28 The plaintiff contends that this was a case of presumed undue influence in which the defendant had assumed a position of ascendancy or influence over the plaintiff or the plaintiff reposed trust and confidence in the defendant. Counsel for the plaintiff submitted that, by no later than 20 April 2004, the defendant occupied or assumed towards her mother a position naturally involving an ascendancy or influence over her, or a dependence or trust on her mother's part. The defendant admits on the pleadings that the plaintiff was reliant on her, and reposed trust and confidence in her. The defendant also deposed that after her return from Queensland the plaintiff's health had noticeably deteriorated, extra care and attention were needed and the plaintiff was afraid of being removed again from her home.
29 It is necessary, at this point, to review the evidence about the plaintiff's health and mental state.
30 The plaintiff had had various health problems before mid-2004. She had a total hip replacement in 1987 and a coronary bypass graft in 1993. In the months leading up to the relevant events, objective evidence confirms that the mental health and general capacity of the plaintiff were noticeably deteriorating.
31 On 2 December 2003 the plaintiff was admitted to Gosford Hospital and observations were made by staff that she was suffering from dementia.
32 On 15 December 2003, Dr Paul Caska, a general and laproscopic surgeon wrote to the plaintiff's general practitioner, Dr Kalra, and noted the plaintiff's need to have certain medical procedures carried out, and that those procedures "will at least minimise her time in hospital, as [other procedures] would be a real problem in her, especially given her dementia".
33 On 31 January 2004 a nephrologist wrote to the plaintiff's general practitioner, noting that "…since her discharge from hospital she has been well apart from her underlying dementia".
34 On 5 February 2004, the Aged Care Assessment Team ("ACAT") from Central Coast Health assessed the plaintiff and noted that she would "greatly benefit from involvement in a Dementia Care Group" and would require assistance with self care, communication, health care tasks, transport, activities involved in social and community participation, domestic assistance, meals and home maintenance. It was further noted that the plaintiff suffered from hypertension, kidney failure, bowel obstruction and an unstable gait.
35 On 27 February 2004, while the defendant was still in the United States, Dr Kalra wrote to the geriatrician at Wyong Shire Hospital and noted that:
"patient has moderate dementia. Her geriatric mini-mental state examination ("MMSE") is 22/30. It was 28/30 last year".
36 The defendant gave evidence that the plaintiff's mental state was markedly worse after the return to Bateau Bay from Queensland. The defendant's evidence includes observations that her mother was disoriented, forgetful to the extent that she would forget what day it was and what she had been doing earlier in the same day
37 Mr Steer gave evidence that, when the plaintiff signed the will, power of attorney and guardian appointment on 21 April 2001, she was lucid. He recorded in his file note that he "was satisfied that she understood the nature of the three documents that she signed". Yet at the same time Mr Steer observed that the plaintiff was forgetful and could not recall what day it was or that she had met with him earlier in the same day (see paragraph [8] above).
38 On 24 April 2004, Dr Kalra wrote a letter concerning then pending Guardianship Tribunal proceedings in respect of the plaintiff. He said:
"She suffers from cognitive impairment (moderate dementia)… There are occasions where she is unable to make decisions regarding ongoing medical therapy and domestic services. She would eventually require residential care of a permanent nature. I would support an appointment of a guardian for her…"
39 On 28 June 2004, Dr Minogue also wrote a letter for purposes of the Guardianship Tribunal proceedings in which he stated that the plaintiff needed assistance in most facets of her life and that she was not capable of making decisions alone. Dr Minogue started by observing that:
"She presents now as an alert, cheerful elderly woman. On questioning however, she is disoriented in time, possibly place but seems to be oriented in person. She is well aware of her surroundings and in my opinion, she is well able to make decisions."
40 However he went on to say that:
"…she is suffering from a moderate degree of Alzheimer's disease in addition to her physical condition…it is my opinion that she is very easily manipulated and is very susceptible to other people's ideas. It is my opinion that he capacity to manage her life decisions and financial affairs is indeed moderately impaired and I support the proposition that she has a Guardian and financial manager".
41 This letter was written just days after the earliest date on which the transfer could have been signed, being 25 June 2004.
42 It is quite clear on the evidence that, on 25 June 2004 and for at least six months beforehand, the plaintiff suffered from dementia and that her capacity to make decisions was appreciably impaired. There is abundant evidence - including from Mr Steer as to the answers given to his questions when she went back to the office on 21 April 2004 - that the plaintiff was disoriented and unaware of important matters of context.
43 The circumstances in the period April to June 2004 were such that the plaintiff's incapacity in these respects, combined with the gratitude that she bore towards the defendant for having brought her home from Queensland and restored her to her home environment, consolidated both dependence and trust on the plaintiff's part and ascendancy and influence on the part of the defendant. This situation was a natural one in the circumstances. An old lady with failing mental powers and in deteriorating health was cared for diligently and with affection by her daughter. The defendant is to be commended for the way in which she looked after her mother. But the fact that the defendant acted towards her mother as she did out of respect and affection does not change the legal conclusion that the defendant stood in a position of undue influence towards the plaintiff.
44 That being so, the law requires that the defendant positively justify the retention of the benefit conferred upon her by the plaintiff. To do this, she must, in the words of Dixon J in Johnson v Buttress (above), show that "the gift was the independent and well-understood act of a man [here, woman] in a position to exercise a free judgment based on information as full as that of the donee".
45 A matter to be addressed at one in that context is the legal advice that the plaintiff received concerning the transfer.
46 The plaintiff introduced into evidence without objection an opinion of Mr Peter Cornelius, a solicitor experienced in matters of property and conveyancing. Mr Cornelius addressed the steps that would be taken by a prudent solicitor retained to advise an intending donor of land to a family member. His evidence was accurately summarised in submissions of counsel for the plaintiff as follows:
" The evidence of Mr Cornelius is to the effect that a solicitor acting for Mrs Winefield, in accordance with common practice would have:
a) obtained clear instructions from Mrs Winefield as to her wishes and intentions;
b) had reason to question whether or not Mrs Winefield had the capacity herself to give instructions or to fully understand the nature of the transaction and would be likely to consider as an appropriate follow up the obtaining of an opinion from Dr Kalra or other suitable health professional;
c) would have sought instructions directly from Mrs Winefield and to confirm with Mrs Winefield that it was her wish to transfer the property to herself and Ms Clark and would discuss the arrangements to accompany that Transfer;
d) included in the matters that would be discussed and confirmed with Mrs Winefield:
i. Mrs Winefield's understanding of the transaction including the purposes as understood by Mrs Winefield for effecting the transaction, its providence and the viable alternative options;
ii. the consideration to be paid by Ms Clark for the Transfer and how it would be determined;
iii. whether or not consideration was to be paid at the time of the Transfer or otherwise;
iv. if the consideration was not to be paid at the time of the Transfer whether it was to be secured or otherwise;
v. documentation of the arrangements for payment of the consideration if it was not be paid at settlement, including payment of interest (if any), and the terms as to payment of the consideration, including the date or dates for repayment of principal and (if applicable) interest;
vi. the details and documentation thereof of the co-ownership.
e) explained to the client the difference between a joint tenancy and a tenancy in common and would then need to be satisfied that the client understood that in a joint tenancy the property would pass on the death of a joint owner to the other;
f) have taken considerable care to understand the wishes of Mrs Winefield in relation to the payment of the consideration recorded in the Transfer, and would:
i. if it was intended that no consideration was to be paid then the solicitor would not draw the Transfer showing the consideration of $210,000.00 but would simply refer to a consideration of $1.00. To express a consideration of $210,000.00, even if accompanied by an acknowledgement of payment would lead doubt as to whether there had been an agreement to make this payment which remained undischarged and would have the potential to give rise to later uncertainty and possible disputes; and
ii. if instructions had been received and Mrs Winefield required payment in the sum of $210,000.00, then the solicitor, who had been previously retained to prepare a Will in terms of the Will dated 21 April 2004, would confirm that Mrs Winefield understood that the estate would be entitled to claim that sum from Ms Clark if it had not been paid prior to her death, and the solicitor would seek instructions as to whether Mrs Winefield would, in those circumstances, wish to include a release in her Will of any outstanding portion of the consideration. Further, the solicitor would explain that if the debt was left as a debt repayment on demand it would become statute barred after six years."