Turner v Windever [2003] NSWSC 1147

New South Wales Supreme Court

CITATION : Turner v Windever [2003] NSWSC 1147 HEARING DATE(S) : 2, 3, 4, 7 & 24 April 2003; written submissions to 22 May 2003 JUDGMENT DATE : 4 December 2003 JURISDICTION: Equity JUDGMENT OF : Austin J DECISION : Summons dismissed

CATCHWORDS : EQUITY - unconscionable dealings - requirement of special disadvantage - whether satisfied when elderly woman, frail but in possession of mental faculties, transfers of property to one child at an undervalue, removing it from her residuary estate Bester v Perpetual Trustee Co Limited [1970] 3 NSWR 30 Blomley v Ryan (1956) 99 CLR 362 Bridgewater v Leahy (1998) 194 CLR 457 CASES CITED : Commercial Bank Australia Limited v Amadio (1983) 151 CLR 337 Johnson v Buttress (1936) 56 CLR 113 Louth v Diprose (1992) 175 CLR 61 Maynard v Moseley (1676) 3 Swans 651 Wilton v Farnworth (1948) 76 CLR 646 PARTIES : Suzanne Mary Turner (P) Carol Ann Windever and Daniel William Windever (D) FILE NUMBER(S) : SC 4537/01 COUNSEL : Mr S Y Reuben (P) Mr M B J Lee (D) SOLICITORS : Astley Thompson Cox (P) Marsdens Law (D)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

AUSTIN J

THURSDAY 4 DECEMBER 2003

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."