Pura v Kornmehl [2004] NSWSC 260

New South Wales Supreme Court

CITATION : Pura v Kornmehl [2004] NSWSC 260 HEARING DATE(S) : 12 & 15 March 2004 JUDGMENT DATE : 6 May 2004 JURISDICTION: Equity JUDGMENT OF : Austin J DECISION : Judgment to be entered for plaintiff. Cross-claim to be dismissed.

CATCHWORDS : CONTRACT - informal arrangements between parties in a romantic relationship - arrangement for parties to live together replaced by arrangement for them to separate and for him to pay her $5,000 per month for 18 months - whether parties intended to enter into legal relations - whether agreements sufficiently certain - whether valuable consideration given Beaton v McDivitt (1987) 13 NSWLR 162 Jones v Dunkel (1959) 101 CLR 298 Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 Pettitt v Pettitt [1970] AC 777 CASES CITED : Placer Development Pty Ltd v Commonwealth (1969) 121 CLR 353 Popiw v Popiw [1959] VR 197 Riches v Hogben [1986] 1 QdR 315 Sharp v Anderson (1994) 6 BPR 13,801 Wakeling v Ripley (1951) 51 SR(NSW) 183 PARTIES : Natalie Pura (P/XD) Paul Kornmehl (D/XC) FILE NUMBER(S) : SC 3167/03 COUNSEL : R Francois (P/XD) G A Sirtes (D/XC) SOLICITORS : Picone & Co (P/XD) Landerer Company (D/XC)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

AUSTIN J

THURSDAY 6 MAY 2004

3167/03 NATALIE PURA V PAUL KORNMEHL JUDGMENT 1 HIS HONOUR: This proceeding began by statement of liquidated claim, for non-payment of money allegedly due under a contract, filed on 19 August 2002 in the District Court of New South Wales. The defendant, by his notice of grounds of defence, denied that the alleged contract existed. The proceeding was transferred to this Court after the defendant filed a cross-claim seeking to set aside the alleged contract on grounds of unconscionability, duress and undue influence. 2 The plaintiff says that she made a contract with the defendant on 28 July 2001, to the effect that she would terminate her employment and move in to his apartment to live with him and look after him, and he would pay her $5,000 per month for the rest of her life. She says that on 22 September 2001, that agreement was replaced by a second agreement under which she would move out of the defendant's apartment and he would pay her $5,000 per month for 18 months. She says that the defendant paid her only $20,000, and she seeks damages for failure to pay the remaining instalments totalling $70,000, together with interest. 3 Although the plaintiff relies on the second contract and says that the first contract was brought to an end, it is necessary to make findings with respect to the first contract in order to determine whether the defendant's promise of payment under the second contract (if made) was made for valuable consideration. The defendant's claims based on unconscionability, duress and undue influence with respect to the second contract arise for determination only if the Court finds that the second contract was otherwise valid and enforceable. The witnesses 4 To large degree, the evidence in this case is the evidence of the plaintiff and the defendant themselves. Each has attacked the credit of the other. 5 The defendant attacked the plaintiff's credit on three grounds. First, she agreed in cross-examination that she had lied about her age, understating it, in a job application form. While not meaning to condone this conduct, I do not regard the fact that a middle-aged woman has understated her age in an application for work in a competitive job market as a sufficient basis for disbelieving or discounting her evidence either generally or in respect of unrelated matters. 6 Secondly, in her letter of 24 October 2001 the plaintiff claimed she had taken on a financial commitment to give herself a little more security, whereas in truth, she was only exploring the prospect of doing so and had not committed herself. Clearly the claim of a financial commitment was a misstatement, but the plaintiff answered questions on the subject directly and without evasion in her cross-examination, and the misstatement was not relevant to her claim in this proceeding. Once again I do not regard the misstatement as a sufficient ground for disregarding or discounting her evidence on the crucial matters. 7 Although neither of these matters destroys the plaintiff's credit, and they do not do so when considered together, they clearly are a basis for careful assessment of her evidence (cf Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705, 719 per Heydon JA). I have endeavoured to do so. On the whole, however, I have not found any adequate reason for disbelieving the evidence she gave in her affidavits and in the witness box. 8 Thirdly, the plaintiff sent a memorandum to her employer in which she suggested she would have to leave her work at Holden if her hours changed. The defendant criticised this conduct and said it reflected poorly on the plaintiff's credit. But in fact Holden did not change her working hours, she continued to work for them and when she left, her employer said he was sorry to see her go. I regard for this matter as having no significance with respect to the plaintiff's credit. 9 On the other hand, the defendant's evidence was unsatisfactory in serious ways. In cross-examination he denied telling the plaintiff that he loved her. Then he was taken to a note which he left for her in his apartment, saying "My Darling Natalie, I do love you very much!! [Signed] PK". He offered a series of extraordinary explanations: "I might have written it down like you do with any girlfriend." "If I write to somebody, to my niece I love her or I write to my aunt I love her so this does not mean anything to me." "In Holland - … if you have a friend or a girlfriend, you write that but it does not mean anything." "I was with a girl three weeks ago and told her the same story. I am from Holland and that is the way we live. If you like someone you say, 'I love you'." 10 The defendant denied in cross-examination that the plaintiff stayed with him on the weekend after they returned from their overseas trip on 28 July, because "it was finished when we got off the plane". However, later he admitted that he took her out "once or twice" after they returned. Then he admitted that the plaintiff came over for the long weekend beginning on 3 August, and they went together to lunch with Mr and Mrs Khedoori, dinner with Mr and Mrs Morton, and then dinner with Mr Silvers. He agreed it was "possible" that they went to lunch at the Sheraton on the Park on the public holiday Monday, and that they then went to David Jones to buy an electric blanket because the blanket was not working on the plaintiff's side of the bed. Having given this evidence, he then apparently resiled saying, "after the trip I didn't go with her anywhere". Yet he did not deny that on the Tuesday after the plaintiff resigned from Holden, he went with her together to Mr and Mrs Khedoori and to Mr and Mrs Saloman, and that on the following Friday she had dinner with his family. This evidence was contradictory, more than once. 11 On many occasions in cross-examination, the defendant said "it's possible", even to uncontroversial or even incontrovertible matters. He said, early in his evidence, that his stroke had taken a lot away from his memory of things that had happened in the past. Some of his answers in cross-examination appeared to me to be confused. More often, he gave the evidence he wanted to give without regard to the cross-examiner's questions, constantly recounting his version of the events surrounding the plaintiff's departure from his Darling Point apartment after his stroke, even where the questions were clearly referring to events before his stroke. I agree with the submissions of counsel for the plaintiff, that the defendant demonstrated he was capable of understanding and answering questions during cross-examination, but on certain topics he was evasive or non-responsive and his the memory loss appeared to be selective. 12 Having regard to these matters, and my observation of the demeanour of the parties in the witness box, I have decided to prefer the plaintiff's evidence to the defendant's evidence where there is a conflict between them and no external corroboration. 13 Rohan Pura, the plaintiff's son, has given evidence of various conversations he had with his mother, and some with the defendant, which generally confirm his mother's version of the events. That evidence is not and could not be tendered to prove the truth of what his mother told him, but only the fact that she had conversations with him of specified content at contemporaneous times. I do not regard it as having any significant weight. I take the same view regarding the evidence of Anita Kornmehl, the defendant's daughter, to the extent that it records conversations between her and her father which confirm his evidence. Commencement of the relationship 14 The plaintiff is 66 years of age. Prior to the events in contention, she had a secretarial job at Holden. The defendant, who is wealthy, is 83 and has retired from active work. They first met one another socially in about 1991, with their respective spouses. They resumed contact with one another at the end of 2000, by which time the defendant had been separated from his wife for about seven years and the plaintiff had been a widow for a little over six months. They were brought into contact with one another by mutual friends, Vera and Henry Khedoori. Thereafter they formed a romantic relationship. 15 The plaintiff gave evidence that the defendant pursued her enthusiastically, whereas the defendant's evidence was that he was lonely and looking for company, and was pleased to met someone to go out with regularly on a casual basis. She listed various social engagements which they attended as a couple in January and February 2001, and said that similar occasions occurred through the first half of 2001. She said the defendant arranged a cocktail party for 50 people in his Darling Point apartment, telling her, "I would like to have a party at home so that I can show you off to my friends and I can meet your friends". She said that by that time they had become very fond of one another. 16 Her evidence is supported by photographs, and the evidence includes the note mentioned above, in which at some time in the first half of 2001 he emphatically proclaimed his love. The plaintiff's son gave evidence that in about mid-March 2001 he had a conversation with the defendant, in which the defendant said, "I love your mother and want her with me". 17 It seems to me that the evidence as a whole shows that the defendant was, indeed, enthusiastically pursuing the plaintiff during the first half of 2001 and gave the appearance of being infatuated with her. She said she fell in love with him. 18 The plaintiff was living at Wahroonga, a considerable distance from the defendant's residence. In about April 2001 the defendant gave her a key to his apartment at Darling Point and to the security garage door there. His oral evidence was that he did so, in effect, out of chivalry. He said he did not like the idea that she would have to wait for him outside his apartment if they had arranged a date and he was delayed. In his affidavit he said he did so because he is hard of hearing. 19 The plaintiff gave a different version, claiming that he told her he was giving her the key because he wanted her to know that she was "the only woman" in his life, and so that she could come in freely at any time and be reassured by listening to any messages on his answering machine. My view of the evidence is that he gave her a key not merely out of chivalry or because he was hard of hearing, but as part of his enthusiastic pursuit of her favours. 20 The defendant also gave evidence that he told the plaintiff she could stay over occasionally on the weekends. He said that at about this time, they commenced a sexual relationship, and from approximately April to June 2001 she stayed in his apartment on most Saturday nights. The plaintiff said they were together every weekend for from March to September 2001 except for one weekend. I shall return later to the question whether their relationship continued after they returned from overseas on 28 July, but it is at least clear that they spent nearly all of their weekends together from about March 2001 until their departure for overseas in June 2001. 21 The plaintiff added that they were away together for a week in Port Douglas in April and a week in Melbourne in June 2001. Those trips were not denied at the defendant. The overseas cruise 22 In February 2001 the defendant told the plaintiff that he had booked passage for two on a luxury cruise of the Baltic Sea leaving from Europe on 21 June 2001. He asked her to come with him. After reflection, she agreed to do so. She gave evidence that, as the departure day grew near, on one occasion the defendant said to her: "I love you. I want you to give up your job at Holden. We certainly don't need the money. I want to travel with you, do things together we cannot do if you are working. We should be together. Give up your job and I will of course, look after you financially. We will have a wonderful life together." 23 She said they agreed with one another that the overseas trip would give them the opportunity to see if they got on well and really wanted to spend the rest of their lives together. 24 The defendant said that this conversation did not take place, and he specifically denied asking the plaintiff to live with him, or offering to look after her financially. He said he remembered being told by her that she was giving up her job, but he denied asking her to do so. My findings as to this evidence are set out later. 25 Their overseas trip was from 21 June to 28 July 2001, in Holland, on the cruise ship and in the United States. The plaintiff has not given direct evidence about their relationship during the trip, except to the effect that the relationship continued until September 2001. The defendant's evidence is quite different. He said that he formed the view, during the trip, that he and the plaintiff were not compatible in the long-term, and that he decided he would slowly bring their relationship to an end over the ensuring few weeks. He said he did not tell the plaintiff of his decision during the trip because he did not want to ruin the holiday. He said that when they returned from overseas she asked him whether they could live together, and he said no, that they would talk about it again in the next few weeks. He said he was trying to avoid confrontation. He said that up to the time of his stroke on 24 August the plaintiff repeatedly asked him whether she could move in, and each time he said, "No, we will discuss it again later". 26 I reject this evidence by the defendant, because is inconsistent with other evidence (including his own) which indicates that the relationship between the parties continued during the period from 28 July to 24 August 2001. That evidence is set out later. The alleged first agreement 27 The plaintiff says that when they returned to Sydney on 28 July 2001, the defendant told her he had a wonderful time with her on their holiday and that he wanted her to give two weeks notice to Holden, and then move in with him at Darling Point. 28 The plaintiff claimed that the defendant then said: "Of course, when you leave work, I will make sure you are financially secure. I will put $5,000 every month into your account for the rest of your life, if you give up working forever so that you can be with me and look after me in my old age. We will look after each other and it will be better for each of us to be together than to be alone. Even a dog doesn't like to be alone."