Hurt v Freeman

INTRODUCTION AND OVERVIEW 3 NARRATIVE OF FACTS 5 Events of 1980 9 Events of 1981 15 Events of 1982 18 Events of 1983 20 The September 1993 contract for sale 27 Late 1983 29 Events of 1984 29 Mrs Hurt's final Will 35 Events of 1985 37 Completion of contract for sale 37 The Defendant sells the property without accounting for the proceeds to the Plaintiffs 38 The Plaintiffs Statement of Claim 39 QUESTIONS FOR RESOLUTION 40 Question 1 - Representations 42 Conclusion on Question 1 66 Question 2 - Assumption operative at time of contract 66 Conclusion on Question 2 67 Question 3 - Enforceability by Defendant of rights under Contract of Sale 67 Question 4 - Assumption operative at time of completion of contract. 69 Question 5 - Unconscionability 69 Conclusion 73 Question 6 - Minimum equity to remedy 73 Conclusion 76 Question 7 - Constructive Trust and Tracing 76 Unconscionability 77 Conclusion 78 Equitable Estoppel 78 Conclusion 80 Common intention 81 Conclusion 82 Tracing 82 Question 8 - Limitations 83 Conclusion 87 Question 9 - Laches 88 Conclusion 91 Incidental Questions 91 (a) If the Defendant had made the promise, why would he have sold the property in 1997 or not have hidden the proceeds? 91 (b) The representations do not make sense and clearly were not in the self-interest of the Defendant. 92 OVERALL CONCLUSION 93 ORDERS AND COSTS 94

INTRODUCTION AND OVERVIEW 1 This is a claim for equitable relief commenced on 28 September 1999. It is brought by the Plaintiffs who are in the first two cases the two children (married sons) while the remaining five Plaintiffs are the five grandchildren of the now deceased Mrs Hurt. It arises out of representations said to have been made by the Defendant, who was a close friend of the deceased. The Defendant denies making them. The basis of the Plaintiffs' claim is that when Mrs Hurt entered into a written contract in September 1983 for the sale of the family home at Longueville to the Defendant (Mr Ray Freeman) for a sum substantially below its market price, she did so in reliance on these alleged representations made to her by the Defendant. She had known him since 1973. At the time of the contract, she was 90 years of age. There was a 44 year age difference between them, their's being a companionate friendship in which (according to the Plaintiffs) he was clearly in the ascendant. It began in 1973 and continued until her death in 1986 at the age of 93. 2 The representations are said to have been operative both at the time of Mrs Hurt's entry into the contract and at its completion in June 1985, fourteen months before her death. They were, according to the Plaintiffs, promises that if the Defendant acquired the property he would return it, or the proceeds arising from its sale (subject to deductions made for his purchase price and any capital expenditure incurred by him), to the family of Mrs Hurt when he no longer had any use for the property. On the basis of those representations the Plaintiffs claim that after acquiring title to the property the Defendant held the Property (or such net proceeds as resulted from its sale) upon trust for the Plaintiffs, subject to his rights for indefinite occupation. 3 Following Mrs Hurt's death in August 1986, and a nine year period overseas the Defendant returned to Australia and departed from these alleged representations. He did so by selling the Longueville property without notifying the Plaintiffs or distributing to them any net proceeds (in accordance with his alleged representations). It is contended that the Defendant acted unconscionably in so doing and in departing from the shared assumption brought about by those representations, relied upon by Mrs Hurt to her detriment. Using the proceeds from the sale the Defendant purchased a property in Paddington. Accordingly, the Plaintiffs seek to trace into the Paddington property and into the Defendant's assets, such being in aid of relief by way of remedial constructive trust over that property as well as over a policy, purchased using the proceeds of sale. 4 The Defendant strenuously disputes all these claims and in particular that he ever made such representations to Mrs Hurt in relation to the property. He contends that in any event, the causes of action relied upon by the Plaintiffs arose more than six years prior to commencement of these proceedings and as such are either barred by the Limitation Act 1969 (NSW) or by laches. The Plaintiffs respond by contending that their cause of action arose at the earliest in October 1997 when the Defendant refused to honour and fulfil his alleged promises to Mrs Hurt. This was when the Defendant sold the Property, after ceasing to reside there, failing (according to the Plaintiffs) properly to account for the proceeds in accordance with the alleged representations. Alternatively (say the Plaintiffs) their cause of action arose in July 1998 being the first date the Plaintiffs discovered, and with reasonable diligence could have discovered, the facts giving rise to their cause of action. Laches is denied. The Plaintiffs seek to explain their not bringing proceedings earlier, on the basis that they waited to see whether or not the Defendant would perform his promise when the time came for it to be performed. 5 The other issues are set out later in this judgment, under the heading "Questions for Resolution". NARRATIVE OF FACTS 6 I include below a narrative of largely uncontroversial facts, but identifying any points of dispute between the parties and their alternative versions. Where the late Mrs Hurt's correspondence has been summarised, or its effect given, this was done by the Plaintiffs' legal advisers, as to selected passages which the Plaintiffs contend bear on the issues of this case. It is accepted by the Defendant as an accurate summation of what those passages actually say. The Defendant would still draw different conclusions from the Plaintiffs, as to the significance of what is said in the letters, in relation to the issues in this case. The Defendant invited a reading of all the letters for overall impression but did not identify any other letter or other passages for specific attention. 7 The First and Second Plaintiffs (Dr Bruce Hurt and Mr Robert Hurt respectively) are the sons of the late Winfred Amelia Hurt. I shall refer to them as Bruce Hurt and Robert Hurt respectively. Mrs Hurt was born on 4 May 1893 and died on 6 August 1986 aged 93 years. The Third to Seventh Plaintiffs are the grandchildren of Mrs Hurt. 8 Mrs Hurt lived in the home at 32 Lucretia Avenue Longueville ("the Property") between 1928 and 1984. Until 1968 she lived there with her husband, Eric Hurt, and thereafter she lived there on her own as a widow. 9 Until 1968 the title to the property was in her husband's name. The title then passed under her husband's Will to Mrs Hurt. 10 The property consisted of an older style home with separate lounge, dining room, sleep out and sunroom on a 901 metre square block in Longueville. It was a north facing waterfront block with views overlooking Woodford Bay of some value. 11 After her husband's death, Mrs Hurt remained in regular contact with her sons. She was particularly close to the Second Plaintiff, Robert Hurt even though he worked in the Public Service in Canberra. They very frequently exchanged lengthy letters and shared many thoughts and feelings. 12 The Defendant says that he first met Mrs Hurt in about February 1973. The Defendant was then 36 years of age and Mrs Hurt was almost 80 years of age such that there was a 44 year age difference. At that stage he was Special Events Manager for David Jones Australia. He was attempting to set up a museum of vintage merchandise which had been purchased from David Jones in years gone by. Mrs Hurt offered to donate a dress she had made from material purchased from David Jones. A month or two later the Defendant visited Mrs Hurt at home and later collected the dress (Defendant's affidavit paras 9-13). 13 The Defendant asserts that by about 1975 or 1976 he and Mrs Hurt developed a close relationship of friendship. He says the relationship was based on their common interests including the opera and ballet. They were both involved in charities. Mrs Hurt was the Secretary of the Lady Mayoress' Fundraising Committee. The Defendant says he was involved in a number of charities. The Defendant says that by 1975 they would see each other one a week for lunch when he was in Sydney, either at a restaurant in David Jones or at her house; they went to some social events together, including the opera, ballet and symphony. He says that when he was in Sydney they spoke almost every day by telephone and when he was overseas on business he would telephone her about once a week. The Defendant says that he gave gifts to Mrs Hurt, such as flowers, soaps, perfumes, catalogues or magazines which he had purchased overseas. He says that she brought gifts to him such as cookies, cakes, pies, coins, stamps and other mementoes and keepsakes (Defendant paras 14-30). 14 The Defendant says he came to consider Mrs Hurt as one of his closest friends (Defendant para 25). 15 The Defendant says that in January 1977 Mrs Hurt inquired whether he would come and live with her if she put another floor on the house. He says he rejected the offer as out of the question because he was very happy where he was (Defendant para 31). 16 The Defendant says that in about 1978 Mrs Hurt asked him to consider one day living at the house in Longueville. According to him she said "this is a beautiful area and much nicer than where you are living. After I leave the house, I would like someone who really appreciates the view and the area to live here" (Defendant para 33). 17 Although the Plaintiffs have been unable to locate a copy, there is other evidence that Mrs Hurt's Will in 1980 left the property and all of her assets to her two sons in equal shares: (see for example letter 7 May 1980, Mrs Hurt to Robert Hurt at p5). By 1980 the ages of Mrs Hurt's sons and grandchildren were as follows: Robert Hurt, 57 Bruce Hurt, 54 Sally Hurt (now White) - Bruce's daughter, 20 Gina Hurt (now Sutton) - Bruce's daughter, 17 Andrew Hurt - Bruce's son, 15 Eric Hurt - Robert's son, 12 Robert Hurt - Robert's son, 7. 18 Apart from the property, Mrs Hurt had very few other assets which she could leave to her children or grandchildren. She was by 1980, 87 years old. 19 By early to mid 1980, Mrs Hurt had formed the view that she wanted the Defendant to live in the property after she died or no longer needed it. She had a number of reasons. These are brought out in her correspondence to the Second Plaintiff. She believed that the Defendant would appreciate the peace and beauty of the property (See letters from Mrs Hurt to Robert 7 May 1980 (PX1 at 92); 22 June 1980 (PX1 at 110)). She wanted him to live in something better than what she believed to be his current dark rented home in Surry Hills, set in a poor neighbourhood (See letter from Mrs Hurt to Robert 15 April 1980 (PX1 at 81)). She believed that she and the Defendant shared much in common, especially in terms of spiritual and moral values (See letter from Mrs Hurt to Robert 27 May 1980 (PX1 at 98)). She thought he was a good man who had worked very hard from humble upbringings to make a great success of his life (See letters from Mrs Hurt to Robert 7 May 1980 (PX1 at 92); 8 February 1982 (PX1 at 177-78)). She thought that he was highly regarded in society (See letters from Mrs Hurt to Robert 7 May 1980 (PX1 at 91); 8 October 1980 (PX1 at 120)). She believed he was extremely generous to his mother and his sister and her two children (See letter from Mrs Hurt to Robert 27 May 1980 (PX1 at 98)). She also thought that her two sons may not wish to live there (See letters from Mrs Hurt to Robert 25 January 1981 (PX1 at 156); 16 February 1982 (PX1 at 183); 28 October 1982 (PX1 at 216)). 20 The correspondence from Mrs Hurt to the Second Plaintiff suggests that Mrs Hurt had made or believed she had made a promise to the Defendant that he could live in the house after she ceased to need it, and that she felt morally bound to keep this promise: (see letters from Mrs Hurt to Robert 7 May 1980 (PX1 at 93); 22 June 1980 (PX1 at 109-110); 27 June 1980 (PX1 at 112-113)). 21 Mrs Hurt's correspondence also evidences her anxiety not to disinherit her children and grandchildren (See letters from Mrs Hurt to Robert 6 May 1980 (PX1 at 88); 15 April 1980 (PX1 at 79); 3 June 1980 (PX1 at 103)). She appreciated that the property was her only substantial asset and that in the ordinary course it would pass to her sons. 22 Accordingly, it is the Plaintiffs' case (disputed by the Defendant) that Mrs Hurt formed the view, notwithstanding her promise to the Defendant, that the most appropriate compromise by which to resolve this dilemma would be that the Defendant might live in the property for so long as he wished, and that the property would revert to the Hurt family after the Defendant ceased to live in it or no longer needed it (for example see letter from Mrs Hurt to Robert 25 January 1981 (PX1 at 123)). 23 Consistent with that case the Plaintiffs contend that in the period from 1980 until June 1985 (when he acquired title to the property upon completion of the sale) the Defendant repeatedly both acquiesced in Mrs Hurt's expressed wish and intention and moreover expressly promised Mrs Hurt that he would observe it. Again this is disputed by the Defendant. 24 The manner in which the sale transaction between the Defendant and Mrs Hurt developed between 1980 and 1985 is set out below. As evidence of these facts the Plaintiffs rely on statements made by Mrs Hurt in her letters, especially to the Second Plaintiff. The Plaintiffs contend that those letters are reliable and accurate in what they record as to conversations between the Defendant and Mrs Hurt, and Mrs Hurt's state of mind from time to time. On the other hand, the Defendant claims that Mrs Hurt's competing loyalties led her to seek to reassure the Plaintiffs that they would not be disadvantaged by her wish to benefit the Defendant. Accordingly, the Defendant denies (Affidavit para 42) having made the representations hereafter referred to (in the letters of 22 October 1980, 13 January 1981, 3 March 1981 and 23 January 1983) and contends that Mrs Hurt's letters to the Second Plaintiff are wholly consistent with her wishing only to alleviate any concerns that he or his brother may have had. Events of 1980 25 The first document that the Plaintiffs claim evidences Mrs Hurt's promise to the Defendant is contained in her letter to the Second Plaintiff dated 15 April 1980 (PX1 at 72), especially pages 8-10 (PX1 at 79-81). The following points emerge: (a) she felt she was morally bound to keep a promise she had made to the Defendant; (b) it was her chance remark to the Defendant which brought forth the request he would like the opportunity to buy the property; (c) she would know the person who would occupy the house when she had to leave it; (d) the Defendant assured her she could live in the house as long as she wanted to; and (e) Mrs Hurt said she could not believe what the real estate agents were saying the property was worth. She offered the property to the Defendant for purchase at a maximum price of $50,000 - to which he agreed. 26 Mrs Hurt's letter to the Second Plaintiff of 18 April 1980 (PX1 at 85) records that: (a) the First Plaintiff had visited her to "read the riot act"; (b) she should not proceed to sell the property to the Defendant. This closed the chapter; (c) she had heard on the news that real estate prices were increasing in Sydney because of a shortage of dwellings. There was an increase from $42,000 in 1978 to $65,000 in 1980 for a suburban home. Prices had not increased in Melbourne. 27 Mrs Hurt's letter to the Second Plaintiff of 6 May1980 (PX1 at 87) records: (a) Mrs Hurt was wondering why she could not do what she wanted with what was hers. Yet she was unwilling to do anything which would hurt her sons. Somehow there must be a compromise; and (b) she again referred to escalating property prices in Sydney. 28 Mrs Hurt wrote again to the Second Plaintiff the next day, 7 May1980 (PX1 at 89) once more raising the house at length. The letter records: (a) That she wanted to feel that the Defendant could live in the property when she is no longer able to; (b) she is concerned she has broken her promise to the Defendant; (c) if there is no other way she would hope to add a codicil to her Will that it is her wish that the Defendant be given the house at a price he can afford, and he certainly can't meet the present stupid outlandish figures the agents are advertising; and (d) she would like to be able to settle at $50,000 with the Second Plaintiff's consent. 29 Mrs Hurt's letter to the Second Plaintiff of 3 June 1980 (PX1 at 101) records: (a) the Defendant visited her the previous day during lunch and offered $60,000 for the property; (b) Mrs Hurt thought it an adequate, realistic price; and (c) she hoped that her father's Will could be worked out to Robert's advantage to make up for any deficiency in No. 32. 30 Mrs Hurt's letter to the Second Plaintiff of 22 June 1980 (PX1 at 109) recorded: (a) her upset that she could not keep her word to a person who was so worthy; (b) she had learned that she could not do as she liked with what she thought was hers; (c) she had received a letter from the Defendant who was in Bali. He had expressed thoughts and dreams of the future at No. 32 with real appreciation and wonder. She did not know how she could tell him. 31 Mrs Hurt's letter to the Second Plaintiff of 27 June 1980 (PX1 at 111) records: (a) a request to Robert to promise that when she was no longer in No. 32 for any reason that he would look after the Defendant and the house as she had promised he could have it for his home at a price he could afford to pay; (b) she said that she had accepted the Defendant's offer of $60,000 and had intended going ahead and making it legal, accepting a deposit and letting him pay monthly instalments, with him agreeing never to press to come and live here whilst she needed No. 32 as her home; (c) if she could have afforded it she would have gladly put a top storey on so he could live in it and to protect her; (d) she was so unhappy at the thought of telling him they could not go ahead with the agreed plan as Bruce was not happy for it to take place at present. Bruce was trying to protect her; (e) she wished to be fair in honouring her promise that Ray could have the house when she no longer required to live here at a price he could afford; and (f) she was making arrangements to get a valuation of No. 32. This was for her own satisfaction only. 32 A certificate of valuation was obtained from the Valuer General on or about 16 July 1980. It was a valuation of Mrs Hurt's interest as owner of the land with vacant possession. It included fixed floor and window coverings and light fittings. The value was $90,000. (Mrs Hurt later obtained a certified copy of the valuation on 17 December 1980). 33 So the position as of July 1980 was that Mrs Hurt wanted to sell the property to the Defendant so he could live in it as a home. The price discussed was $60,000. This sum was then well below the valuation of $90,000. Her sons, especially Bruce, had expressed opposition and the sale was not going ahead. 34 There is a gap in the correspondence until 8 October 1980. Mrs Hurt's letter to the Second Plaintiff of that date (PX1 at 117) records: (a) she was restless to get on to settling something about No. 32 to keep her promise to the Defendant, that the house is for him when she no longer required to live there; and (b) the Defendant was offering a deposit of $15,000 also and regular payments through his solicitors. 35 Mrs Hurt's letter of 22 October 1980 (PX1 at 121) to the Second Plaintiff records: (a) the Defendant came to see her on the previous day during his lunch hour so she could share with him Robert's concern about the future payment for the house; (b) Mrs Hurt and the Defendant had already agreed that when she died or no longer required to live in the house, the Defendant would be in a position to immediately occupy the dwelling and make arrangements to borrow the full amount owing on the house and settle with Robert and Bruce. There was never any idea of continuing with instalments at regular intervals; (c) "Ray is a very fine person and does not want to do anything to upset anyone - as a matter of fact he has said that he would rather lose the house than for me to have any worry about it - he has also said that when he no longer requires to live here he will want to arrange his affairs so that the house goes back into the Hurt family - He asks me to be sure and sends his regards to you and Emily and hopes to see you when you are in Sydney" [representation 1A]. 36 Mrs Hurt's letter probably written on 8 December 1980 (PX1 at 133) recorded she was still in a very disturbed state about No. 32 and her promise to the Defendant. She was waiting for the new valuation to have bargaining power. 37 Mrs Hurt's letter of 9 December 1980 (PX1 at 135) to the Second Plaintiff records: (a) the latest valuation on No. 32 was $90,000; (b) the Defendant was willing to put a $20,000 deposit (which would be paid to Robert and Bruce) and whatever monthly instalments are necessary. Mrs Hurt could live in the house for as long as she required to; and (c) the Defendant needed helping morally and spiritually. She would be failing him by not keeping her word. 38 As mentioned above, the Valuer General on 17 December 1980 sent to Mrs Hurt a certified copy of the valuation dated 16 July 1980 at $90,000. It is not clear from her letter of 9 December 1980 what was the total purchase price which the Defendant was offering to pay. 39 The Defendant says that he received a retrenchment package of approximately $18,000 from David Jones after he finished work on 21 November 1980. Thereafter he was unemployed until about September 1981 when he started with Wedgwood (Defendant para 40). Events of 1981 40 Mrs Hurt's letter to the Second Plaintiff dated 13 January 1981 (PX1 at 137) records: (a) the Defendant came to see her yesterday to talk about the house. He had been to the Commonwealth Bank to enquire about a trust fund that could start at $20,000 and accumulate with instalments and interest, which if one thinks of the future of the grandchildren this could earn for each the sum of $15,000 when they come of age. It could relieve Robert of anxiety for their future; (b) Mrs Hurt would die happy if she knew the Defendant could live in the house whilst he required to do so; (c) the Defendant was so anxious to bring it about now because he was about to receive the lump sum from David Jones which he must invest and he would feel in his older age that he would have a place of peace to come to; (d) Mrs Hurt had spoken with Bruce whom she quotes as saying to her that he would buy the house at the price his contact suggested ¾ $175,000; (e) the letter concluded "By the way - Ray says he would make provision for 32 to go back to the Hurt family when he no longer requires to live here" [representation 1B]. 41 There is a letter from the Second Plaintiff to Mrs Hurt dated 18 January 1981 (PX1 at 141) which records: (a) that Robert was concerned that there be any long term mortgage agreement. Mrs Hurt should ensure that the Defendant did not undertake a contract in relation to No. 32 that he could not afford; (b) Mrs Hurt apparently wished to set a sale price of $75,000 which was about three quarters (¾) of the Valuer General's valuation and probably half the current open market value; (c) a company could be established comprising five equal shares for each of the grandchildren to finance a loan to the Defendant of the balance between $75,000 and the initial payment of $22,000. There would be regular repayments including interest at a minimum of bank rates; (d) if the Defendant wished to reside elsewhere at any time the property would be offered to the finance company for repurchase on the same conditions as the Defendant brought it. He would finance its repurchase under the same conditions of contract; (e) these were some of the points which Mrs Hurt had told Robert about; (f) Robert's frank view was that the financing or mortgage agreement was unworkable. It would be far too expensive for Ray. They should protect him from an unhappily obligated future. 42 Mrs Hurt responded to this letter on 25 January 1981 (PX1 at 155): (a) she was sad she had caused Robert such deep concern by suggesting selling the house to the Defendant; (b) the Defendant realised that he must be thinking about his own future and a home - he never had anywhere that he could call home, only a place to eat and sleep; (c) Mrs Hurt had said enough - they would speak no more of selling No. 32; (d) the letter also records the Defendant's latest offer for the house was $90,000 not $75,000. 43 The Defendant says that in about February 1981 he purchased a derelict property at 291 Chalmers Street Redfern. The purchase price was $81,000. He says that he paid $20,000 and raised the balance by mortgage. This would appear to be use of the redundancy payment from David Jones. The Defendant says that in buying and renovating the property he spent in total about $165,000. Renovations were complete by November 1981 (Defendant paras 41-42). 44 Mrs Hurt's letter to the Second Plaintiff of 3 March 1981 (PX1 at 164) records: (a) she knows that Robert and Bruce are against her selling the property for any figure to Ray; (b) she feels morally bound to keep her promise to Ray that some day, when she no longer requires to, he can live at No. 32; (c) the only way to do this was to make it his home, when she leaves, with him undertaking to keep it up to saleable value, carrying out necessary repairs or alterations, maintain it so that when finally it is vacated by him, Robert and family, Bruce and family can have it back as heritage. If he spends money increasing the value of the property he would be reimbursed [representation 1C]; (d) she had discussed the legal aspect of this with her solicitor. She is not sure whether the Defendant would accept her terms as he hoped to buy the home. The Defendant was coming to see her that week and they would discuss it. 45 Mrs Hurt's letter to both sons written about 31 May1981 (PX1 at 173) discloses that she had instructed her solicitor to prepare a new Will which permitted the Defendant to possess the house to live in for as long as he wished to do so and at the end of such time the house would be sold and the proceeds divided into six shares, five for the grandchildren and one for the Defendant's own direction. Although this Will has not been located there is further evidence of it in the letter from Bruce to Robert dated 12 February 1982 recording statements made by Mrs Hurt about its contents. 46 Mrs Hurt's description of this Will records that: (a) The Defendant would be permitted to use the property as long as he wished to; and (b) It would then return to the Hurt family (or more specifically to the grandchildren, with the Defendant now being entitled to a one sixth share of the proceeds). 47 During 1981 Mrs Hurt gave the Defendant a cheque for $5,000 or $6,000. He asserts that it was a gift to help him come into No. 32 eventually (Defendant's Affidavit, paras 43 and 44). 48 There is then a gap in the correspondence until 1982. Events of 1982 49 Mrs Hurt's letter to Robert dated 8 February 1982 (PX1 at 177) records: (a) she does not want to break her promise to the Defendant; (b) Mrs Hurt still seems concerned to assist the Defendant to move away from Redfern or Surry Hills to "heaven" in Longueville. 50 Bruce's letter to Robert dated 12 February 1982 (PX1 at 181) also refers to these discussions with Mrs Hurt. There is reference to the Will apparently made in 1981 as referred to above. Bruce suggested she should change her Will back to simple linear inheritance: (see Bruce's affidavit, para 7). 51 Bruce's letter to Mr O'Reilly from Marshall Landers (Mrs Hurt's solicitors) dated 1 March 1982 (PX1 at 190) records: (a) the suggestion that Mrs Hurt revert to a simple linear Will; (b) Mrs Hurt had obtained a valuation on the property in June 1981 for $175,000. She is to send Mr O'Reilly a copy of the document; (c) the up-to-date Valuer General's figure of land value alone would probably be in the order of $100,000 to $150,000; (d) this shows that there is value in the property above the $60,000-$90,000 she had in mind in the previous week. 52 Also on 1 March 1982 Mrs Hurt sent a letter to Robert (PX1 at 192). It records: (a) Robert's financial difficulties; (b) the suggestion that the Defendant buy the house and the sons divide the proceeds equally. The price would be a reasonable price to be determined when the time comes. 53 Mrs Hurt's letter to Robert of 3 March 1982 (PX1 at 196) records: (a) a small screed in her handwriting is in the hands of Mr O'Reilly her solicitor, naming Robert and Bruce as executors or administrators of her final Will (she hopes), expressing faith in them both to administer her affairs according to her wishes; (b) all past ideas expressed in former Wills made by her have been revoked. 54 Bruce's letter to Robert dated 4 March 1982 (PX1 at 198) records: (a) Mr O'Reilly had rung to say that he had received instructions from Mrs Hurt to draw up a new Will along the lines Bruce had advised; (b) Bruce had rung Mrs Hurt that day who was confused. She had received the proposed Will from Mr O'Reilly but it was three pages long and complicated. She needed time to consider it. It was possible that she had already written down her wishes and had them witnessed by Mr O'Reilly. If so, that record is not in evidence. 55 There is then a letter of 1 May1982 which is not relevant and then a break in the correspondence until 28 October 1982 with a letter to Robert. That letter (PX1 at 215) records: (a) Mrs Hurt had asked Mr O'Reilly to draw up a new Will. He is to distribute any monies immediately after her death and not wait until the children come of age. When No. 32 is finally sold the money will go the same way. 56 Thus, assuming as is reasonable for the purposes of the chronology that the content of Mrs Hurt's correspondence is accurate and reliable the position by the end of 1982 was that it was Mrs Hurt's intention that the proceeds of No. 32 would go back to the family (more particularly the two sons, because of Robert's financial needs). Mrs Hurt's promise that the Defendant could occupy the property after she needed it had not been implemented in any legal fashion. Events of 1983 57 On or about 17 January 1983 Robert Hurt sent to Mrs Hurt a Will for her to sign. This Will (PX1 at 220): (a) appointed Robert and Bruce executors and trustees; (b) left all of Mrs Hurt's property in equal shares to Robert and Bruce; (c) referred to Mrs Hurt's wish that her trustees' offer the Defendant an option to purchase 32 Lucretia Avenue under terms and conditions "both at the time of the sale and for the future, which I have orally made known to my Trustees". 58 In a letter from Mrs Hurt to Robert dated 19 January 1983 (PX1 at 221), Mrs Hurt: (a) said she could not sign the Will; and (b) that she would explain in detail why not as well as her promise to Mr Freeman. 59 Mrs Hurt wrote to Robert on 23 January 1983 which letter (PX1 at 222) records: (a) that Mrs Hurt has given 32 to Ray to occupy after her death for as long as he wishes to live there; at the end of which time - for any reason - he will honour a promise made to Mrs Hurt that Robert and Bruce (if still living) will share equally the proceeds of the house if sold and in due course the children of Robert and Bruce will benefit [representation 1D]; (b) that the Defendant has undertaken to make arrangements for the transfer after Mrs Hurt's death of certain of her belongings into a new museum as well as ensuring that other household items are offered to Robert and Bruce; (c) that the Defendant is conversant with all Mrs Hurt's wishes in this direction and she has implicit faith in his promise to do the best he can for her family when she is no longer on this earth; (d) the last thing Mrs Hurt would want to happen is to hurt Robert in any way - he has always been so wonderful to her and she loves him very dearly and is sad and distressed with all that is happening in his own environment; (e) that Mrs Hurt had given her furniture (an old lounge, tub chairs, dining room table and chairs) to the Defendant together with a lamp and glass top wrought iron table and chairs from the front veranda; (f) that Mrs Hurt wanted Robert and the Defendant to be friends and felt sure they would be able to work things out together when the time arrived - the Defendant promises this. 60 The Defendant denies making representation 1D (Defendant's affidavit, para 50). 61 On 4 February 1983 (PX1 at 227), Mrs Hurt wrote to Robert. The letter recorded: (a) Mrs Hurt was concerned that if Robert died before her, who would there be to "fight the cause?" - no-one and all would be lost which was Mrs Hurt's reason for seeing Mr O'Reilly; (b) that Mrs Hurt told Mr O'Reilly that she wished that her house property, the dwelling only, be offered to the Defendant for purchase at a reasonable value and be divided into three shares as between the Defendant, Bruce and Robert with the Defendant's share to be accepted as the deposit on the sale. The Defendant would take immediate possession and occupy the house; (c) Mrs Hurt's request to Robert to try and accept what she has done and is now sharing with Robert, because she is convinced it is better this way for the present and as time passes and minds become less baffled, we can talk of these matters again and discuss more fully all the circumstances; and (d) that Mrs Hurt wished most of all that Robert and Ray be friends and be natural with each other - that the Defendant will want Robert to accept the idea of both he and Robert being able to express themselves freely. 62 On 12 February 1983 (PX1 at 235) Robert wrote to Mrs Hurt. A copy of this letter was retained by the Plaintiffs. In that letter inter alia: (a) Robert was critical of the Defendant, in particular his failure to conduct any maintenance on the property or improve its worth as an asset; (b) Robert said the Defendant could not have the "fine understanding" ascribed to him by Mrs Hurt because he is letting Mrs Hurt walk back from promises made by her in earlier years about the heritage of Bruce and Robert and her grandchildren; (c) Robert is critical of Mrs Hurt because she has adhered to her promises to the Defendant to transfer to him 32 Lucretia Avenue but she has not kept her promise to Robert made at Christmas that she would trust Robert and sign the Will he had prepared and sent to her on 17 January 1983 in connection with which Robert had undertaken to implement Mrs Hurt's wishes about the Defendant and No. 32 "no matter how much they hurt". 63 On 16 February 1983 Mrs Hurt prepared a letter to Robert (responding to the letter from Robert dated 12 February 1983) (PX1 at 243). The letter was not sent until 10 September 1983 (see below). Mrs Hurt's letter recorded: (a) her deep concern about Robert's physical and mental health; (b) Mrs Hurt was "so sad" that Robert could accuse her of letting him and Bruce down and she found it hard to believe Robert could think so little of her; (c) she wishes that Robert could think as highly of the Defendant as the Defendant does of Robert - the Defendant wants Robert to be able to talk things over with him and to be friends for all time; (d) with Mrs Hurt the completeness of love with the Defendant came too late and she is so truly grateful for the wonderful spiritual harmony which does exist - 50 years too late; (e) that Mrs Hurt came across this letter (unsent) on 10 September 1983 and she was sending it to Robert for his perusal to help him realise "how worried I get". 64 On 17 February 1983 Mrs Hurt wrote to Robert which letter (PX1 at 247) recorded: (a) Mrs Hurt's deep love and concern for Robert and in particular his present state of physical and mental distress; (b) Mrs Hurt's assurance that nothing has changed regarding the arrangements for material possessions at No. 32 and the arrangements relating to the contents of the garage are "well understood"; (c) that the arrangements Mrs Hurt is putting in place in relation to No. 32 have been to try and protect Robert from unnecessary worry and responsibility after her death as he would not be in a position to drop everything and occupy the dwelling immediately which someone has to do; (d) that the Defendant has tremendous regard and admiration for Robert as a person and offers his hand in friendship to be the basis of the Defendant and Robert getting together to sort out what Robert's wishes are in regard to the furniture and furnishings and their distribution; (e) that the Defendant can be trusted and Mrs Hurt has absolute faith in his promises and he has proven his worth to her through all the years they have been acquainted; (f) that Mrs Hurt and the Defendant's communication is purely spiritual harmony and this has been of such tremendous value to Mrs Hurt that anything she could do for the Defendant would never be enough to repay him; and (g) as between Mrs Hurt and the Defendant - "we understand each other". 65 There is then a gap until a letter of 24 May1983 from Mrs Hurt to Robert which is not relevant and a further gap in the correspondence until 20 June 1983 when Mrs Hurt wrote to Robert. The 20 June 1983 letter (PX1 at 255) records: (a) the Defendant has been consistent in his attention to Mrs Hurt over a period of 10 years or more even in the midst of a very busy life - of living alone without money - sometimes without a job in a sub-standard dwelling in the area of Surry Hills or Redfern; (b) the quality of the "makeup" of the Defendant is the very highest calibre, dependable, faithful, hardworking - doesn't drink or smoke; (c) if it had not been for such a discrepancy in years Mrs Hurt would have hoped the Defendant would ask her to marry him; (d) that it is therefore no wonder that Mrs Hurt must be sure that the necessary provision be made to ensure that the Defendant is the person she wishes to live in 32 Lucretia; (e) Mrs Hurt has promised the Defendant 32 Lucretia to live in when she passes on; (f) the only way Mrs Hurt can repay the Defendant for all he has meant to her is a reduction in the price by one third of its value when it is sold to him at the reigning price at the right time; (g) 32 Lucretia cannot be left unoccupied for even one day with all the unemployed, below par youths in the neighbourhood and Mrs Hurt's suggestion is that Ray be invited to be caretaker on the day of her death and live at No. 32 until such time as sale to him has been arranged; (h) Mrs Hurt is sad to have to drag Robert through all this - he has been so wonderfully considerate and generous to her always; (i) that Robert should accept this letter with all that has not been written but still lives forever in Mrs Hurt's heart - her love for her two sons and their families. 66 There is then a letter from Marshall Landers & Co to Mrs Hurt dated 21 June 1983 (PX1 at 259) which refers to a new Will. 67 A signed version of the Will referred to in the letter of 21 June 1983 from Marshall Landers & Co has not been located. However, the terms of such Will as it stood at that time can be inferred from a letter from Marshall Landers & Co to Mrs Hurt dated 1 July 1983 which attaches an amended version of the Will but also discloses the original terms. 68 The Will referred to in the 21 June 1983 letter: (a) contained an option in favour of the Defendant to purchase 32 Lucretia Avenue at a price to be mutually agreed by the Defendant and each of Robert and Bruce failing which agreement such price as may be determined by the Valuer General to be the value of the property as at the date of death of Mrs Hurt; (b) provided that in the event of the Defendant exercising the option to purchase, the Defendant be gifted an amount equivalent to one third of the value of the property as determined with intent that the Defendant only be required to pay as purchase price two thirds of such value. 69 The amended Will forwarded under cover of the 1 July 1983 letter (PX1 at 261) provided: (a) a fixed price of $150,000 as the exercise price for the option given to the Defendant to purchase No. 32 and the removal of the provision requiring the Defendant, Bruce and Robert to agree on a purchase price; and (b) gifted the Defendant a sum of $50,000 making the amount payable on purchase by the Defendant $100,000. 70 The draft Will forming part of exhibit RSF12 to the Defendant's affidavit, apparently sent to Mrs Hurt under cover of letter from Marshall Landers & Co dated 13 July 1983 is in the same terms as the amended draft Will attached to the letter from Marshall Landers & Co to Mrs Hurt dated 1 July 1983. 71 The Plaintiffs do not know whether this Will in its original or amended form was ever signed by Mrs Hurt. The September 1993 contract for sale 72 There is then a gap in the correspondence until September 1983. It appears, from a letter dated 5 September 1983 (PX1 at 272) from Marshall Landers to Mrs Hurt, that Mr O'Reilly had sent to Mrs Hurt a draft contract for sale of 32 Lucretia Avenue to the Defendant on 18 August 1983. The draft contract had also been sent to the Defendant. The letter of 5 September 1983 from Marshall Landers encloses a new Will for Mrs Hurt to sign which omits all reference to 32 Lucretia Avenue. The Will provides for any remaining assets of Mrs Hurt (after disposal of 32 Lucretia Avenue) to go to Robert and Bruce Hurt equally with the proviso that if either of them should pre-decease Mrs Hurt then their children should take the share of their father. 73 The Plaintiffs believe that the Will enclosed with the letter from Marshall Landers of 5 September 1983 was signed by Mrs Hurt in September 1983: (R Hurt 9 June 2000, para 18). 74 Within three days, (by 8 September 1983), the Defendant had handed to Marshall Landers the contract signed by him (see below) together with the deposit of $100 referred to in the contract: (see letter from Marshall Landers to Mrs Hurt dated 8 September 1983). 75 The signed contract for sale of 32 Lucretia Avenue between Mrs Hurt (who had also signed) and the Defendant dated 12 September 1983 (PX1 at 281): (a) provided for a purchase price of $100,000 with a nominal $100 payable as a deposit on exchange of contracts and the balance payable on completion; (b) provided that completion would take place three months after the first to occur of: (i) Mrs Hurt ceasing to reside in the property and giving written notice to Mr Freeman that she no longer wished to do so; or (ii) the death of Mrs Hurt (see special condition 2A); (c) provided that Mr Freeman could occupy the property after the occurrence of either of the events referred to in (i) and (ii) above and that whether or not he entered into occupation, Mr Freeman would be liable from the date of such occurrence for all rates and outgoings in respect of the property: (special condition 2(b)); (d) did not contain any mechanism for an increase in the purchase price to reflect any increasing property values prior to completion. 76 Accordingly, during the period February 1983 - September 1983 the legal mechanism by which Mrs Hurt's promise to the Defendant to live at 32 Lucretia Avenue was effected changed from an option to purchase under her Will (with two different formulae for calculation of the purchase price being proposed) to a contract for sale. Late 1983 77 By early November 1983, the Plaintiffs contend that Mrs Hurt's health had declined to the point where Mr O'Reilly of Marshall Landers wrote to her suggesting that it may be of advantage to her if she were to give a power of attorney to him to sign documents: (letter Marshall Landers to Mrs Hurt 2 November 1983, (PX1 at 293)). A general power of attorney was signed by Mrs Hurt in favour of Mr O'Reilly on 7 November 1983 (PX1 at 298). Events of 1984 78 Subsequently, on 11 January 1984, a general power of attorney was signed by Mrs Hurt in favour of Bruce (PX2 at 314). 79 On or about 7 February 1984 Bruce obtained a written letter of valuation of 32 Lucretia Avenue from Mackeddie Real Estate Pty Limited (PX2 at 320). The valuation was $240,000 as at 7 February 1984 and $230,000 as at September 1983. At the time of the valuation Mackeddie Real Estate was a member of the Real Estate Institute of NSW and a real estate agency operating in Longueville. The valuation refers to a site inspection of 32 Lucretia Avenue being conducted in order to determine the value. 80 On 6 February 1984 Bruce wrote to the Defendant informing him inter alia that Mrs Hurt, who was then in Concord Hospital was too sick to return to No. 32 (PX2 at 319). 81 On 11 February 1984, when Bruce visited his mother at Concord Hospital, she gave him a copy of his 6 February 1984 letter to the Defendant which also contained a handwritten statement from Mrs Hurt to the effect that she intended to return home to No. 32. 82 On 14 February 1984, Bruce again wrote to the Defendant informing him of his visit to Mrs Hurt on 11 February and his receipt of the copied letter dated 6 February 1984 (PX2 at 321). Bruce informed the Defendant that there was an arrangement for Mrs Hurt to be transferred to Greenwich Hospital the following day and that Bruce would assess her wishes further. 83 On 26 February 1984 Mrs Hurt wrote to the Defendant which letter (PX2 at 322) recorded: (a) Mrs Hurt's wish that the Defendant consider re-negotiating the contract for sale of No. 32 so that it can better express Mrs Hurt's wishes "i.e. to provide for my own future financial needs and ultimately share my estate equally between you, Robert and Bruce after all my expenses have been paid"; (b) Mrs Hurt's statement that she realised she was not thinking clearly when she signed the contract for sale in September 1983 and that she had been in a stress area ever since and now wished to bring about a better solution. 84 On 15 March 1984 (PX2 at 328) Marshall Landers sent a letter to Mrs Hurt at the Greenwich Hospital. The letter records: (a) that Mrs Hurt's doctor is pleased with her progress but does not consider she could return to No. 32 to live; (b) that both the Defendant and Bruce had spoken with Mr O'Reilly in relation to the contract for sale of No. 32; (c) that the Defendant had told Mr O'Reilly he does not consider he is able to give any thought to re-negotiation of the terms of the contract and that Mrs Hurt does not wish to see him placed in a position where he could not acquire the home; (d) that Mrs Hurt had indicated to Mr O'Reilly that she wished there to be discussions with the Defendant as to a possible basis on which the Defendant might be able to still acquire No. 32 but at a more realistic price, having in mind at the present value that if this were done it could produce a final result where the value of the home might be shared equally between the Defendant and each of Bruce and Robert; (e) that Mr O'Reilly thought Mrs Hurt's proposal would be a proper arrangement to be made in all the circumstances; one which might leave Mrs Hurt feeling she had been fair to all concerned; and (f) an arrangement proposed by Mr O'Reilly involving deferral of the purchase price on the security of the mortgage on generous terms to the Defendant. 85 On 21 March 1984 Bruce sent a letter (PX2 at 349) to the Defendant. The letter records: (a) concerns of Bruce in relation to payments made from Mrs Hurt's account during the period June 1981 and July 1983 which also involved Mrs Hurt's sister, Dorothy Dudley; (b) that the Mackeddie real estate valuation of the property as at September 1983 and February 1984 had been obtained and the valuation figures as at these periods, noting these amounts were far above the $100,000 purchase price in the September 1983 contract for sale; (c) a question for the Defendant - "Do you wonder why I must continue to see if I can put Mrs Hurt's finances into better shape and that you are central to her problems." 86 On 23 March 1984 Bruce sent a letter to the Defendant which letter (PX2 at 351) records: (a) a discussion between the Defendant, Mrs Hurt and Bruce the previous day in which the Defendant said he was not prepared to re-negotiate the contract for sale of No. 32; (b) Bruce's surprise and concern at the Defendant's decision in view of Mrs Hurt's repeated recent wishes that he re-negotiate; and (c) a threat of legal action against the Defendant by Bruce. 87 On 25 March 1984 Mrs Hurt wrote a letter to Bruce from Greenwich Hospital which letter (PX2 at 354) records: (a) that the Defendant had shown her Bruce's letter to him of 23 March 1984; (b) that Mrs Hurt is fully aware of the contract for sale now and has no regrets; (c) that the Defendant offers fortnightly payments to supply her everyday needs. 88 There is also a letter of 24 March 1984 to Mr O'Reilly from Mrs Hurt in which Mrs Hurt requests him to revoke the power of attorney she gave to Bruce (PX2 at 353). 89 Notwithstanding the letter of 25 March 1984 from Mrs Hurt to Bruce, approximately one week later on 3 April 1984, Mrs Hurt sent a letter to the Defendant which records that it would relieve Mrs Hurt's distress and give her greater peace of mind if the Defendant would reconsider and renegotiate the terms of the contract for sale of No. 32 (PX2 at 369). 90 Some three days later, on 6 April 1984, Mrs Hurt wrote to Bruce (PX2 at 372), stating: (a) she wished to revoke the power of attorney in favour of Bruce; (b) she wished to cancel her letter to the Defendant of 3 April 1984 to renegotiate the contract; (c) her decision was final and she would not accept Bruce deciding for her as to what was right. 91 On 9 April 1984 Bruce sent a letter to Mrs Hurt which letter (PX2 at 373) records: (a) his receipt of Mrs Hurt's letter of 6 April 1984; (b) that the terms of that letter were completely different to Mrs Hurt's words and actions when Bruce was by her side and that she seemed to be two people; (c) that Mrs Hurt has gone completely over to the Defendant allowing him to do anything with her, even hurting her two sons, her sister Dorothy ("Aunty Doff"), Bruce and Robert's families and all her true friends. 92 On 16 April 1984 Bruce visited Mrs Hurt at 32 Lucretia Avenue after she had been discharged from Greenwich Hospital. They had a long conversation in which Mrs Hurt said that the contract for sale provided inter alia that when the Defendant no longer wished to live at No. 32 he would sell the house and distribute the proceeds to Mrs Hurt's grandchildren and that the Defendant had promised her this: (Bruce Hurt, para 11). 93 During the same conversation, Bruce informed Mrs Hurt that was not what the contract said and that it did not contain such a condition. Mrs Hurt's response was that this was not true and that she knew what the Defendant had promised her and trusted him completely. 94 Exhibit RSF14 is a copy of a Will the Defendant says was signed by Mrs Hurt on 30 April 1984. This Will: (a) purports to devise 32 Lucretia Avenue to the Defendant without conditions; (b) purports to cancel any money owing by the Defendant on the property; (c) provides that the balance of Mrs Hurt's estate should be divided equally between the Defendant and each of Robert and Bruce; and (d) appoints Mr O'Reilly as executor. 95 The Plaintiffs had no knowledge of the alleged Will referred to in exhibit RSF14 prior to receipt of the Defendant's affidavit. The Plaintiffs contend that the Defendant's role in the creation of such an extraordinary document calls for explanation. 96 On or about 29 May1984 Bruce had a further conversation with Mrs Hurt dealing with inter alia the sale of No. 32 to the Defendant during the course of which Mrs Hurt said she had done the right thing about the house, the Defendant was to be merely a caretaker and that when he finished with the house and sold it the proceeds would go to Bruce's and Robert's children. When Bruce asked Mrs Hurt what proof she had of this, Mrs Hurt replied "Ray has promised me this" (Bruce Hurt, para 13). 97 On or about 24 August1984 Mrs Hurt vacated 32 Lucretia Avenue and moved to the Caroline Chisholm Nursing Home in Lane Cove: (Bruce Hurt, para 14). 98 There is then a gap in relevant communications until October 1994. 99 The Plaintiffs contend that on 10 and 12 October 1984 the Defendant telephoned Robert Hurt and represented that if No. 32 were ever sold, the net proceeds (net of the Defendant's costs of acquisition and any capital improvements by him) would be returned to the children of Robert and Bruce. Robert made contemporaneous handwritten notes of each conversation: (Robert Hurt, paras 21 and 22) (PX2 at 427-32). 100 The Defendant denies making the representations to Robert Hurt referred to in para 94 above: (Defendant, para 72). Mrs Hurt's final Will 101 On 15 October 1984 Mrs Hurt made her final Will witnessed inter alia by the Defendant (exhibit RSF16 to the affidavit of the Defendant). Mrs Hurt's final Will in respect of which probate was granted on 1 December 1988: (a) appointed Bruce as her executor and trustee; and (b) left all the possessions then owed by her in equal shares to Robert and Bruce. 102 This Will removed the extraordinary provisions of the 30 April 1994 Will (see 94 above). 103 On 19 October 1984 Robert wrote to the Defendant following his receipt of Mrs Hurt's last Will dated 15 October 1984 (PX2 at 438). Attached to that letter was a letter drafted by Robert Hurt purporting to be from the Defendant to Robert which contained the following statement: "If at any time following the completion of the contract for sale to me, the property is no longer my sole or principal residence, I (or my estate if I die) will pay in equal shares to you and Bruce, or if either of you are no longer living to your surviving children, a sum of money being the greater of the reasonable market price at that time, and the sale price, if the property is sold at that time, reduced by $150,000 and by proven accumulated expenditure by me on capital improvements costs to the property but not including maintenance costs". 104 The Defendant refused to sign the letter. 105 On 24 October 1984 there was a telephone conversation between Robert Hurt and the Defendant. The Plaintiffs' version of the conversation is set out in para 24 of Robert Hurt's affidavit. In particular, Robert says the Defendant admitted he had a moral obligation to honour the conditions, but he would not sign a commitment. The Defendant admits a conversation occurred but denies much of Robert's version. In particular, the Defendant denies discussing the conditions "referred to in the letters from Robert" and making any reference to the representations the Plaintiffs contend were made to Robert by the Defendant on 10 and 12 October 1984. Robert made a contemporaneous note of the telephone conversation with the Defendant: (Robert Hurt, para 24) (PX2 at 462). 106 There was a further telephone conversation between the Defendant and Robert on 25 October 1984. The Plaintiffs' version of the effect of the conversation (cross-referenced to his contemporary notes referred to below) is set out in para 25 of Robert Hurt's affidavit. "Neither your mother nor I want the conditions in the letter which you sent me [referring to the letter dated 19 October 1984]. I want to be totally free of conditions. I want you to forget what I promised your mother regarding the conditions. Told you those things on 10 October in confidence. For the children's sake - one day there will be a surprise for the children - I have that moral obligation. You have my word. But I don't want to go into the detail of the conditions." "Everything will be done according to what is set down by your mother but there will be no formal agreement as to conditions. I don't want to have the future without some surprise for the children."