of proof is on anyone who asserts that it is.... The test of whether a chattel which has been to some extent affixed to the land as a fixture is whether it has been fixed with the intention that it shall remain in position permanently or for an indefinite or substantial period..., or whether it has been fixed with the intent that it shall remain in position only for some temporary purpose.... In the former case, it is a fixture, whether it has been fixed for the better enjoyment of the land or building, or fixed merely to steady the thing itself, for the better use or enjoyment of the thing fixed.... If it is proved to have been fixed merely for a temporary purpose it is not a fixture.... The intention of the person fixing it must be gathered from the purpose for which and the time during which user in the fixed position is contemplated.... If the thing has been securely fixed, and in particular if it has been so fixed that it cannot be detached without substantial injury to the thing itself or to that to which it is attached, this supplies strong but not necessarily conclusive evidence that a permanent fixing was intended.... On the other hand, the fact that the fixing is very slight helps to support an inference that it was not intended to be permanent. But each case depends on its own facts. (my emphasis) 195 Here, as mentioned above, the cottage rests on steel piers or railings. Although the suggestion was made in cross-examination that this was necessary as a precaution against flooding, that was plausibly denied by the Cowans and there was no building evidence to support that contention. The degree of affixation of the cottage to the land was, as I understand it, limited.

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There is no doubt that the general maxim of the law is, that what is annexed to the land becomes part of the land; but it is very difficult, if not impossible, to say with precision what constitutes an annexation sufficient for this purpose. It is a question which must depend on the circumstances of each case, and mainly on two circumstances, as indicating the intention, viz, the degree of annexation and the object of the annexation. When the article in question is no further attached to the land than by its own weight it is generally to be considered a mere chattel. But even in such a case, if the intention is apparent to make the articles part of the land, they do become part of the land. ... On the other hand, an article may be very firmly fixed to the land, and yet the circumstances may be such as to shew that it was never intended to be part of the land, and then it does not become part of the land. ... Perhaps the true rule is, that articles not otherwise attached to the land than by their own weight are not to be considered as part of the land, unless the circumstances are such as to shew that they were intended to be part of the land, the onus of shewing that they were so intended lying on those who assert that they have ceased to be chattels, and that, on the contrary, an article which is affixed to the land even slightly is to be considered as part of the land, unless the circumstances are such as to shew that it was intended all along to continue a chattel, the onus lying on those who contend that it is a chattel. (my emphasis) 197 It seems to me that the reference in the authorities to a party carrying an onus to establish that the purpose of annexation either was or was not such as to convert the chattel into a fixture is a reference to an evidentiary onus which may be imposed upon a party, depending upon the persuasive power in the particular circumstances of the case of the degree of annexation to move the court to the conclusion that the object in question either is, or is not, a fixture and thus part of the land, that is, it is not a legal onus of proof (National Dairies, at [15]).

[38]

202 The issue, before me was not framed as to whether the cottage was a "fixture". However, the considerations discussed in the above cases illustrate the difficulty in simply assuming (as the submissions for Ms Darmanin appear to do) that the placement of the cottage on the Glenorie property constituted in any real sense a benefit to the Cowans (which they could now be said to be unconscionably retaining). It is here that there is a real point of distinction between this case and cases such as Morris v Morris and Palinkas v Palinkas. 203 I find that even aside from the Council demolition notice, no benefit has been conferred on the cowans by reason of the placement of the cottage on their land. Was there a binding agreement and if so what were its terms ? 204 The Cowans deny that the arrangement reached between them in relation to the occupation of their land was one which was intended to be legally binding. 205 The arrangement was clearly reached in a social context, between friends. The very dependency Mr Crossland relies upon for the undue influence claim is predicated on there being a close domestic or social relationship. 206 There is a rebuttable presumption (being a presumption of fact) that arrangements or agreements made in such a context are not intended to have legal force. The rationale or justification for making an assumption that there is no intention to create legal relations in such a situation is that, at the time of making the alleged promise, the parties would not have regarded their arrangements in terms of legal consequences. 207 The presumption that, due to the nature of the relationship between the parties, they did not intend to create legal relations, has been applied beyond the family context to other social and domestic arrangements (for example, Coward v Motor Insurer's Bureau [1963] 1 QB 259; Buckpitt v Oates [1968] 1 All ER 1145; Parker v Clarke (at 292)). 208 In Teen Ranch Pty Ltd v Brown (1995) 87 IR 308, Handley, JA (p 310) indicated that family, social, and domestic arrangements do not normally give rise to binding contracts because the parties lack the necessary intention, referring to Balfour v Balfour [1919] 2 KB 571. 209 Aitkin LJ in Balfour v Balfour (at 578), gave as an ordinary example of the situation where an agreement between parties does not result in a contract within the legal meaning of that term the situation where there is an offer and an acceptance of hospitality. In a very real sense that is precisely the offer which was made by the Cowans in this case - that Ms Darmanin and her daughter could stay with them (albeit not in their house as there was insufficient room) for an undefined period. In arrangements of this kind it has been recognised (see for example in Balfour v Balfour the decision of Fenton Atkinson LJ) that a sacrifice might be made in reliance upon a promise on the basis simply of trust in the promisor to honour the promise of support (at 337) not because of an intention to create legally binding relations.

[42]

212 In Ermogenous v Greek Orthodox Community [2002] HCA 8; (2002) 209 CLR 95, the issue of intention to create contractual relations was considered in the following passage (at [24]): Because the search for the "intention to create contractual relations" requires an objective assessment of the state of affairs between the parties (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour) the circumstances which might properly be taken into account in deciding whether there was the relevant intention are so varied as to preclude the formation of any prescriptive rules. Although the word "intention" is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties. 213 In determining whether the presumption has been rebutted, account is taken of the subject matter of the agreement, the status of the parties to it, their relationship to one another, and other surrounding circumstances (Ermogenous v Greek Orthodox Community, at [24]). Regard is also had to the consideration for the promise(s) in question and the certainty with which the parties have expressed their agreement. In this context, Greig and Davis in The Law of Contract The Law Book Company, 1987, refer to Thomas v Hollier (1984) 53 ALR 39 as indicating that, where a promise has been made as an act of friendship, something that otherwise might be classified as adequate consideration might not be so regarded. 214 The conduct of the promisee (and the reliance placed on the promise) may also indicate an intention for there to be a legally binding obligation (as in Todd v Nicol; Wakely v Ripley). In Wakeling v Ripely the act of the plaintiff in leaving a salaried position in Cambridge on the faith of a promise to take up accommodation in Bowral, was considered by Street CJ (at 187) as being so serious that it would have been obvious to the defendants that the plaintiffs were relying upon what was considered a definite assurance and a definite agreement such that it could be inferred that there was an intention to create legal relations. 215 In a different context, the decisions of Baulkham Hills Private Hospital Pty Limited v G R Securities Pty Limited (1986) 40 NSWLR 622 and Australian Broadcasting Corporation v XIVth Commonwealth Games Limited (1988) 18 NSWLR 540 also indicate that the magnitude, subject matter or complexity of the transaction or dispute may in appropriate cases lead to an inference that the parties' common intention was not to be bound by any contract or agreement until a formal document was executed. 216 Here, Ms Darmanin sold her existing home in the knowledge that there had been an offer of accommodation on the Glenorie property (in a dwelling to be provided at her expense). However, it seems to me reasonable to infer on the evidence that Ms Darmanin might have sold the property anyway (despite her assertion to the contrary) given the impact her incapacity at the time may have had on her ability to continue working and meeting her mortgage repayments. 217 There was nothing in writing and no party sought legal advice. The question which, on balance, I find to have made to the Cowans by Ms Darmanin in around September 2007 as to whether their offer was "still open" is inconsistent with an understanding on the part of Ms Darmanin that in mid 2007 there was any intention to be legally bound by an acceptance of that offer. It is instructive that it was not until the parties were seeking to agree on arrangements following the breakdown of the relationship that any need for legal advice seems to have been considered (and even then Mrs Cowan was writing in terms of the provision of a statutory declaration as "security" for the then proposed arrangement, not a contract as such). 218 As to the question of certainty, it is suggested by Greig and Davis in The Law of Contract (at 197) that the weight of the consideration (in the form of the detriment or disadvantage to the plaintiff) may compensate for a lack of clarity in the arrangements, where the substance of the promise can be ascertained, but that as the substance of the agreement becomes difficult to identify with certainty then the more likely it is the arrangement will fail for want of an intention to create legal relations (see also Carter J., Peden E and Tolhurst G., Contract Law in Australia, 5th end, Butterworths, 2007, at [8-04]). 219 The present case is unlike that of Palinkas where an intention to create legal relations was found in a domestic arrangement. There the arrangement was put into writing and the terms of certain recitals, coupled with the overall structure of the agreement as a duly executed deed and the contents of its operative parts, were such that his Honour considered it plain beyond argument that both parties intended to make a legally binding and enforceable contract at the time when they executed the deed (one of the terms of the document stated that the defendant "intends as far as possible that this agreement shall be binding upon his heirs, executors and assigns") (at [70]). Here the arrangement was far more informal. 220 As to the informality of the arrangement, I note that in R T & Y E Falls Investments Pty Limited v The State of New South Wales & ors [2001] NSWSC 1027, Palmer J accepted that, as a general rule, when parties had been negotiating a substantial commercial transaction in the common expectation that at some stage a formal contract would be brought into existence, the court should be reluctant to find a common intention that a binding informal contract should come into existence at any time prior to the execution of the formal document; especially when the terms of the alleged informal contract would have to be pieced together or implied from various conversations and from selective extracts from correspondence. That factor is not the case here where no negotiation in relation to the terms of the contract seems to have taken place. Nevertheless, it is relevant to note his Honour's observation that commonsense has a part to play in the court's enquiry (at [53]). 221 Subsequent conduct or communications may be considered when considering whether a binding agreement has been reached. So, in Film Bars Pty Limited v Pacific Film Laboratories Pty Limited (1979) 1 BPR 9251, McLelland J noted that in determining whether the communications between the parties constituted a contract, the court was not confined to a consideration of the terms or manner in which the communications were made, but could interpret them by reference to the subject matter and surrounding circumstances, (including the nature of and relationship between the parties; previous communications between the parties; and standards of reasonable conduct in the known circumstances); and that it was legitimate to refer to and take into account subsequent communications between the parties. 222 His Honour there noted that the probative value of subsequent communications must be found in the light they throw on the proper interpretation of the earlier communications alleged to constitute the contract and said that, perhaps more commonly, subsequent communications might be legitimately used against a party as an admission by conduct of the existence or non-existence as the case may be of a subsisting contract, referring to Barrier Wharfs Limited v W Scott Fell & Co Limited (1908) 5 CLR 647. 223 The parties' conduct after January 2008 does not seem to me consistent with there being any understanding that a binding legal agreement had been reached. There was no evidence of any suggestion that, when asked to leave, Ms Darmanin asserted a legal right to remain on the premises. More critically, in my view, Ms Darmanin's request that the Cowans buy the cottage from her is inconsistent with her present assertion that property in the cottage was to be the Cowans' (whether immediately, subject only to her right of rent free accommodation, or in due course).

[52]

(a) as at the time that Ms Darmanin spent the 4/5 days in around May 2007 with the Cowans (at around the time the initial offer of a temporary place of accommodation was made by Mrs Cowan) there is no doubt that the Cowans knew that Ms Darmanin was suffering from a depressive illness serious enough that she was unable to care for herself or her daughter. Although there is no evidence to suggest that they were aware of the impact that illness would have had on her judgment (or indeed that the illness would persist even after Ms Darmanin had recovered from her zombie like state) it seems safe to assume that if a reasonable person formed the view that Ms Darmanin was incapable of caring and cooking for herself and her child (and was in a dazed and stupefied or zombie-like state) then at least at that stage her judgment was likely to be impaired and she would be unable to look after her own financial or other affairs. I am not, however, convinced that this remained the position after Ms Darmanin changed her medication and appeared to have recovered from that bout of depression. In particular, I accept Dr Roberts' evidence to the effect that, to a lay person without considerable experience of living with someone suffering from bipolar disorder, it would not be expected that they would appreciate that there could be subtle cognitive defects even in periods of quiescence. That becomes relevant when considering the time at which Ms Darmanin made the particular decisions which have led to the present situation and entered into the arrangement in relation to the construction of the cottage on the Glenorie property (a final decision as to which may not, it seems to me, be said to have been made until much later - at least in the sense that up until the point at which Ms Darmanin, with Mrs Cowan's assistance, committed to the construction of the cottage it would have been open to Ms Darmanin to take a different course with the net proceeds of sale of the property). Accepting Mrs Cowan's evidence that Ms Darmanin had made some enquiries as to the alternative options open to her in relation to rental accommodation, this is inconsistent with any firm arrangement at an earlier point, as pleaded.

[59]

(h) I do not accept that the arrangement had no benefit for Ms Darmanin. It was one pursuant to which she had the benefit of accommodation for herself and her daughter, having discharged her financial obligations in relation to the Gymea property, and had the benefit of Mrs Cowan's assistance in relation to the care of her daughter. I also find that she had the benefit of retaining title to the dwelling built and she was able to remove and sell it. The fact that the arrangement proved to be short term in duration does not mean that it was one that was of no benefit to Ms Darmanin. Rather, it seems to me that the arrangement was one which had little or no benefit to the Cowans. 234 The issue as to what benefit was gained from the expenditure (in circumstances where there is now a demolition order in respect of the property) was addressed in paragraph 29 of the pleading, it being alleged that even if the residence was built illegally and must be demolished (such that Mr Cowan does not ultimately benefit from the expenditure of Ms Darmanin - an apparent admission that there is no ultimate benefit if the cottage is removed), it is unconscionable that the Cowans should not pay for the cost of construction of the cottage because, in addition to the matters pleaded in paragraph 28(a)-(h), it is alleged that Mr Cowan knew at the relevant time that there was a reasonable risk that the construction was unlawful and would have to be demolished. I am not satisfied that the evidence goes that far. The Cowans were concerned about the height of the building during the course of construction but mainly from the point of view of the neighbours. There is nothing to show that they appreciated (or ought to have appreciated) that there was a risk of demolition of the cottage or that they knowingly assumed that risk (any more than Ms Darmanin appears to have been on notice of and accepted that risk). 235 In submissions, Mr Crossland explained the unconscionability claim as being akin to a claim of unjust enrichment (not dependent on the state of Ms Darmanin's mental health) in reliance on Morris v Morris (a case described by Young CJ in Eq (as his Honour then was) in Henderson v Miles (No 2) [2005] NSWSC 867, in the context of considering the remedy there granted, as a 'one-off case' (at [29])). 236 In essence it is said that Ms Darmanin has been (wrongly, unfairly or unconscionably) put in the position that she has lost her "life savings". By this, it seems that Mr Crossland is referring to her equity in the Gymea property and is assuming that the cottage itself has no residual value - a proposition that ignores the evidence that the cottage is or is possibly be relocatable albeit with some difficulty and at additional cost with the potential need to remove the top floor. (Ms Darmanin's evidence was that she had been told it would cost over $30,000 to remove the cottage (T 22.13) but it is not clear to me that there has been any real attempt to place a value on the cottage if removed, as opposed to demolished). 237 The unfortunate fact that Ms Darmanin may have lost part or all of the funds expended by her in the construction and fitout of the cottage (if the resale value of the cottage is reduced or if the cottage cannot be sold or is required to be demolished) does not of itself establish a claim for equitable relief on the basis of some general principle of unconscionability. 238 As recognised in a number of cases, while unconscionability as a concept underlies the basis for many instances of equitable relief, it does not operate wholly at large (Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199) and does not create rights merely on the grounds of what is thought fair (Muschinski v Dodds (1985) 160 CLR 583). Instead what is required is that a plaintiff point to the reason why the impugned conduct (whether that be the reliance upon or assertion of strict legal rights) is said to be unconscionable (Tory v Tory [2007] NSWSC 1078, per White J, at [58]). 239 In this case, the alleged unconscionability of the Cowans not reimbursing Ms Darmanin for her expenditure on the cottage arises, it is said, because Ms Darmanin's expenditure was based on the representation and invitation (or offer) of the Cowans that she would be permitted to live on their property for 6 or 8 years (T 141) or a promise that Ms Darmanin could live there for a long period of time (T 144.48). It is alleged that Ms Darmanin relied on that promise (to the knowledge of the Cowans). It is further said that (though this is not pleaded) the Cowans could not be sure that the promise would be fulfilled because relationships do break down; something of which Ms Darmanin would surely equally be on notice. 240 Mr Crossland submits (and I agree, at least to the extent that the cause of the breakdown is not wilful misconduct or fraud on the part of Ms Darmanin) that it is irrelevant why the relationship between the parties broke down. (Mrs Cowan's evidence was that the cause of the breakdown was Ms Darmanin's sexually provocative conduct towards her husband.) 241 It is submitted by Mr Crossland that, but for the promises or representations, Ms Darmanin would still have her money or would have used it for something else. (That implicitly accepts that irrespective of the promise, Ms Darmanin would have sold her house.) It is, of course, entirely possible that Ms Darmanin would have lost her money on a number of pursuits, ill-advised or otherwise - Ms Easson's report referring to an instance where Ms Darmanin had apparently permitted an acquaintance in Thailand to have access to her credit card details. However, what other use Ms Darmanin might have made of the money seems to me to be beside the point. What she in fact did with it was to invest in the construction of a cottage which may not now have a value commensurate with the cost of its construction and for which Ms Darmanin appears now to have no use or no ability to use. 242 Given that much weight was placed on Morris v Morris (it being the only case cited in submissions for the unconscionability claim) it is useful to recall the facts of that case (which, in certain critical respects, seem to me to be distinguishable from the present case). There, the father had contributed $28,000 towards an extension of his son's house on the basis that the father would continue to live in the house as extended; the relationship between the son and his wife broke down and the son left the house; then the relationship between the father and his daughter-in-law broke down and the father was unable to continue to live in the property. The issue was whether the father was entitled to any, and if so what, proprietary interest in the property. McLelland J found that the father did have an equity arising from the facts before him but that this equity would be satisfied by the imposition of an equitable charge for $28,000 plus interest as from the date of commencement of the proceedings. 243 After finding that it was not open on the facts to infer an actual intention that a share of the property was to be held on trust in favour of the father, McLelland J said (from 64):

[60]

However, in my view wider equitable principles operate in the present case. The plaintiff spent money on the defendants' property in the expectation, induced or encouraged by the defendants that he would be able to live there indefinitely as a member of their family. This expectation has been defeated by the occurrence of events which were not in contemplation when the money was spent and as a result of which any subsisting right of residence by the plaintiff in the property is now of no practical consequence. In my opinion, on the facts of this case, it would be unconscionable and inequitable that the defendants should now retain the benefit of the expenditure by the plaintiff of his money on their property free of any obligation of recoupment to him. Consequently an equity arises in favour of the plaintiff and the court must determine how in all the circumstances justice requires that that equity be satisfied. What a plaintiff in such a case as this should in justice receive will not necessarily correspond with what, when the relevant expenditure was made, he expected to receive. 244 Interposing there, I accept that Ms Darmanin spent money on the construction and fitout of the cottage in the expectation, which was not (at least up to a point - ie up to the time at which the size of the cottage was being increased at Ms Darmanin's request) discouraged by the Cowans and which arose from an offer made by one or both of the Cowans that she would be able to live in the cottage on their land with her daughter for some time ("a few years"). I do not accept that the time was identified with the precision suggested by Ms Darmanin (a factor that makes it difficult to accept that there was a binding contract between the parties in relation to the use of the cottage on the land). Nor do I accept that the cottage was ever intended to become the Cowans' property. 245 Relevantly, I find that the expenditure by Ms Darmanin was on a dwelling to be located on the Cowans' land but which was never intended by the parties to be permanently on the land. It is therefore difficult for it to be seen as money spent on an improvement of their land (even apart from the fact that it is currently the subject of a demolition order from the Council) since it would in law seem to be in the nature of a chattel placed on the land. (While the fact that the cottage was built on steel piers and had from time to time been referred to as portable may not have been sufficient of itself to lead to the conclusion that it was not intended to become part of the land, those matters coupled with the parties' conduct leads me to the conclusion that it was never intended as an improvement to the land.) The cottage has not been shown to be incapable of removal; indeed the opposite is the case. The presence of the cottage cannot in my view be seen to be a benefit which the Cowans are (unconscionably) retaining if it is left on the land by Ms Darmanin. 246 In Morris v Morris, McLelland J went on to consider and apply a principle analogous to the general equitable principle stated in Chalmers v Pardoe (at 681, 682), where, on the facts of the case, the Privy Council considered that it would be against conscience that the defendant should retain the benefit of the buildings erected by the plaintiff on the defendant's land so as to become part of that land without repaying to the plaintiff the sums expended in their erection. In Chalmers v Pardoe, the Privy Council had said:

[61]

There can be no doubt upon the authorities that where an owner of land has invited or expressly encouraged another to expend money upon part of his land upon the face of an assurance or promise that that part of the land will be made over to the person so expending his money, a court of equity will prima facie require the owner by appropriate conveyance to fulfil his obligation; and when, for example for reasons of title, no such conveyance can effectively be made, a court of equity may declare that the person who has expended the money is entitled to an equitable charge or lien for the amount so expended. ... It was said in Plimmer v Wellington Corporation (1884) 9 App. Cas. 699, 714 P.C. that the court must look at the circum stances in each case to decide in what way the equity can be satisfied. 247 McLelland J noted that that principle had been applied in a great variety of situations and considered that the assurance or promise to the plaintiff in the case before his Honour (of an indefinite right of residence in the defendants' property) was the operative equivalent of the assurance or promise to make over part of the land referred to in the extract from Chalmers v Pardoe. 248 Morris v Morris, has been referred to (see for example Giumelli v Giumelli, at [31]) or applied (see Talevski and Anor v Talevski and Anor [2007] NSWSC 945, at [37]) in situations where as to where a benefit has been conferred on the faith of a promise or expectation engendered by the defendant that the plaintiff would obtain an interest in land. As to any entitlement to relief based on promissory estoppel, in Henderson v Miles, Young CJ in Eq (as his Honour then was), made reference to the decision in Morris v Morris when determining what in the circumstances of the case was an appropriate remedy. Although in Morris v Morris the claim was not expressed to be on the basis of a promissory estoppel as such, such a foundation would seem to have been available on the facts of the case, it having been found that an expectation had been created and relied upon by the plaintiff in that case and McLelland J having expressly relied upon the decision of Chalmers v Pardoe. I do not read his Honour's judgment as supporting a conclusion that Morris v Morris provides a basis upon which a plaintiff can establish an entitlement to a remedy simply on the basis of a general principle of unconscionability or unfairness at large (as seemed to be the contention put forward by Mr Crossland at the outset).

[71]

The cases do show that outside those four areas there are situations where equity will raise what I might call a quasi constructive trust to prevent there being an unconscionable windfall. By "unconscionable windfall" is meant a situation where the parties could never have contemplated when they entered into an arrangement that should that arrangement cease, without attributable blame on any of them, one party would end up with a profit. That phrase, of course, comes from a paraphrase of what Deane J said in Muschinski v Dodds (1985) 160 CLR 583 at 620; and see Baumgartner v Baumgartner (1987) 164 CLR 137, especially at 157 where there was some discussion about these words "attributable blame". and referred to "the granny flat cases" as another set of examples where equity would give relief ( Malsbury v Malsbury (1979) 1 BPR 9550 and Morris v Morris ). In Pennie v Pennie , Pembroke J had regard to Morris v Morris as setting out the principles according to which protection would be afforded to a party who had expended money on another party's property. In that case, his Honour found that there was no "joint venture" of the kind for which the defendants had contended and said that neither the plaintiff nor his son had any intention that the son would have a beneficial interest in the property. (His Honour also referred to the risks involved in spending money on another's property.) 260 Here, the difference as I see it is that the money Ms Darmanin spent was on a building that was always intended to be her property, albeit one located for a time on the Cowan's land. 261 Accepting that there was a joint relationship (though not a joint endeavour as such) which has broken with down without attributable blame (as that expression is understood in the authorities referred to above), and that Ms Darmanin incurred expenditure on building a cottage on the faith of the promise of rent-free accommodation on the land on which it was placed, I am nevertheless not satisfied that any benefit has been conferred on the Cowans that was not intended by the parties to be enjoyed by them - what they have is a temporary structure on their land which I find was only ever intended to be temporary or to be relocatable (and which the Council has now required to be demolished).

[73]

264 McLelland J did not undertake a detailed consideration or assessment of whether there was in fact a benefit conferred by reason of the contribution of the $28,000 for the value of the extension seemingly as it was plain that an extension of a permanent nature to the main home on a property will benefit the owners of such a home in real financial terms. Indeed in those cases cited above which have considered whether there is an equitable entitlement on the basis of the expenditure of a sum towards some joint relationship or on the faith of a promise of an interest in land, the nature of the expenditure (that is the transfer of funds or application of funds, or purchase of equipment or stock to be applied in a joint business or benefit conferred (such as a proprietary interest for no or an undervalue) was such that it could be plainly seen that a contribution had been made amounting to a benefit which could be said to reside in the hands of the defendant (so, for example, in Muschinksi, the plaintiff had paid the purchase price for the property in question, in Baumgartner v Baumgartner (1987) 164 CLR 137 the relevant contribution was payment towards the purpose price of property, in Morris v Morris, the contribution was a sum of money which was applied to the improvement of a house, in Kriezis, the contribution was contribution of funds to the acquisition of a home, in McKay v McKay and Sirtes v Pryer [2005] NSWSC 1082 the contribution was a transfer of an interest in land and in Taylor v Streitcher, the contribution, like Morris v Morris, was the expenditure of money to make improvements to a house that was to be shared between the plaintiffs and defendants). 265 In this case it is difficult to find that the Cowans, by reason of the expenditure of Ms Darmanin, have accepted or are seeking to retain any benefit at all in circumstances where (as I have found) it was never intended that the cottage would become the property of the Cowans or would be a permanent fixture on their land (unlike the promises of an entire interest in the improved land in the cases of Morris v Morris and Taylor v Streitcher, where the failure in the parties' relationship resulted in a retention of such a benefit earlier than was contemplated by the parties). It seems to me that this is the result irrespective of whether the construction of the house amounted to an illegal construction. (In other words, if the cottage has at all times remained Ms Darmanin's property and she has chosen simply to leave it on the property because it will cost her too much to remove and she has no where to put it, any benefit then conferred on the Cowans results not from the initial arrangement but from Ms Darmanin's later decision, and that does not produce any unconscionability in my view.)

[74]

266 Ms Darmanin did not expressly plead an entitlement to relief on the basis of there being an unjust enrichment of the Cowans at the expense of Ms Darmanin though this was said to be akin to the claim of unconscionability as pleaded. The authors of Mason & Carter's Restitution Law in Australia Butterworths, Sydney, 2008, at [2904], (and see also the decision of Weinberg J in Lactos Fresh Pty Ltd v Finishing Services Pty Ltd (No 2) [2006] FCA 748, at [111]) refer to the degree of specificity of the pleadings required properly to claim an entitlement to restitution on the basis of unjust enrichment. In any event, even if the claim is founded on unjust enrichment it cannot be said that the existence of the cottage on the Cowans' land could truly enrich the Cowans given the current demolition order, nor does there seem to be any free acceptance by the Cowans of a benefit conferred on them which might support an unjust enrichment claim of that kind. Rather, the Cowans appear to have been left with the cost of demolition of Ms Darmanin's property which she has chosen not to remove from their land. 267 I find that the Cowans allowed the construction of the cottage on their land on the basis that it would be able to be relocated. The Cowans are not asserting a right to the cottage. The inability of Ms Darmanin to realise the asset resulting from her expenditure arises from her decision not to remove the cottage (and any additional cost in its removal arises from her decision to build a larger cottage on the property). (While there might have been a basis on which Ms Darmanin may have had a claim for relief arising out of the detrimental reliance by her on the Cowans' promise (so as to enforce the promise of a rent-free tenancy for some time to accord with the promise made to her), that is not what she has sought and it suffers from the lack of certainty as to the time of such occupation. In any event no such relief would now be available in light of the Council's demolition order. Whatever the position in that regard, on the claim of unconscionability as brought it does not seem to me that there is any unconscionability where the Cowans have not obtained (and are not seeking to retain) any benefit as a result of the acceptance by Ms Darmanin of their offer of assistance. 268 Accordingly, the unconscionability claim fails.

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(ii) Contractual claim 269 The first way in which relief is sought on the basis of the alleged contract is under the Contracts Review Act. The second way in which relief is sought on this claim is on the basis of unconscionability in the Amadio sense. The third way in which this claim is put is on the basis of undue influence. 270 Before turning to these matters, I note that, to the extent that each is predicated on there being a binding contract in fact place, the claim will necessarily fail having regard to my finding that there is no binding legal contract. Nevertheless, even though so pleaded, it is not apparent that the second and third ways in which Ms Darmanin's contractual claim is based are necessarily dependent on there being a binding legal contract. Contracts Review Act 271 Under the Contracts Review Act, the court may grant relief in respect of unjust contracts where the court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made. However, it is necessary that there be a contract in order to enliven the Court's jurisdiction. Allsop P and Young JA (with whom Sackville JA agreed) said in Ford by his Tutor Beatrice Ann Watkinson v Perpetual Trustees Victoria Limited [2009] NSWCA 186; (2009) 75 NSWLR 42 said (from [91]): There is no definition of the word "contract" in the Contracts Review Act . In his work The Law of Unjust Contracts (1982, Butterworths), the late Professor J Peden (who prepared the Report on Harsh and Unconscionable Contracts and the draft Bill) commented on this omission (at p 105). He said that the scope of the Act depends upon the common law meaning of contract. The Act, of course, also extends to an arrangement consisting of an inter-related combination or series of contracts considered as a whole: s 15. Professor Peden included in the meaning a contract formed, but voidable by reason of fraud, illegality, mistake or lack of capacity. We agree with this analysis. There appears, however, to be no basis to apply the Act to circumstances where there is no contract formed . Here, the only basis for the contract of loan and the mortgage was the signing by Mr Ford of the documents in question. The success of the plea of non est factum means that there was no signature. Thus, there was no relevant contract for the purposes of the Contracts Review Act . (my emphasis)

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272 I have found that there is no binding agreement. This disposes of the Contracts Review Act claim. Had I been of the view that there was a contract, I would nevertheless not have found it to be unjust for the purposes of the Act. 273 The matters to which, pursuant to s 9(2) the court is to have regard, in determining whether a contract is unjust, include whether there was any material inequality in bargaining power; whether or not the contract provisions were the subject of negotiations; whether or not it was reasonably practicable for the parties seeking relief to negotiate for the alteration of any of the provisions of the contract; whether or not the provisions of the contract imposed conditions with which it was reasonably difficult to comply or which were not reasonably necessary for the protection of the legitimate interests of any party to the contract; and the extent, if any, to which the provisions of the contract and their legal and practical effect were accurately explained by any person to the parties seeking relief and whether or not that party understood the provisions and their effect. However, as noted by Einstein J in Agricultural and Rural Finance Pty Ltd & Anor v John Edward Atkinson & Ors [2010] NSWSC 635, the mere fact that a party to a contract can point to circumstances that fall within the words of one or more paragraphs in s 9(2) of the Act does not mean that there is an arguable case for relief under the Act, his Honour there citing Hogan v Howard Finance Limited (1987) ASC 55-594 at 57, 539 (Hope JA, Street CJ agreeing); Australian Guarantee Corporation v McClelland (1993) ASC 56-230 at 58, 389). 274 In addition, s 9(1) provides that the court must have regard to the public interest and to all the circumstances of the case (West v AGC (Advances) Ltd (1986) 5 NSWLR 610, per McHugh JA, at 621). 275 In Riz v Perpetual Trustee Australia Ltd (2008) NSW ConvR 56-198; [2007] NSWSC 1153, at [51], in a summary later approved by Campbell JA in Kowalczuk v Accom Finance Pty Ltd (2008) 252 ALR 55, at [87], Brereton J noted that there are two questions to be considered:

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The first is whether the contract was unjust in the circumstances in which it was made, having regard to the factors referred to in s 9. This is a conclusion of fact, albeit one of ultimate fact involving a broadly based value judgment [ Antonovic v Volker (1986) 7 NSWLR 151 at 154-155 (Samuels JA, Kirby P agreeing); Beneficial Finance Corporation Ltd v Karavas (1991) 23 NSWLR 256 at 270E (Samuels JA); Perpetual Trustee Company Ltd v Khoshaba [2006] NSWCA 41 at [34]-[40] (Spigelman CJ), at [106]-[111] (Basten JA)]. The second, which arises only if the first is resolved in the affirmative, is whether any and if so what relief should be granted; this involves the exercise of a judicial discretion [ Khoshaba at [34]-[36] (Spigelman CJ), at [109] (Basten JA)]. 276 As to the first of those questions, I note that in West v AGC (at 620), McHugh JA recognised that a contract can be unjust because of the way it operates in relation to the claimant or because of the way in which it was made or both. His Honour contrasted "substantive injustice", arising because the terms of the contract or its consequences or effects were unjust, with "procedural injustice", arising because of the unfairness of the methods used to enter into the agreement (though recognizing that there could be both substantive and procedural injustice). At 621, his Honour observed that a contract could be "unjust" even if it not unconscionable, harsh or oppressive. 277 Was there any procedural injustice in this case? The pleading adverts to the lack of independent advice given to Ms Darmanin at the time of entry into the alleged agreement (mid 2007) and to the fact that the Cowans did not advise Ms Darmanin to obtain such advice. (Nor, however, did the Cowans obtain any independent advice, from which I would infer that they were equally not cognisant of any need to do so.) 278 There does not, however, appear to have been any conduct on the part of the Cowans aimed at preventing Ms Darmanin (had she wished to do so) from seeking advice from others in relation to the arrangements in question and, in relation to the sale of the Gymea property Ms Darmanin had advice from an experienced real estate agent in relation to the sale and had had the opportunity to obtain advice from her employer. Although Ms Darmanin complained that she had entered into the sale under pressure I am not satisfied that this was the case. In relation to the construction of the cottage, I note, however, Ms Darmanin's evidence that "lots" of people had warned her against the transaction (although it is not clear other than Ms Easson - who had warned her in November it seems that this was an 'unsafe thing to do' - T86, who those may have been or when those warnings were given). There was no evidence of any unfair methods employed by the Cowans to cause Ms Darmanin to enter into the arrangements and I do not accept that they encouraged or exploited any dependence by Ms Darmanin on their emotional or other support in order to procure her to enter into the arrangements. Insofar as the lack of a written contract is relied upon, it seems to me that the Cowans were equally at a disadvantage in that regard. 279 I am therefore not satisfied that there was any relevant procedural injustice in this case. 280 Was there any substantive injustice? 281 In Kowalczuk, Campbell JA noted that s 4(1) provides a non-exhaustive definition of "unjust" as including unconscionable, harsh or oppressive, and that injustice was to be construed in a corresponding manner. 282 For Ms Darmanin, reliance seems to be placed squarely on the asserted improvidence of the transaction, that improvidence lying in the fact that the arrangement left Ms Darmanin in a position where she had no substantial assets and was vulnerable to eviction. It is alleged that the arrangement had little or no benefit for Ms Darmanin. 283 Improvidence is relevant to determining whether a contract is unjust under the Contracts Review Act. In Perpetual Trustees Vic Ltd v Bodiroza [2009] NSWSC 861, Hulme J took into account the improvidence of the impugned transaction in that case as a factor contributing toward the unjustness of the contract (at [107]) and found that the transaction was so obviously improvident as to lead to the conclusion that the defendant cannot have entered into it with an of appreciation of what was involved (at [101]) (see also Mighell and Anor v Gargoura and Ors [2009] NSWSC 248, at [61]; Frederick John Jones v Jennifer May Moss [2007] NSWSC 969, at [86]; Mizzi v Reliance Financial Services Pty Ltd and Ors [2007] NSWSC 37, at [46]; Pasternacki and Solka-Pasternacki (as Executors of the Estate of the Late Mary Nagy) v Correy [2000] NSWCA 333 where the improvidence of the impugned transaction was also relevant to the court's assessment of the unjustness of the contract). 284 As noted earlier, the point to which the court must look, when determining whether a contract is unjust within the meaning of the Act is the time at which the contract is made (s 7(1) referring to in the circumstances relating to the contract at the time it was made) as reinforced by s 9(1) (Elders Rural Finance Ltd v Smith (1996) 41 NSWLR 296 per Mahoney P at 297). Therefore the fact that the arrangement has proved to be disadvantageous for Ms Darmanin does not of itself mean that it was unjust at the outset (though if this was a reasonably foreseeable outcome that could be taken into account). McHugh JA in West v AGC said at 620:

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…the court may have regard to any circumstance existing at the time of the contract whether or not a party was aware of that circumstance. But the court cannot have regard to any injustice arising from a circumstance that was not reasonably foreseeable at the time when the contract was made . (my emphasis) 285 At the time the agreement is alleged to have been entered into, in mid 2007, Ms Darmanin was in a position where there seems to have been a real doubt as to her ability to continue to meet mortgage repayments (caused by the fact that she was in a zombie-like state and unable to work or care for herself or her child). In those circumstances the decision to sell her Gymea property and discharge her debts would appear to have been within the realm of prudent financial decisions and did benefit Ms Darmanin in the sense that she discharged her debt and obtained assistance for herself and her daughter. 286 What she did with the proceeds of sale (at a much later time, I might add) was to convert them into the asset comprised by the cottage. I accept that this part of the arrangement (particularly in the absence of a written agreement) was one that left her vulnerable to some extent to eviction (though any tenancy arrangement to a lesser or greater degree would have that risk and this submission does not take into account any equitable rights Ms Darmanin might have obtained to remain in the cottage on the land). However, it seems to me that any real improvidence arises, it seems to me, in the failure to consider what would happen when and if the period of occupation came to an end (namely how and to where the cottage was to be removed and/or whether it would be readily able to be sold at a price that would leave Ms Darmanin with funds for the future. (The fact that Ms Darmanin now seems unable from a practical point of view herself to use of the cottage does not mean that it is of no value since it is by no means apparent that it could not be sold to a purchaser willing to move it to another location). 287 In considering the consequences or effects of the agreement, it is also appropriate to take into account the position of the Cowans, for whom there were also disadvantages arising from the arrangement (in terms of the inevitable intrusion on their privacy on the land and the restriction on their freedom to use part of the land for so long as Ms Darmanin remained there). They have also been exposed to the cost of removal of the cottage and/or any action taken by Council in relation to the cottage. 288 In Perpetual Trustee Company Limited v Albert and Rose Khoshaba [2006] NSWCA 41, the Court of Appeal had regard to the purpose for which a particular contract was entered into as a relevant circumstance when considering ss 7 and 9 of the Act. (Here it seems to me to be clear that the purpose of the arrangement was to provide assistance to Ms Darmanin and nothing else.) Spigelman CJ at [76] said:

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293 Had I been satisfied both that there was a contract and that it was unjust, it would not follow that relief would automatically be given. That would have depended on the answer to the second of the questions posed in Riz. In the present case, had the question of relief arisen I would have considered that the appropriate relief was to do no more than to make provision for reasonable notice to be given to Ms Darmanin to enable her to remove the cottage (so as to allow her a proper opportunity to realise the value remaining in the asset by either locating suitable other land to which to remove the cottage or a prospective purchaser for the cottage). Amadio unconscionability 294 The jurisdiction of the court to set aside transactions on the basis of unconscionability has been well established and has been set out in a number of High Court decisions (see for example the decisions of Deane and Mason (as his Honour then was) JJ in Commercial Bank of Australia Ltd v Amadio; Louth v Diprose [1992] HCA 61; (1992) 175 CLR 621 per Deane and Brennan (as his Honour then was) JJ; Bridgewater v Leahy [1998] HCA 66; 194 CLR 457; 158 ALR 66; 72 ALJR 1525; Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 214 CLR 51). 295 The term "unconscionable" is used as a description of various grounds of equitable intervention to refuse enforcement of or to set aside transactions that offend equity and good conscience (Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd, at 72 - 73). Reference to the type of unconscionability that can justify equity's intervention to set aside a transaction, as was done in Amadio, has since been referred to as "unconscionability in the Amadio sense" (see for example the decision of Beazley JA in Elkofairi v Permanent Trustee Co Ltd [2002] NSWCA 413, at [61]; Graham Evans Pty Ltd v Stencraft Pty Ltd [1999] FCA 290, at [83]; Australian Competition and Consumer Commission v Oceana Commercial Pty Ltd [2004] FCAFC 174, at [176]; Crowe v Commonwealth Bank of Australia [2005] NSWCA 41, at [54]). 296 As explained by Deane J in Amadio (at 474), the jurisdiction of courts of equity to relieve against unconscionable dealing was developed from the jurisdiction which the Court of Chancery assumed, at a very early period, to set aside transactions in which expectant heirs had dealt with their expectations without being adequately protected against the pressure put upon them by their poverty (see for example O'Rorke v Bolingbroke (1877) 2 App Cas 814, at 822). 297 The doctrine of unconscionability (in the Amadio sense) is concerned with the setting aside of transactions where unconscientious advantage or use has been taken by one party of a special disadvantage suffered by the other. In such situations, equity intervenes not necessarily because the complainant has been deprived of an independent judgment and voluntary will, but because that party has been unable to make a worthwhile judgment as to what was in the best interests of that party (Louth v Diprose, per Brennan J, at 626) and the party benefiting from the transaction has taken unconscientious advantage of that situation. 298 In Louth v Diprose, Brennan J (as his Honour then was) stated (at 626): The jurisdiction of equity to set aside gifts procured by unconscionable conduct ordinarily arises from the concatenation of three factors: a relationship between the parties which, to the knowledge of the donee, places the donor at a special disadvantage vis-a-vis the donee; the donee's unconscientious exploitation of the donor's disadvantage; and the consequent overbearing of the will of the donor whereby the donor is unable to make a worthwhile judgment as to what is in his or her best interest ((4) Commercial Bank of Australia Ltd. v. Amadio [1983] HCA 14; (1983) 151 CLR 447, at pp 461, 462, 474-475, 489; Blomley v. Ryan (1956) 99 CLR362, at p 415.). A similar jurisdiction exists to set aside gifts procured by undue influence.

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303 In Lopwell Pty Ltd v Clarke and Ors [2009] NSWCA 165, Macfarlan JA (with whom Ipp and Campbell JJA agreed) said: [47] It is clear from the authorities cited above (see [42-45]) that a relevant "special disability" need not arise out of "sickness, age, sex, infirmity of body or mind, drunkenness [or] illiteracy" (these being some of the examples given by Fullager J in Blomley v Ryan : see [42] above). Complete dependence upon a trusted adviser for financial advice can be just as much a disability for this purpose as the emotional dependence in Louth v Diprose and Bridgewater v Leahy. The question to be answered is whether, by reason of their total reliance upon an adviser who was, unbeknown to them, not independent, the Clarkes were not in a position to protect their own best interests. (my emphasis) 304 The position of the disadvantaged party relative to the ascendant party may also be relevant (see for example Deane J in Amadio, where his Honour indicated that the determination of whether there was a special disability is best approached by a comparison of the relative positions of the parties, at 476). In the present case the parties were all private individuals, and I consider that the Cowans were not motivated by commercial or personal gain, the transaction being one entered into in the context of a situation where they had intended to do no more than assist Ms Darmanin. None of the parties had legal advice in relation to the arrangements (though Ms Darmanin appears to have had some independent input at some stage into some aspects of the arrangements through Mr Anastasiadis and Dr Zafiropoulos). Therefore, although the fact that Ms Darmanin did not receive independent advice is something that may go to establishing a special disability on her part, given the equal need for independent advice and lack of its receipt on the part of the Cowans, this factor does not of itself tend, in my view, towards a finding of relative disadvantage as between the respective parties. 305 What I consider put Ms Darmanin at a potential disadvantage was her depressive illness or bipolar disorder. Certainly, the bipolar disorder suffered by Ms Darmanin, insofar as it may have impacted her thought process and judgment skills, was a disadvantage or disability of a kind capable of attracting the Amadio unconscionability doctrine. However, more was required to be established than simply that Ms Darmanin suffered from this disorder or that her cognitive thought processes may have been affected at the relevant time or times (and I note, having regard to Dr Roberts' evidence, that the extent of the deficits in her cognitive ability is likely to have varied over the period from mid 2007 to late 2007). 306 What Amadio makes clear is that, when determining whether unconscientious use has been made of a party's special disadvantage, it must also be shown that the other party (here the Cowans) knew or ought to have known of the situation - ie both of the existence of that disadvantage and of its effect (Amadio, at p466). It is not necessary that it be shown that the ascendant party is guilty of dishonesty or moral obliquity (Amadio, per Deane J, at 478) but what must be shown is that the ascendant party either had actual knowledge of or knew of the facts which are such as to raise in the mind of any reasonable person a very real question as to the weaker party's ability to make a judgment as to what was in his or her own best interests (see Amadio, at 467).

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309 Similarly, in Amadio, Deane J [at 19] posed the question whether the special disability of the Amadios was sufficiently evident to the bank to make it prima facie unfair or "unconscientious" of the bank to procure their execution of the document of guarantee and mortgage in the circumstances in which that execution was procured. 310 In Lopwell, Macfarlan JA indicated, consistently with Amadio, that to establish that advantage has been taken of a special disability it is not necessary to establish that the defendants had engaged in active persuasion; rather it was necessary to prove that the defendant had or should have had knowledge or suspicion of the disability and that a benefit was taken (at [52]) (my emphasis). Relevantly, Macfarlan JA was of the view that the knowledge requirements as discussed in Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89, particularly at [171-188] dealing with the knowledge required to attract the second limb of Barnes v Addy [1874] 9 Ch App. 244, would not be of assistance as the principles relevant to knowing receipt and knowing assistance were developed in a context different from that of unconscionability, specifically noting that unlike the position with unconscionability, a finding of liability under the second limb of Barnes v Addy does not require a finding that the defendant received a benefit from his or her conduct. Another difference noted by Macfarlan JA was that the conduct with which the second limb of Barnes v Addy is concerned is dishonest or fraudulent, rather than unconscionable, conduct. Ultimately, Macfarlan JA was of the view that such differences might well warrant a higher level of knowledge being required in the context of Barnes v Addy than is the case with unconscionable conduct (at [55]). 311 Macfarlan JA stated [at 52]: [52] … To find that Lopwell took advantage of the Clarkes' special disability it is not necessary to find that Lopwell engaged in active persuasion. If Lopwell had, or should have had, relevant knowledge or suspicion of the disability (an issue to which I will shortly come), its taking of the benefit of the transactions sufficed. As was said by the majority in Bridgewater v Leahy , the relevant equity may "be enlivened not only by the active pursuit of the benefit [which the transaction] conferred but by the passive acceptance of that benefit" (at [122]).

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313 It is here that the time of the relevant impugned decision is critical. A decision made while Ms Darmanin was lying zombie-like on the Cowans' couch would be one which I think the Cowans ought to have realised was made without the benefit of considered judgment on Ms Darmanin's part. However, the relevant decisions (to sell the Gymea property and then to build the cottage) were made at a later stage, at which time I am not satisfied that the Cowans ought to have known that Ms Darmanin's judgment might have been affected by her mental condition (even assuming that they were aware at that stage that her depressive illness was an ongoing one). 314 In this regard I note that in Attorney-General (NSW) v World Best Holdings Ltd [2005] NSWCA 261; (2005) 63 NSWLR 557, rejecting the proposition that the concept of unconscionability (as used in the Retail Leases Act 1994 (NSW)) is able to be applied as if it were equivalent to what was "fair" or "just", Spigelman CJ emphasised that the concept "requires a high level of moral obloquy" (at [121]). His Honour, noting that the statutory concept of unconscionability was not as restricted as the concept in equity, said [at 120]: Unconscionability is a well-established but narrow principle in equitable doctrine. It has been applied over the centuries with considerable restraint and in a manner which is consistent with the maintenance of the basic principles of freedom of contract. It is not a principle of what "fairness" or "justice" or "good conscience" requires in the particular circumstances of the case. As Deane J put it in Muschinski v Dodds (1985) 160 CLR 583 at 616: … [P]roprietary rights fall to be governed by principles of law and not by some mix of judicial discretion … , subjective views about which party 'ought to win' … and 'the formless void of individual moral opinion' … Long before Lord Seldon's anachronism identifying the Chancellor's foot as the measure of Chancery relief, undefined notions of 'justice' and what was 'fair' had given way in the law of equity to the rule of ordered principle which is of the essence of any coherent system of rational law. The mere fact that it would be unjust or unfair in a situation of discord for an owner of a legal estate to assert his ownership against another provides, of itself, no mandate for a judicial declaration that the ownership in whole or in part lies, in equity, in that other …

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320 In Louth v Diprose, Brennan J (after citing from the decisions of Deane J and Mason J above in Amadio) went on to state: 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. Gifts obtained by unconscionable conduct and gifts obtained by undue influence are set aside by equity on substantially the same basis. In White and Tudor's Leading Cases in Equity ((7) 9th ed. (1928), vol.1, pp 203ff), the notes to Huguenin v. Baseley ((8) [1807] EngR 397; (1807) 14 Ves Jun 273 (33 ER 526).) treat the principle applied in cases of unconscionable conduct as an extension of the principle applied in cases of undue influence ((9) White and Tudor, op cit, p 227; founded on Dent v. Bennett (1839) 4 My. and Cr.269, at p 277 [1839] EngR 434; (41 ER 105, at p 108); Smith v. Kay [1859] EngR 38; (1859) 7 HLC 750, at p 779 [1859] EngR 38; (11 ER 299, at pp 310-311).): "The principle upon which equity will give relief as against the persons standing in (the categories of confidential) relations to the donor, will be extended and applied to all the variety of relations in which dominion may be exercised by one person over another." The ground for setting aside a gift obtained by unconscientious exploitation of a donor's special disadvantage, as explained in Amadio, can be compared with the ground for setting aside a gift obtained by undue influence, as explained by Dixon J. in Johnson v. Buttress ( (10) [1936] HCA 41; (1936) 56 CLR 113, at p 134.): "The basis of the equitable jurisdiction to set aside an alienation of property on the ground of undue influence is the prevention of an unconscientious use of any special capacity or opportunity that may exist or arise of affecting the alienor's will or freedom of judgment in reference to such a matter. The source of power to practise such a domination may be found in no antecedent relation but in a particular situation, or in the deliberate contrivance of the party. If this be so, facts must be proved showing that the transaction was the outcome of such an actual influence over the mind of the alienor that it cannot be considered his free act. But the parties may antecedently stand in a relation that gives to one an authority or influence over the other from the abuse of which it is proper that he should be protected." (Emphasis added.) The similarity between the two jurisdictions gives to cases arising in the exercise of one jurisdiction an analogous character in considering cases involving the same points in the other jurisdiction.

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328 As to the size and improvidence (if any) of the impugned transaction (to the extent that this is a factor indicating that a relationship of undue influence existed, I note that although the arrangement ultimately consumed all the net proceeds of sale of Ms Darmanin's Gymea property that would not necessarily have been the case had Ms Darmanin not increased the size and fittings of the cottage. However, even accepting that the arrangement was of a substantial amount having regard to Ms Darmanin's assets, I am not satisfied that it was so improvident as to point to the existence of a relationship where a presumption of undue influence would arise. 329 (In saying this I note that the improvidence of the transaction is neither a necessary nor a sufficient requirement for either of the doctrines of unconscionability or undue influence to operate, and the absence of improvidence will not be a defence to a claim based on unconscionability or undue influence.) 330 In Amadio, Deane J stated (at 475): In most cases where equity courts have granted relief against unconscionable dealing, there has been an inadequacy of consideration moving from the stronger party. It is not, however, essential that that should be so (see Blomley v. Ryan (1956) 99 CLR, at p 405 ; Harrison v. National Bank of Australasia Ltd. (1928) 23 Tas LR 1 ; but cf. Lloyds Bank v. Bundy (1975) 1 QB 326, at p 337 and Cresswell v. Potter (1978) 1 WLR 255, at p 257 ). Notwithstanding that adequate consideration may have moved from the stronger party, a transaction may be unfair, unreasonable and unjust from the view point of the party under the disability. An obvious instance of circumstances in which that may be so is the case where the benefit of the consideration does not move to the party under the disability but moves to some third party involved in the transaction. 331 In relation to an allegation of undue influence, it would seem that the improvidence or otherwise of the transaction is relevant not only to the question whether a presumption of undue influence arises in the first place but also to whether any such presumption has been rebutted. Of course, as observed by the authors of Meagher, Gummow and Lehane's Equity Doctrines and Remedies, 4th edn, Butterworths, 2002 (at [15-020]), the jurisdiction to intervene on the basis of undue influence is not based upon mere inadequacy of consideration, the improvidence of the transaction or the inequality of bargaining power, "as equity mends no man's bargain" (there citing Maynard v Moseley (1676) 3 Swan 651, at 655; Allcard v Skinner, at 157-158; Brusewitz v Brown [1923] NZLR 1106, at 1109-10). 332 Where the transaction is otherwise one that has been made for full or fair value, it seems unlikely that the facts will give rise to the existence of a presumed case of undue influence and instead the party seeking to set the transaction aside will have to prove there was in fact undue influence exercised. In Watkins v Combes (1922) 30 CLR 180, at 193-194, Isaacs J stated:

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336 In that regard, the lack of any benefit to the Cowans seems to me to point against the presumption of any undue influence on their part. 337 In passing I note that the question whether it is necessary that the improvidence of the transaction be established before the presumption will apply, as opposed to being relevant only to rebutting the presumption once established, was considered in England, in Royal Bank of Scotland v Etridge (AP) [2001] UKHL 44 where Nicholls LJ said (at [21]): As already noted, there are two prerequisites to the evidential shift in the burden of proof from the complainant to the other party. First, that the complainant reposed trust and confidence in the other party, or the other party acquired ascendancy over the complainant. Second, that the transaction is not readily explicable by the relationship of the parties. …The need for this second prerequisite has recently been questioned: see Nourse LJ in Barclays Bank Plc v Coleman [2001] QB, 20, 30-32, one of the cases under appeal before your Lordships' House. Mr Sher QC invited your Lordships to depart from the decision of the House on this point in National Westminster Bank Plc v Morgan [1985] AC 686. My Lords, this is not an invitation I would accept. The second prerequisite, as expressed by Lindley LJ, is good sense. It is a necessary limitation upon the width of the first prerequisite. It would be absurd for the law to presume that every gift by a child to a parent, or every transaction between a client and his solicitor or between a patient and his doctor, was brought about by undue influence unless the contrary is affirmatively proved. Such a presumption would be too far-reaching. The law would out of touch with everyday life if the presumption were to apply to every Christmas or birthday gift by a child to a parent, or to an agreement whereby a client or patient agrees to be responsible for the reasonable fees of his legal or medical adviser. The law would be rightly open to ridicule, for transactions such as these are unexceptionable. They do not suggest that something may be amiss. So something more is needed before the law reverses the burden of proof, something which calls for an explanation. When that something more is present, the greater the disadvantage to the vulnerable person, the more cogent must be the explanation before the presumption will be regarded as rebutted . (my emphasis)

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341 Thus in Allcard v Skinner (1887) 36 Ch D 145; [1886-90] All ER Rep 90 it was said that once the facts are established from which the court will infer that a situation exists where undue influence may have been exerted, then the presumption arises and the onus then falls upon the donee to rebut the presumption by proving that "in fact the gift was the spontaneous act of the donor acting under circumstances which enabled him to exercise an independent will and which justifies the court in holding that the gift was the result of a free exercise of the donor's will". 342 In On Equity, (Young, Croft and Smith, Lawbook Co, 2009) it is said that, to rebut a presumption of undue influence, it is necessary to show that the transfer was the independent, well understood act of a person exercising free judgment (citing Johnson v Buttress, at 134) and that, in transferring the property (or conferring the benefit for that matter) the transferor was acting independently of the influence of the relevant person (citing Watkins v Combes (1922) 30 CLR 180). Even if the reasonableness of the transaction does not prevent the presumption from arising, it will be relevant to rebutting the presumption, as explained by Isaacs J in Watkins v Combes. 343 As Deane J noted in Amadio (at 423) when undue influence is raised, one looks to the quality of the consent or assent by the weaker party. The question at the heart of the doctrine is not whether the intention in fact existed but how that intention was produced (Huguenin v Baseley (1807) 14 Vesey Jnr 273 at 300, 33 ER 526, at 536; Hartigan v International Society for Krishna Consciousness Incorporated [2002] NSWSC 810, at [27]; [29]), that is whether the intention was one formed by the weaker party's own free and independent exercise of will. 344 Given the finding I have made that no presumption of undue influence arose it is not necessary to make any further finding. Had it been necessary I would have found that any such presumption was rebutted in circumstances where I find that the decision to accept the Cowans' offer was made at a time when there was no dominance by the Cowans of her will but that where Ms Darmanin had exercised her own judgment (whether that be ill advised or otherwise) and where there was no benefit as such to the Cowans and hence nothing 'undue' in the sense considered above. Conclusion 345 For the reasons set out above, I am of the view that there was no binding legal agreement as alleged between the parties (and hence the Contracts Review Act claim fails); that there was no Amadio unconscionability or undue influence exerted by the Cowans and hence the remaining bases of the contractual claim fail; and that the Cowans have obtained no benefit from the arrangement (let alone any benefit which it would be unconscionable for them now to retain). The claims by Ms Darmanin thus fail and the appropriate order is to dismiss the proceedings with costs. **********

Darmanin v Cowan

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