Hurt v Freeman

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."

The Defendant admits the conversation but denies much of Robert's version. In particular, the Defendant denies there were conditions promised by the Defendant to Mrs Hurt relating to the sale of 32 Lucretia Avenue. The Defendant alleges he said during the conversation that neither himself nor Mrs Hurt were prepared to "add the conditions you [Robert] want": (Defendant, para 84). Robert made a contemporaneous note of what he says was the telephone conversation on 25 October 1984: (Robert Hurt, para 25) (PX2 at 468). 107 On or around 16 November 1984 the Defendant moved into and commenced occupation of No. 32 without paying or being required to pay rent or an occupation fee (Robert Hurt, para 27). Events of 1985 108 On 7 January 1985 Robert Hurt visited Mrs Hurt at the Caroline Chisholm Nursing Home. The Plaintiffs contend that during the visit Mrs Hurt said to Robert words to the effect: (a) that Mrs Hurt was certain that the Defendant would honour his promise to her that when he no longer wanted to live permanently at No. 32 the property would be sold at its market value and the proceeds would be distributed amongst Mrs Hurt's grandchildren; (b) that irrespective of other interpretations Mrs Hurt retained her faith in the Defendant that he would ensure that his promise to her was met and that No. 32 would ultimately be for the benefit of her grandchildren once the Defendant no longer wished to live there no matter how far into the future that might be. 109 The statements by Mrs Hurt referred to above are set out in para 28 of Robert Hurt's affidavit. Robert Hurt made a contemporaneous note of Mrs Hurt's statement: (see Robert Hurt, para 28 and PX2 at 547 paras 7 and 8). Completion of contract for sale 110 On or about 25 June 1985, the contract for sale of the property was completed by the transfer of the property to the Defendant. On completion, the Defendant paid the then outstanding balance of the purchase price of $99,000 to Mrs Hurt's solicitors for deposit. A trust account was then opened by Bruce and Robert Hurt as trustees principally to ensure that Mrs Hurt's medical and financial needs were taken care of properly (Robert Hurt, para 29). 111 The Defendant contends that he: (a) sold his property at Chalmers Road, Redfern in May 1985 for approximately $140,000; and (b) paid out the mortgage secured on the title to Redfern and used the balance of the sale proceeds to assist with the purchase of No. 32: (Defendant, para 64). 112 The transfer of the Chalmers property is dated 7 June 1986 and refers to a contract dated 20 May1986. The Plaintiffs contend the discrepancy between the Defendant's evidence as to the time of sale of Chalmers Street and the dates appearing on the transfer requires explanation by the Defendant. 113 The Defendant alleges he spent approximately $110,000 undertaking repairs, maintenance and renovations at No. 32 over a period of 4-5 years after he first took possession: (Defendant, para 65). No verifying documents were produced. 114 The Defendant contends that he moved out of No. 32 in 1989 and did not live there again until July 1997 prior to its sale on 31 October 1997. From 1999 the Defendant lived firstly in New York and then by 1992 in Vierques in Puerto Rico (Defendant, para 67). The Defendant sells the property without accounting for the proceeds to the Plaintiffs 115 On 31 October 1997 the Defendant sold 32 Lucretia Avenue for $1.625 million. The Defendant purchased a property at 26 George Street, Paddington from part of the sale proceeds for $500,000. The Defendant invested the balance of approximately $920,000 (net of expenses and other alleged payments) in an investment fund with National Australian Financial Management Ltd, a subsidiary of the National Australia Bank Limited: (Defendant, para 69). The investment fund was described as a flexible income plan policy. The initial investment was $925,834.03 commencing 12 November 1997. The policy number was L0291356. 116 The sale of 32 Lucretia Avenue was conducted by the Defendant without reference to Robert or Bruce. Robert only found out about the sale by accident on 2 July 1998 when this information was obtained from an acquaintance who lived in Lucretia Avenue. 117 The Defendant has not paid the proceeds of sale or any part thereof to Robert, Bruce or any other member of the Hurt family. Neither Bruce nor Robert have had direct communication with the Defendant since Mrs Hurt died on 6 August1986 (Robert Hurt, para 31). 118 On or about 24 June 1999 Bruce Hurt caused to be registered against the title to the George Street, Paddington property a caveat registered No. 5923939. The Plaintiffs Statement of Claim 119 I should refer at this point to an aspect of the Plaintiffs' pleaded case in their Statement of Claim. Paragraph 23 of the Statement of Claim provides that: "The Plaintiffs charge and the facts are that the Contract was grossly improvident in that Mr Freeman was granted indefinite rights to occupy the Property free of any liability to pay rent or other occupation fee, and to purchase the property for a fixed price that at the time of the Contract and at all times thereafter was, or was likely to be, substantially less than its true market value." 120 The term "the Contract" is defined in the Statement of Claim as the written contract of September 1983. Whereas, it is "the collateral contract" which constitutes the agreement alleged between Mrs Hurt and Mr Freeman derived from alleged representations made by Mr Freeman that he would ultimately return the Longueville property to the Hurt family, or sell it and return to the First and Second Plaintiffs the proceeds of its sale (subject to deductions made for his purchase price and any capital expenditure incurred by him). 121 However, although paragraph [23] of the Statement of Claim states that "the Contract was grossly improvident" it also refers to what it terms the Defendant's "indefinite rights to occupy the property". But the terms of the written contract (special condition 2A) provide that the Defendant was free to occupy the Property only after Mrs Hurt ceased to reside there, or after her death, both events then triggering a requirement in the contract itself that completion take place within three months following the relevant event. Thus it is only accurate to describe the contract as conferring "indefinite rights to occupy the property" if understood as referring to an owner's right to do so. The contract provides for completion at what was a substantial undervalue, thereby conferring that right of indefinite occupation as owner, so paying no "rent or occupation fee". 122 Thus as I understand the Plaintiffs' argument, based upon its pleaded case, it is this. Ignoring the collateral contract whereby either the property or the net profit from its sale, would be returned to the Hurt family, after the Defendant no longer wished to live in it, the contract was "grossly improvident". This is because it conferred the incidents of ownership, including rent-free occupation following completion, at a price that was a gross undervalue. That pleading does not say that with the collateral contract, the contract ceased to be "grossly improvident", nor indeed does it say the opposite. It simply pleads the position as I have described it. 123 It is on the basis of the pleadings as stated that I approach the claims of the Plaintiffs. QUESTIONS FOR RESOLUTION 124 I turn now to the issues requiring resolution, both factual and legal, as follows. Question 1 - Representations: Did the Defendant represent to Mrs Hurt (or otherwise induce her to assume) that if he acquired the property, he would return it (or the net proceeds of sale) to the Hurt family when he no longer needed it ? Question 2 - Assumption operative at time of contract: If yes to 1, was this assumption operative on the mind of Mrs Hurt at the time she executed the contract for sale to the Defendant (12 September 1983)? Question 3 - Enforceability by Defendant of rights under Contract of Sale: Were the rights obtained by the Defendant under the contract for sale either unenforceable or of doubtful validity by reason of: (a) the improvidence of the transaction and/or (b) the Defendant's conduct in procuring Mrs Hurt's assent to it? Question 4 - Assumption operative at time of completion of contract: At the time Mrs Hurt completed the contract for sale (25 June 1985) did the representations of the Defendant and her assumption based on those representations continue to operate on her mind? Question 5 - Unconscionability: Did the Defendant act unconscionably in departing from the representations in October 1997 (i.e. selling the property without accounting for any of the proceeds to the Hurt family)? Question 6 - Minimum equity to remedy: What is the minimum equity necessary to remedy the alleged unconscionable conduct by the Defendant? Question 7 - Constructive Trust and Tracing: Are the Plaintiffs entitled to a constructive trust aided by tracing into: (a) the property at George Street, Paddington; (b) the flexible income plan policy No. L0291356 held by the Defendant with National Australia Financial Management Ltd? Question 8 - Limitations: Are the Plaintiffs' claims barred by the Limitation Act 1969 (NSW)? Question 9 - Laches: Further or alternatively, is it inequitable and unjust to grant to the Plaintiffs any of the relief they claim by reason of their alleged laches? Question 1 - Representations 125 I turn now to consider whether the Defendant made the alleged representations to Mrs Hurt and set out below in greater detail the significance of the correspondence relied upon by the Plaintiffs and their oral evidence bearing upon that. 126 Before turning to the evidence of the alleged representations in their minutiae it is necessary to test the plausibility of the representations having been made, by reference to their context. Clearly, by early to mid 1980, Mrs Hurt had decided that she would like the Defendant to live in the Longueville property after she died or no longer needed it (see letters from Mrs Hurt to Robert 15 April 1980 (PX1 at 79-80); 7 May 1980 (PX1 at 92); 27 July 1980 (PX1 at 98); 22 June 1980 (PX1 at 110); 15 April 1980 (PX1 at 81)). She sought to make an arrangement which would facilitate the Defendant's acquisition of the property at a price that he could afford. Nonetheless, Mrs Hurt was conscious as at July 1980 that her sons opposed offers to purchase the house made by the Defendant of $50,000 and some six weeks later of $60,000 on the basis that such prices were too cheap (T, 176.40-.50; 177.25-.30) being well below the true value of the property. Thus, as of the second half of 1980 both the Defendant and Mrs Hurt were aware that the Valuer General had placed a value of $90,000 on the house (T, 178.5-.10). However, both knew that the Defendant could not afford more than $60,000. There is no reason to doubt that Mrs Hurt wanted to reconcile what she wanted for the Defendant with what she felt was fair for her sons and their families. 127 Thus Mrs Hurt's letters of this period to Robert disclose her dilemma: "And of course my own situation - why I can't do what I want with what is mine - I could break loose and go ahead but I'm very unwilling to do anything to hurt you and Bruce - somehow there surely must be a compromise." [6 May1980 - PX1 at 88] "Underneath all of this of course is my own mental conflict - I haven't so far got an assurance from Bruce that he will understand and accept any decisions I finally make to manage my own affairs in my own way…" [26 May1980 - PX1 at 95] "I am faced with a situation as never before. I cannot keep my word to one who is so worthy and been so good to me in these lonely years and apart from suffering myself, it will destroy the faith of one who holds me in high regard. I have just learned that I cannot do as I like with what I thought was mine but I am reminded of heritage - family - rites and the law - and forbidden to sign anything that I had hoped would give me pleasure…" [22 June 1980 PX1 at 110] "I find all this is causing a mental conflict for me - when I can't do what I want to do with what is mine without hurting someone - this I do not wish to do - but I must be fair in honouring my promise that Ray could have this house when I no longer require to live here - at a price he can afford." [27 June 1980 PX1 at 113] 128 The Defendant confirmed that at this time Mrs Hurt had told him that she was very unwilling to do anything to hurt Robert and Bruce (T, 169.53). See also for example letters from Mrs Hurt to Robert dated 15 April 1980 (PX1 at 79); 23 January 1983 (PX1 at 225)), but that "Mrs Hurt only ever mentioned that the family were well taken care of, that the children had been given gifts that had increased in value over their lifetime…" (T, 179.23-.6). Nonetheless, the Defendant expressed the view that "(t)here was no consideration of me [the Defendant] benefiting over the family" (T, 179.29-.30). Accordingly, the Defendant conceded that he understood Mrs Hurt hoped to come to some sort of arrangement that was one intended not to disadvantage her family (T, 170.18-.21). However, it should be noted that Mrs Hurt had previously expressed her hope that her husband's Will could be worked out to her sons' advantage which "will make up for any deficiency in 32 - when the time comes and the money free for distribution even if Doff was the only survivor…" (Letter from Mrs Hurt to Robert (PX1 at 103)). 129 In the light of such correspondence, it appears that Mrs Hurt recognised that there must be at least some disadvantage that would arise from any division of her estate or sale to the Defendant of the Longueville property. 130 It is against this background that I consider the Plaintiffs' claims that the representations were made by the Defendant and were relied upon by Mrs Hurt in entering into and completing the contract of sale. In the absence of Mrs Hurt's own testimony the Plaintiffs proffer four sources of evidence said to support that the alleged representations were made. I refer to each of these in turn. 131 On the Plaintiffs' case the first and principal evidence of the Defendant's promises are four letters written by Mrs Hurt to the Second Plaintiff, Robert Hurt and in particular the four letters earlier cited; see letters of 22 October 1980 (para 35(c)), 13 January 1981 (para 40(e), 3 March 1981 (para 44(c)) and 23 January 1983 (para 59(a)). The promises are said to be revealed in those letters as follows. 132 Mrs Hurt's letter of 22 October 1980 to Robert which records that (PX1 at 123): "Ray is a very fine person and does not want to do anything to upset anyone - as a matter of fact he has said he would rather lose the house than for me to have any worries 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 can go back into the Hurt family." 133 Mrs Hurt's letter to Robert dated 13 January 1981 which records that (PX1 at 139-140) "I would die happy if I knew Ray could live here whilst he required to do so… 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." 134 Mrs Hurt's letter to Robert of 3 March 1981 which records that (PX1 at 165) "There is only one way to do this [for Mrs Hurt to keep her promise to the Defendant that when she no longer requires to live at 32 Lucretia Avenue he could live there - see PX1 at 164-165] and that is to make it his home, when I leave here, undertaking to keep it up to saleable value, carry out necessary repairs or alterations, to make it more comfortable living…and maintain it to the highest possible condition so that when it is finally vacated by him, you and family, Bruce and family have it back as heritage-there is only one area that troubles me, if he spends a lot of money on increasing the value of the property, he would be reimbursed, as he has a mother to whom he is most devoted and a sister with two children whom I know he would wish to continue assisting." 135 Mrs Hurt's letter to Robert of 23 January 1983 records in unequivocal terms of promise - not mere intention - that (PX1 at 222): "I have given 32 to Ray to occupy after my death for as long as he requires to live here at the end of which time - for any reason - he will honour a promise made to me that you and Bruce (if still living) will share equally the proceeds of the house if it is sold and in due course your children will benefit." 136 Mrs Hurt's letter to Robert of 17 February 1983 which records that (PX1 at 248): "I have absolute faith in his [the Defendant's] promises and has proven his worth to me through all the years we have been acquainted…" 137 Standing alone these letters provide a not insubstantial evidentiary basis for the Plaintiffs' claim that Mrs Hurt entered the contract of sale in reliance on the Defendant's representations, though subject to what follows. First, the series of letters identifying the promises conclude in February 1983. This is some seven months prior to Mrs Hurt's entry into the contract of sale for the Longueville property rather than being contemporaneous and is dated some 28 months prior to the contract's later completion. Nonetheless, if one accepts the veracity of Mrs Hurt's letter of 22 October 1980 (as extracted above) it is significant that the Defendant had made such a promise which presupposed his purchase of that same property. That the promise was not embodied in the contract is a factor tending against the promise, but that factor needs to be weighed against others pointing to the promises as having been made, and the later letters contain no record of revocation of the promises earlier cited. 138 Second, there is some dispute as to the accuracy and reliability of the content of Mrs Hurt's letters. The Defendant contends that the Deceased'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 and "for whatever reason to make him [Robert] feel better about something that was going to happen in the future with the house…" (T, 176.1 - .5). However, the Defendant admitted that except in respect to their recording of his alleged promises to Mrs Hurt, Mrs Hurt's letters to Robert were an accurate and reliable record of other aspects of the Defendant's relationship with Mrs Hurt. In particular, except in relation to the alleged promises, the Defendant made specific admissions as to the accuracy of the content of the letters from Mrs Hurt to Robert of 6 May1980 (PX1 at 86); T, 169-70), 7 May1980 (PX1 at 89); T, 170-2) and 22 October 1980 (PX1 at 121); T, 183-4). She contemplated that transfer of the Longueville property by way of sale or will where, in the letter of 22 October 1980 Mrs Hurt writes: "he has also said that when he no longer requires to live here he will want to arrange his affairs so that the house go back into the Hurt family". Everything in the letter is said by the Defendant to be true save only for the promise, which he denies (T, 184.30-.34) with an emphatic "never". That strains credulity. 139 Moreover, the Defendant admitted that Mrs Hurt paid great attention to detail (T, 141.50; T, 175.39), and was truthful and honourable (T, 175.30-.38). That is hardly consistent with the suggestion that she set out actively to mislead her sons on this important matter. Moreover, from her correspondence it is clear that her "honour" and adherence to her word were of the utmost importance to her (for example, "(A)ll the money in the world cannot mend a broken promise": PX1 at 193; she said she was concerned about a lack of moral values PX1 at 138. See also letters of 22 June 1980 (PX1 at 109-110); and of 27 June 1980 (PX1 at 112-113). 140 Nevertheless, although Mrs Hurt and Robert had a very close relationship it is clear that she was not beyond misleading him unintentionally as a consequence of memory lapses, or, though I am included to think more likely only when confronted with something she did not want to debate, even possibly deliberate untruths. In his letter to Bruce dated 10 June 1984 (PX2 at 386) Robert wrote that when confronted, Mrs Hurt had flatly denied making any will or amending any will in 1984, or entering into any financial arrangement with the effect of reducing the $100,000 owed by the Defendant on the Longueville property under the contract of sale. In fact, Mrs Hurt had assured Robert that her long-standing intention remained firm that there should be a 3-way split. Robert even went to the length of showing Mrs Hurt this particular letter before he sent it to Bruce in order to confirm that its contents properly described what she believed and said (PX2 at 388). Nonetheless, it is clear from the chronology that this assurance followed Mrs Hurt's revision of her Will dated April 1984 (she was then in her 91st year) wherein she purported to cancel any money owing by the Defendant on the property. An example of one other possible untruth is to be found in the information passed on by Mrs Hurt to the Defendant that her sons had never contacted her for many years (Letter from Bruce to Robert 12 October 1984 (PX2 at 433)). Such examples leave open the possibility that Mrs Hurt's recollection of the representations were mere fibs made to appease her children. The alternative hypothesis is that there was some vacillation but from which she recovered, with her intention remaining as the Plaintiffs' contend. The latter is more consistent with Mrs Hurt being truthful and honourable, though pulled in competing directions. 141 Although it is clear that Mrs Hurt "had her own views and liked them to be seen to be followed" (T, 111.10-.14 p2) there is also some suggestion that Mrs Hurt was both the subject of attempts to influence her but also capable of playing the parties off against one another. Evidently, the Plaintiffs had hoped that Mrs Hurt could be influenced. Indeed, Bruce expressed such a view in his letter to Robert dated 26 September 1984 (PX2 at 415) when he recorded that, "I thought I had her in the mood to sign a will to you and me as beneficiaries - but she had withdrawn her agreement when I saw her yesterday - with no explanation other than 'I wish to be the Captain of my own affairs.' " In this context it is also significant that Robert's note recording his conversation with Mrs Hurt at the Caroline Chisholm Nursing Home on 7 January 1985 (if it is to be accepted as a truthful account, a subject to which I will return later) discloses that "Mum volunteered the statement that "Ray had given her the notes which she copied onto the letter from her to Ray of the 18th November 1984 and asked her to write them on that letter" (PX2 at 545). Certainly there were a number of letters written by Mrs Hurt, the content of which were soon after retracted (see for example, Mrs Hurt's letters of 3 April 1984 and 6 April 1984 in relation to renegotiation of the contract - PX2 at 369 & PX2 at 372) that suggest some vacillation on her part between the parties. There is also the letter from Marshall, Landers & Co to Mrs Hurt, 15 March 1984 (PX2 at 328), in which there is discussion of Mrs Hurt's indication that she would like the Defendant to acquire the home but at a more "realistic price". These letters may well be the corollary of occasional, if temporary, susceptibility to influence, co-existing with her attempts to play the parties off against one another. Certainly, it is clear that the Plaintiffs did not consider her incapable of manipulation in her relationships with others (see letter of Robert to Ray Freeman 8 October 1984 PX2 at 420), and at least at times understandably felt that she was not straightforward with them. One such example is to be found in Bruce Hurt's letter to Robert dated 26 September 1984, referring to Mrs Hurt's Will in which she sought to return to the Defendant what was left of the $100,000 owing on the property, in which he expressed the opinion that "(s)he pretends she does not understand all these - but I believe she knows exactly what she has done." (PX2 at 415). 142 Having expressed these reservations in respect of the veracity of Mrs Hurt's letters it is clear that two possible interpretations are open to me. The first is that the letters are an accurate and reliable record consistent with the high priority Mrs Hurt placed on being truthful to one's word (and "in believing one is obliged to be the best of oneself in everything one does or thinks": PX1 at 86). The second possible interpretation is that the representations were "invented" as a means of reassuring the Plaintiffs that they would not be disadvantaged by her wish to benefit the Defendant. In considering which of these interpretations is to be preferred it is necessary to consider the alternative sources relied upon by the Plaintiffs. 143 Apart from the letters, an important support for the Defendant's promise is the evidence given by Bruce Hurt, the First Plaintiff. Before dealing with that, I should state my assessment of him as a witness. I found him an impressive witness, forthright, his memory not always precise but reasonable for such distant events, especially where they had an emotional imprint. He was clearly deeply hurt that Mr Freeman had acquired the degree of influence he had on her. He dealt with Mr Freeman more confrontingly than his more diplomatic brother Robert. Bruce Hurt gave evidence of two conversations he had with Mrs Hurt on or about 16 April 1984 and on or about 29 May1984 in which it is said Mrs Hurt repeated the Defendant's promise (see Affidavit of Bruce Hurt 15 June 2000, paras [11] and [13]). 144 According to the First Plaintiff's Affidavit, the conversation on 16 April 1984 was to the effect: Mrs Hurt: "The contract with Ray states that after my death - and not before, Ray will occupy the house and pay no money until he no longer wishes to live there. Eventually he will sell the house and distribute the proceeds to my grandchildren. Ray promised me this." Bruce Hurt: "This is not what the contract says. You do not even have a copy of the contract. It does not contain a condition like this." Mrs Hurt: "That's not true ! I don't believe you ! I know what Ray promised me and I trust him completely." 145 According to the First Plaintiff's Affidavit the conversation on 29 May1984 was to the effect: Mrs Hurt: "I have done the right thing about the house, Ray is merely a caretaker. When he finishes with the house and sells it, the proceeds will go to your children." Bruce Hurt: "Well, what proof do you have of this ?" Mrs Hurt: "Ray has promised me this" 146 Confirmation of the conversation between Bruce Hurt and Mrs Hurt on or about 29 May1984 is contained in the letter from Bruce to Robert dated 29 May1984 (PX2 at 384). 147 If this evidence is to be believed, a subject to which I will return shortly, it does not suffer from the time separation identified in relation to Mrs Hurt's letters proffered as the principal source of the representations, being conversations that occurred after Mrs Hurt had entered into the contract of sale but before its completion. Nonetheless, this evidence, being a conversation between Mrs Hurt and the First Plaintiff, must by its very nature be subject to similar questioning as to the veracity of Mrs Hurt's letters. Did they reflect her real intent? For reasons which I will elaborate, I consider they did. 148 I find, as I have said, that Dr Hurt was a credible and reliable witness. Whilst he was clearly acting "in concert" with the Second Plaintiff in the early 1980s in putting together evidence that might constitute the basis of a case of undue influence and/or a case under the Mental Health Act, and acknowledged that one of the reasons he said that the contract was not reasonable was that he "did not like the consequences at the end of the day for his family's sake - his brother and his family's sake" (T, 89.10-11) his evidence was direct and uncalculated. Indeed that acknowledgement is testimony to that. He made concessions, in particular in respect of his motivations and his belief that the Defendant would not keep his word, at appropriate junctures (see for example T, 28/30.30; T, 31.52-53). Moreover and importantly, his evidence of the conversations with his mother on 16 April and 29 May 1984 was not challenged in cross-examination. 149 The third source from which the Plaintiff claims support for the Defendant's representations is the conversation said to have taken place between Robert Hurt, the Second Plaintiff, and Mrs Hurt on 7 January 1985 (referred to in para 28 of the Second Plaintiff's affidavit). I should here record my impressions of him as also a careful, honest, candid witness, in personality more conciliatory in manner than his forthright brother. A good example of his candour is to be found at T, 107 where he readily concedes the consequences and unusual features of the arrangement he says existed, based on the representations and arrangement he and his brother contend were made. This alleged conversation is recorded in contemporaneous notes contained in PX2 at 546 and 547 whose accuracy I have no reason to doubt. The Second Plaintiff's evidence was that Mrs Hurt said words to the effect - "I am certain that Ray will honour his promise to me that when he no longer wants to live permanently at 32 the property will be sold at its market value and the proceeds will be distributed among my grandchildren. Irrespective of other interpretations, I retain my faith in Ray that he will ensure that his promise to me is met and that 32 will ultimately be for the benefit of my grandchildren once he no longer wishes to live there no matter how far into the future that may be." 150 This evidence is the final evidence relied on by the Plaintiffs of the representations in the chronology. As such, it is significant that the conversation occurred after Mrs Hurt's entry into the contract (12 September 1983 was the date of the contract) but 5 months prior to its completion (on 25 June 1985). It is in similar terms to the two conversations with the first Plaintiff on 16 April 1984 and 29 May 1984. Its timing is not inconsistent with the original promise there referred to being earlier in point of time, namely that referred to in pre-contract correspondence between Mrs Hurt and Robert; see in particular the letter dated 23 January 1983 to Robert Hurt (para 59 above). If that were so, and if it is to be accepted as truthful testimony, as I do, it too may be relied on to support the Plaintiffs' contention that Mrs Hurt was induced to enter the contract of sale on the basis of the preceding representations. 151 The fourth source, and to my mind a significant source, relied on to evidence the Defendant's promise is a series of alleged telephone conversations said to have occurred between Robert Hurt and the Defendant. These were alleged conversations, dated respectively 12 October 1984 and 24 and 25 October 1984, with an intervening letter from Robert Hurt to Mr Freeman dated 19 October 1984 (see respectively PX2 at 431, PX2 at 462 and PX2 at 438). All therefore postdate the contract and precede the conversation referred to in para 149 above of 7 January 1985, and completion of the contract on 25 June 1985. These conversations were all recorded in contemporaneous notes. According to Robert Hurt's notes, this was with the knowledge of Mr Freeman, he taking no notes (PX2 at 466). 152 In the first conversation between Robert Hurt and the Defendant on 12 October 1984 (referred to in para 22 of Robert Hurt's affidavit of 9 June 2000 and at PX2 at 431) Robert's evidence is that the Defendant said words to the effect - "I told her [Mrs Hurt] of our long talk the other day and that I had made it clear to you that I want the $100,000 to go to you and Bruce and that if I ever sold the house, the surplus over my initial purchase price of $150,000 plus my investment costs in improvements would go to your children and Bruce's children."

The $100,000 clearly refers to the purchase price for the Property. 153 That conversation was followed by a long letter of Robert Hurt's to Mr Freeman (PX2 at 438 to 461). It attempts to formalise an arrangement between them, covering a number of matters, but as to the house crystallised at para 14 (PX2 at 450) and see also particularly paras 8 and 9). This Robert Hurt sought to have documented in draft letters enclosed by Robert Hurt (which Mr Freeman was asked by deceased to sign) marked A, B, C and D; these I quote below.

" A " 291 Chalmers Street REDFERN SYDNEY NSW 2016 Mr ROBERT HURT 14 VALDER PLACE FARRER ACT 2607 Dear Robert This is to confirm in writing the following condition, which I have orally told you about and which is in accordance with your Mother's wishes, of the sale to me by your mother of the property at 32 Lucretia Avenue Longueville Sydney NSW. If at any time following the completion of the Contract For Sale to me, the property no longer is my sole or principle [sic] 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 improvement costs to the property but not including maintenance costs. Yours sincerely, Raymond Freeman. Dated this day of 198

" B " CAROLINE CHISHOLM NURSING HOME 274 BURNS BAY ROAD LANE COVE SYDNEY NSW 2066 Mr RAYMOND FREEMAN. 291 CHALMERS STREET REDFERN SYDNEY NSW 2016 Dear Ray, This letter concerns the Contract for Sale of the property at 32 Lucretia Avenue Longueville which we signed on the 12th September 1983. In regard to the Completion of the Contract, I require that the balance of the purchase price namely $99,900, be paid by you or your agent directly to my son Robert M C Hurt and not to my solicitor. This money will be in repayment of the debt I owe Robert for his expenses and labour in contributing to the maintenance and improvement of the property throughout his life time. Sincerely, Winifred Hurt Dated this day of 198

" C " CAROLINE CHISHOLM NURSING HOME 274 BURNS BAY ROAD LANE COVE SYDNEY NSW 2066 Mr RAYMOND FREEMAN. 291 CHALMERS STREET REDFERN SYDNEY NSW 2016 Dear Ray, This letter concerns the Contract for Sale of the property at 32 Lucretia Avenue Longueville which we signed on the 12th September 1983. This is to formally advise you that I do not expect to again reside there. Sincerely, Winifred Hurt Dated this day of 198

" D " 291 Chalmers Street REDFERN SYDNEY NSW 2016 Mr ROBERT HURT 14 VALDER PLACE FARRER ACT 2607 Dear Robert This is to confirm that when the Contract For Sale of the property at 32 Lucretia Avenue Longueville is completed by my payment of the balance owing of $99,900, I undertake to pay, if they arise, any expenses properly claimed on your mother's estate which would otherwise reduce that amount, to the extent that it will remain at that figure. Further from the date of completion of the contract, I undertake to pay 1/3 of any expenses your Mother has in excess of those that can be met by her pensions, on the understanding that you and Bruce will pay the other 2/3. Yours sincerely, Raymond Freeman. Dated this day of 198 " 154 Robert Hurt's note of his telephone conversation with the Defendant on 24 October 1984 (PX2 at 462) states that: "Conditions [sent by Robert to the Defendant in written form to sign - see above] are such that Ray can't accept them even though he has that Moral obligation to honour them. Doesn't intend to sign any commitment as to the future - he will make up his own mind what to do. Morally Ray means that the Children of the Hurt family would benefit. Whatever the outcome may be Ray says he will not commit himself in writing. "Ray said he has always said he would honour his promise to Mum to give the proceeds from 32 to the Hurt family when Ray no longer wants it." 155 However Robert Hurt's note of his telephone conversation with the Defendant on 25 October 1984 (PX2 at 468) states: "Ray saw mum last night and they went over the letter I had sent Ray." "No objection other than the conditions. Mum or Ray do not want conditions. Ray said he wants to be totally free of conditions; Ray wants it to be forgotten what he has promised to Mum regarding conditions - he said that was told to me on 10 October '84 in confidence; For childrens sake - one day there will be a surprise for the children - he has that moral obligation; I have Ray's word he says; Ray says he doesn't want to go into detail of the conditions. He says Mum wants to make it quite clear sale is without condition ….." 156 Then later in the note he states (PX2 at 469): "Ray said everything will be done according to what was set down by Mum but NO formal agreement to conditions. Ray says he doesn't want to have the future without some surprise for the children. He said he certainly doesn't want firm precise conditions of sale for the future." ….. "Ray said he will not, & Mum does not want him to, sign the letter I proposed regarding conditions." 157 Significantly, the conversation of 25 October 1984 is one in which the Defendant refused to go into details about the conditions. It followed that earlier conversation quoted (on 24 October 1984) in which Robert Hurt also confirmed that it was his normal practice to take notes of their telephone conversations and that he had done this on each occasion that he and the Defendant had spoken (PX2 at 466). The conversation of 25 October was also preceded by Robert's letter to the Defendant on 19 October 1984. This, as I have said, outlined the statements said to have been made by the Defendant in the telephone call of 12 October 1994 and set out extracts from Mrs Hurt's letters in the period between 1980 and 1983 recording the alleged promises. Given this chronology I am prepared to infer that the Defendant's increasing reticence to discuss the details of the promises culminating in the telephone conversation of 25 October 1994 (and subsequently) was a consequence of his knowing that a record of his promises had been kept. Moreover, the Defendant, knowing that, never attempted to correct what was being recorded with a written response, as one would expect if the Defendant's denials in these proceedings are to be believed. 158 In reaching a conclusion as to whether the promises were made, important is the degree of credence to be given to the Plaintiffs, Robert and Bruce, as against the Defendant Mr Freeman. I have already found Robert and Bruce to be truthful witnesses. On Mr Freeman's credit generally, I found him generally unconvincing and unreliable as a witness. There were a number of instances of prevarication or obfuscation. Just one example was his unwillingness to concede the obvious, as where he refused to acknowledge that his position had improved under the July 1983 will, to the extent that he was now receiving effectively one-third of Mrs Hurt's estate rather than the one-sixth under the earlier will (T, 209-10, T, 217-228). 159 A number of other examples are given at paras 132-140 of the Plaintiffs' written submissions dated 19 September 2001 which point to a pattern of his evidence being inconsistent and contradictory. However, it should be recorded that I do accept that he was genuinely fond of Mrs Hurt and gave her valued and constant companionship over the years that he knew her. That said, I doubt that he felt any genuine concern for Robert and Bruce Hurt insofar as his interest and their's conflicted, just as they were fearful of Mr Freeman's influence on their mother. 160 That nonetheless his relationship with her was one from which he profited, is borne out by the telling evidence of cheques paid by Mrs Hurt to him during the period 1981 to 1983 totalling $12,000. He admitted his own incomplete disclosure of all amounts paid to him or to his benefit, omitting all cheques in the $12,000 over and above the $5,000 or $6,000 he did disclose; see T, 192.16, 192.40. I quote here also other matters fairly recorded in the Plaintiffs' written submissions (paras 124-127) which reflect badly on Mr Freeman: "124. The Defendant admitted that in March 1984 he had been informed by Bruce Hurt in a letter (TB, 2-332) that Mrs Hurt's total income for the period June 1981 to July 1983 was only $15,000 (T, 193.10). The 21 March 1994 letter from Bruce documented in detail the cheques the Defendant had directly received together with those made out to building contractors, solicitors and others for his benefit from Mrs Hurt and her elderly sister Ms Dorothy Dudley. In the light of her minimal income, it was wrong of him to accept such large gifts. The Defendant did not reply to this letter and gave no explanation why. 125. The Defendant also gave evidence that he really did not know whether he received a cheque in the amount of $5,000 or $6000 from Mrs Hurt notwithstanding his affidavit evidence on oath to this effect in paragraph 43 of his affidavit (T, 195.20). 126. Despite having an opportunity during the adjournment of his cross examination to provide an explanation to the Court in relation to: · all the cheques paid by Mrs Hurt; · the Defendant's failure to repay such amounts; · the non-disclosure by the Defendant of all cheques paid by Mrs Hurt in his affidavit; · whether the content of paragraph 43 of his affidavit was correct, no explanation was given as to any of these matters by the Defendant upon resumption of his cross examination when he was given an opportunity to do so (T, 205.30). 127. The Defendant did admit he put all of Mrs Hurt's money into his own Redfern property (T, 197.10). There was no return of any of these funds from the Defendant to Mrs Hurt or the Hurt family following the sale of the Defendant's Redfern property." 161 Then there was the Defendant's evidence that he did not wish or intend to purchase the property in 1980, 1981 or at any time prior to 1983 (see T, 160.25 and T, 161). That evidence is quite contrary to his other evidence as follows. (a) The Defendant's affidavit evidence (at para 36) was to the effect that he was willing to pay $60,000 to purchase the property in 1980. The Defendant was unable to explain the inconsistency between his oral and affidavit evidence when this was put squarely to him in cross examination (see T, 163-165). (b) The purchase by the Defendant of the property was being discussed between the Defendant and Mrs Hurt throughout 1980 as is confirmed by Mrs Hurt's letters to Robert of 15 April 1980 (TB, 1-81); 7 May 1980 (TB, 1-94); 3 June 1980 (TB, 1-102); 26 June 1980 (TB, 1-112); 8 October 1980 (TB, 1-119); and further Mrs Hurt's 13 January 1981 letter (TB, 1-138). (c) In his subsequent evidence in cross examination, the Defendant admitted he was seeking to purchase the property during 1980 and 1981 (T, 236-237). The Defendant also admitted at T, 176.40 - T, 177 he knew in mid-1980 that Robert and Bruce Hurt opposed the sale to the Defendant of the property at the price of $60,000. The Defendant further admitted that as at March 1981, the reason his purchase of the property did not go ahead was because Robert and Bruce remained opposed to the price he was offering (T, 195.40). 162 Then the Defendant claimed Mrs Hurt ceased writing letters to him after 1978 or 1979 and that the sum total of Mrs Hurt's letters were contained in exhibit RSF2 to the Defendant's affidavit of 10 October 2000 (T, 141.55 - T, 142.2). That evidence is inconsistent with the following evidence: (a) His evidence at T, 142.7 that there might have been a "few" letters from Mrs Hurt additional to those contained in exhibit RSF2. (b) The statement in the Defendant's affidavit of 10 October 2000 at para 21 that exhibit RSF2 did not represent the entire correspondence from Mrs Hurt, a statement with which the Defendant belatedly agreed in cross examination at T, 144.45. (c) Further evidence by the Defendant at T, 148 - 149 seeking to explain the position in relation to the letters he received from Mrs Hurt was similarly contradictory. (d) Further, notwithstanding his knowledge of and receipt of a notice to produce dated 25 June 2001 from the Plaintiffs calling for any letters to the Defendant from Mrs Hurt additional to those in exhibit RSF2, the Defendant admitted he took no steps to locate such letters (T, 143.30 - 34; T, 148.45). Nor did he make any inquiries towards obtaining such letters (T, 156.30). (e) Further again, Robert Hurt's note of his conversation with the Defendant on 23 July 1984 recorded (at T, B2-413) the Defendant as saying he had "hundreds of letters from Mrs Hurt to show her affection". (f) The Defendant admitted that the contents of this note prepared by Robert Hurt were generally correct save for this statement (T, 154 - 155). (g) Later, he claimed that other papers from Mrs Hurt were kept at Longueville (T242-3). In all the circumstances, I would conclude that there were many letters from Mrs Hurt to the Defendant which he has failed to produce and that such letters would not have assisted his defence. 163 The Plaintiffs also relied on another instance of evidence which was said to "defy credulity". It was that the Defendant on the one hand (according to his evidence in cross-examination T, 157-8 but not mentioned in his affidavit), had his invitation to live at the house extended to his partner Mr Quesada yet he did not disclose that they lived in a homosexual relationship; see para175 below. It was also put against the Defendant that he should have explicitly revealed the true nature of his personal and sexual relationship with Mr Quesada to Mrs Hurt. However, I do not find it inconceivable that he might not mention this, either out of reticence towards an older woman of likely conventional views of her generation, or because he did not want to shatter her romantic illusion that she thought of him as someone she might have married but for their age difference (T, 137.45). He might moreover have surmised that she had reason enough to have guessed at the true situation without wanting to acknowledge it, simply from his resistance to moving at the time to No. 32 and concluded that none of this need be made explicit. It is, I accept, conceivable he actually concealed the true nature of the relationship, relying on her evident infatuation (T, 137.7). That she was not wanting to face the facts is clear from her letter to him of 20 June 1983 (TB, 1-255) "his very busy life of living alone without money" [emphasis added]. However, in these matters, one could not be confident of the true position. There are in any event enough other reasons for concluding that his evidence was on the whole self-serving and unreliable. 164 In contrast, I found, as I have said, Robert Hurt (as also his brother Bruce) to be a credible and reliable witnesses. Robert Hurt's notes recording conversations with the Defendant and Mrs Hurt were contemporaneous and detailed. It is true that one must be wary of such notes being merely self-serving. However, the Defendant did admit that the evidence of Robert Hurt as to the conversations between himself and Robert were "generally accurate". Yet he then conveniently excepts what Robert records of the Defendant's statements concerning his promises to Mrs Hurt: T, 154-55; T, 231-232. To accept the Defendant's position requires one to conclude that Robert Hurt was skilled at manipulating just those critical alleged facts (about the proceeds of sale of No. 32 after Mr Freeman no longer had use for it) but no others. I find that highly improbable. That instead those promises were so conformed is supported, though from an earlier point of time, by the earlier correspondence to Robert Hurt from Mrs Hurt. That correspondence manifests a consistent intention as to the promise made; see letters of 22 October 1980, 13 January 1981, 3 March 1981 and 23 January 1983. 165 Taking all those matters cumulatively into account, I am prepared to find that the notes as written are an accurate record of the conversations between the Second Plaintiff and the Defendant including as to the alleged promise. The significance of this finding in relation to the Plaintiffs' case lies essentially in the confirmation given by the Defendant that he had in fact made such representations to Mrs Hurt at the time of the contract, but did not want to record them in writing. Thus although the recorded telephone conversations between the Defendant and Second Plaintiff are not direct evidence of those representations, they are admissions that these promises were in fact made to Mrs Hurt. 166 Accordingly, this evidence supports an interpretation of Mrs Hurt's letters as an accurate, reliable and truthful record of the representations made to her by the Defendant at a time preceding entering into the contract, but never withdrawn. Such an interpretation, as outlined above, is consistent with the high priority Mrs Hurt placed on keeping her word (22 June 1980 PX2 at 109). 167 As against this evidence of the promise led by the Plaintiffs, there are only the uncorroborated denials of the Defendant. It is those to which I now turn. 168 The Defendant denied in both his affidavit of 10 October 2000 (see paras 42, 50, 53, 54, 72, and 83-86) and in cross-examination (see T, 184.30; T, 190.25; T, 196.1; T, 203.10-20; T, 222.40; T, 225.15) that he had made the alleged representations to Mrs Hurt to induce her to enter into the contract of sale. However, the Defendant did admit that he had made a promise to act as a caretaker to clear the house of Mrs Hurt's possessions and then return it to the Hurt family in circumstances where he expected to be the recipient of one-fifth or one-sixth of the proceeds of the sale in accordance with Mrs Hurt's Will (T, 180.1-8). The Defendant claims that he did not make these representations in the context of a proposed purchase (T, 236.1-5). 169 Nonetheless, in the absence of corroboration, the Defendant's evidence refuting the Plaintiffs' alleged representations is unconvincing given a number of very significant contradictions contained in his other evidence. To some of these I have already made reference. 170 Thus one striking example is the Defendant's evidence that he did not wish or intend to purchase the property in 1980, 1981 or any time prior to 1983 (see T, 160.25-30 and T, 161). This was contrary to his other evidence. 171 Thus, the Defendant's affidavit evidence (at para 36) was to the effect that he was prepared to pay $60,000 to purchase the Longueville property in 1980. 172 Moreover, Mrs Hurt's correspondence makes it clear that the purchase by the Defendant of the property was being discussed between the Defendant and Mrs Hurt throughout 1980: see Mrs Hurt's letters to Robert of 15 April 1980 (PX1 at 81); 7 May1980 (PX1 at 94); 3 June 1980 (PX1 at 102); 26 June 1980 (PX1 at 112); 8 October 1980 (PX1 at 119); 13 January 1981 (PX1 at 138). 173 Then, in subsequent evidence in cross-examination, the Defendant admitted that he sought to purchase the property during 1980 and 1981 (T, 236-237). He also admitted that he knew in mid-1980 that Robert and Bruce Hurt opposed the sale of the property to him for $60,000 (T, 176.40 - T, 177), and that as at March 1981 it was because of their opposition that the purchase had not gone ahead (T, 195.40). 174 Among a number of other significant contradictions made by the Defendant were these: (a) in relation to the Will under which Mrs Hurt granted the Defendant an option to purchase the property for a net price of $100,000, the Defendant claimed that he had first learned of such a Will in the early part of 1983 (T, 208.35 - .45); but then, he subsequently contended that he first became aware of this Will after Mrs Hurt's death (T, 211.15); (b) in relation to Mrs Hurt's Will dated 30 April 1984 (PX2 at 380) which cancelled the Defendant's debt owing on the property, the Defendant first gave evidence that he did not recall seeing this Will (T, 154.50); he subsequently said he was not sure when he had seen this Will (T, 228.20 - .25). Yet this Will was in fact produced by the Defendant in these proceedings as exhibit RSF14 to his affidavit sworn 10 October 2000; (c) in relation to the letter from her solicitor Mr O'Reilly to Mrs Hurt of 13 July 1983 enclosing a Will (PX1 at 264), the Defendant gave evidence that he had not seen it prior to the contract for sale being signed in September 1983 (T, 213.20); and that the enclosed Will (TB, 1-265-268) was not a document that the Defendant believed he had in his possession when the proceedings commenced (T, 213.40). Yet the relevant letter and will were in fact produced by the Defendant in these proceedings as exhibit RSF12 to his affidavit sworn 10 October 2000 with the result that when this was pointed out to him in cross-examination he (T, 215), then admitted Mrs Hurt gave him the will, although not on or about 13 July 1983 (T, 216.40). 175 Moreover, the Defendant's evidence (given for the first time in cross examination, and not appearing in para [31] of his affidavit) that the invitation made by Mrs Hurt to the Defendant in her letter to him sent around 1978 (PX1 at 5) to live at the Longueville property was also an invitation extended to Mr Quesada to live at the house (T, 157 - 158) is difficult to believe. I consider it is more likely that Mrs Hurt had in mind an arrangement that would sustain and foster her relationship with the Defendant and not one that would require her to share with a third party the quiet afternoons on the verandah at Longueville that she already enjoyed with him. That conclusion is open, whether or not she knew specifically of Mr Quesada and the nature of his relationship with the Defendant (see para 163 above). 176 Similarly, in seeking to avoid giving other evidence that would harm his own case the Defendant proffered some explanations that were difficult to believe. For instance, the Defendant's claim that Mrs Hurt was aware that he never wanted to cross the bridge to live (T, 162.50 - .55 and T, 163.15) from the time of their very first discussions about the Longueville property sat uneasily with his earlier admission that Mrs Hurt apprehended that he would obtain very great pleasure out of living at the Longueville property (T, 162.55 - 163.10). This is particularly so when the Defendant admitted that Mrs Hurt might easily have interpreted from his feelings, that it gave him so much pleasure just to walk down the path of the Longueville property and find peace in the shadow of the trees (T, 172.1 - .7) and that, as best that he could tell, Mrs Hurt thought that he got great pleasure out of coming into the house and gazing out on to the bay (T, 172.10 - .15). Indeed, the whole premise of Mrs Hurt's plan to gift or sell the Longueville property to the Defendant seems to have been founded on the solace that she would gain from knowing the person who would occupy the house when she had to leave it (see letters from Mrs Hurt to Robert, 15 April 1980 PX1 at 79-80; 27 May1980 PX1 at 98), especially when she believed that neither of her two sons were minded to live at Longueville themselves. Indeed his frankly self-interested explanation for declining to terminate his lease in 1978 and be Mrs Hurt's guest was very revealing as appears in the following passage (see for context T, 157.10 - .50 but in particular .39 to .46): "Q. When she made you that offer, did you give her a reason why it was out of the question? A. We would not wish to live in Longueville and certainly I would not want to leave a house to live with an elderly lady.

Q. Who's we? A. Riccardo and myself." 177 Furthermore, given the pivotal importance of the Defendant's relationship with Mrs Hurt to this case, and in particular the Plaintiffs' claims of undue influence in their Statement of Claim, it is significant that the Defendant's evidence earlier set out in respect of cheques received by him or for his benefit from Mrs Hurt during the period from 1981-1983 was evidence not only going to credit, but of taking unfair advantage of a lady with little cash resources. The Defendant admitted (at T, 191) that he did not disclose in his affidavit all amounts paid by Mrs Hurt to him or his benefit, including an additional cheque in the amount of $12,000 (T, 192.40). He was unable to provide an explanation for this non-disclosure (T, 192.16). The Defendant also admitted that he really did not know whether he received a cheque in the amount of $5,000 or $6,000 from Mrs Hurt notwithstanding his sworn affidavit evidence (paragraph 43) (T, 195.20). Conclusion on Question 1 178 In the light of my favourable assessment of Plaintiffs as witnesses and my unfavourable assessment of the Defendant, and of the objective evidence of Mrs Hurt's letters to Robert Hurt (dated 22 October 1980; 13 January 1981; 3 March 1981; 23 January 1993; and 17 February 1983) with the representations there identified and more particularly, the contemporaneous notes made of the telephone conversations between the Defendant and Robert Hurt on 12 October 1984, 24 October 1984, and 25 October 1984, and in the absence of evidence corroborating the Defendant's testimony, I find that the Defendant made representations to Mrs Hurt that, if he acquired the property he would return it (or the net proceeds of sale) to the Hurt family when he no longer needed it. By "net" proceeds of sale, was meant net after giving credit for the cost of any improvements effected by the Defendant and the amount ($100,000) he had paid by way of purchase price. Question 2 - Assumption operative at time of contract 179 A number of conversations that occurred after Mrs Hurt's entry into the contract of sale on 12 September 1983 support the Plaintiffs' contention that Mrs Hurt was induced to enter the contract of sale by the Defendant's representations. Supporting evidence is to be found: in the conversations between the First Plaintiff and Mrs Hurt on 16 April 1984 and 29 May1984 (the latter confirmed by a letter from Bruce to Robert dated May 1984 (PX2 at 384)); the conversation between the Second Plaintiff and Mrs Hurt on 7 January 1985 (recorded in contemporaneous note PX2 at 545 and 546); and the telephone conversations between the Second Plaintiff and the Defendant on 12 October 1984, 24 October 1984, and 25 October 1984 (all recorded in contemporaneous notes). Moreover, such an understanding is reflected in Mrs Hurt's references in her letters to Robert (for example, the letters of the 4th, 16th and 17th February 1983), to ongoing arrangements involving the Defendant, and Robert and Bruce, relating to the Longueville property and to her fervent desire that these ongoing arrangements and the relationship between the Defendant and her sons, especially Robert, be based on a mutual respect, sensitivity and understanding. 180 Indeed, this correspondence reveals that Mrs Hurt was optimistic, on the strength of conversations she had with the Defendant, that there was great potential for a relationship to develop between the Defendant and Robert of the same depth as her relationship with each of Robert and the Defendant. Mrs Hurt's state of mind in relation to these matters is consistent with a belief that the Defendant would fulfil his promise for the benefit of her sons and grandchildren. Conclusion on Question 2 181 On the basis of this evidence I am prepared to find that the Defendant's representations were operative on the mind of Mrs Hurt at the time that she executed the contract of sale to the Defendant. Question 3 - Enforceability by Defendant of rights under Contract of Sale 182 Given my finding that the Defendant made the representations alleged by the Plaintiffs it is strictly unnecessary that I consider the improvidence or otherwise of the contract of sale, and its bearing upon the enforceability of that written contract. Moreover, to do so would be to frame the Plaintiffs' case in terms of undue influence, a cause of action that is clearly unavailable to the Plaintiffs under the Statute of Limitations (NSW) 1969. Nevertheless, I would make the following observations. 183 First, the purchase price payable by the Defendant (which commenced at $50,000 in April 1980 and increased to a net amount of $100,000 payable by the Defendant in September 1983 and June 1985) was very substantially less than market value, being between $180,000-$215,000 as at September 1983 and between $215,000-250,000 as at June 1985 (see valuation summary p9 of the report by Mr Rooke dated 21 August 2001 [DX6], and contemporaneous valuation TB, 2-320)). This is but one factor that adds credibility to the representations, because the contractual arrangements would have been indeed improvident, certainly unless mitigated by such representations. Thus the gross disparity in price favouring the Defendant supports that the representations were made. 184 Second, it is clear that Mrs Hurt trusted, admired and loved the Defendant. The Defendant agreed she was infatuated. This was despite the disparity in their ages, and the Defendant's own relationship with Mr Quesada, if indeed she knew about it. Mrs Hurt's letters are replete with statements to this effect (see for example, Mrs Hurt's letter of 17 February 1983 (PX1 at 247) which records her "absolute faith in his [the Defendant's] promises"), and the Defendant acknowledged that Mrs Hurt's infatuation with him never changed (T, 137.6; T, 158.45; T, 171.55). Not only does such affection explain why Mrs Hurt sold the property to the Defendant at a price which he could afford. It also explains that it was Mrs Hurt's trust in the Defendant's spiritual and moral values (letter 27 May1980 PX2 at 98) which led her to believe that the Defendant would honour and fulfil his promises. Indeed, Mrs Hurt would not consider the prospect of the Defendant failing to fulfil his promises when this was (implicitly) raised by Bruce and Robert in their conversations with her on 16 April 1984, 29 May1984 and 7 January 1985. 185 However, the limitation period would preclude the contractual cause of action that might otherwise have arisen to set aside the transaction or deny its enforcement. That occasion has long past for considering the enforceability of rights under the contract of sale. Question 4 - Assumption operative at time of completion of contract. 186 As discussed above, the conversations between Mrs Hurt and the First and Second Plaintiffs that occurred after she entered into the contract on 12 September 1983 clearly indicate that the assumption induced by the Defendant that the Longueville property (or the net profit from its sale) would be returned to the Hurt family when the Defendant no longer needed it, was operative on Mrs Hurt's mind at the time of execution. That recognises that the latest of these conversations occurred between Mrs Hurt and Robert on 7 January 1985, some five and half months before completion of the contract on 25 June 1985. Nonetheless, given the comparatively long period of time over which this assumption had been operating, namely from 22 October 1980 (as disclosed in Mrs Hurt's letter of that date) until at least 7 January 1985, and the fact that there is no evidence to the contrary, I find it more probable than not that Mrs Hurt completed the contract still labouring under that assumption. Furthermore, medical reports adduced by the Plaintiffs from Dr Gutkin, psychogeriatrician dated 27 March 1985 and 24 April 1985, indicate that from the period of approximately March 1985 until her death, Mrs Hurt progressively became mentally and physically weaker and incapable of managing her affairs. This period is only two and a half months after the last conversation between Mrs Hurt and Robert on the subject of the Defendant's promises. Question 5 - Unconscionability 187 Given my earlier finding that the Defendant made a number of promises to Mrs Hurt in similar but varied form, that after having acquired the Longueville property he would return it (or its net profit after any sale of that property) to the Hurt family when he no longer had any need for it, it is necessary to consider whether the Defendant acted unconscionably in departing from the representations in October 1997 when he sought to sell the property without accounting for any of the proceeds to the Hurt family. 188 However, before turning to consider the issue of unconscionability it is first necessary to determine whether the Defendant's promises were of sufficient certainty required to bind a definite interest in property and to benefit definite persons to a definite extent; see "Jordan: Chapters on Equity in New South Wales" 6th ed (1947); edited F C Stephen Ch III. That is to say, the promise itself must have been made in clear and unambiguous terms and must be of ascertainable content capable of being reasonably understood: Fairey v Fairey (Santow J, 14 September 1998 unreported) at 62. The Plaintiffs rely upon four representations which I set out below: (1) "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". (22 October 1980 - Letter from Mrs Hurt to Robert PX1 at 123); (2) "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" (13 January 1981 - Letter from Mrs Hurt to Robert PX1 at 140); (3) "There is only one way to do this [that is, to keep her promise that he could live in the Longueville property someday] and that is to make it his home, when I leave here, undertaking to keep it up to saleable value, carry out necessary repairs or alterations, to make it more comfortable living - (certain damp areas) - keep fully insured and pay all rates and taxes and maintain it to the highest possible condition so that when finally it is vacated by him, you and family, Bruce and family have it back as heritage - there is only one area that troubles me, if he spends a lot of money on increasing the value of the property, he would be reimbursed…" (Letter from Mrs Hurt to Robert 3 March 1981 PX1 at 165); (4) "I have given 32 to Ray to occupy after my death for as long as he requires to live here at the end of which time - for any reason - he will honour a promise made to me that you and Bruce (if still living) will share equally the proceeds of the house if it is sold and in due course your children will benefit." (Letter from Mrs Hurt to Robert 23 January 1983 PX1 at 222). 189 Although these representations vary somewhat in content it is clear that their common foundation is their intention to ultimately benefit the Hurt family, either by way of return of the property itself or any net profit arising from its sale. The conversations between the Defendant and Robert Hurt (TB, 2.431; 12 October 1984 - referred to in para 22 of Robert Hurt's affidavit of 9 June 2000) clearly indicate that both the Defendant and Mrs Hurt understood the promise to include a return to the Defendant of the costs expended in improvements in addition to the purchase price of $100,000. Indeed, such an understanding is manifested in the Defendant's representation referred to in Mrs Hurt's letter of 3 March 1981 (PX1 at 165). On that basis there is no ambiguity in respect of the intended beneficiaries, nor of the quantum of the amount to be deducted from the sale proceeds of the property and returned to the Defendant. That is not altered by the fact that there has been subsequent dispute between the parties in respect of the actual value and costs of purported improvements to the property. 190 Nonetheless, the Defendant contends that the Plaintiffs' case required the Defendant to purchase the property but subject to the extraordinary obligation that he should give it to the Hurt family at some indeterminate and clearly uncertain time in the future "when he no longer had any use for it" (Defendant's submissions, p6). However, despite the fact that the fulfilment of the promise was prescribed (at the time of the promise) at an indeterminate point in the future, it was nonetheless an identifiable point of time when it did occur. For on any view of the meaning of that quoted phrase, the Defendant clearly had no use for the property as soon as he set about selling it. Whether it could also be said that the Defendant no longer had any use for the property if he left it vacant or unoccupied for an extended period of time is a question that I do not have to decide. In any event the Defendant's sale of the Longueville property on 31 October 1997 clearly indicated that he no longer had a use for the property, as a home or rental investment or otherwise. 191 Having found that the Defendant's promise was made in sufficiently clear and unambiguous terms and was of ascertainable content capable of being reasonably understood by Mrs Hurt, I turn now to the issue of unconscionability. Given that the Defendant procured Mrs Hurt's entry into the contract of sale in September 1983, knowing that he did so at substantial undervalue and that Mrs Hurt was infatuated with him, and believed that his honesty, high moral character (T, 136.48) and love for her meant that he could be trusted to keep his promises (T, 136.45), his subsequent decision to resile from the promises was unconscionable. Although initially the Defendant contended that he did not read the letter from Robert Hurt of the 19 October 1984, in which Robert wrote, "To that degree I believe that Mum has had no moral right to dispose of her estate in any other way, just as she is expecting you without any written obligation to honour your undertaking to return 32 to Bruce and me…",

the Defendant subsequently conceded in cross-examination that from October 1984 he was aware that the First and Second Plaintiffs believed that he had made undertakings to Mrs Hurt. 192 The Defendant claims that in response to Robert Hurt's letter of 19 October 1984 he discussed the alleged undertakings with Mrs Hurt and that she was "perfectly at ease to stand by her commitment of selling the house to me without conditions" (T, 235.35-40). Nonetheless, such a claim is inconsistent with the evidence of Robert Hurt concerning his conversation with Mrs Hurt on 7 January 1985 in which Mrs Hurt said words to the effect that the Defendant had promised that he would sell the property at market value and distribute the proceeds among her grandchildren when he no longer wanted to live there. Having earlier accepted this evidence, I find that the Defendant was well aware that Mrs Hurt was relying upon his representations in entering into the contract of sale. Conclusion 193 Accordingly, the Defendant played such a part in Mrs Hurt's adoption of, and persistence in, the assumption that he would return the property (or its net proceeds upon a sale) to the Hurt family that he was guilty of unjust and oppressive conduct in seeking to depart from those promises: compare Commonwealth v Verwayen 170 CLR 394 at 444-445 per Deane J. The fact that the Defendant refused to document his promises in late 1984 (referring to them as "moral obligations") does not serve to deny the unconscionability of his later actions in selling the property without regard to his representations. Even a moral obligation, if intended to be binding as I find this was, is enforceable in equity, if (as I conclude) it were unconscionable to permit departure from it in the circumstances. Question 6 - Minimum equity to remedy 194 For the purposes of convenience I propose to consider the valuation issues collectively. 195 In order to assess the implications of Mrs Hurt's entry into the contract of sale for the Longueville property, it was necessary to obtain a valuation of the market value of the property as at the date of entry into and completion of the contract. Accordingly, pursuant to Pt 72 of the Supreme Court Rules 1970, I appointed a valuer, Mr Rooke, for the purpose of determining the value of the Longueville property as at September 1983 and as at June 1985. Mr Rooke provided two sets of values for the property. These depended on whose instructions as to the characteristics of and improvements to the property were accepted, that of the Plaintiff or the Defendant; see Valuation Report at p9. 196 Importantly, for the purposes not only of the market assessment but also for ascertaining the cost of improvements made to the property incurred by the Defendant after he took possession of it in December 1985, there is a dispute of fact between the Plaintiffs and the Defendant as to the physical condition and the extent of the improvements. A summary indicates that the Plaintiff contends the property to offer a two bedroom, two bathroom accommodation in a detached, older style brick and tile residence which was structurally sound, appropriately fitted out, had no major defects although aesthetically would have been improved with a coat of paint. The Defendant indicated that the premises provided one bedroom accommodation in a poor state of repair and required repainting, rewiring and re-plumbing. 197 If the Defendant's instructions are accepted, the values are $180,000 and $215,000 as at September 1983 and June 1985 respectively (see Valuation Report, p9). If, on the other hand, the Plaintiffs' instructions are accepted, the values as at September 1983 and June 1985 are respectively $215,000 and $250,000. 198 In the absence of evidence which directly assists the Court in resolving this issue, it is significant that several factors indicate that the Plaintiffs' instructions are to be favoured. First, contrary to the Defendant's instructions to the valuer that the property contained only one bedroom (Valuation Report, p2) in cross-examination the Defendant admitted that the property was an older style two bedroom house (T, 131). Second, although the Defendant claims in para 65 of his affidavit that the property as at 1983 and 1985 was in a poor state of repair and required repainting, re-floored, rewiring and re-plumbing over a period of 4 or 5 years after he first took possession in December 1985, the property was sufficiently attractive for it to be featured in two magazines, "Vogue Living" and "Australian Gourmet" within a relatively short space of time, being February 1986. One presumes that this was before all or most of the repairs were effected. Nevertheless, I observe that Mrs Hurt expressed the view in April 1980 that "(t)he house 32 as it stands needs much doing to it - there is dampness underneath all the area of the Johnson's corner - all the interiors, painting - fences will be a must even if I stay here forever - it is so cold in the house in winter…" (Letter from Mrs Hurt to Robert, 15 April 1980 - PX1 at 81). Third, given that I found the First and Second Plaintiffs to be reliable and credible witnesses I would accept the Plaintiffs' instructions to the valuer in preference to the Defendant's (Valuation Report at pp1-2). 199 Accordingly, I find that as at September 1983 (date of entry into contract) the property was valued at $215,000 and by June 1985 (the date of completion) was valued at $250,000. 200 In the light of the values attributed to the property above (and its state of repair and presentation at the date of the contract of sale) it is necessary to consider the minimum equity required to remedy the Defendant's unconscionable conduct in selling the property on 31 October 1997 for $1,625,000. The representations made by the Defendant provided that he would return the net proceeds of any sale of the Longueville property, being the sale proceeds reduced by the purchase price of $100,000 and any costs incurred by the Defendant in improving the property before sale, to the Hurt family. To this end, the Defendant contends (para [65] affidavit, 10 October 2000) that he spent approximately $110,000 undertaking repairs, maintenance and renovations over a period of about four or five years after he first took possession in December 1985. Further, the Defendant tendered a Schedule of Work and Cost Estimate from November 1984 until the end of 1989 valuing the costs of improvements at $104,500.00: DX3. The Defendant admitted that DX3 is at best a "guesstimate" arrived at by calling the company that did the work for him which had not retained the documentation for this work: T, 129.35-39. The Defendant does not have any invoices or documents of any sort referring to the work alleged to have been undertaken at his expense on the Longueville property: T, 129.20-23. The Plaintiffs claim that the Defendant had an opportunity to obtain this evidence after proceedings were commenced but failed to do so. With some hesitation, having regard to earlier findings on credit, but taking into account that the onus on the Plaintiffs following the admission of DX3, to refute that figure of $104,500. I am prepared to accept the Defendant's estimate of what he spent, there being no contrary evidence from the Plaintiffs. Conclusion 201 Bearing in mind that the relief given should be "the minimum relief necessary to do justice between the parties" (Baumgartner v Baumgartner (1987) 164 CLR 137 at 150) and doing the best I can, I conclude that the minimum equity necessary to remedy the alleged unconscionable conduct by the Defendant is to require the Defendant to pay the sum derived from taking $1,625,000 (the proceeds of sale), less the sum of $100,000 (the purchase price paid) plus $104,500 (amount claimed for improvements), with interest to be payable thereon at supreme Court rates from the time the proceeds of sale were first received. That produces the sum of $1,420,500 as payable by the Defendant to the Plaintiffs plus interest as aforesaid. Question 7 - Constructive Trust and Tracing 202 Given that the Longueville property has been sold, the Plaintiffs claim a constructive trust over: (a) The proceeds of the sale of 32 Lucretia Avenue; (b) the property at George Street, Paddington purchased by the Defendant using part of the proceeds of the Longueville sale (Defendant's affidavit 10 October 2000, para [69]); and (c) the funds in the National Australia Financial Management policy in the name of the Defendant being a investment of part of the proceeds of the Longueville sale (Defendant's affidavit 10 October 2000 para [69]). 203 The Plaintiffs rely on three general bases for the imposition by the Court of a constructive trust. I will deal with each of these in turn. Unconscionability 204 Do the circumstances give rise to the unconscionable assertion or retention of beneficial ownership of property by the Defendant (now to be found in the traceable proceeds of sale as reinvested), such that equity should intervene by the remedial institution of a constructive trust, aided by any necessary tracing, or by other permissible relief? 205 The Plaintiffs' claim a constructive trust to remedy the unconscionable conduct of the Defendant in: (a) resiling from his representations and promises to Mrs Hurt as to the return of the Longueville property or the net proceeds of sale thereof to Mrs Hurt's family and failing to fulfil the assumption to that effect upon which Mrs Hurt relied to her detriment in deciding to enter into the contract of sale and to transfer the property to him; (b) acting in a manner designed to defeat the beneficial interests of the Plaintiffs in the property at 32 Lucretia Avenue and/or in its proceeds of sale. 206 Deane J recognised in Hospital Products v United States Surgical Corporation (1984) 156 CLR 41 at 125 that a constructive trust may be imposed in circumstances where a person could not in good conscience retain for himself a benefit, or the proceeds of a benefit, which he has appropriated to himself in breach of his contractual or other legal or equitable obligations to another. However, as Deane J also pointed out (at 615), a constructive trust will not be imposed according to idiosyncratic notions of what is just and fair, but is a remedy only available when warranted by established equitable principles or by the legitimate processes of legal reasoning, by analogy, induction and deduction, from the starting point of a proper understanding of the conceptual foundation of such principles. More recently in Guimelli v Guimelli (1999) 196 CLR 101 at 113 [10] it was recognised that a constructive trust is an appropriate remedy in such circumstances. 207 In the present case, as discussed above, the Defendant played such a part in Mrs Hurt's adoption of, and persistence in, the assumption that he would return the property (or its net proceeds upon a sale) to the Hurt family when he no longer needed it, that by not doing so he was guilty of unconscionable conduct. By failing to give notice to a member of the Hurt family of his intention to sell the Longueville property in 1997, and then failing to account to the Plaintiffs for their share of the sale proceeds of $1.625,000, the Defendant sought to defeat the beneficial interests of the Plaintiffs in the Longueville property or in its proceeds of sale and could not in good conscience retain the total proceeds. Conclusion 208 Accordingly, I find that a remedial constructive trust as sought by the Plaintiffs is an appropriate means by which to remedy the Defendant's unconscionable behaviour. Equitable Estoppel 209 The Plaintiffs also claim a constructive trust on the ground of equitable estoppel based on the detrimental reliance by Mrs Hurt on the Defendant's promise which they allege created a shared assumption as to the eventual return of 32 Lucretia Avenue or the net proceeds of the sale thereof to the Hurt family; and the failure of the Defendant to inform Mrs Hurt prior to the contract of sale (or its later completion) that he did not intend to fulfil his promise and their shared assumption based on that promise. Essentially, the Plaintiff claims that it would be unconscionable for the Defendant to depart from the assumption or expectation induced by the Defendant's conduct, by way of representations as earlier found. 210 Accordingly, I turn to consider whether the elements of a claim in equitable estoppel have been made out. 211 In Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 Brennan J (as he then was) laid down the six matters (or probanda) which must be established: "In my opinion, to establish an equitable estoppel, it is necessary for the plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the Defendant or expected that a particular legal relationship would exist between them and, in the latter case, the Defendant would not be free to withdraw from the expected legal relationship; (2) the Defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the Defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the Defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise…" 212 The first of these probanda, in referring to an assumption by Mrs Hurt that a particular legal relationship then existed between her and the Defendant, should not be read narrowly. Indeed, there is no necessity that there be the creation or encouragement by the Defendant in Mrs Hurt of an assumption that a contract will come into existence if, as here, there be at least encouragement that a promise will be performed: per Priestley JA in Ausotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 at 610. However, it is an essential element of the principle of estoppel, that the conduct of the parties sought to be estopped must properly be characterised as "unconscionable": Murray's Meats Pty Ltd v Bevillesta Pty Ltd (McLelland CJ in Eq, SC(NSW) 28 October 1993 unreported). 213 Applying those principles to the present case, I am satisfied that the shared assumption between Mrs Hurt and the Defendant was that the Defendant would enjoy ownership (including residence) of the Longueville property until such time as he no longer needed it at which time he would either return the property (or the net proceeds of any sale, being the sale price reduced by the purchase price and the cost of any improvements) to the Hurt family. 214 It is clear that Mrs Hurt relied on that assumption in entering into the contract for sale dated 12 September 1993. That contract upon completion (absent such promises) granted the Defendant indefinite rights to occupy the property free of any liability to pay rent or other occupation fee, simply by completing for a fixed price (a net $100,000). It was a price, furthermore, fixed at the time of entry into the contract, with only a requirement to pay a nominal $100 deposit, that was substantially less than its true market value (being as I have earlier found $215,000). This discrepancy favouring the Defendant was likely to, and in fact did, increase, given that by the time of settlement (June 1985) the value of the property was (as earlier determined) $250,000. Accordingly, in reliance upon the Defendant's promise Mrs Hurt suffered the detriment of refraining from selling the property to an alternative arm's length purchaser and hence from receiving a significantly higher purchase price than that paid by the Defendant. The promise also led Mrs Hurt to refrain from leaving the property (or the proceeds from its sale) by will to Robert and Bruce and/or her grandchildren. Given Mrs Hurt's "mental conflict" (to coin her own phrase) I am prepared to find that but for the Defendant's promises, Mrs Hurt would not have so acted and that she acted in reliance on them to her detriment, so satisfying the fifth probanda. The Defendant's departure from that shared assumption was unconscionable. It does not cease to be a shared assumption, or unconscionable, because the Plaintiffs had justified suspicions which they waited for subsequent events either to confirm or dispel. Conclusion 215 The Defendant's action in failing to account for the proceeds of the sale, so failing to fulfil the assumption and expectation of Mrs Hurt derived from his representations, constitutes unconscionable behaviour sufficient to ground a claim of equitable estoppel. Each of the six matters requiring to be established for equitable estoppel have been satisfied. 216 Accordingly, I am satisfied that a remedial constructive trust should be imposed over the proceeds (or that into which traceable) on that basis also. Common intention 217 In the alternative, the Plaintiffs claim a constructive trust on the ground of a common intention between Mrs Hurt and the Defendant in terms of the Defendant's promise. 218 In Hohol v Hohol [1981] VR 221 O'Bryan J identified three essential elements of a common intention constructive trust. In that case his Honour said (at 225): "From the cases I have referred to it can be said that the essential elements of the trust are, first, that the parties formed a common intention as to the ownership of the beneficial interest. This will usually be formed at the time of the transaction and may be inferred as a matter of fact from the words or conduct of the parties. Secondly, that the party claiming a beneficial interest must show that he, or she, has acted to his, or her, detriment. Thirdly, that it would be a fraud on the claimant for the other party to assert that the claimant had no beneficial interest in the property…" 219 In determining whether there is a common intention that a claimant was to have a beneficial interest in the property the court will look firstly for direct evidence of any express communications between the parties or the making of admissions by them: Rasmussen v Rasmussen [1995] 1 VR 613 per Coldrey J (at 615). Clearly, the representations made to Mrs Hurt by the Defendant, the subject of the estoppel, in respect of the beneficial interest of the Longueville property, and articulated by Mrs Hurt in her letters to her sons manifest a common intention. In so far as Mrs Hurt entered into the contract for sale on the faith of the belief or expectation that the Defendant would return the Longueville property (or its net proceeds after sale) to the Hurt family when he no longer needed it, his failure to do so meant that Mrs Hurt "would suffer so substantially as to make it unconscionable for the other party to disappoint [her]…": Thwaites v Ryan [1984] VR 65 per Fullagar J at 95. Conclusion 220 I am satisfied that a constructive trust may be imposed, derived from a common intention between Mrs Hurt and the Defendant. Tracing 221 Do the Plaintiffs have a right to trace into the Defendant's assets in aid of a constructive trust? 222 The constructive trust as a proprietary remedy arises where it is possible to trace particular property, still identifiable and remaining in the Defendant's possession: see for example, El Anjou v Dollar Land Holdings P/c [1993] Ch 717; [1994] 1 BCLC 464 (CA). However, as the High Court recognised in Brady v Stapleton (1952) 88 CLR 322 at 337 (recalling the words of Lord Ellenbrough CJ in Taylor v Plumer (1815) 3 M & S 562 at 575) that: "It makes no difference in reason or in law into what other form, different from the original, the change may have been made…for the product of or substitute for the original thing still follows the nature of the thing itself, as long as it can be ascertained to be such, and the right only ceases when the means of ascertainment fail…" 223 By the Defendant's own admission the proceeds of the Longueville sale were used to purchase the property at 26 George Street, Paddington and the balance invested in the flexible income plan policy no. L0291356 held by the Defendant with National Australia Financial Management Ltd: Defendant's affidavit, para [69]. Given that there is no difficulty in ascertaining the transmogrified property over which the Plaintiffs claim a constructive trust they have a right to trace into the aforementioned assets. I would only add that: (a) there is no necessity for a fiduciary relationship to be called in aid for tracing in such circumstances nor should one be contrived; see Optus Productions Pty Ltd v Popwing Pty Limited (Santow J, 28 February 1995, unreported) and see Muschinski v Dodds (1986) 160 CLR 683 at 116-7 per Deane J who expressly denies the necessity for a pre-existing fiduciary relationship in circumstances where some principle of the law of equity calls for the imposition of a constructive trust; and (b) a particular advantage of a proprietary claim is that if the property claimed has risen in value, the beneficiary obtains the benefit of that rise in value: Ford & Lee, "Principles of the Law of Trusts", [17200] 224 Having determined that a constructive trust is the appropriate remedy and that the Plaintiffs are entitled to trace into the Defendants assets it is unnecessary for me to consider the Plaintiffs' claim that the representations gave rise to a personal obligation on the Defendant enforceable in equity by an order for compensation. Question 8 - Limitations 225 The Defendant contends that the Plaintiffs' claim is barred by the Limitation Act 1969 (NSW). 226 Before turning to determine the availability or otherwise of this defence I need to consider why the Plaintiffs did not bring an action earlier than the Statement of Claim filed 28 September 1999 if they were of the view as early as 1983, whether pleaded or not, that the contract of sale was improvident. 227 The tendered correspondence between the First and Second Plaintiffs suggest a number of reasons why the Plaintiffs did not commence legal proceedings against the Defendant, despite their numerous threats. 228 First, there is some suggestion that the Plaintiffs themselves considered that the evidence was not strong enough to successfully support the actions that they had contemplated, namely, a case under the Mental Health Act, and a case under the undue influence provisions of the law of contract: Bruce Hurt's letters to Robert, 5 November 1984 (PX2 at 477); 22 November 1984 (PX2 at 527). However, it is to be noted that by March 27 1985 Bruce Hurt had received advice from a Geriatric/Neuro-Specialist that Mrs Hurt was incapable of understanding her financial affairs. 229 Second, the Plaintiffs were concerned that their mother's presence in court would not assist any legal proceedings: T, 120 (wherein the Second Plaintiff affirmed the proposition put to him that he was worried evidence given by his mother might not help his case). Indeed, Bruce Hurt's letter to Robert on 29 May1984 (PX2 at 385) states that, "I doubt if I can bring myself to drag her into court ! She is adamant that I won't and I guess she is right. I will persist with the barristers opinion - but I really can't see any joy in court action. She is too smart - and Ray is too clever to believe a court would understand our position…" 230 However, this should not be read out of context, for earlier in the same letter (PX2 at 384) Bruce Hurt says, "She is convinced she has done the right thing about the house - and believes Ray is to be merely a caretaker and when he finishes with the house and sells it, the proceeds will go to our children. I asked what proof we have - and she said he has made her his promise!" 231 In any event, Robert was aware that Mrs Hurt, a frail elderly woman, was concerned about appearing as a witness in any such proceedings, as evidenced in her letter to him dated 1 April 1984 (PX2 at 364). 232 Moreover, it is evident that the Plaintiffs feared that the Defendant's ascendancy had only increased during the period following entry into the contract of sale. This is evidenced by Bruce Hurt's letter to Robert of the 30 November 1983 in which he indicated that he was reluctant to send the particular contents of a letter to the Defendant because of "the possibility that Mrs Hurt might be persuaded by him to change her will to move everything in his direction" and "It is probably her right to do so" (PX1 at 311). This said, there were clearly a number of possible reasons that the Plaintiffs did not in fact bring an action against the Defendant prior to that brought in 1998. 233 Nonetheless, the action that was brought in 1998 beginning these proceedings was not in fact a claim for the contract to be set aside on the grounds of undue influence or mental unsoundness, as may have been agitated in the early to mid-1980s, but rather a claim for a constructive trust framed in terms of a failure to honour representations made to Mrs Hurt at the time of entering and completing the contract for sale and the equity to which that gave rise. 234 Given that the terms of the representations themselves were that the Defendant would return the property (or the net proceeds arising from its sale) when he no longer had any need for it, the Plaintiffs' cause of action arose at the earliest in October 1997 when the Defendant refused to honour and fulfil his promises to Mrs Hurt by selling the Longueville property without accounting for the net proceeds to the Hurt family. To that end, although the Defendant did not live at the Longueville property between 1989 and July 1997 (Defendant's affidavit, paragraph 67), he did live in the property again in July 1997 (Defendant's affidavit, paragraph 67) and rented it out to tenants whilst he was abroad. Clearly, there may have been some question as to whether the Defendant needed the property (in the terms of Mrs Hurt's and his shared understanding) after 1989 when he left to go overseas. However, the First Plaintiff claims that he did not realise that the Defendant was in fact overseas in the period between 1989-1997, although he was aware that it was being rented out: T, 20.3-18. Moreover, as the First Plaintiff himself recognised, while the promise existed in an undefined time period, "there was one definition that would stand up and that was when the property was to be sold either Mr Freeman would or would not honour his promise". (T, 21.55 - 22.1) 235 Given that the Plaintiffs first became aware of the sale of the property accidentally in July 1998, having received no notice from the Defendant (affidavit of Robert Hurt, 9 June 2000 para [31]), July 1998 was the first date that the Plaintiffs could have reasonably discovered the facts giving rise to their cause of action. Admittedly they did not caveat, which however might be justified because the act of caveating might have been unreasonable, when it was in advance of knowing whether the Defendant would fulfil the representations he had made. When the Plaintiffs found out about the sale, was the first point in time at which it could be said that the Defendant had indicated to the Plaintiffs in no uncertain terms that he no longer had any need for the property and did not intend to honour the representations he had made. 236 Given that the Plaintiffs' cause of action is one to recover trust property it is significant that ss47 and 48 of the Limitation Act 1969 (NSW) provide that: Section 47 (1) An action on a cause of action: (a) in respect of fraud or a fraudulent breach of trust, against a person who is, while a trustee, a party or privy to the fraud or the breach of trust or against the person's successor, (b) for a remedy of the conversion to a person's own use of trust property received by the person while a trustee, against that person or against the person's successor, (c) to recover trust property, or property into which trust property can be traced, against a trustee or against any other person, or (d) to recover money on account of a wrongful distribution of trust property, against the person to whom the property is distributed or against the person's successor, is not maintainable by a trustee of the trust or by a beneficiary under the trust or by a person claiming through a beneficiary under the trust if brought after the expiration of the only or later to expire of such of the following limitation periods as are applicable: (e) a limitation period of twelve years running from the date on which the plaintiff or a person through whom the plaintiff claims first discovers or may with reasonable diligence discover the facts giving rise to the cause of action and that the cause of action has accrued, and (f) the limitation period for the cause of action fixed by or under any provision of this Act other than this section.

(2) Except in the case of fraud or a fraudulent breach of trust, and except so far as concerns income converted by a trustee to his or her own use or income retained and still held by the trustee or his or her successor at the time when the action is brought, this section does not apply to an action on a cause of action to recover arrears of income. [emphasis added]

48. Breach of trust An action on a cause of action in respect of a breach of trust is not maintainable if brought after the expiration of the only or later to expire of such of the following periods of limitation as are applicable: (a) a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims, and (b) the limitation period for the cause of action fixed by or under any provision of this Act other than this section. Conclusion 237 Accordingly, for a proprietary trust claim like the present, the limitation period runs from the date the Plaintiff first discovers or with reasonable diligence could have discovered, the facts giving rise to the cause of action. On that basis, the action having accrued in 1997, the Plaintiffs were clearly in time. In any event, even if contrary to my finding the cause of action accrued in 1989 when the Defendant left the property to go overseas, the Plaintiffs are still within time under s47 if one treats the Property as trust property. However, I do not need to reach a concluded view on the latter proposition, given my earlier conclusion. Question 9 - Laches 238 Having found that the Plaintiffs' cause of action arose in July 1998 it is strictly unnecessary for me to consider the Defendant's claim that it is inequitable and unjust to grant to the Plaintiffs any of the relief they claim by reason of their alleged laches. Nonetheless, in the event that the Plaintiffs' cause of action accrued earlier than July 1998 I will consider the issue briefly. 239 Laches is established when two conditions are fulfilled. There must first be unreasonable delay in the commencement of proceedings; second, in all the circumstances the consequences of delay must render the grant of relief unjust. 240 In respect of the first limb, the point of time as from which the reasonableness of delay is determined is, prima facie, the time at which the plaintiff came to know of the facts that had given rise to the ground of equitable intervention in question: Stafford v Stafford (1857) 44 ER 697 at p.701; Hourigan v Trustees Executors and Agency Co. Ltd (1934) 51 CLR 619 at p.651. This was not a case where the Defendant had, before July 1998, clearly indicated an intention to repudiate his representations to Mrs Hurt and no longer to be bound by them. Nor could it be said that a reasonably assiduous person would have proceeded with substantially greater speed or diligence. Indeed, the Plaintiffs sought to monitor the Defendant's use of the property and did not consider that the mere fact that he had tenanted the property meant that he no longer needed it or wished to reside there in the future: T, 20.10-17; affidavit of Robert Hurt 22 August 2001 paras 6-11. 241 Nonetheless, the Defendant contends that the Plaintiffs were unreasonable in failing to contact him between 1986 and the commencement of these proceedings to communicate that they would take legal steps if he failed to adhere to his undertaking. However, a number of factors militate against this finding. First, the Defendant conceded that he had been alerted by Robert's letter of 19 October 1984, that the Plaintiffs believed that he had made undertakings to Mrs Hurt to return the Longueville property: T, 242.12. Second, the Defendant was also aware that the Plaintiffs had written evidence from Mrs Hurt recording the Defendant's promises, and that they had sought to have him sign a written confirmation of his promises (Annexure to Robert Hurt's letter - PX2 at 458). Third, on the basis of my earlier findings, the Second Plaintiff was told by the Defendant in the telephone conversation of 24 October 1984 that the Defendant would adhere to his undertakings to Mrs Hurt. Fourth, given that the Defendant cleared out and sorted through Mrs Hurt's possessions from the Longueville property it is arguably significant that the Defendant retained Mrs Hurt's July 1983 and April 1984 Wills (Exhibits RSF12 and 14 to his affidavit). Given my findings in relation to the conversations of October 1984 between Robert and the Defendant it is open to me to infer and I do infer that the Defendant is likely to have believed that such documents could assist him to defend a future claim by the Plaintiffs. For all these reasons the Defendant was on notice that the Plaintiffs might well seek to enforce his promises to Mrs Hurt from as early as 1984. Moreover, despite both the First and Second Plaintiffs lack of faith in the Defendant's trustworthiness it was reasonable for the Plaintiffs to take the view that they could not safely determine in advance whether the Defendant would or would not adhere to his promise in the future, whatever their suspicions. This was particularly so given that the Plaintiffs recognised that the promise itself had an end point by which that adherence could be assessed: T, 86.18-21; T, 103.1-5. 242 In respect of the second limb of the laches claim, it is necessary that the Defendant be prejudiced by the delay. One such prejudice said to be occasioned by the bringing of these proceedings is the absence of key witnesses. The first of these is Mr O'Reilly, Mrs Hurt's solicitor, now retired. According to the First Plaintiff attempts were made to contact him at the beginning of proceedings and he was unable to recall who Mrs Hurt was: T, 70.6-10. Nonetheless, the First Plaintiff was satisfied that the Mr O'Reilly he spoke to had been his mother's former solicitor: T, 70.25-26. In any event there was considerable evidence of Mr O'Reilly's role in relation to the proposed dealings concerning the Longueville property, both Wills and the September 1983 contract of sale: PX1 at 187, 190, 259, 261, 264, 272, 277, 286, 293, 294, 297, 309; PX2 at 238, 353. On that basis, I do not consider that there was any prejudice to the Defendant arising out of Mr O'Reilly not being called to give oral evidence. The Defendant also contends that prejudice arose from the Plaintiffs failing to call, among others, Mr Healey (who witnessed Mrs Hurt's signature on the transfer), Reverend Glassock (the Pastor at the Caroline Chisholm Nursing Home), and Matron Pell (of the Caroline Chisholm Nursing Home) and even the respective wives of the Plaintiffs. Although the onus for proving the existence of the representations alleged to have been made by the Defendant to Mrs Hurt rests on the Plaintiffs, and the Plaintiffs called no other witnesses, I conclude they did satisfy that onus. Moreover, the Defendant did not demonstrate that Mr O'Reilly or any other person could have given evidence relevant to the Defendant's representations and promises and I do not need to consider undue influence as a separate basis. But even if he could have given useful evidence, Mr O'Reilly could have been called by the Defendant and his recollection tested; Mr O'Reilly was not in the Plaintiffs' "camp". Nor did the Defendant file any evidence detailing steps take by him to obtain further witnesses to give evidence and/or the unavailability of such witnesses. 243 Moreover, the fact that Mrs Hurt herself was unavailable to give evidence could not be said to prejudice the Defendant's case when prior to her death (on 6 August1986) it was a hypothetical question whether the very promises upon which these proceedings have been brought would be fulfilled. Conclusion 244 The defence of laches is not available to the Defendant in the circumstances. Incidental Questions 245 Although not operating to refute the Plaintiffs' case, the Defendant's Counsel raised several questions that I consider incidental to the issue of the Defendant's representations. It is to those that I now turn. (a) If the Defendant had made the promise, why would he have sold the property in 1997 or not have hidden the proceeds? 246 Counsel for the Defendant contends that the Defendant's behaviour in selling the Longueville property in 1997 and purchasing another property in Paddington with the proceeds (the balance of which were invested in an Australian account) "does not bespeak conduct by a person waiting for the plaintiffs to turn up and demand their due" (Defendant's written submissions, p30). It is said that this is particularly the case given that the Defendant had chosen for part of the time to live overseas. Accordingly, it is put that it would be strange indeed for the Defendant to sell a property if he knew or anticipated that the proceeds of sale would then belong to others. 247 However, such a submission fails to recognise that the representations made by the Defendant to Mrs Hurt provided that at whatever time the Defendant chose to sell the property he would only ever receive $100,000 plus the expenses he had incurred on improvements. Given that he clearly had no desire or intention to live in the Longueville property in the long term after his return to Sydney the only benefit the Defendant could hope to gain from retaining the property was the rent. Accordingly, the fact is that the Defendant himself gave evidence that, from the sale proceeds of the Longueville property: "I repaid debts to friends from whom I borrowed money. I also used some funds to pay medical bills of about $35,000. I used some of the funds for living expenses" (Defendant's affidavit, para [69]) 248 This leaves open the possible (and not improbable) explanation that the Defendant required the funds for more pressing commitments at the time of the sale. Moreover, after ten years absence, and at the distance of 1997 the Defendant may have thought that he could get away with a sale of the property more especially if he did not alert the Plaintiffs. Certainly once his breach of the promises was discovered a caveat was lodged on the George Street, Paddington property by the Plaintiffs in order to prevent its sale. (b) The representations do not make sense and clearly were not in the self-interest of the Defendant. 249 The Defendant's counsel contends that the alleged representations not only fail to make sense but would be an "extraordinary obligation" that would "paralyse his [the Defendant's] capital" and would be "obviously uncommercial": Defendant's written submissions, pp6-7. 250 Taking as the starting point the contention that the Defendant's promises were nonsensical, it is important to recognise that the Defendant's promise facilitated a resolution of Mrs Hurt's "mental conflict". It reconciled her promise to the Defendant that he could live in the property for as long as he needed to do so (see letters from Mrs Hurt to Robert of 7 May1980 at TB, 1-93; 27 May1980 at TB, 1-98; 22 June 1980 at TB, 1-109; 27 June 1980 at TB, 1-112 and 113; 9 December 1980 at TB, 1-136; 3 March 1981 at TB, 1-164-165; 8 February 1982 at TB, 1-177; 20 June 1983 at TB, 1-257) with her intention not to occasion detriment to, or hurt, her children and grandchildren (see letters from Mrs Hurt to Robert of 6 May1980 TB, 1-88; 25 January 1981 at TB, 1-155; 23 January 1983 at TB, 1-224; 16 February 1983 at TB, 1-243; 17 February 1983 at TB, 1-247; 20 June 1983 at TB, 1-258). As the Defendant himself conceded, "(t)here was no consideration of me benefiting over the family" (T, 179.29-30). At no time during the period of negotiations about the Longueville property did the Defendant have the financial capacity to acquire the property at a fair market value. Indeed, the Defendant admitted (at T, 224) that he told Mrs Hurt's solicitor, Mr O'Reilly, in early 1984 that he could not give any thought to re-negotiating the terms of the contract of sale following requests from Mrs Hurt that he do so (see letter from Marshall Landers to Mrs Hurt dated 15 March 1984 - TB, 2-330) because he could not afford a cent more than $100,000 as purchase price (T224.50-57). Accordingly, his only means to the property was to accept a large element of gift from Mrs Hurt. On that basis, the arrangement was generous to him because he acquired a property he could not otherwise afford, he obtained long term use at no further payment and he would recover his original capital plus improvements at the time of sale. All he was foregoing was the ultimate interest or return on use of his capital. OVERALL CONCLUSION 251 The Plaintiffs, having discharged the onus of proving the existence of the representations alleged to have been made by the Defendant to Mrs Hurt in order to induce her to enter and complete the contract of sale of 12 September 1983, are entitled to recover the sum of $1,420,500 plus interest thereon from the time the sale proceeds were derived, by way of equitable relief in consequence of the unconscionability that would attend his not honouring his promises or representations, or failing to fulfil the assumption he had thereby induced. A similar result would follow by way of equitable compensation. Accordingly, the Plaintiffs are entitled to a remedial constructive trust over the proceeds of the sale of 32 Lucretia Avenue. They are also entitled to trace in respect of the sum of $1,420,500, plus interest thereon from the time the sale proceeds were first derived, against (a) the Defendant's property at George Street Paddington, bought using part of the proceeds of the Longueville sale; (b) the funds in the National Australia Financial Management Policy in the name of the Defendant being investment of part of the proceeds of the Longueville sale. 252 The earliest point in time at which it could be said that the Defendant had indicated unequivocally, by the actions he took, that he no longer had any need for the property, was at the time of sale on 31 October 1997. Alternatively the point of time is when, with reasonable diligence, the facts giving rise to the cause of action could have been discovered by the Plaintiffs (July 1998). Accordingly, on either basis, the Plaintiffs' cause of action instituted 28 September 1999 to recover trust or traceable property is not barred by the Limitation Act 1969 (NSW) nor a claim of laches. ORDERS AND COSTS 253 I direct the parties to submit orders giving effect to this judgment within ten days. Prima facie costs should follow the event, but the parties may address me on costs if they wish.

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