Harper v Harper

Background

1. In April 2021, Brenda moved from Dubbo to Port Macquarie and commenced living with Troy and Donna at the home they rented there. From that time until January 2022 she lived with Troy and Donna and then from January 2022 until November 2022 she lived with a friend, whose home was three houses from Troy and Donna's home, and in that latter period would often visit Troy and Donna and regularly stay with them for a few days at a time. She stayed in a granny flat on the property. She was in receipt of the aged pension, and also performed occasional work as a cleaner, including for Troy and Donna. I infer that she had limited education and no business experience. Throughout this period, Brenda's daughters lived elsewhere (Tracy in Dubbo and Lisa in Queensland) and she looked to Troy and Donna for familial support.
2. On 21 May 2021, Brenda entered into a contract to purchase the Land for $350,000. Completion occurred on 11 June 2021. The solicitor who acted for her on the purchase was Mr Phillip Davidson who practised in Port Macquarie under the name 'Seaside Conveyancing'. Brenda funded the purchase price with the proceeds of the sale of a property she had previously owned in Dubbo.
3. In June 2021, Brenda engaged Hotondo Homes, a building company, to design and construct a house for her on the Land. However, in late June 2022 she decided that due to the escalating cost of the build, she could no longer afford to proceed with it. This resulted in Hotondo Homes issuing an invoice to Brenda on 20 June 2022 for $18,826 for the costs associated with the work they had undertaken, including preparation of plans and obtaining a development approval from the Council.
4. On 22 June 2022, Brenda engaged Wiseberry, a local real estate agent, to sell the Land. She signed an exclusive agency agreement (with a term of three months, expiring on 22 October 2022) which stated the agent's estimate of the current selling price of the Land to be between $500,000 to $550,000, and instructed the agent to market the Land at $560,000. The listing at $560,000 commenced on 6 July 2022. The agreement identified Mr Davidson as the conveyancer who would act for Brenda on any sale.
5. On 4 July 2022, Brenda paid a holding deposit of $5,000 on the purchase of a unit in a retirement village in Port Macquarie (retirement unit), which she ultimately purchased on 18 October 2022. The total price was $520,000, which she paid in full on 18 October 2022. This amount was partly funded by the payment of $130,000 made by Troy and Donna to Brenda referred to below. Mr Davidson advised Brenda on the contract for the purchase of the retirement unit.
6. In August 2022, Brenda gave $10,000 in cash to Troy for safekeeping, which the parties treated as a loan.
7. From around 10 September 2022, Brenda authorised Wiseberry to talk to Troy about the Land and there are texts and emails from that time until early November 2022 from Wiseberry to Troy regarding enquiries made by third parties relating to the Land.
8. On 20 September 2022, Wiseberry reduced the price range for the Land from $490,000 to $540,000.
9. During the period from July to September 2022, Troy and Brenda had a number of discussions regarding how Brenda would fund the amount payable by her for the retirement unit, which was due to settle on 19 October 2022. Brenda was concerned that the Land would not be sold before that date, and that she would have a shortfall. There is no evidence (including in the records produced by Wiseberry in response to a subpoena) to suggest that any offers were received by Wiseberry for the purchase of the Land, other than an offer of $450,000, which Troy says was passed on to him by Wiseberry on 8 September 2022 and rejected by Brenda (which she denies).
10. In late September 2022, Troy offered to lend Brenda $130,000, which was the amount which he and Donna had retained after the sale of an investment property at Warren, New South Wales. Around the same time, Troy suggested to Brenda that he and Donna could purchase the Land from Brenda using the amount of $130,000 as a deposit, rather than as a loan, and that Mr Davidson would be asked to act for both parties on the transaction. There is a dispute about what was said in these discussions, as discussed below. In particular, Brenda's evidence is that Troy offered to pay $540,000 for the Land, whereas Troy says that he suggested that the price would be determined by a written valuation, with the amount of $130,000 being paid as a deposit and he and Donna would apply for a loan to pay the balance.
11. On around 30 September 2022, Troy telephoned Mr Davidson and asked him to act for all three parties on the transaction. There is no evidence as to what was said in this conversation and Mr Davidson did not give evidence. However, on 30 September 2022, he sent a letter to Brenda and another letter to Troy and Donna advising each that he was acting for the other party, but would 'undertake to ensure your interests are protected as prescribed by legislation'. The letter sets out the terms of Reg 12 of Schedule 3 of the Conveyancers Licensing Regulation 2006 (NSW), dealing with the situation where a licensed conveyancer acts for both parties to a transaction.
12. On 5 October 2022, Troy contacted a mortgage broker, Mr Scott Lavender of Aussie Home Loans. Mr Lavender did not give evidence, but a document recording his notes regarding the application indicates that the applicants for the loan were Troy and Donna and the amount of the loan being applied for was $277,500 and states: Applicants seeking to buy a block of land in Port Macquarie from MA Mother for $370,000. Applicants looking to borrow 75% of the purchase price and have savings from a prior property sale to cover the rest. Due to applicants past business ventures being wound up in 2019 applicants have historical entries on their credit files. This is meaning we need to look at alternate lending solutions. Both applicants work FT… Seeking 25 year loan term to take applicants to maximum working age. Once settled would then explore build options. Due to nature of loan required, our lender options were limited to Pepper, Aussie Activate and Liberty. Liberty don't allow land purchase. Activate is an Aussie branded Pepper product, so effectively the same product. Will do land in a cat 1 location to 75%. There our recommendation is the Activate/Pepper product. Security Value: $370,000. Security Address: House - 14 FLORENCE Close, PORT MACQUARIE NSW 2444 Australia …Total Security Value: $370,000 Base Loan Amount $277,500.00 LMI: $3,191.25 LMI Capped: No Total Loan Amount: $277,500.00 LVR: 75% … Principal & Interest Product Special Notes: Savings: $132,000 …
13. Mr Lavender's supporting notes set out the assets and liabilities of Troy and Donna (which they had supplied) which included 'savings' of $132,000. This was the amount which Troy and Donna held as the net proceeds of the sale of their property at Warren referred to earlier.
14. On 10 October 2022, Mr Michael Reid of Opteon Solutions inspected the Land for the purposes of undertaking a valuation of the Land for stamp duty purposes. Mr Reid provided a written valuation report to Troy on 12 October 2022 which stated the market value of the Land for stamp duty purposes to be $495,000.
15. In the meantime, on 11 October 2022 at 1:10pm, Mr Lavender, the mortgage broker with whom Troy was dealing, sent an email to Troy setting out details of a local court judgment in favour of the Gilgandra Shire Council for $6,375 which he said 'appeared to be stopping the loan from going ahead', which had been registered on 22 April 2021. As explained by Troy in cross-examination, a company which had previously been the trustee of his self-managed superannuation fund had an outstanding debt for Council rates in respect of a property held by the fund for which the Council obtained judgment. Mr Lavender told Troy in a telephone conversation on the same day that this problem would go away after 23 April 2023 because the credit report would only show defaults within a period of 24 months. These discussions between Troy and Mr Lavender were the basis for Troy to form the view that any financing by him and Donna to fund the purchase of the Land could not occur until April 2023.
16. On either 11 or 12 October 2022, Troy and Brenda met at a café at Lake Innes Village, Port Macquarie called Ruins Café. Troy says the meeting was 'on or around' 12 October 2022 at around 12:30pm, whereas Brenda says it was on 11 October 2022. She expressed confidence in the date because that was the birthday of her former husband, Tom, and she recalled commenting to Troy to that effect at the meeting. Troy agreed that his father's birthday was on 11 October, but it was not put to him that Brenda commented on this at the meeting. There is a dispute about what was said at this meeting, discussed below.
17. On 12 October 2022 at 1:29pm, Mr Davidson sent an email to each of Brenda and Troy which stated simply 'see attached front page', which attached the front page of a contract for the sale of the Land. Brenda was named as vendor and Troy and Donna were named as purchasers. The date for completion was stated to be '42 days after the date of this contract'. The price was stated to be $130,000 comprising a deposit of $13,000 and a balance of $117,000. Shortly afterwards at 1:45pm, a response was sent from Brenda's email which read 'Received thanks Phil. Brenda.' Although Brenda's evidence was that she could not recall seeing Mr Davidson's email or sending the reply, I am satisfied that she did.
18. On 13 October 2022, Troy transferred $130,000 into the trust account of Seaside Conveyancing, which was subsequently transferred to Brenda's bank account on 14 October 2022 to assist with the purchase of the retirement unit.
19. On 14 October 2022, Brenda asked Troy to return the amount of $10,000 which he had been holding for her, saying that she was still $15,000 short of the funds necessary to complete the purchase of the retirement unit. Troy then rang Tracy and asked if she could help. She responded that she was driving and would call back shortly. There followed a text exchange between Troy and Tracy as follows: Troy: Yep, short $6k. You good for that for a little bit Bub. Tracy: Can the 3 of us discuss it? I need to know more about the deal and what's going on? Troy: Yep, give you a call shortly if you are free. Tracy: I'm free. Troy: OK won't be long.
20. Shortly afterwards, Tracy rang Troy who was at home and had now been joined by Brenda and Donna and they had a conversation about the proposed transaction. There is a dispute about what was said, as discussed below.
21. Later that day, Tracy transferred $10,000 to Brenda's bank account by online transfer. On 27 October 2022, Troy transferred $10,200 to Tracy explaining in a text that the extra $200 was 'towards the interest'. I infer that this was treated as a repayment by Troy of the amount which Brenda had previously provided to him by way of safekeeping.
22. On 19 October 2022, Brenda completed the purchase of her retirement unit.
23. On 20 October 2022 Mr Davidson sent a fee agreement to Brenda for his services in respect of the matter, described as 'Sale of 14 Florence Close Port Macquarie, NSW 2444'. Brenda's signature appears on this fee agreement under the statement 'I understand and accept the above terms of engagement'.
24. On 23 October 2022, Brenda received a text message from Troy which said 'Can you come up this arvo if you are free. Got some paperwork to sign… I'm home about 4'. Later that day, which was a Sunday, Brenda went to Troy and Donna's home and signed some documents relating to the sale of the Land including the Contract in the presence of Troy and Donna. There is a dispute as to what occurred at this meeting, as discussed below.
25. On 27 October 2022 Seaside Conveyancing sent to Troy and Brenda a letter authorising their own office to pay the balance of the purchase money for settlement, and enclosing a PEXA deposit form, and another letter regarding payment of the rates (which Troy responded to by saying that he would take over the rates). On the same day Seaside Conveyancing paid stamp duty on the Contract in an amount based on a dutiable value of $495,000. Mr Davidson must have received a copy of Mr Reid's valuation to achieve this outcome.
26. On 30 October 2022 Brenda telephoned Lisa and told her that she owed Hotondo Homes $20,000 and was worried that she was 'going to lose the house and the car', and also that she had sold the Land to Donna and Troy and had signed some papers for the sale. This was the first time that Lisa had heard about the sale and, at Brenda's suggestion, she rang her sister Tracy on the following day to ask about it. Lisa deposed that in this telephone conversation, Tracy said: Me: 'What's going on? Mum is saying that she's selling the land to Troy and Donna but they haven't paid her the full amount yet?' Tracy: 'We reached an agreement between myself, Mum, Troy and Donna on the 14th that Troy and Donna would purchase the block of land from Brenda for $540,000. Troy and Donna had told us originally that they had a loan approved to buy the land for $540,000, but it came out that their loan would not be approved until April 2023. So a few days before the settlement of mum's retirement home purchase, we had to figure out a new agreement. Troy and Donna offered to give mum $130,000 which she needed for her retirement home as a deposit for the purchase of her land, and to pay the balance of $410,000 in April 2023. I asked them to draw up an agreement. No land is supposed to transfer until then. I also lent $10,000 to help mum get into the retirement home.' Me: 'What about the signed documents?' Tracy: 'I'll talk to Mum about it.'
27. Lisa was not challenged in cross-examination on this evidence and I accept it.
28. On 31 October 2022, a transfer of title to the Land in favour of Troy and Donna was registered. Mr Davidson signed the transfer on behalf of both the transferor and the transferee. It is very difficult to understand, based on the evidence, how Mr Davidson came to sign the transfer on behalf of Brenda and lodge it for registration on 31 October 2022 when he was aware (a) of the discrepancy between the purchase price shown on the Contract and the market value of the Land, and (b) that the date for completion stated in the Contract was 42 days after the date of the Contract (ie 2 December 2022).
29. On 1 November 2022, Mr Davidson sent an email to Brenda attaching a settlement adjustment sheet showing the purchase price as $130,000 and on the following day he sent a letter to Brenda confirming that settlement of the sale had taken place on 31 October 2022 setting out some standard information regarding the sale. A corresponding letter was sent by him on the next day to Troy and Donna in substantially the same terms.
30. Over the period from 7 November 2022 to 27 January 2023, Troy and Brenda made seven payments of $400 to Brenda, which I infer related to the arrangement for them to pay Brenda's strata fees on her retirement unit.
31. On 16 November 2022, Brenda moved into the retirement unit. In the period since completion of the purchase Troy and some family members and friends assisted with refurbishment of the unit to enable her to move in.
32. On 20 December 2022, the debt Brenda owed to Hotondo Homes was paid. It appears that Brenda obtained the funds to do so from a loan made to her by a friend which was ultimately repaid by a gift made to Brenda by her brother.
33. Brenda spent Christmas with Tracy and Lisa and on 26 December 2022 all three of them sat down with Brenda to review her email and online banking accounts. In the course of this exercise, they came across the various emails from Seaside Conveyancing relating to the sale of the Land referred to above, which appeared in the deleted folder of Brenda's email account. Brenda did not recognise any of the emails. They also discovered some deleted texts on Brenda's smartphone. It was suggested that Troy had deleted these emails and texts, but I am not satisfied that this has been established by the evidence; rather, it is quite possible that Brenda did so inadvertently. They were not permanently deleted from her email account.
34. On 4 January 2023, Tracy had separate telephone calls with Donna and Troy to discuss why title to the Land had been transferred to Troy and Donna before payment of the full purchase price. Tracy deposes that her conversation with Donna was as follows: Tracy: What's going on? We found this contract of sale for $130,000. What have you done? Donna: We're still going to give her the rest of the money in April once we get the loan. Tracy: How do you think you'll be able to do that when the sale has already gone through? You promised me that the land wouldn't transfer until you'd paid the full balance. Neither of you have been protecting Mum. If you did everything above board, why is it that you don't have any further information? Donna: I thought it was all fine. Tracy: You've got no paperwork, so you need to come up with an explanation and fast.
35. Tracy also deposes to a separate conversation with Troy later on 4 January 2023 about the discrepancy between the Contract and what had been discussed on 14 October 2022. It is not necessary to set this out. It is sufficient to note that in Tracy's recollection of each of her conversations with Donna and Troy on 4 January 2023, there was no mention of what had been agreed as the total amount of the purchase price (ie. $540,00 or $495,000).
36. Tracy received a text from Donna on 12 January 2023 which stated 'Hey hun can I have a quick chat to you please'. They had a conversation later that day, which Tracy sets out in her first affidavit. Donna accepts that they had a conversation but her affidavit does not deal with it. Tracy deposes that in this conversation Donna said 'I admit I did the wrong thing. I should have spoken up. I knew that paperwork was being drawn up and that we didn't bring it up during our talk on the 14th' (which I infer was a reference to the conversation on 14 October 2022) and also (in response to Tracy saying 'You should have followed our agreement') that Donna said 'You're right'.
37. Donna denied in cross-examination Tracy's version of the conversation on 12 January 2023, but I infer that she did in the conversation accept that the Contract did not set out the full terms of the agreement reached on 14 October 2022 because on 14 January 2023, Donna sent a text to Brenda and Tracy which said: Just letting you know I spoke with Chris from solicitors. He has advised the best way to do this is we meet and Brenda advises what she would like in it and I forward through for him to draft up. He will act as your representative Brenda and we will be independent. Can you please let me know a day next week that suits to have this discussion and Tracy will be on the phone as a witness.
38. On 30 January 2023, Tracy and Donna had a further conversation about having a meeting with a solicitor (which was not Mr Davidson) but nothing came of it.
39. On 10 February 2023, Brenda commenced proceedings in this Court before the duty judge and an order was made restraining the defendants from transferring, charging, encumbering or otherwise dealing with the Land up until Tuesday, 14 February 2023. The matter came back before the Court on 13 February 2023 when an order was made extending that freezing order until further order of the Court.
40. On 23 February 2023 Brenda and Troy had a conversation regarding the court proceedings which became heated. They each depose to different versions of what was said. Relevantly for present purposes, Brenda deposes that in this conversation Troy said 'I'll just bloody give it back then' and 'I want my $130,000 and I want the expenses. You ruined us over a piece of dirt and found it necessary to bring in solicitors', and that she responded 'That had to happen because it was nothing as it was promised by you'. Troy's version of this part of the conversation is broadly similar. In effect, Troy was prepared to return the Land to Brenda if the $130,000 (plus expenses) was repaid, whereas Brenda wanted to keep Troy and Donna to the bargain which she alleges was agreed. They have not spoken to each other since that time.
41. On 27 February 2023, the Statement of Claim (SOC) was filed.

Disputed conversations

1. While there are a number of disputed conversations regarding the transaction concerning the Land, there are only four of significance to the issues which the Court has to decide. These are (a) the conversation at Troy and Donna's house at the end of September 2022, (b) the conversation at Ruins Café on 11 or 12 October 2022, (c) the telephone discussion on 14 October 2022 and (d) the meeting at Troy and Donna's house on 23 October 2022 when the Contract was signed.

Conversation between Troy and Brenda at the end of September 2022

1. Brenda deposed to a conversation between her and Troy at Troy and Donna's house in late September 2022, in which Troy said to her 'Donna and I have decided to buy your block of land, Mum. We're willing to pay you $540,000' to which she responded 'That would be great'. In contrast, Troy deposes that in a conversation with his mother at the end of September 2022 he offered to 'use' the amount of $130,000, which he had previously proposed to lend to her, as a deposit towards the purchase of the Land and he would apply for a loan to see if he and Donna could purchase the Land outright, saying to her 'It'll have to be valued, so we will get a written value on what its worth', and 'I'll go for a loan for the balance'. He denies that there was any discussion of a price of $540,000.
2. The defendants admit in the Defence that this conversation with Brenda at the end of September 2022 involved an offer by them to purchase the Land for a price determined by an independent valuation, not $540,000, and say that Brenda accepted that offer.
3. I am not satisfied that there was any agreement as to the purchase price at the end of September 2022. First, Troy's evidence that no price was mentioned is supported by Tracy. Tracy was staying with Troy and Donna between 29 September 2022 and 3 October 2022. She agreed in cross-examination that no sale price was ever mentioned by Brenda or Troy in any conversation she had at the time (T139:10-139:25). Had there been some understanding or agreement as to price, the probabilities are that it would have been said to Tracy, as she had a discussion with Brenda about the proposed sale in that period.
4. Second, it is apparent from the loan application that Troy and Donna made to their mortgage broker, Mr Lavender, on 5 October 2022 that they did not have access to funds of $540,000 at the end of September 2022 without obtaining a loan and Brenda makes no mention in her evidence of the conversation at this time of the need for finance. It would have been unlikely for Troy to have offered any such amount without mentioning the need for finance (which was ultimately part of the oral agreement). When Brenda was confronted with the fact that finance was not mentioned and that she knew that Troy did not have access to $540,000, she replied 'how would I know?' (T77:16). Brenda later agreed that Troy never said that he had funds of $540,000 (T78:1-3).

Meeting at Ruins Café on 10 or 11 October

1. Troy deposed that in the conversation at the Ruins Café he told Brenda that he and Donna had been knocked back on their application for a loan because they had 'a default from [one of their] companies' which was due to 'drop off' on 23 April 2023 so at the 'end of April we'll be right to go for the loan on the land and pay you out', and also that he had received a valuation of the Land which 'has come in at $495,000 and that's what we would pay for the block'. He deposed that Brenda agreed to the purchase price being $495,000.
2. He also deposed that he put to Brenda two alternative ways of structuring the transaction. The first was the Brenda would 'sign the property over to us now', so that he and Donna 'could use the block as collateral to get the house going at the same time so at the end of the house build we can refinance and pay you the whole lot'. The second was that 'we can wait until the end of April and give you the money for the land at that time.' He deposed that Brenda agreed to the first alternative and also to his proposal that 'we just put the sale price at $130,000 and that's it and we pay you out the rest later'.
3. Troy deposed that he then telephoned Mr Davidson on speakerphone so that Brenda could hear and told Mr Davidson that he and Donna 'would be buying the block off Brenda for $495,000. We've got to wait for our loan for another six months and we're happy to put the block through at the contract price of $130,000 and do settlement. Can we get the contracts drawn up?'. Troy also deposed that he said to Mr Davidson that the contract should include a promise regarding the payment of the 'balance on the $495,000'. There is no evidence from Mr Davidson regarding this conversation as he was not called to give evidence.
4. Brenda has only a vague recollection of the conversation. She recalled that there was a discussion about the payment of $130,000 upfront, and that Troy and Donna would pay her strata fees on the retirement unit each month until their loan came through when the balance of the price would be paid, and that she had a brief discussion on the telephone with Mr Davidson in the car park of the café, and not on speakerphone. Her evidence is that the meeting occurred on 11 October 2022 and there was no mention of a valuation having been obtained or any agreement for the purchase price to be $495,000. She also denies that there was any mention of Troy and Donna's loan not being approved until April 2023 and says that the first time this was mentioned to her was in the conversation on 14 October 2022 referred to below.

Telephone call on 14 October 2022

1. Tracy and Brenda give detailed evidence about what was said in the telephone conversation on 14 October 2022. Tracy deposed that the conversation was to the following effect: Tracy: 'I wanted us all together to chat about what is going on. Why is mum suddenly short of money? I thought you were buying her land from her.' Troy: 'Yes, we are. The loan is coming through, but there is a default against our names for a previous bankruptcy. Our loan won't come through until April 2023 so we'll pay Mum the balance then, and give her $130,000 now.' Tracy: 'Okay, in that case we have to lay down some rules. Nothing to go ahead until the loan has come through. How much are you buying it for?' Troy: 'We are buying it off her for $540k.' Tracy: 'Okay, in that case you should pay mum the $130,000 now as a deposit so that she can buy her place in the retirement village, and pay the remaining $410,000 in April 2023 when your loan is approved by the bank. The land can't go through until then. That way, Mum is protected. Do you agree?' Troy and Donna: 'Yes.' Tracy: 'If your loan isn't approved in April, you will need to return the land to Mum so that she can sell it. If this happens, Mum can repay you the $130,000 from the proceeds of the sale.' Troy: 'Agreed. And in the meantime, we'll pay Mum's strata fees.' Tracy: 'Why?' Troy: 'Mum will be left with nothing so we'll pay that until the money comes through in April. That'll just help mum get over the line.' Tracy: 'Okay. You need to get a lawyer to draw up an agreement to make sure that mum's land and your money is protected.' Troy and Donna: 'We will get a lawyer to draw up an agreement to make sure that Mum's land and our money is protected.' Tracy: 'Okay, and how much does Mum need to finalise her sale?' Troy: '$15,000. I can come up with about half, but that's all we've got.' Tracy: 'Mum, I'll transfer you $10,000. That way Troy and Donna don't have to give you everything they've got. That'll leave Troy and Donna with a buffer in case something happens.' Troy: 'Okay, I'll pay you back after as I owe mum $10,000 anyway.' Tracy: 'Sounds good.'
2. Brenda's recollection of the conversation recorded in her affidavit also includes Tracy mentioning twice that a lawyer would need to be instructed to prepare a written agreement, and the second time involved Tracy saying 'You'll need to get a lawyer to prepare a document putting all of these terms into writing'.

Meeting on 23 October at Troy and Donna's house

1. Brenda went to Troy and Donna's home late on Sunday, 23 October 2022. Troy and Brenda sat at the kitchen table while Donna prepared dinner. Troy and Donna deposed that Troy read out to Brenda the different clauses of the contract and following this they each signed it. While it is dated 21 October 2022, there appears to be no dispute that the document was signed on 23 October 2022 at the kitchen table before dinner.
2. The only version of the Contract in evidence is the first two pages. The first page is dated 21 October 2022 written by hand, and bears the signatures of Brenda, Troy and Donna. The printed details on the document are the same as the unsigned version emailed by Mr Davidson on 12 October 2022.
3. Brenda has no clear recollection of what she signed apart from the Contract, but it is likely that she also signed at this meeting a client authorisation form for the transaction prepared by Mr Davidson, and Mr Davidson's engagement letter. The client authorisation form included the following: I AUTHORISE the Representative to act on my behalf or where I am a Client Agent to act on behalf of the Client, in accordance with the terms of this Client Authorisation and any Participation Rules and any Prescribed Requirement to: (a) sign documents on my behalf as required for the Conveyancing Transaction(s); and (b) submit or authorise submissions of documents for lodgement with the relevant Land Registry; and (c) authorise any financial settlement involved in the Conveyancing Transaction(s); and (d) do anything else necessary to complete the Conveyancing Transaction(s). The term 'Representative' is defined to mean 'Seaside Conveyancing'.
4. Brenda deposes that she had a conversation with Troy and Donna in the kitchen after Troy had handed the Contract to her to the following effect: Troy: We need to get this signed so that everything can go forward. Brenda: Is this how it was all discussed around the table with us all and with Tracy on the phone? Troy: Yes, Mum, it is how we discussed it. How many times do I have to go over it with you? Donna: It's all good Mum, it's all fine. Brenda: Have you got the letter from the solicitor drawn up? Troy: We'll do that, and we'll pay the cost for that. It'll get done. Brenda: Are you sure this is how it is all going down how you discussed it with Tracy? Donna: Yes, yes, Mum. Troy: If you don't sign this now, you'll lose your retirement village home as well. This is what has to happen to get you into your place and to get this across the line.

Claim by Hotondo Homes

1. On 6 September 2022, Hotondo Homes served a statement of claim on Brenda which ultimately resulted in a default judgment being obtained against her for $19,170 on 25 October 2022.
2. Troy was aware at the time the Contract was signed of the urgency with which Hotondo Homes was approaching the recovery of the debt. On 14 October 2022 at 10:44am he received a text from Dean Thompson of Hotondo Homes which stated: 'Thanks for the chat on the weekend. How have you gone having a chat to your mum about the statement of claim? I checked just now with the court and it was served on Sept 6th and they haven't had a response in the required 28 days'. Troy responded 'Thanks mate'.
3. Troy deposes that he told Brenda about this text from Mr Thompson on or around the date he received it, but she denies this.
4. On 19 October 2022, the following exchange by text between Troy and Mr Thompson occurred: Mr Thompson: I can't wait any longer I'm afraid Troy I will be filing a default judgement claim the court today for $18,826 + legal costs Troy: You have to do what you have to do mate Thanks for letting me know Not an issue between us at all
5. On 28 November 2022, the following exchange by text between Troy and Mr Thompson occurred: Mr Thompson: trying for a positive outcome for both parties before a writ of garnishee is issued Troy. We won't just write this off. I can deal direct with Brenda or a solicitor if you prefer Troy: Take it up with Brenda mate it's her issue Not sure what's happening But thanks for contacting me about it
6. On 29 November 2022, Brenda's application to pay the judgment debt by instalments was refused by the Local Court.
7. Around the end of November 2022, Troy arranged for the registration of Brenda's motor vehicle to be transferred into Troy's name. It was ultimately transferred back into Brenda's name around the middle of January 2023. Brenda deposes that Troy said to her 'Mum you should sign the vehicle into my name. You owe Hotondo Homes almost $20,000. They won't sell your house for just $20,000 but they could sell your car… You should do this to protect yourself Mum'. Troy accepted in cross-examination that he suggested this transfer for 'asset protection' reasons.
8. I am satisfied, in light of the matters referred to in [93]-[100] above, that Troy did make the statement to Brenda about the risk of losing her retirement unit referred to at [93] above and that he did so to put pressure on Brenda to sign the Contract at the meeting.

Issues

1. By the SOC, the plaintiff seeks an equitable lien over the Land for the amount of $407,200. This is said to be the balance of the purchase price of $540,000 owing by the defendants to the plaintiff under an oral agreement for the sale of the Land entered into at the end of September 2022 (the Agreement) after deducting the deposit of $130,000 and the total of the amounts paid by Troy and Donna for strata fees of $2,800. The plaintiff seeks the appointment of a receiver to undertake the sale of the Land and repay the plaintiff her unpaid purchase price, interest and costs.
2. In the SOC, the plaintiff also claims in the alternative that: 1. The defendants made a fraudulent representation to Brenda that the terms of the Contract signed on 23 October 2022 reflected the terms of the Agreement for which the claimed loss is $407,200, or 2. That equity should intervene on the basis that the defendants obtained the benefit of the transaction effected by the Contract and the transfer through unconscionable conduct or undue influence.
3. By their cross-claim, the defendants seek: 1. A declaration that the agreement between the defendants (as purchasers) and the plaintiff (as vendor) to purchase the Land was subject to a term that if the balance of the purchase price was not paid by April 2023, the Land was to be sold and the defendants would be repaid the monies expended by them on behalf of the plaintiff and the balance of the net proceeds of sale will be paid to the defendants; 2. Alternatively, a declaration that the parties entered into the agreement to purchase the Land under a mutual mistake as to the purchase price.
4. Accordingly, the issues to be determined are: 1. Whether the plaintiff is entitled to an equitable lien over the Land in the amount of $407,600 or alternatively $362,200 based on the Agreement said to have been entered into at the end of September 2022; 2. Whether the defendants made a fraudulent misrepresentation that the terms of the Contract signed on 23 October 2022 reflected the terms of the Agreement; 3. Whether the Contract and the transfer were entered into as a result of the unconscionable conduct of the defendants; 4. Whether the Contract and the transfer were entered into as a result of the undue influence of the defendants; 5. Whether the defendants are entitled to the relief claimed in the cross claim.

First issue: Equitable lien

1. The pleaded case on the equitable lien claim (set out in the SOC at [28]) is that: 1. the plaintiff parted with title to the [Land] to the first and second defendant without receiving the full purchase price pursuant to the Agreement between her and the defendants; 2. title to the [Land] was transferred to the first and second defendant at a loss to the plaintiff that continues by way of unconscionable advantage and/or undue influence; and 3. the [Land] is subject to an equitable lien in favour of the plaintiff for the remaining balance of the purchase price, interest and costs.
2. The 'Agreement' is defined in the SOC at [12] as the oral agreement referred to at [102] above.

Principles

1. It is well established that an unpaid vendor of land who has parted with legal title to the land is generally entitled to an equitable lien over the land as security for the unpaid purchase price. In Hewett v Court (1983) 149 CLR 639; [1983] HCA 7, Gibbs CJ said at 645: Equitable lien does not depend either upon contract or upon possession. It arises by operation of law, under a doctrine of equity "as part of a scheme of equitable adjustment of mutual rights and obligations"; those words of Isaacs J were used in Davies v Littlejohn (1923) 34 CLR 174 at 185, in relation to the doctrine of vendor's lien, but they have a general application. It would be difficult, if not impossible, to state a general principle which would cover the diversity of cases in which an equitable lien has been said to be created. A vendor's lien for unpaid purchase money has been said to be founded on the principle that "a person, having got the estate of another, shall not, as between them, keep it, and not pay the consideration": Mackreth v Symmons (1808) 15 Ves 329 at 340; 33 ER 778 at 782. The lien of a purchaser for the purchase money that he has paid to the vendor on a sale that has gone off through no fault of the purchaser may perhaps rest on the converse principle that he who has agreed to convey property in return for a purchase price will not be allowed to keep the price if he fails to make the conveyance. At all events, the rule has been said to be founded on "solid and substantial justice": Rose v Watson (1864) 10 HL Cas 672 at 684; 11 ER 1187 at 1192. In each of these cases the vendor or the purchaser, as the case may be, is treated as a secured creditor (cf Combe v Lord Swaythling [1947] Ch 625 at 628) - the lien is the security for the money which is justly due. See also 663-4 per Deane J.
2. Once a vendor's equitable lien is created, absent waiver or abandonment, it continues until the full purchase price is paid: Wossidlo v Catt (1934) 52 CLR 301; [1934] HCA 52 at 307 per Rich J; Reliance Finance Corporation Pty Ltd v Heid [1982] 1 NSWLR 466 at 477-478 per Hope JA (Glass and Mahoney JJA agreeing).
3. Although called a lien, it is a form of equitable charge over the subject property in that it does not depend upon possession and may, in general, be enforced as any other equitable charge, namely by sale in pursuance of a court order. In EI Sykes, Law of Securities (5th ed, 1993, Lawbook Co) at 199, the learned authors describe the nature of an equitable lien relevantly as follows: The equitable lien differs from the equitable charge mainly in the mode of creation. It arises by implication of law in certain circumstances. Once in existence, it basically confers the same remedies, viz. the powers of sale and appointment of a receiver but only of course through the court … ..The equitable lien arises purely from implication of law … The equitable lien, like the equitable charge, is a pure hypothecation; it involves no transfer of actual or potential ownership, it does not depend on possession and it rests only on an equity, with the result that it is unenforceable against the bona fide purchaser for value without notice of the legal estate. Nevertheless, it is an "interest" in land; it is of a proprietary character. … The circumstances in which an equitable lien arises have never been exhaustively classified and the list is possibly not a closed one, but the following are the main cases: (a) A vendor of land who has parted with the legal title by way of conveyance has an equitable lien over the land to the extent of purchase money unpaid, such lien being available against all save the bona fide purchaser for value of the legal estate without notice of the fact of non-payment …

Plaintiff's submissions

1. The plaintiff submitted that the evidence establishes the following: (a) on or around 6 July 2022 Brenda listed the Land for sale with Wiseberry Real Estate (approximately 3 months prior to the transfer of the Land to Troy and Donna) for the sale price of $560,000; (b) Brenda required the Land to be sold in order to bridge a shortfall of $130,000 in her funds so she could purchase and move into a unit in a retirement village; (c) in September 2022, Troy and Donna offered to loan Brenda the sum of $130,000 if the Land did not sell before 19 October 2022, and then Troy and Donna offered to purchase the Land from her with such an offer being accepted - the contest being how much was offered and agreed to between the parties; (d) on 23 October 2022, Brenda entered into a contract for sale, that had already been signed by Troy and Donna, with a contract price of $130,000; (e) the Land was transferred on 31 October 2022; (f) between 5 November 2022 and 27 January 2023, Troy made payments totalling $2,800; and (g) that Brenda, Troy and Donna agree that the sum of $130,000 was below the agreed sale price of the Land.
2. The plaintiff submitted that these facts support a finding that Brenda has an equitable lien over the Land for a disputed amount - Brenda contends that the purchase price is $540,000 and therefore she is owed $407,200, when factoring in smaller amounts paid to Brenda for strata fees in the sum of $2,800. By contrast, Troy and Donna admit that at the time the Land was transferred, they owed Brenda an amount, they contend that is $365,000. There was accordingly a vendor's lien for unpaid purchase monies or otherwise an equitable lien for Troy and Donna's indebtedness to Brenda. The matter for determination is what was the quantum of the agreed sale price.

Defendants' submissions

1. The defendant submitted that the plaintiff has not established that Troy and Brenda agreed in the conversation at the end of September 2022 that he and Donna would purchase the property for a price of $540,000 and accordingly an equitable lien has not been established.

Consideration

1. The plaintiff's pleaded case in support of the equitable lien relies on the contention that an oral agreement for sale of the Land by the plaintiff to the defendants for a purchase price of $540,000 was made at the end of September 2022 in a conversation between Troy and Brenda at Troy and Donna's home referred to at [60] above.
2. In my view, Brenda has not established that an agreement as to the purchase price was reached by the end of September 2022, for the reasons given at [62]-[66] above. Absent an agreement on price, there could be no binding contract at this time: JD Heydon, Heydon on Contract (Lawbook Co, 2019) at [3.60]. A further matter supporting this conclusion is that Mr Davidson was not called to give evidence. It can be expected that he would have given relevant evidence about any agreement as to the purchase price by 30 September 2022. Brenda has the onus of proof on this issue and could have called Mr Davidson, who acted for her on the transaction, to establish the nature of the discussions he had with Troy about the transaction on 30 September 2022. I draw the adverse inference under Jones v Dunkel that his evidence would not have assisted Brenda's case on this issue. As the purchase price is an essential term for a contract the sale of land, Brenda has not discharged her onus of proof that there was an agreement for the sale of the Land at the end of September 2022.
3. Accordingly, the claim for an equitable lien fails.
4. The SOC does not plead that a binding agreement for the sale of the land was entered into between the parties on 14 October 2022. In my opinion, the plaintiff was correct in not doing so. That conversation falls within the third category of Masters v Cameron (1954) 91 CLR 353 at 360 which applies where the parties' intention was not to make a concluded bargain unless and until they execute a formal contract.
5. The question whether the parties had reached agreement in the telephone conversation on 14 October 2022 is to be decided objectively by reference to what the parties' words and conduct would be reasonably understood to convey, not upon their actual beliefs and intentions, in light of the surrounding circumstances: Radovanovic v Stekovic [2024] NSWCA 129 at [22]-[25]. In my view, the statements made by Tracy in the conversation, and assented to by Brenda, Troy and Donna, clearly indicated that each of them contemplated that a binding agreement would come into existence only on the transaction they had discussed being recorded in a contract for sale prepared by a solicitor. It is also relevant that the conversation occurred by telephone and the terms of the transaction were not straightforward. In all the circumstances, a reasonable person in the position of the parties would, in my view, have taken them to intend that no binding contract would come into existence until they had approved and signed a contract of sale prepared by a solicitor retained for that purpose.

Second issue: fraudulent misrepresentation

1. The representation said to be fraudulent is pleaded in the SOC at [16(d)] and [20]: [16] On or about a date between about 14 October 2022 and 30 October 2022, the First and Second Defendants handed the Plaintiff a document, which was a contract for sale for the Property ... and asked her to sign it in circumstances where: ... (d) the First and Second Defendant falsely represented to the Plaintiff that the terms of the Contract of Sale reflected the terms of the Agreement; ...
2. The particulars to SOC [16] refer to the conversations between the parties at Troy and Donna's house on 14 October 2022 and also '30 October 2022' (the latter presumably being a reference to the meeting on 23 October 2022 when the Contract was signed). The 'Agreement' is defined in the SOC as the oral agreement referred to at [102] above.

Principles

1. In Derry v Peek [1889] UKHL 1; (1889) 14 App Cas 337 at 374, Lord Herschell said: Fraud is proved when it is shewn that a false representation has been made (1) knowingly, or (2) without belief in its truth, (3) recklessly, careless whether it be true or false. Although I have treated the second and third as distinct cases, I think the third is but an instance of the second, for one who makes a statement under such circumstances can have no real belief in the truth of what he states. To prevent a false statement being fraudulent, there must, I think always be an honest belief in its truth. And this probably covers the whole ground, for one who knowingly alleges that which is false, has obviously no such honest belief.
2. In Magill v Magill (2006) 226 CLR 551; [2006] HCA 51 at [114], Gummow, Kirby and Crennan JJ said (footnotes omitted): The modern tort of deceit will be established where a plaintiff can show five elements: first, that the defendant made a false representation; secondly, that the defendant made the representation with the knowledge that it was false, or that the defendant was reckless or careless as to whether the representation was false or not; thirdly, that the defendant made the representation with the intention that it be relied upon by the plaintiff; fourthly, that the plaintiff acted in reliance on the false representation; and fifthly, that the plaintiff suffered damage which was caused by reliance on the false representation. Generally, the elements of the tort have been found to exist in cases which concern pecuniary loss flowing from a false inducement and the need to satisfy each element has always been strictly enforced, because fraud is such a serious allegation.
3. Fraud always involves an element of dishonesty or moral turpitude: Bahr v Nicolay (No 2) (1988) 164 CLR 604; [1988] HCA 16 at 614; and should not lightly be made: see Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563; [1995] HCA 68 at 578-579, and Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 39. In the latter case, the plurality said at [22]: … And since at least 1889 and the well-known decision of the House of Lords in Derry v Peek, it has been firmly established that a false statement, made through carelessness and without reasonable grounds for believing it to be true, may be evidence of fraud but does not necessarily amount to fraud. As four members of this Court said in Krakowski v Eurolynx Properties Ltd: "In order to succeed in fraud, a representee must prove, inter alia, that the representor had no honest belief in the truth of the representation in the sense in which the representor intended it to be understood."

Plaintiff's submissions

1. The plaintiff submitted that the evidence establishes that Troy said to Brenda at the meeting on 23 October 2022 that the contract for sale she was asked to sign reflected what was agreed between the parties during September 2022, namely a contract price of $540,000 (or, if the court accepts what Troy and Donna assert, an agreed price of $495,000) and reflected the terms as discussed on 14 October 2022, when it did not, adequately satisfies the elements of fraudulent misrepresentation against Brenda. This is because (a) Troy and Donna knew it to be false, (b) Troy and Donna knew that Brenda had relied on the falsehood, and (c) Brenda's reliance resulted in her suffering a loss of $407,200.
2. The admission by Troy and Donna in their Amended Defence at [16(a)] that the agreed price was more than $130,000 is a concession by the defendants that they fraudulently misrepresented the contract price to Brenda. In addition, the court should accept Tracy's evidence that Donna admitted to Tracy on 4 and 12 January 2023 in the conversations referred to earlier that Donna and Troy had breached the agreement reached with Brenda on 14 October 2022.

Defendants' submissions

1. The defendants submitted that the claim for fraudulent misrepresentation was hopeless and ought to be dismissed as none of the elements for deceit as stated in Magill set out above are established.
2. As to whether a false representation was made, the false representation which is said to have been made is that the terms of the contract for sale reflected the terms of the Agreement as defined in the SOC at [12]: SOC at [16(d)]. If the 'Agreement' pleaded in the SOC is not established or the court accepts the defendants' submission that the price of $540,000 was not agreed in the conversation on 14 October 2022, the first element is not met.
3. In considering whether the representation pleaded was said requires a consideration of the conduct as a whole which must be examined to ascertain what truly was said and what was conveyed: Girchow Enterprises Pty Ltd v Ultimate Franchising Group Pty Ltd [2023] FCA 420 at [12], per Thawley J. It is conduct as a whole in light of the relevant surrounding facts and circumstances that is relevant (Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60 at [109]).
4. The defendants submitted that there are two glaring problems with the representation pleaded: First, Brenda, for the first time, conceded in cross-examination that she saw the front page of the contract and observed a sale price of $130,000 (T111:10-111:17 and 112:38-113:7). Second, this was Brenda's third contract for sale in the preceding 18 months: she admitted in cross-examination that she knew it was a contract for sale and that the Land was being conveyed to Troy and Donna (T 114:48-114:50 and 115:12-115:17). Brenda was never frank about either of these matters in her affidavits. In these circumstances and based on these admissions, it is submitted that the Court should not find that the representation pleaded and alleged was ever said.
5. Separately, Troy and Donna proceeded on the basis of the transfer of the Land to them to be used as a mortgage to obtain finance. Tracy proceeded on the basis that the transfer could only occur in April 2023 when finance was approved. That has led Brenda to assert that the representation was made in the terms that it was false. Tracy's version of the conversation (set out earlier) and Brenda's apparent reliance on it is premised on Tracy's misapprehension of the transaction and her belief the bank could not advance money to Troy and Brenda if the Land was transferred at $130,000.

Consideration

1. There are three fundamental difficulties with the plaintiff's fraudulent representation claim. First, the false representation pleaded is that the terms of the contract of sale which Brenda was asked to sign reflected the terms of the agreement reached at the end of September 2022. I have concluded for the reasons given above that no agreement was reached at the end of September 2022. Further, no representation was made at the meeting on 23 October 2022 that the contract for sale reflected the terms of what had been agreed at the end of September 2022 (no doubt because matters had moved on to the discussion of the terms of the sale in the telephone conversation with Tracy which occurred on 14 October 2022). That of itself leads to the conclusion that the false representation pleaded was not made.
2. Second, no representation was made at the meeting on 23 October 2022 that the contract for sale which Brenda was asked to sign reflected all the terms of what had been agreed in the telephone conversation on 14 October 2022. Troy did, as Brenda accepts, say to Brenda at the meeting that a further document was required (being a letter to be prepared by a solicitor). The representation made at the meeting was that the contract for sale together with that further document would reflect the agreement reached earlier. I have found that what had been agreed at the meeting on 14 October 2022 was that a further amount of $410,000 would be payable, subject to finance being obtained, but there was ambiguity in the discussions about when title to the Land would pass. I am not satisfied on all the evidence that Troy or Donna knew that the agreement reached on 14 October 2022 included a requirement that title to the Land was not to pass until payment of the purchase price in full.
3. Of course, that further document mentioned by Troy was not entered into. However, looking at the matter at the time of the meeting on 23 October 2022, Troy did not represent that the contract which Brenda was asked to sign reflected the entirety of the agreement reached previously (to the contrary, he acknowledged that a further document was needed) and while the contract provided for completion to occur 42 days after the date of the contract, he did not make a representation about the terms of the contract which he knew to be false.
4. Third, Brenda knew that the contract she was asked to sign did not contain the entirety of the terms of their agreement, most significant of which was the further payment to be made by Troy and Donna in respect of the purchase price if finance was obtained. Accordingly, she has not established that she acted in reliance on a false representation about the conformity of the contract she was asked to sign with a prior agreement as to the purchase price.

Principles

1. The parties are not in dispute as to the principles to be applied in relation to unconscionable conduct. The essential elements which need to be established are: first, that one party (the 'weaker' party) to a transaction is placed at a special disadvantage, vis-à-vis the other (the 'stronger' party); second, that the weaker party has knowledge of that special disadvantage; and third, there is an unconscientious exploitation by the stronger party of the weaker party's special disadvantage. These principles were summarised by Meagher and Payne JJA in Mentink v Olsen [2020] NSWCA 182 as follows: [2] Where a party seeks to set aside a transaction on the basis of unconscionable conduct, it must be established (1) that one party to the transaction is placed at a "special disadvantage" vis-à-vis the other in the sense that the disabling condition or circumstance is one which seriously affects the ability of that party to make a judgment as to his or her own best interests; and (2) that the other party understood the plaintiff to be at a special disadvantage and its effect with respect to his or her not being in a position to look after his or her interests. Where those circumstances make it prima facie unfair or "unconscientious" that the "stronger party" procure or accept the weaker party's assent to the impugned transaction, the onus is cast on the stronger party to show that it was fair, just and reasonable: Commercial Bank of Australia v Amadio (1983) 151 CLR 447 at 461-462 (Mason J), 474 (Deane J, Mason and Wilson JJ agreeing); [1983] HCA 14 . [3] Both parties are agreed that the deceased had testamentary capacity to make the will of 15 October 2016 and the codicil of 2 November 2016. It did not follow that the deceased could not be under a special disadvantage in the relevant sense. Such a disadvantage may be situational or relational, have been created or exacerbated by an absence of advice or explanation, and may coexist with a "full understanding" of the transaction: as to the latter, see Bridgewater v Leahy (1998) 194 CLR 457; [1998] HCA 66 at [115]. As Mason J explained in Amadio at 461, in cases of unconscionability "the will of the innocent party, even if independent and voluntary, is the result of the disadvantageous position in which he is placed and of the other party unconscientiously taking advantage of that position". [4] The innocent party must have been under a disadvantage that was "special" in the sense that it involved an inability "to make a judgment as to his or her own best interests": Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49 at [64]; or "to make worthwhile decisions in his [or her] own interests": Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392; [2013] HCA 25 at [124]. But the question of whether the deceased was under such a disadvantage is not to be considered separately from the other relevant circumstances, and particularly her relationship with the appellant: Kakavas at [122]-[124].

Plaintiff's submissions

1. It was submitted for the plaintiff that the conduct of Troy and Donna evidences a joint effort to retain a benefit obtained by them through the exploitation of a special disability that Brenda was under during the course of discussions in September and October 2022. That special disability was evidenced by a number of matters, including the following: 1. Brenda was around 67 years old when negotiations to purchase the Land took place; 2. Troy and Donna had access to Brenda's emails and bank accounts; 3. Brenda was reliant upon Troy to assist her with her interactions with Hotondo Homes regarding the design of a proposed house on the Land, as well as her dealings with Hotondo Homes regarding the debt for $18,826 which arose when the project was not proceeded with; 4. Brenda was reliant upon Troy and Donna I relation to the sale of the Land given they both knew that Brenda wished to move into a retirement village unit but had limited personal funds, and due to the inability to sell the Land through Wiseberry had a shortfall of funds required to settle her purchase of her retirement unit on 19 October 2022; 5. Brenda relied on Troy to contact Mr Davidson in relation to the preparation of the contract of sale and that it would contain what was orally agreed on 14 October 2022; 6. Brenda relied on Troy and Donna when it came to signing the contract for sale that it reflected what had been agreed to orally; 7. Brenda did not receive any legal or financial advice in relation to the contract for sale; 8. Brenda feared that if she did not sign the contract for sale, she would 'lose [her] retirement village home' as a result of what Troy said to her at the meeting on 23 October 2022; 9. Brenda had a lack of understanding of the precise terms of the contract for sale, no real opportunity to read it and was placed under a feeling of pressure to sign it; 10. Brenda had a lack of knowledge of the improvident nature of the transaction in that she gave up any interest in the Land, without any document recording what had been agreed orally about the payment of the balance of the purchase price.
2. It was submitted that Brenda was in a position of special disadvantage or disability at the time she was invited to execute the contract for sale, which disadvantage was unconscientiously taken advantage of by Troy and his wife. At the time, she was transitioning into retirement to her recently purchased retirement unit and her only asset was the Land, which she considered was being purchased by Troy and Donna for the sum of $540,000 and that the contract for sale reflected those terms. Brenda relied upon Troy for nearly all activities in her life demonstrating a dependence that placed her in a vulnerable position vis-à-vis Troy.

Defendants' submissions

1. The defendants submitted that while Brenda attempted to portray herself as effectively unable to protect her interests, the evidence established otherwise. In particular: (a) she dealt with two standard contracts for sale of land and the retirement unit contract before October 2023; (b) she independently retained professionals to advise her as to those contracts and had an understanding of them; (c) she dealt with and entered into two agency agreements with real estate agents before October 2023; (d) she sent at least one email and used email.; (e) she spent the equivalent of a day in the witness box and was argumentative to the end; and (f) she also led her brother to believe that Troy treated her poorly and stole from her notwithstanding the concessions she made referred to at [133] above.
2. Further, the fact that Brenda is pursuing this litigation with the sole intent of obtaining damages or equitable compensation based on a value of the Land of $540,000 (as distinct from seeking an order setting aside the transaction), informs the Court that she well able to discern her financial and legal interests.
3. The defendants submitted that in all the circumstances, the claim based on unconscionability (or undue influence) could not stand, given that Tracy accepted in cross examination that at no time had Troy or Donna ever suggested that they were entitled to keep the Land for $130,000 and Troy had told Brenda on 23 February 2023 that he would 'sign it back over'.
4. Even if the unconscionable conduct or undue influence claims were made out, it would not be equitable to assess damages commencing at a price for the Land of $540,000 given it is common ground that the agreement was always subject to finance and the appraisals of value of the Land are well below $500,000. Setting aside the transfer would be sufficient.

Consideration

1. I accept the plaintiff's submission summarised at [160] above that Brenda was under a special disadvantage at the time the Contract was signed. In particular, her age, relative poverty (reliant on the aged pension), lack of education, lack of business experience, and reliance on Troy, all placed her at a serious disadvantage vis-a-vis Troy and Donna which affected her ability to make a judgment as to what was in her best interests. Troy and Donna clearly knew that Brenda was under this serious disadvantage. The Contract was clearly an improvident transaction - it was a transfer of her most significant asset (apart from her retirement unit) for a price significantly less than market value, in circumstances where there was no agreement recording any obligation on Troy or Donna to pay her any further amount or at any particular time.
2. In these circumstances, the evidentiary onus shifts to Troy and Brenda to establish that the Contract and transfer were fair, just and reasonable. Critical to the discharge of that evidentiary onus is whether Brenda was given independent advice. I am satisfied on the evidence that she was not.
3. Based on a consideration of all the evidence, in my opinion the defendants unconscionably took advantage of the special disadvantage under which Brenda was operating to bring about the Contract and the transfer. Accordingly, the Contract and transfer were unconscionable transactions and should be set aside.
4. The usual remedy where a transaction has been found to be tainted by undue influence or unconscionable conduct is rescission. The transaction is set aside, and the parties are put back in the position they would have been in had the transaction not occurred, on the basis that the party who seeks equity must do equity: Ah Sam v Mortimer [2021] NSWCA 327 at [137]. Nevertheless, the Court may fashion a remedy to do 'practical justice' between the parties as appropriate in the circumstances, but without allowing one party to obtain an unwarranted benefit at the expense of the other: Vadasz v Pioneer Concrete (SA) Pty Ltd (1995) 184 CLR 102; [1995] HCA 14 at 113-114; Bridgewater v Leahy (1998) 194 CLR 457; [1998] HCA 66 at [124]-[127].
5. The plaintiff seeks equitable compensation of $407,200 which represents what she alleges is the unpaid purchase price for the Land. Equitable compensation might be awarded to a plaintiff for any loss suffered by reason of a transaction vitiated by unconscionable conduct: see eg. McFarlane v McFarlane [2021] VSC 197 at [64]-[68] per Richards J. However, to do so in this case would confer an unwarranted benefit on the plaintiff. In this case, the transaction can be unwound, and the plaintiff has not demonstrated any loss which would not be adequately remedied by her regaining title to the Land. The Court can do practical justice by ordering the sale of the Land through a receiver appointed by the Court, thereby allowing the plaintiff to secure the market value of the Land, subject to repaying the amounts of $130,000 and $2,800 paid to her by the defendants. Equitable compensation would not be appropriate in these circumstances.

Principles

1. Under the doctrine of undue influence, a court of equity will set aside an improvident or substantial transaction that was unconscientiously procured as a consequence of the relationship between the parties to that transaction. It is insufficient that there is mere inequality in bargaining power, rather the relationship must be one which gives rise 'to such influence over the mind of the other that the act of the other is not a "free act"': Thorne v Kennedy at [31].
2. There are relationships which by themselves give rise to a presumption of undue influence. That is not the case here, but the presumption 'can also be raised by proof that the history of the particular relationship involved one party occupying a similar position of ascendency or influence, and the other a corresponding position of dependency or trust': Thorne v Kennedy at [34] citing Johnson v Buttress (1936) 56 CLR 113; [1936] HCA 41 at 134-35 per Dixon J.
3. The High Court in Thorne v Kennedy at [34] stated that (citations omitted): Common experience gives rise to a presumption that a transaction was not the exercise of a person's free will if (i) the person is proved to be in a particular relationship, and (ii) the transaction is one, commonly involving a "substantial benefit" to another, which cannot be explained by "ordinary motives", or "is not readily explicable by the relationship of the parties".
4. In relation to the latter condition, it must be proved that the transaction was 'so improvident or the gift is so substantial as not to be reasonably accounted for on the ground of friendship, relationship, charity or other ordinary motives on which ordinary persons act': Brown v Barber [2020] WASC 84 at [316] quoting Sir Frederick Jordan, Chapters on Equity in New South Wales (6th ed, 1947). It is not the relationship alone that gives rise to the presumption but rather the specific transaction within the context of a relationship of ascendancy and corresponding dependency.
5. As Emmett AJA set out in Tomanovic Multitown Pty Ltd v Interlux Projects Pty Ltd [2021] NSWSC 190 at [89] (footnotes omitted): Undue influence can exist from very different sources. For example, excessive pressure may give rise to undue influence. However, since pressure is but one of the sources for the inference that one person may exert undue influence over another, it is not necessary that pressure that contributes to a conclusion of undue influence be characterised as illegitimate or improper. A person can be subjected to undue influence where the effect of factors such as pressure is that the person has no free will. Where a party is not a free agent and is not equal to protecting himself or herself, the Court will protect him or her. Undue influence can arise from the deliberate contrivance of another, which includes pressure, giving rise to such influence over the mind of the other that the act is not a free act. The question whether a person's act is free requires consideration of the extent to which the person was constrained in assessing alternatives and deciding between them. Thus, pressure can deprive a person of free choice where it causes the person to subordinate his or her will to that of another party. Questions of degree are involved but, at the very least, the judgment of the party seeking relief must be shown to be "markedly sub-standard" as a result of the effect upon that person's mind of the will of another. There are various ways in which undue influence can be established. There may be a presumption that a transaction was not the exercise of a person's free will if the person is proved to be in a particular relationship and the transaction is one involving a substantial benefit to another that cannot be explained by ordinary motives or is not readily explicable by the relationship of the parties.

Plaintiff's submissions

1. The plaintiff submitted that there was a sufficient relationship of dependency by Brenda upon Troy and Donna, or ascendancy exercised over Brenda to give rise to a presumption of undue influence. By the time that Brenda had decided to sell the Land in June 2022, she was in an increasing position of dependency on Troy. That was particularly so once Troy and Donna offered to purchase the Land from her - an offer which she duly accepted. The evidence of Brenda is replete with her subjective views and objective conduct that she had a clear relationship of dependence and trust reposed in Troy and Donna, which became more acute over time. That level of trust reached a crescendo at the execution of the contract on 23 October 2022 given the overwhelming financial vulnerability that that transaction placed Brenda in. There can be no doubt that Brenda assumed that the contract for sale reflected the entirety of the agreement reached with the respect to the Land. The matters referred to above in respect of the submissions as to unconscionability strongly inform the conclusion that Brenda's entry into the contract for sale was caused by the undue influence of Troy and Donna.

Defendants' submissions

1. The defendants' submissions regarding the undue influence claim were essentially the same as for the unconscionable conduct claim.

Consideration

1. In view of my conclusion on the unconscionable conduct issue, this issue does not arise. However, for essentially the same reasons, I consider that the plaintiff has established her case of undue influence on the part of the defendants. In my opinion the evidence establishes that in the period from around June 2021 to October 2022, Brenda placed trust and confidence in Troy, and to a lesser extent, Donna as members of her family with whom she resided for all or part of that time. Donna acknowledged in cross examination that Brenda relied on Troy (T287.37), and this is confirmed by the fact that she trusted him to deal with Hotondo Homes and Wiseberry in relation to the Land. This placed Troy in a position of being able to exert influence over Brenda. Troy did so by exerting pressure on Brenda to sign the Contract at the meeting on 23 October 2023: see [101] above. For the reasons already given, the transaction was improvident, conferring a very substantial benefit on Troy and Donna which cannot be explained by the relationship of the parties, and consequently the presumption that it resulted from undue influence arises. In my view, Troy and Donna have not discharged their evidentiary onus of establishing that Brenda knew what she was doing when she signed the Contract, and that the transaction was the result of her free will.
2. The relief to which Brenda would be entitled for this claim is the same as for the unconscionable conduct claim.

Cross-claim

1. In light of the conclusions reached above, the relief sought in the cross-claim does not arise and it should be dismissed.

Conclusion

1. The plaintiff has not succeeded in her claim for an equitable lien or that the defendants made a fraudulent misrepresentation as pleaded. However, she has succeeded in her alternative claim that the Contract and transfer are vitiated by the unconscionable conduct of the defendants.
2. The appropriate remedy is that the Contract and transfer are set aside, a receiver be appointed to sell the Land and the defendants are refunded the amounts of $130,000 and $2,800 which they paid to the plaintiff out of the proceeds of sale. The parties were agreed that the appropriate course is for the Court to appoint a receiver for the purpose of selling and disbursing the proceeds of sale of the Land. The consent of Mr Christopher Darin to act as receiver has been obtained with the estimate of his remuneration being in the vicinity of between $5,000-$7,000 plus GST but in any event capped at $7,000 plus GST. It is appropriate that he is appointed as the receiver to effect the sale of the Land.
3. The cross-claim should be dismissed.
4. I will hear the parties as to costs.
5. I will give the parties seven days to bring in short minutes of order to give effect to these reasons, including a timetable for submissions on costs. If the parties cannot agree on the form of the orders, they are to provide their respective versions of the proposed orders to my Associate together with a short outline of submissions of no more than three pages in support of their proposed orders.

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