There was a contract between Patrick and Sally. The contract contained the price and the obligation to sell so the main terms were agreed and certain. Real Estate contracts must be in writing17, which this apparently was. If the contract was not the standard form real estate contract for sale in NSW there will be a rebuttable presumption that the parties did not intend to be bound until after exchange.
There are vitiating factors. Patrick approached Sally as a counsellor. This is similar to a doctor/patient relationship which is a recognised category of influence, so there may be a presumption of undue influence. Alternatively there was a relationship of "special trust and confidence"18 because Patrick became dependant on Sally's si?? ances for even trivial decisions after the death of his mother.
"There is no presumption of undue influence unless there is evidence that the transaction was wrongful – that it amounted to taking an unfair advantage of the other person even though there may have been a relationship of influence and/or confidence. "19 There is evidence that Joanna took unfair advantage of Patrick as she purchased his house well below market value. Assuming the relationship is one of special trust and confidence, the onus of proof is on Sally to prove there was no undue influence.
Patrick was vulnerable and unhappy; this affected his ability to look after his own interests, so he was in a position of special disadvantage20. Sally was aware of this and took advantage of the situation by encouraging him to sell the house to her at undervalue, claiming the advice was from Patrick's mother. Thus Sally's conduct was unconscionable. Sally may argue that the advice was from Patrick's mother, but the court may not accept this since the advice about the house was unsolicited, unlike the earlier advice.
In any event, Sally took unfair advantage of Patrick's circumstances by persuading him to sell the house at such an enormous undervalue. Patrick will be able to establish both undue influence and unconscionable conduct. Patrick can seek restitution so the property would be returned to him on repayment of the $30,000 and he would recover any other expenses such as stamp duty. If this was not possible (for instance if Sally had on sold the property) or if Patrick did not want it, he could sue Sally for the $170,000 difference in market value.