Turner v Windever

4537/01 SUZANNE MARY TURNER V CAROL ANN WINDEVER & ANOR JUDGMENT 1 HIS HONOUR: Betty Lett had seven children during her marriage. One of her daughters, Suzanne Turner, is now the plaintiff in this proceeding. Another daughter, Carol Windever, is the first defendant. The second defendant, Daniel Windever, is Carol's husband. Another daughter is Mrs Christine Blackburn. 2 Mrs Lett and her husband were divorced in 1985. Mrs Lett lived on the south coast of New South Wales, from the late 1980s until her death on 25 December 2001, aged 75 years. In her last will dated 2 March 2001 she named Suzanne Turner as executrix, and after some specific bequests, gave the residue of her estate (including any interest she might have in real estate) to four of her children, including Mrs Turner and Mrs Blackburn but excluding Mrs Windever. Probate of that will was granted to Mrs Turner. Mrs Lett commenced the present proceeding before she died, but in due course Mrs Turner was substituted as plaintiff, by orders of this Court made on 4 August 2002. According to the inventory of property of the estate prepared by Mrs Turner as executrix, the total value of the estate was $233,026, and by far the most valuable asset was said to be an interest in property claimed in the present proceeding, valued by her at $220,000. 3 In 1996 Mrs Lett was living in a home unit, owned by her, in Narooma on the south coast of New South Wales. She decided to sell the home unit and was attracted to a property at 13 View Hill Road Kianga ("the Kianga property"), but the price was more than her available funds. She borrowed the balance from her daughter and son-in-law, Mr and Mrs Blackburn, and signed a mortgage in their favour, which provided for compound interest ("the Blackburn mortgage"). Later she became concerned about the provision for compound interest and the prospect that Mr and Mrs Blackburn might "foreclose" (in circumstances that need to be explored and analysed). In November 1998 she entered into a transaction by which she transferred the Kianga property to Mr and Mrs Windever for a consideration of $1, and Mr and Mrs Windever paid out and discharged the Blackburn mortgage. Mr and Mrs Windever granted Mrs Lett a right to reside in the Kianga property for the rest of her life. 4 In 1999 Mr and Mrs Windever sold their residence in Dalmeny and moved to Melbourne. Later they moved in to the Kianga property, to live there with Mrs Lett. Their son subsequently joined them. Then tensions developed between Mrs Lett and the Windever family and in December 2000 Mrs Lett moved out. She spent the last year of her life in temporary residential arrangements with various children. 5 Mrs Lett commenced the present proceeding by summons filed on 11 September 2001. She sought the following final relief:

1. A declaration that Mr and Mrs Windever hold the Kianga property in trust for her, subject to an equitable charge to secure repayment of the amount used to discharge the Blackburn mortgage.
2. A declaration that the transfer of the Kianga property by Mrs Lett to Mr and Mrs Windever was an unconscionable and/or unconscientious transaction liable to be set aside.
3. An order that the transfer be set aside.
4. Alternatively to 3, an order that Mr and Mrs Windever reconvey the Kianga property to Mrs Lett free of any encumbrance placed upon it since the date of the transfer.
5. An order for equitable compensation.
6. Interest. 7. Costs. 6 As I have said, the proceeding is now maintained by Mrs Turner as her executrix. It is particularly important in cases of this kind to analyse carefully all the relevant facts. I shall first do so, and then turn to the relevant law and its application to the facts. Some observations about Mrs Lett's evidence 7 Notwithstanding an objection on behalf of Mr and Mrs Windever on the ground that the evidence could no longer be tested by cross-examination, I allowed Mrs Turner to tender in evidence the affidavit of Mrs Lett made on 16 October 2001. Although admissible, Mrs Lett's evidence has to be treated with great care, in my opinion. It is clear from reading the affidavit that the deponent was very hostile to Mr and Mrs Windever at that time. Most of the assertions in the affidavit are challenged by Mr and Mrs Windever. This is precisely the sort of case where the Court is most likely to be assisted, in determining the credibility of a witness, by observing the witness giving oral evidence and responding to cross-examination. 8 I have decided that, in these circumstances, the correct approach is not to accept Mrs Lett's evidence where it is challenged by the defendants' evidence, unless there is some external corroboration. 9 There were many inconsistencies in the evidence of the plaintiff's other witnesses, on one hand, and the defendants and their witnesses on the other. However, I do not think it necessary to make any general finding on the credibility of any of the witnesses, although I shall have occasion to prefer the evidence of one rather than another where there is inconsistency. Mrs Lett's state of health 10 Part of Mrs Turner's case is that her mother was in a position a disadvantage because of ill health, when she entered into the November 1998 transaction. The evidence of Mrs Lett's health is fairly sketchy. I shall summarise it. 11 Hospital records indicate that Mrs Lett had a heart attack and was hospitalised in July 1994. In February-March 1995 she was treated in hospital for severe anaemia and a stomach ulcer. She was given a blood transfusion. On 2 March 1995 she was reviewed in the Vascular Clinic for decreased blood flow in both legs. On 12 March 1995 she had angioplasty with stenting to the left leg, and in late May 1995 she had angioplasty with stenting to the right leg. At that time she was diagnosed with abdominal aortic aneurysm. On 22 June 1995 she had a post-angioplasty procedures follow-up at the Vascular Clinic. 12 Mrs Windever gave evidence that in about 1994 when her mother was in Woden Valley Hospital, she had a conversation with a specialist, who explained to her: "We can't operate on the aneurysm because of the age, you have to be fit to have surgery on the aorta. You don't have to worry though; your mother will probably die of old age before her aneurysm worries her. As long she stays on her medication and stops smoking she should live well into her 80s." 13 The hospital evidence does not directly indicate Mrs Lett's state of health in 1997 and 1998, at the time of her dealings with the Kianga property. We know that she was about 72 years old in 1998. Mrs Turner's case is that Mrs Lett's health deteriorated markedly in 1997, after she moved into the Kianga property, and she contends that it was poor in 1998. Mr and Mrs Windever do not accept that this was so, contending instead that Mrs Lett suffered from the ordinary ailments associated with old age, and that she was a robust and independent woman at the time of the November 1998 transaction. 14 Mrs Lett said in her affidavit made that after moving into the Kianga property, her health deteriorated quite rapidly and she became very frail and unable to get about. She said: "I became unable to drive my car and it was very difficult for me to walk anywhere. I was unable to leave my house although I was independent enough to be able to attend to my own personal needs such as toilet and shower. I also did my own cooking and the small amount of washing that I required. Daniel Windever erected a clothesline at the back door of the home and I was able to get to that to peg out the clothes for drying. My grandson, Scott, used to do my shopping for me for which I paid him and I also paid my grandson, Peter, to help around the garden with the weeding and mowing lawns. I was still able to attend to my own ironing." 15 Mrs Windever disagreed with this evidence, saying that her mother was not able to drive her car before she took up residence at the Kianga property, and that she never paid anyone to do shopping or gardening because this work was done by Mrs Windever, her husband and at times by Peter Lett. The fact that Mrs Windever did not specifically disagree with her mother's assertion that she became very frail and unable to get about, suggest that this was probably so. 16 Mrs Turner gave evidence that Mrs Windever received a carer's pension and was paid $40 per week by Mrs Lett for cooking and cleaning, and she said that her mother also paid for gardening and maintenance work. There is no direct evidence of the carer's pension and it seems to me unsafe to rely on Mrs Turner's evidence about financial arrangements between her mother and her estranged sister. In any event, the question of payment has no significance to the determination of this case. I accept, however, that Mrs Lett needed to have substantial assistance to handle ordinary chores in 1997 and 1998. 17 Mrs Turner gave oral evidence that her mother's condition deteriorated gradually after April 1997. When asked for particulars of this, she said that her mother was "limited in her movement" and she found it very difficult to walk too far. When pressed, she said that after walking 50 metres her mother would be puffing and would become breathless. Mrs Blackburn said there was a big change to her mother's health after Mr and Mrs Windever moved into the Kianga property with her, and referred to her mother's shortness of breath after moving only a few metres. Mrs Blackburn said her mother had "coronary artery disease". In his letter dated 24 March 1998, Mr Wain describes Mrs Lett as being 72 years of age and in poor health. 18 However, both Mr and Mrs Blackburn said in evidence that they regarded Mrs Lett as sufficiently competent to understand the November 1998 transaction. Additionally, Mrs Blackburn said her mother wanted to keep her independence, at the time of acquisition of the Kianga property in April 1997. The latter evidence is echoed by Mrs Turner's written submission, that Mrs Lett was "a fiercely independent person who purchased the Kianga property in the hope that she would maintain that independence and not have to go to a nursing home in her later years". 19 Mr Wain, a solicitor in the firm Delves & Wain, dealt with Mrs Lett from about March 1998 to the time of the November 1998 transaction. He gave evidence that, during the course of his dealings with Mrs Lett, he considered that her mental processes were unimpaired and that she was competent to instruct him in relation to the matters upon which he was retained. 20 There is a hospital record indicating that in November 2000 Mrs Lett was treated for vomiting and diarrhoea. This does not indicate any more general or ongoing problem, and in any case is after the November 1998 transaction. 21 Dr C Marshall, a doctor in general practice, wrote a medical certificate for Mrs Lett dated 24 July 2001, referring to an unspecified "past medical history of abdominal aortic aneurysm, hypertension, left ventricular failure, ischaemic heart disease with angioplasty and stent, myocardial infarction, congestive cardiac failure, decreased renal function". In the absence of other evidence, I infer that this list refers to the episodes recorded in the hospital records for 1994 and 1995, except as regards renal function. The medical certificate states that Mrs Lett's condition "has deteriorated lately and she has required alterations of the medications to help stabilise the renal function and blood pressure." Avoidance of stressful situations was recommended. 22 The cause of Mrs Lett's death, recorded on her death certificate, was: "(I) a) Abdominal aortic aneurysm five years b) Peripheral vascular disease years c) Cardiomyopathy (II) Diverticulitis Peptic ulcer." Mrs Lett's decision to buy the Kianga property 23 Mrs Lett lived on the south coast of New South Wales from the late 1980s. She had purchased a house at Dalmeny which was on two levels, and not particularly suitable for her as she became older. She eventually sold it and purchased a unit at Narooma, which was only two doors from where her daughter Mrs Windever lived. Mrs Lett said she was comfortable in the Narooma unit, although Mrs Windever pointed out that the unit was split-level on a steep block, with terraced gardens that her mother was unable to maintain without help. 24 Mrs Lett said that in January 1997 or earlier, Mrs Windever suggested to her that it would be a good idea for Mrs Lett to grant her a power of attorney so she could attend to Mrs Lett's affairs should Mrs Lett become incapable of doing so. On 31 January 1997 Mrs Lett executed a general power of attorney in favour of Mrs Windever. She gave evidence that she executed it before the Clerk of the Local Court at Narooma Court House, and was taken there by Mrs Windever. Mrs Windever disputed Mrs Lett's assertions that the power of attorney was her idea and that she prepared the draft document. Mrs Windever agreed that she took her mother to the Clerk of the Court at Narooma. Nothing turns on this disagreement. It is common ground that the power of attorney was not used, and its main significance is to indicate that Mrs Lett reposed trust in Mrs Windever in January 1997. 25 At about that time the house between Mrs Lett and Mr and Mrs Windever was put up for sale. Mrs Windever told Mrs Lett that a public instrumentality (the Department of Housing, according to Mrs Windever, or the Aboriginal Land Council, according to Mrs Lett) were looking to buy homes in that area, and if they did, the value of surrounding homes would decline. Mrs Windever told her mother that she intended to sell, and suggested that all three properties be put on the market at the same time. Mrs Lett decided to sell her unit. 26 Mrs Lett looked for another property in or near Narooma. She received assistance from family members including Mrs Blackburn and her husband Jeffrey. They took her to inspect a house at Dalmeny and then advised her that the house would not be suitable because it was on a sloping block unsuitable for a person of Mrs Lett's age. They also took her to inspect a property at 13 View Hill Road Kianga (the Kianga property). Mrs Lett was attracted to the property, which Mr and Mrs Blackburn regarded as more suitable than the Dalmeny property, but the asking price was $145,000, about $48,000 more than her available funds. 27 Mr and Mrs Blackburn subsequently had a conversation in which they decided to offer to lend Mrs Lett $48,000 to enable her to acquire the Kianga property. Mr Blackburn had some money invested, at an interest rate of about 15% per annum, through Edmund Fredericks, of Fredericks & Co, solicitors, from which he could draw to make the loan. 28 According to Mrs Blackburn's evidence, she and her husband spoke to Mrs Lett in the presence of Mrs Windever. She told her mother that they would lend her $48,000 at 10% interest. Mrs Lett accepted the offer of a loan. I accept this evidence. 29 Mrs Lett entered into a contract to purchase the Kianga property on 27 March 1997 for $145,000. A transfer was registered in her favour on 22 April 1997. Mr Fredericks acted for Mrs Lett as purchaser and mortgagor, and for Mr Blackburn as mortgagee. According to Mrs Lett's affidavit, Mr Fredericks invited her, on more than one occasion, to obtain independent legal advice, but she did not want to do so. 30 In her affidavit, Mrs Lett said this about the loan arrangement: "I understood that the terms of the loan were that I would have to pay interest to the Blackburns of 10% but there would be no actual repayments of principal and no actual payment of interest. In effect the Blackburns would receive back their principal and interest either following my sale of the Kianga property or my death." 31 This evidence is consistent with Mr Blackburn's evidence of the arrangement. He said that his wife told Mrs Lett: "We will charge you interest of 10% but you will not have to actually pay it unless you sell the property. When you die the $48,000 and interest can come out of your estate." 32 Mrs Blackburn gave evidence in virtually the same terms, but she added that Mrs Windever commented that the offer was "a really good idea". According to Mrs Blackburn, Mrs Lett agreed with this. None of the evidence asserts that compound interest was mentioned. The Blackburn mortgage 33 It appears that Mr Blackburn instructed Fredericks & Co to prepare a mortgage. On 22 April 1997 the firm wrote to him enclosing a photocopy of a draft mortgage document, asking him whether it met with his approval. The draft provided for an interest rate of 10% per annum compounding and calculated on a daily basis. The evidence does not explain why Fredericks & Co made provision for compounding rather than simple interest. It appears that their letter was not answered. Fredericks & Co wrote again on 24 October 1997, noting that Mrs Lett had become the registered proprietor of the Kianga property and asking Mr Blackburn to confirm his instructions to "proceed with the Mortgage documents", and instructions in relation to registration of the mortgage. Mr Blackburn gave evidence relevant to these matters but it was confused and unconvincing. 34 What appears to have happened is that Mr Blackburn arranged for signature of the draft mortgage without referring back to Fredericks & Co. The mortgage, in the form drafted by Fredericks & Co, was executed by Mrs Lett and Mr Blackburn, as sole mortgagee, and dated 26 April 1997. Mrs Lett's signature was witnessed by Mrs Turner, and Mr Blackburn's signature was witnessed by JA Turner (evidently Mrs Turner's husband). 35 Under the terms of the mortgage, Mr Blackburn advanced $48,000 to Mrs Lett, secured over the Kianga property. Covenant 2 in Annexure A of the mortgage instrument stated: "2. The Mortgagor will pay interest on the principal sum or on so much thereof as for the time be shall remain unpaid, and upon any judgment or order in which this or the preceding covenant may become merged at the rate of ten (10%) per cent per annum compounding and calculated on a daily basis." 36 In my opinion the reference to a rate of 10% "compounding" means, in a mortgage instrument, that interest was to be calculated as compound interest with a daily compounding frequency. There is, of course, an enormous difference in effect between simple and compound interest, calculated on a daily basis, where interest remains unpaid. Counsel for the defendants provided me with some computer calculations which indicated, for example, that if money is invested at 10% compound interest calculated on a daily basis for a duration of 1.6 years, the compounded rate of return is 16.7%, whereas if the investment duration is 4.7 years, the compounded rate of return is 59.4%, and if the investment duration is 5.9 years, the compounded rate of return is 80.85%. Events from March 1997 to November 1998 37 I have already referred to the conflicting evidence regarding Mrs Lett's state of health after she moved into the Kianga property. It appears that Mrs Lett moved into the Kianga property in April 1997. 38 Mrs Lett's evidence is that, when she moved into the Kianga property, she had a degree of independence, since she had a motor car and was able to drive it. Mrs Windever disagreed, saying that her mother was not able to drive her car before she took up residence at the Kianga property. Nothing turns on this disagreement, since it appears to be common ground that Mrs Lett ceased to be able to drive her car well before the November 1998 transaction, and also common ground that Mrs Lett was fiercely independent at this time. 39 Mrs Lett remained in close contact with her daughter, Mrs Windever. In addition to the power of attorney executed in favour Mrs Windever in January 1997, Mrs Lett signed an authority dated 13 December 2000 to enable Mrs Windever to operate her account with the Commonwealth Bank. I accept Mrs Windever's evidence that the bank authority was obtained at the suggestion of the bank's representative, because Mrs Lett had difficulty in walking and found it hard to get to the bank to do business. 40 Mrs Windever gave evidence that from May 1997, she assisted her mother in obtaining medical attention, taking medication, housecleaning, cooking of meals and shopping. Mrs Lett did her own washing, according to Mrs Windever, but Mrs Windever put it out on the clothesline daily as Mrs Lett could not negotiate steps. Mrs Windever said that her husband took over ground maintenance and minor repair duties in the home. I accept this evidence. Peter Lett, one of Mrs Lett's sons, gave evidence that he visited the Kianga property regularly in the years from 1997 to 2000 on many occasions, when he observed Mr and Mrs Windever working around the property. 41 Mrs Windever said that in about February 1998, Mrs Turner and her husband visited Mr and Mrs Windever at their home in Dalmeny. Mrs Turner told Mrs Windever about the Blackburn mortgage and in particular, the provision for compound interest of 10% per annum calculated daily. Mrs Turner said, according to Mrs Windever, "you realise that in just a few years this means Christine and Jeffrey will be owed more than the property is worth when Mum dies." 42 Mrs Windever said she had no knowledge of the Blackburn mortgage, and in response to a question from her, Mrs Turner said she raised the matter because she and her husband witnessed the document, and they had come to regret signing it because their mother was under the impression that she would only owe $48,000 and no interest. Mrs Turner told Mrs Windever that she was worried that the information might kill her mother, and asked Mrs Windever to break the news. 43 Mrs Turner's evidence was that she informed Mr and Mrs Windever late in February 1998 about the signing of the mortgage and the conversation she had with her mother before she witnessed the document, in which her mother said that it had been explained to her and she understood it. Mrs Turner denied that her conversation with Mrs Windever had any of the other components to which Mrs Windever deposed. Nothing turns on this discrepancy. 44 Mrs Windever told her mother about the compound interest the next day, and gave evidence that her mother became very distressed. Mrs Turner and her husband arrived at the property during this conversation, and Mrs Lett said she wanted to find out about the mortgage document. 45 This evidence is consistent with Mrs Lett's affidavit. Mrs Lett said that, some months after she moved into the Kianga property, Mrs Windever told her: "Chris and Jeff Blackburn are only using you and lent you the money for their own advantage. They are charging you compounding interest. In a couple of years, Chris and Jeff will own the property and you'll be out. You'll have nothing. If you sign the property over to us you can stay here for the rest of your life." 46 Mrs Lett said that Mrs Windever also said that her, "Mum, you're going to have to sell your car otherwise there will be no money left for your funeral." Mrs Lett said that, as a result of that conversation, she sold her car. Mrs Windever denied telling her mother that she would have to sell her car. I find Mrs Lett's evidence on that point implausible, because by this time, she had ceased driving her car and selling it was a natural step to take, while it would not be rational to sell the car because of an anticipated future liability if the car had any use. 47 I do not accept Mrs Lett's evidence that the conversation in which she found out about compounding interest happened just "some months" after April 1997. The evidence of Mrs Turner and Mrs Windever places the relevant conversation in February 1998. That seems to me to be likely, since the first steps taken by Delves & Wain on Mrs Lett's instructions were in March 1998. 48 For the same reason, I do not accept Peter Lett's evidence that he had a conversation with his mother about the compound interest problem in September 1997. According to Mr Lett, his mother telephoned him after speaking to Mrs Turner, who told his mother that the mortgage papers she had signed should have been explained to her, and that Mr Blackburn was charging 10% compound interest on a daily basis. Mr Lett said his mother told him she was very worried. Some such conversation probably occurred, but the weight of evidence suggests that it did not happen until about February 1998. Mrs Turner denied having any such conversation with her mother. Consistently with the other evidence, it may be that Mrs Lett contacted Mr Lett after having spoken to Mrs Windever, and Mr Lett's recollection is faulty both as to the time of his conversation with his mother, and as the identity of the sister who informed his mother of the problem. 49 Mrs Lett gave evidence in her affidavit that she became very upset and confused following Mrs Windeyer's statements about the loan. It appears to be common ground that Mrs Lett was disturbed by two matters, one the operation of compounding of interest, and the other the fact that Mr Blackburn could "foreclose". Mrs Windever said that her mother told her of a telephone conversation in which Mrs Blackburn said that if her mother continued to dispute the debt, Mr Blackburn would foreclose the mortgage. Mr Windever gave similar evidence. That is denied by Mr Blackburn, although he conceded he may have mentioned to his wife or someone else in the family the idea of foreclosing on the mortgage, which he recollected someone was "bandying about". It is unnecessary for me to find that Mr Blackburn made such a threat, and it would be difficult to do so on the evidence for me, but I do find that, for whatever reason, Mrs Lett was very concerned that foreclosure would occur. 50 Mr Blackburn gave evidence that, around November 1997, he and his wife became aware of Mrs Lett's concern about the compound interest rate. Mr Blackburn said he had a conversation with his wife at that time, in which he told her that they should change the mortgage so that the interest rate was not a compounding rate. Mr Blackburn gave evidence that in November 1997 he telephoned Mr Fredericks and instructed him to change the mortgage so that the interest rate would no longer be a compounding rate, and Mr Fredericks agreed to do so and promised to send papers for Mr Blackburn to sign. Mr Blackburn agreed in cross-examination that he had said that the "charging" of compound interest was causing "major problems" in the family. He gave evidence that he subsequently received a letter from Mr Fredericks enclosing documents which he signed and returned. 51 Mr Blackburn annexed to his affidavit made on 4 March 2003 a photocopy of a document purporting to be a letter to him from Fredericks & Co dated 18 November 1997. According to the letter, a photocopy of the mortgage was enclosed, from which "the reference to compounding" was deleted and "calculated on another basis in relation to special condition 2". The letter asked Mr Blackburn to initial the amendment, and inquired whether the document should be sent to Mrs Lett for execution. 52 A puzzling aspect of this letter is that the top half of it, which would have contained the Fredericks & Co letterhead if the letter was genuine, has been torn off. In his affidavit, Mr Blackburn said that the top part of the letterhead had been "inadvertently removed" by him, but that he was not sure of the circumstances. 53 It is unnecessary for me to make any finding as to the authenticity of the letter dated 18 November 1997. I do find, however, that it would be unsafe to regard this letter as evidence confirming that Frederick & Co prepared an altered mortgage instrument or instrument of alteration. Apart from the fact that the top half of the letter has been torn off without explanation, the language used in the letter is not the kind of language that would be used by a solicitor who understood the relevant law, and a competent solicitor would not propose that the problem be addressed by making alterations to the existing mortgage instrument after it had been executed. Moreover, the evidence of Mrs Turner and Mr and Mrs Windever about the circumstances in which Mrs Lett became aware of the compound interest problem place those events in February 1998, casting doubt on whether Mr Blackburn could have become aware of his mother-in-law's concern in November 1997 and would have any reason to instruct Fredericks & Co to alter the mortgage in November. In any event, what is reasonably clear, and more important for the purposes of this case, is that any steps taken by Mr Blackburn towards replacing compound with simple interest in the mortgage arrangements were ineffectual, and as far as the evidence goes, it appears that nothing was sent to Mrs Lett for her approval or signature. 54 I note that there is in evidence another version of the Blackburn mortgage, signed only by Mr Blackburn and deferring from the fully signed version in that some printed clauses are annexed. The evidence does not adequately explain how this other document came into existence. It does not appear to be the annexure to Fredericks & Co's letter of 18 November 1997 because the compound interest clause remains. 55 Mrs Lett consulted Trevor Wain of Delves & Wain in order to find out about the terms of the mortgage. She also consulted him, or someone in his office, to make a new will. 56 A will executed by her on 11 March 1998 (subsequently revoked in the circumstances explained below), provided that Mrs Lett gave the whole of her estate to Mrs Windever. Annexed to it is a letter signed by Mrs Lett, setting out reasons why she did not leave any of her estate to her other children. In the case of Mrs Blackburn, the reason given was that she knew Mr Blackburn placed a 10% compound interest rate per annum on the mortgage loan against her property and did nothing about it. In the case of Mrs Turner, it was said that she knew Mr Blackburn had placed a 10% compound interest rate per annum on the mortgage loan against Mrs Lett's property, and did not tell Mrs Lett or explain it until well after the mortgage had been put in place. 57 Mrs Lett's execution of the will was witnessed by Mr Wain and another person, and the backsheet of the will bore the name, Delves & Wain. 58 Mrs Windever gave evidence that her mother consulted Mr Wain on many occasions, and that she made the appointments and drove her to see him. She said that on some of the visits she accompanied her mother into Mr Wain's office, but her mother and Mr Wain did most of the talking. On other occasions, according to Mrs Windever, Mrs Lett saw Mr Wain alone. 59 Mr Wain entered into correspondence with Fredericks & Co. Some of the letters written by Fredericks & Co (identified below) are headed "without prejudice", but no claim to privilege was made at the hearing. 60 On 5 March 1998 Delves & Wain wrote to Fredericks & Co requesting a copy of the Blackburn mortgage as executed by Mr Lett. A copy was supplied to them under cover of Fredericks & Co's letter dated 9 March 1998. 61 On 18 March 1998 Fredericks & Co wrote to Delves & Wain informing them that under the Blackburn mortgage Mrs Lett, as mortgagor, was required "to pay interest upon the principal sum at the rate of 10% per annum and as calculated on a daily basis". The letter noted that, the date of the mortgage being 26 April 1997, Mr Blackburn would require repayment of the principal amount and in addition "interest calculated at the set rate from that date". The letter advised that the interest due and payable was $4,287.12. Clearly enough, the calculation was for simple interest. The letter did not refer to compound interest. It was headed "without prejudice", apparently in order to convey that the proposal for payment of interest was without prejudice to Mr Blackburn's insistence on his strict rights under the mortgage. 62 On 24 March 1998 Delves & Wain wrote to Fredericks & Co, asserting that the mortgage was signed by Mrs Lett without the benefit of any legal advice, and claiming that there was a clear conflict of interest in Fredericks & Co acting on behalf of the mortgagee. The letter said that Mrs Lett was 72 years of age and in poor health, and that "preliminary discussions" with her indicated that she "had no knowledge whatsoever that she was paying interest on the loan funds at 10% per annum on a compounding basis". This assertion is inconsistent with Mrs Lett's affidavit, in which she admitted that she was aware that the mortgage provided for 10% interest. 63 Fredericks & Co wrote another "without prejudice" letter to Delves & Wain on 31 March 1998 saying that Mr Blackburn "would like to resolve the matter by way of payment out including some form of interest", and asking Delves & Wain to obtain instructions so that the matter might be resolved to the satisfaction of all parties. 64 On 3 April 1998 Fredericks & Co wrote to Delves & Wain, once again "without prejudice", saying that according to their instructions, Mrs Lett conceded the debt was outstanding, with an interest component. The letter sought clarification "whether the property is to be sold and the mortgage debt is to be discharged or whether refinance is to be organised". The letter also raised the question whether Mrs Lett would sign an acknowledgement that the debt was outstanding and would be due and payable by her estate upon her death. Delves & Wain replied by letter dated 8 April 1998, indicating that they were in the process of obtaining instructions. Fredericks & Co wrote again on 8 April 1998, in a "without prejudice" letter, asking to be informed as a matter of urgency whether Delves & Wain had instructions to sell the property or arrange alternative finance. 65 On 23 April 1998 Delves & Wain wrote to Fredericks & Co indicating that Mrs Lett had been "completely unaware that there was an interest component as part of the mortgage", and proposing to renegotiate the terms of the mortgage "to a mutually agreeable format", perhaps by reference to a bank interest rate. The letter also noted that Mrs Lett was "most concerned that the mortgagee has the ability under the current terms of the mortgage to call up the principal and interest at any time." The letter suggested that the documentation be redrawn to provide that principal and interest accruing would be paid on Mrs Lett's death or voluntary sale of the property. Mr Wain gave evidence that he took instructions from Mrs Lett in a conference on 22 April 1998. He produced a file note which reflects the contents of the letter written on the next day. 66 There is no evidence of any direct reply to that suggestion. The next correspondence between the solicitors appears to be in November 1998, concerning arrangements for discharge of the Blackburn mortgage. 67 Mrs Blackburn gave evidence that after she received copies of the letters from Delves & Wain dated 24 March and 23 April 1998, she telephoned to speak to her mother but Mrs Windever answer the phone. Mrs Windever said that her mother's complaint was about compound interest, and she said that "by the time you and Jeff get your money back, you will own the property and mum will have nothing". 68 The Blackburn mortgage was registered on 29 July 1998, without the variation from compound to simple interest. Mr Blackburn gave evidence that he was not aware of why this occurred. The November 1998 transaction 69 Mrs Lett's evidence is that, at some unspecified time, that she contacted her son David Lett to see if he could provide her with financial assistance, but he told her he was unable to do so. Mrs Windever's evidence is that her mother told her she had offered the Kianga property to David for the amount owing to Mr Blackburn, and she had made a similar offer to her granddaughter, who also did not accept. Mr Windever placed the discussion in about April 1998, and said that the proposal communicated to him by Mrs Lett was that David would buy the house, but that he could not afford to do so. No evidence was given by David Lett or the granddaughter. It is probable, in my opinion, that in her distressed state, Mrs Lett contacted her son and granddaughter for assistance of some kind, but less likely that she would have approached them with a specific transaction in mind. 70 Mrs Lett's evidence is that she then spoke to Mr and Mrs Windever and they told her they would be able to help. She said that they told her: "If you sign the property over to us now we will give you and exclusive lifetime occupancy of the house and we will pay all monies owing and interest to the Blackburns." According to Mrs Lett's evidence, she trusted Mrs Windever implicitly at that time, and believed her idea was a good one. She told Mrs Windever to go ahead and make the necessary arrangements. 71 Mrs Windever put the matter differently, saying that her mother repeatedly asked her and her husband to buy the Kianga property from her for the amount owing to Mr Blackburn. Mrs Windever denied ever having made an offer, and maintained that all times the offers were made by her mother. This is one of the occasions where Mrs Lett's affidavit evidence is contradicted and it would be unsafe to rely on it. I therefore accept Mrs Windever's account. 72 Mrs Windever gave evidence that in around October 1998, Mrs Lett said to her: "If you can get rid of the debt to Jeffrey Blackburn, you can have the house in consideration of all that you have done for me over the years in looking after me, as long as you promise not to put me in an old persons' home."

She gave similar evidence in her supplementary affidavit made on 7 March 2003. Mr Windever gave similar evidence. Insofar as this evidence seeks to attribute to Mrs Lett a motive of rewarding Mr and Mrs Windever for all of their care and attention over the years, it is not supported by other evidence of Mrs Lett's motive and, being self-serving, I have decided it would be unsafe to accept it. 73 Mrs Lett consulted Mr Wain again, evidently in late October 1998, with respect to the proposal to transfer the Kianga property to Mr and Mrs Windever. Mrs Lett said in her affidavit that Mr Wain told her it would be necessary for some amount to be shown in the contract, and he said he would insert an amount of $1. She said that no time did either Mr Wain or Mrs Windever suggest to her that she should see another solicitor or consider taking independent legal advice before signing documents. Mr Wain did not advise Mrs Lett as to whether there should be a life tenancy in her favour or only a licence, and he never suggested that she should obtain valuation advice. 74 Mr Wain gave evidence that he acted for both Mrs Lett in relation to the mortgage and Mr and Mrs Windever in relation to the transfer because he believed that he had the fully informed consent of both parties to act. He said he made sure, in accordance with his usual practice, that he saw Mrs Lett and Mr and Mrs Windever independently and satisfied himself that they were capable of giving him proper instructions. 75 Counsel for the plaintiff urged me to find that Mr and Mrs Windever conceived and planned the November 1998 transaction many months earlier, no later than December 1997. He relied on documents produced by Delves & Wain, which indicate that a file was opened in the name of Mr and Mrs Windever for the purchase of the Kianga property on 5 December 1997. 76 The file includes some handwritten notes prepared by Mr Windever and headed "Contract for Sale", recording that the proposal was for a sale price of $1 plus assumption of the Blackburn mortgage. Counsel asks the Court to infer from the fact that this document, though undated, appears as the first document in a file that appears to be chronologically arranged, that it was prepared in about December 1997 rather than in, say, November 1998. 77 I am not prepared to make that inference. The other evidence to which I have referred points to the conclusion that the November 1998 transaction developed after Mrs Lett became aware that the mortgage provided for compound interest, in late February or early March 1998. The fact that the handwritten note contains a reference to the loans manager of the Commonwealth Bank, to which Mr Windever made an application only on 5 November 1998, tends to suggest that the notes were created at that time rather than in December 1997. All one can say on the evidence in the Delves & Wain file is that the firm opened a file, presumably on instructions from Mr and Mrs Windever, with respect to a proposed "purchase" of the Kianga property in December 1997, and that that file was closed on 29 April 1998. There is no basis for inferring that the purchase transaction was on the terms that became the November 1998 transaction. 78 In her affidavit, Mrs Lett claimed that after her meeting with Mr Wain, she had some concerns about whether to proceed with the transaction and endeavoured to speak to Mr Wain by telephone, but he did not return her call. She decided to say nothing to Mrs Windever about her concerns. That evidence is not otherwise corroborated, and in my opinion it would be unsafe to rely on it. 79 Mrs Windever said her mother told her she had seen her solicitor, Mr Wain, and that Mr Wain would like to see Mr and Mrs Windever about the conditions Mrs Lett wanted to have in the sale. Mr Windever said that he and his wife attended the office of Mr Wain, and Mr Wain communicated to them Mrs Lett's offer for them to purchase the Kianga property for $1 and discharge the Blackburn mortgage, and enter into a deed of agreement and licence to use the residence. Mr Windever said that Mr Wain told him, "That document will allow her to live there as long as she wants to". 80 On 5 November 1998 Mr Windever made a loan application at the Narooma branch of the Commonwealth Bank of Australia for loan approval in the sum of $60,600, to assist with the purchase of the Kianga property from Mrs Lett and the discharge of the Blackburn mortgage. Mrs Windever then told Mrs Lett that she and her husband had arranged for money to help her discharge the Blackburn the mortgage. 81 On 10 November 1998 Delves & Wain wrote to Fredericks & Co to make arrangements for the discharge of the Blackburn mortgage. Fredericks & Co replied on 11 November 1998, setting out calculations, on a "without prejudice basis", to show the amount of principal and interest owing on the loan up to that date. 82 The calculations showed that the principal amount of $48,000 had been outstanding for 564 days. The interest rate was shown as 10% per annum, and a daily interest rate was calculated by taking 10% of $48,000 and dividing that figure by 365 days, to reach a daily rate of $13.15. Then the total amount of interest was calculated by multiplying that daily rate by 564 days, producing the figure of $7,416.99 4 interest due to 11 November. 83 Fredericks & Co wrote again to confirm that the interest calculation was correct, evidently after receiving instructions from Mr Blackburn. 84 It is obvious from this letter that simple interest rather than compound interest was being charged. Mr Wain gave evidence that he did not inform Mrs Lett of this method of calculation. He said he did not do so because she was "passionate" about the transaction with Mr and Mrs Windever. 85 On 24 November 1998 Mrs Lett went with Mrs Windever to see Mr Wain. She signed a contract for sale, and a transfer of the Kianga property, to Mr and Mrs Windever for a consideration of $1. In the contract for sale Delves and Wain were described as the solicitors for the vendor and the purchaser. The transfer was signed by Mr Wain as solicitor for the transferees, and he also witnessed the signature of the transferor, Mrs Lett. Mrs Lett said in her affidavit that at the meeting with Mr Wain, no-one suggested that she should obtain independent legal advice. However, Mr Wain did write to her on the same day, giving a concise and clear explanation of the transaction, in which he said that "part of the arrangement is that Mr and Mrs Windever will enter into the Deed of Agreement, a copy of which is attached which provides you with a life tenancy arrangement over the property", and he invited her to raise any additional matters which she might wish to discuss. 86 On 29 November 1998 a document entitled "Deed of Agreement and Licence to Use Residence" was executed by Mrs Lett as grantee, and Mr and Mrs Windever as grantors. It is a strange document, not least because all seven numbered clauses appear under the heading "Recitals", and there is no separate operative part. Clearly, however, all paragraphs except the first numbered paragraph are intended to be operative provisions. The full text is as follows: "1. The Grantee has agreed to sell and the Grantor has agreed to purchase the property 13 Viewhill Road, Kianga in the State of New South Wales. 2. The Grantee agrees to sell and the Grantor agrees to purchase the property for the sum of $1.00. 3. In consideration of the transfer of the property 13 Viewhill Road Kianga to the Grantor the Grantor shall give to the Grantee full free and exclusive licence to use the 'residence'. 4. The Grantor agrees that the Grantee does not have to pay or contribute towards rates or the upkeep of the property. 5. The rights of the Grantee are not assignable. 6. No relationship of landlord and tenant is deemed to be created by this Deed of Agreement. 7. The Grantor is not liable for any injury, accidental damage caused to the person or property of the Grantee or any invitee of the Grantee." 87 Although this poorly drafted instrument speaks in terms of a "licence", Mr Windever gave evidence that Mr Wain told him and his wife that the document would allow Mrs Lett to live in the Kianga property as long as she wanted to. Mr and Mrs Windever accepted the offer on that basis. It seems to me probable, though it is not necessary to decide the point, that Mrs Lett acquired out of these arrangements a right to remain in the Kianga property for life, either by way of an oral partly performed contract to confer a life interest, or an irrevocable contractual licence, or a licence coupled with an equity arising out of estoppel. 88 The transaction was settled on 17 December 1998 at the Bateman's Bay branch of the Commonwealth Bank of Australia. Fredericks & Co did not attend on settlement, instructing Delves & Wain to act as their agent. The sum of $55,890.39 was paid to Mr and Mrs Blackburn in discharge of the mortgage on settlement, as principal and interest calculated in the manner set out in the letter of Fredericks & Co of 11 November 1998. 89 Mrs Blackburn gave evidence that she and her husband did not become aware of the November 1998 transaction until after it had been completed. I accept this evidence. Events after completion of the November 1998 transaction 90 It appears that after the November 1998 transaction, Mrs Lett continued living in the Kianga property alone, although she was visited by her children. In November 1999 Mr and Mrs Windever sold the property they then owned in Dalmeny and moved to Melbourne, although they visited Mrs Lett at Kianga from time to time. At around that time they also placed the Kianga property on the market for sale, but it was subsequently withdrawn from the market. According to Mrs Lett, the Kianga property was put on the market by Mr and Mrs Windever without her consent, and when she told them she had no intention or desire to move to Melbourne and insisted that they remove the Kianga property from the market, they did so. This evidence is not denied by Mrs Windever, and I accept it. It suggests that by November 1999 the relationship between Mrs Lett and Mr and Mrs Windever had become strained. 91 According to Mrs Lett's evidence, on one of her trips back to Kianga, Mrs Windever told her not to have other members of the family staying in the house, because the licence was for Mrs Lett only. Mrs Windever denies this conversation. Mrs Lett's evidence is not corroborated and I prefer Mrs Windever's account. 92 In 1999 Mr and Mrs Windever left Melbourne and returned to the south coast of New South Wales. They moved into the Kianga property with Mrs Lett in about November 1999. Mrs Lett said they did not seek her approval. They were joined by their son Scott, aged 24, a few months later. 93 Mrs Lett said in her affidavit that Scott verbally threatened and abused her, and that he used his dog to terrorise her. Mr and Mrs Windever strongly contest this claim. This is another occasion where it would be unsafe to accept Mrs Lett's evidence. 94 According to Mrs Lett's affidavit, she felt powerless to complain about what she regarded as non-compliance by Mr and Mrs Windever with the licence agreement, and she was continually upset about the deterioration of her relationship with her daughter and the treatment she received from Scott. She suggested to them that it might be a good idea for her to stay with her brother Bobby. She said that Mr Windever replied, "If you want to go and stay with Bobby, I'll drive you there, but if you stay too long it will be the finish of our agreement." Mr and Mrs Windever denied that Mr Windever threatened to terminate the licence agreement, and according to their evidence they responded cooperatively to the suggestion that Mrs Windever visit Bobby. It would be unsafe to accept Mrs Lett's evidence. 95 The evidence does not reveal whether Mrs Lett visited Bobby, but late in 2000 she visited her son David Lett and then her daughter Kathleen Burgess, moving out of the Kianga property on 21 December 2000. As subsequent events transpired, she did not return to the Kianga property. 96 On 31 January 2001, why she was living away from the Kianga property, Mrs Lett revoked her power of attorney in favour of Mrs Windever. Mrs Lett gave evidence that in February 2001, when she telephoned Mrs Windever to arrange for transport to return to the Kianga property, Mrs Windever told her she was very annoyed about revocation of the power of attorney, and that if Mrs Lett wanted to come back to Kianga she would have to come by bus. Mrs Lett said she did not think her health would be up to such a long bus trip. Mrs Windever denied Mrs Lett's account of their conversation, saying that her mother told her that Mrs Turner and Mrs Blackburn would bring her home. Nothing turns on this, as far as the issues in this case are concerned. 97 Subsequently there were heated telephone conversations between Mrs Burgess and Mrs Windever. According to her evidence, Mrs Lett did not ever speak to Mrs Windever again. 98 On 2 March 2001 Mrs Lett executed her last will. At around this time she sought legal advice as to whether she could claim an interest in the Kianga property. This led to correspondence and eventually the commencement of the proceeding. At the time of making her affidavit on 16 October 2001, Mrs Lett was living with Mrs Turner. 99 I have omitted from this account of the facts some evidence about bitter quarrels involving Mrs Windever, on the one hand, and Mrs Blackburn or Mrs Turner on the other, including sad arguments about the return of gifts and responsibility for transport arrangements for Mrs Lett. While that evidence demonstrates the depth of the feud that has riven this family, it is irrelevant to any issue I have to decide. Valuation evidence 100 On 16 July 2002 Terry Hanrahan, a registered property valuer, issued a valuation of the Kianga property as at 29 November 1998, on behalf of Mr and Mrs Windever. He assessed the current market value of the fee simple in possession at that time as $135,000. He assessed the value of the Grantee's interest, being the free occupation and use of the property, free of all outgoings for life, at that time as $68,172. The valuation of the fee simple was based on comparable sales. The valuation of the Grantee's interest was on the basis that the interest was a life interest and the assumed likely time span of the interest was 14.67 years. 101 Jeffery Langford, a registered valuer, made valuations of the Kianga property on 3 December 2002 and 27 February 2003, on behalf of Mrs Turner. He expressed the opinion that the current market value range of the property as at 27 November 2002 was $275,000-$290,000. He said that the market value of the property at 29 November 1998 was $130,000. He valued a life interest for Mrs Lett, as at 29 November 1998, at $44,000. He reviewed Mr Hanrahan's report and, while generally agreeing with his valuation approach, disagreed with Mr Hanrahan's assumption that Mrs Lett was in reasonable health and could be expected to enjoy a 14 year life expectancy. Mr Langford said that on his instructions Mrs Lett had very poor health and therefore a higher investment return should be used in calculating the life interest. If the interest was a tenancy at will, it would be valued at $2000. Claim based on unconscionable dealing

102 I have been given extensive submissions by the parties on law concerning unconscionable dealings and undue influence. In my opinion it is unnecessary for me to explore the law in any detail in order to decide this case. The principal issues are issues of fact.

103 The principle upon which equity intervenes to protect the weaker party in an unconscionable transaction was stated by Rich J in Wilton v Farnworth (1948) 76 CLR 646 as follows (at 655): "It has always been considered unconscientious to retain the advantage of a voluntary disposition of a large amount of property improvidently made by an alleged donor who did not understand the nature of the transaction and lacked information of material facts such as the nature and extent of the property, particularly if made in favour of a donee possessing greater information who nevertheless withheld the facts … We have here an improvident transaction entirely voluntary springing from no sensible motive … When to all this is added ignorance of the relevant facts and a failure to understand the transaction very substantial reasons have been proved for the intervention of a court of equity. Voluntarily alienation of his property to the defendant was neither fair nor righteous and in the view of a court of equity it must be regarded as unconscientious for the defendant to take the gift or retain it."

104 That passage was relied on by the plaintiff, although obviously this is not a case of a gift but rather, on the plaintiff's case, a transaction that was improvident because it was at an undervalue from Mrs Lett's point of view. Since Wilton v Farnworth was decided, the law on unconscionable dealings has developed substantially, through such cases as Blomley v Ryan (1956) 99 CLR 362, Commercial Bank Australia Limited v Amadio (1983) 151 CLR 337, Louth v Diprose (1992) 175 CLR 61 and Bridgewater v Leahy (1998) 194 CLR 457.

105 It is convenient, for present purposes, to accept the statement of the elements of unconscionable dealing put forward by counsel for the defendants on the basis of these cases. According to his submission, which I accept, a case of unconscionable dealing involves the following: (a) the weaker party must, at the time of entering into the transaction, suffer from a special disadvantage vis-a-vis the stronger party; (b) the special disadvantage must seriously affect the weaker party's capacity to judge or protect his or her own interests; (c) the stronger party must know of the special disadvantage (or know of facts which would raise that possibility in the mind of any reasonable person); (d) that party must take advantage of the opportunity presented by the disadvantage; and (e) the taking of advantage must have been unconscientious.

106 I would only add that, as cases such as Blomley v Ryan show, once ingredients (a), (b) and (c) are established, and the improvidence of the transaction is shown, the plaintiff's task is made easier by an equitable presumption to the effect that the improvident transaction was a consequence of the special disadvantage, and that the defendant has unconscientiously taken advantage of the opportunity presented by the disadvantage.

107 In my opinion the facts show that the November 1998 transaction was improvident from Mrs Lett's point of view, in the sense that it was a transaction at an undervalue (even though it was a transaction having a rational basis). At the time of the transaction, the Kianga property had a value of around $130,000-$135,000, according to the valuation evidence. Mr and Mrs Windever relieved Mrs Lett of her obligation to repay the Blackburn mortgage and interest, in the sum of $55,890.39. Assuming, as was likely, that Mrs Lett obtained a contractual or equitable right to remain in the property for her lifetime, and not a mere licence revocable at will, she derived something of value from the transaction. The plaintiff's valuer assessed this right at $44,000, and the defendants' valuer assessed its value to a third party at $53,024. The difference turns upon an assessment of Mrs Lett's life expectancy and therefore her state of health at the time. On the defendants' figures, they acquired the Kianga property from Mrs Lett for about $26,000 less than its value in November 1998. On the plaintiff's figures, the shortfall was about $35,000.

108 However, equity does not intervene simply because the transaction is improvident. Lord Nottingham LC's famous observation that "Chancery mends no man's bargain" (Maynard v Moseley (1676) 3 Swans 651, 655) extends to bargains made by the young and the old of either gender. Latham CJ explained that position in Wilton v Farnworth (at 649): "Where a man signs a document knowing that it is a legal document relating to an interest which he has in property, he is in general bound by the act of signature. He may not trouble to inform himself of the contents of the document, but that fact does not deprive the party with whom he deals of the rights which the document gives to him. In the absence of fraud or some other of the special circumstances, a man cannot escape the consequences of signing a document by saying, and proving, that he did not understand it. Unless he was prepared to take the chance of being bound by the terms of the document, whatever they might be, it was for him to protect himself by abstaining from signing the document until he understood it and was satisfied with it. Any weakening of these principles would make chaos of every-day business transactions."

109 Perhaps the observations do not apply with equal force to non-business transactions within a family, especially where one of the parties is the elderly owner of property and the other is one of the class who would expect to receive a benefit from that property when the owner dies. But the basic proposition holds good, that if the parties, even in the family context, commit themselves to a transaction, they are bound by it, unless there are additional facts creating a vitiating circumstance.

110 Here the only vitiating circumstance relied upon by the plaintiff in the summons is "unconscionable and/or unconscientious transaction", that is to say, the equitable doctrine as to unconscionable dealings. For relief to be granted, all the ingredients for the application of the doctrine must be present. In my opinion what is lacking in the present case is any "special disability". Once that ingredient (ingredient (a)) is missing, the other four ingredients cannot be established.

111 In Blomley v Ryan Fullagar J provided a useful list of the disadvantages that might attract the doctrine (at 405): "The circumstances adversely affecting a party, which may induce a court of equity either to refuse its aid or to set the transaction aside, are of great antiquity and can hardly be satisfactorily classified. Among them are poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy, or lack of education, lack of assistance or explanation where assistance or explanation is necessary. The common characteristic seems to be that they have the effect of placing one party at a serious disadvantage vis-à-vis the other."

112 While this list is not exhaustive, it does provide "particular exemplifications of an underlying general principle": Commercial Bank of Australia Ltd v Amadio, at 462 per Mason J. It is also apparent that the underlying common requirement is that the disadvantage must be one which "seriously affects the ability of the innocent party to make a judgment as to his own best interests": Commercial Bank of Australia Ltd v Amadio, at 462 per Mason J.

113 It is necessary that the disability or disadvantage be sufficiently special to attract the doctrine of unconscionable dealing. Mason J highlighted this requirement in Commercial Bank of Australia Ltd v Amadio (at 461): "I qualify the word 'disadvantage' by the adjective 'special' in order to disavow that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasise that the disability, condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests."

114 Mason J also stated (at 461): "Relief on the ground of unconscionable conduct will be granted when unconscientious advantage is taken of an innocent party whose will is overborne so that it is not independent and voluntary, just as it will be granted when such advantage is taken of an innocent party who, though not deprived of an independent and voluntary will, is unable to make a worthwhile judgment as to what is in his best interests." 115 Mr and Mrs Windever submitted that the picture emerging from the evidence is that in November 1998, Mrs Lett was a robust independent woman who was entirely capable of looking after her affairs and of understanding complex legal arrangements. They submitted that such illness as she had became significantly worse after and not before the transaction, and it had not been established that any illness whenever it occurred did anything to impair her mental faculties.

116 In my opinion this submission that Mrs Lett was "robust" overstates the defendants' case. In November 1998 Mrs Lett was frail, she became breathless if she walked for any substantial distance, she had difficulty attending to even light household chores and needed to have someone assist her. She had physical problems that would eventually contribute to her death. Those disabilities and disadvantages are not to be underestimated.

117 On the other hand there is clear evidence that she was a strongly independent person who had no difficulty understanding such matters as the application of compound interest and, later, a transaction by which she transferred her property to the defendants in exchange for release from her loan obligation and a right of residence for life. As Mason J emphasised in the Amadio case, in the passage quoted above, the issue is not whether there is a disadvantage or disability, rather whether that condition seriously affects the ability of the weaker party to make a judgment as to her own best interests. In my opinion the evidence overwhelmingly establishes that in November 1998 Mrs Lett's disabilities and disadvantages did not have that effect.

118 Even the leading cases in this area tend to be fact-specific. Nevertheless a useful comparison can be made between the facts of this case, essentially a case of a frail and capable woman striking a bargain with her daughter and son-in-law to secure for herself residence for life and freedom from the threat of compound interest and foreclosure, and the facts of such cases as, respectively, Wilton v Farnworth, Blomley v Ryan, Louth v Diprose and even Bridgewater v Leahy. There is not, here, an uneducated and dull-witted person giving away his share of his wife's estate without understanding its value, or an aged alcoholic negotiating a transaction at an undervalue while being plied with rum, or an infatuated middle-aged man whose feelings were manipulated for gain, or a very old and frail man whose intention to transfer his property at an undervalue was procured by his nephew and business partner, on whom he depended. That Mrs Lett did not have any such dependence on Mr and Mrs Windever is demonstrated by what subsequently happened when their relationship fell apart.

119 The plaintiff sought to rely on various other matters to make a case for equitable intervention. It was said that Mrs Lett understood the effect of the mortgage given to her by Mr Blackburn, and realised that the agreement pursuant to which the mortgage was granted was that only simple interest would be charged. Then it was said that Mrs Windever misrepresented the situation to her mother, and raised a false concern that compound interest would be charged.

120 I disagree with this contention on the facts. In my opinion, while the evidence shows that Mrs Lett understood the basic agreement she had made with Mr Blackburn, under which he would be entitled to charge interest of 10% per annum, with principal and interest payable in the event of her death or voluntary sale of the property, there seems to have been a difference between them as to whether interest was to be charged on a compounding basis.

121 I agree with the evidence of Mr Wain that the Blackburn mortgage entitled Mr Blackburn to charge interest at a compound rate calculated daily. It was open to Mr Blackburn formally to alter the arrangements, and his evidence indicates that he knew how to go about doing so, but he did not see to it that the mortgage was varied to remove the right to charge compound interest. It is true that during their correspondence with Delves & Wain in 1998, Fredericks & Co gave indications that their client would not charge interest on the compound basis. That could be inferred by a close reading of the letter of Fredericks & Co dated 18 April 1998, although the position could certainly have been made clearer by the drafter of the letter. Then it appeared, by the letter of Fredericks & Co dated 31 March 1998, that Mr Blackburn was prepared to negotiate for "some form of interest". Only by their letter of 11 November 1998 did Fredericks & Co spell out the way in which simple interest would be calculated. But these letters were written "without prejudice", implying that Mr Blackburn sought to preserve his strict legal right to charge compound interest.

122 For Mrs Windever to say, as a lay person in February 1998, "they are charging you compound interest", was not a misrepresentation. It emerged, but only subsequently, that Mr Blackburn would charge only simple interest, but he sought to preserve his rights and did not implement a variation to the mortgage, and instead the mortgage was registered in its unvaried form. I do not accept the proposition that Mr Wain had any obligation to explain to Mrs Lett, in her distressed state, that Mr Blackburn proposed to charge only simple interest, in circumstances where the proposal was without prejudice, nothing had been done to vary the mortgage, and then the mortgage was registered in its unvaried form.

123 Counsel for the plaintiff also alleged that Mr and Mrs Windever engaged in some form of concealment relating to their intention to obtain a transfer of the property from Mrs Lett. In my opinion the evidence does not support this contention. It seems that Mr and Mrs Windever did not proclaim their intention to enter into the arrangement to Mr and Mrs Blackburn or other siblings, but there is no evidence that they suppressed the information in any circumstances where they had, or arguably had, a duty to disclose their intention.

124 Counsel for the plaintiff also contended that Mr and Mrs Windever misrepresented to Mrs Lett the effect of the residence arrangement granted to her under the deed of 29 November 1998. Again, I disagree. In my opinion the probable effect of what happened was that Mrs Lett acquired a right to remain in the residence of the Kianga property for life, on the grounds that I have identified. The representations by Mr and Mrs Windever, that I have set out, were not inconsistent with Mrs Lett's rights, and to the extent that those rights may have been based on equitable estoppel, their conduct contributed to the creation of the rights.

125 While I disagree with the submissions of counsel for the plaintiff concerning misrepresentations with respect to compound interest and the residence arrangement, and the allegation of concealment, in my opinion the establishment of these contentions would not have given rise to a case of unconscionable dealing, in the absence of the ingredient of special disability. No case of fraudulent or innocent misrepresentation was pleaded. Even if, because of these matters, it could be said that Mrs Lett and Mr and Mrs Windever were in the position of unequal bargaining power, Australian law does not recognise inequality of bargaining power as a ground, as such, for intervention in contractual arrangements: Commercial Bank of Australia v Amadio, at 461 per Mason J.

126 In my opinion Mrs Lett did not have the benefit of independent advice, because Mr Wain was acting for Mr and Mrs Windever, who stood to benefit from the transaction, as well as for Mrs Lett. The advice he gave her, while helpful in some respects, did not seek to ensure that she was freed from the effects of such disabilities as she had. It would certainly not have removed the presumption of unconscientious advantage that would have arisen had the ingredients of the doctrine been established. But lack of independent advice is not itself a ground for equitable intervention, as the cases to which I have referred make clear.

127 My conclusion is that none of the matters to which the plaintiff has referred overcomes the fundamental deficiency in the plaintiff's case, namely that the first and essential ingredient for the application of the equitable doctrine, the existence on the part of Mrs Lett of a special disadvantage, has not been established, and consequently the other ingredients for the application of the doctrine cannot be made.

Claim based on undue influence 128 It is well established that the equitable principles relating to unconscionable dealing and undue influence are closely related: Commercial Bank of Australia v Amadio, at 474 per Deane J. Recently it has been suggested that "the time may be right for the acceptance and development by the common law of a unified doctrine of unconscionability: Capper D, "Undue Influence and Unconscionability: A Rationalisation," (1998) 114 LQR 479, 504. But in Australia the conceptual division between the two equitable doctrines has so far been maintained.

129 The difference was explained by Deane J in Commercial Bank of Australia v Amadio (at 474) as follows: "Undue influence, like common law duress, looks to the quality of the consent or assent of the weaker party… Unconscionable dealing looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity or good conscience that he should do so."

130 An important feature of both doctrines is that they employ equitable presumptions. In the case of undue influence, a presumption arises out of the anterior relationship of the parties. The In the case of unconscionable dealings, the presumption that unconscionable advantage is being taken of a disability arises out of the position of the parties at the time of the transaction and the nature of the benefits passing under it: Meagher, Gummow and Lehane, at [1602].

131 The similarities in operation of the two doctrines can engender false assumptions about similarity of scope. It is essential for a judge at first instance to bear in mind the different evidentiary foundations of cases invoking the doctrines, the one focusing on evidence of the prior relationship and the domination and dependence said to have been engendered, and the other focusing on the position of special disadvantage of one party and the other party's knowledge of it at the point of transaction. Thus, if a plaintiff is permitted to shift from reliance on one doctrine to reliance on the other at the trial, the defendant's evidentiary preparation for the hearing could be undermined. On the other hand, if a plaintiff has prepared its case with a view to invoking one doctrine, the evidence is unlikely to be sufficient to warrant relief under the other.

132 At the hearing, and in a somewhat ambiguous way, counsel for the plaintiff referred to the equitable doctrine of undue influence. While disavowing any claim to relief on independent ground of undue influence, he nonetheless referred to leading cases on that subject in opening, and in final submissions he developed an extensive argument that his client was entitled to relief on that ground.

133 In my opinion, it was not open to the plaintiff to develop a case based on undue influence having regard to the way counsel open the case at the hearing. Counsel said, for example, that he wished to make it clear "that we are not seeking to put forward a case of undue influence in that the will of Mrs Lett was overborne by the circumstances as they existed as at 14 November 1998".

134 Assuming, however, that a case of undue influence could be advanced, my view is that the facts fall well short of establishing the ground for equitable intervention under that doctrine. The relationship between mother and daughter is not one of the special relationships in which influence is presumed once the nature of the relationship is established: see Meagher Gummow and Lehane's Equity Doctrines and Remedies (4th ed, 2002) [15-095]. Nor, in my opinion, is it a case where the facts establish a relationship of domination on the one hand and dependence on the other, of the kind adverted to in such cases as Johnson v Buttress (1936) 56 CLR 113 and Bester v Perpetual Trustee Co Limited [1970] 3 NSWR 30.

135 Nothing about the factual relationship between Mrs Lett and Mr and Mrs Windever suggested any domination of her on their part. The fact that they provided household services for her, and may have done so without payment (though the facts are not clear on that point) falls far short of establishing any such relationship. Although for a time they were close to one another, there is simply no substantial ingredient in the facts that would suggest a relationship of influence in the requisite sense.

136 Mrs Turner has failed to establish any equitable ground for relief of the kind sought in this proceeding. The summons should be dismissed. I shall hear the submissions of the parties with respect to costs. *********

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