Having used a similar fact pattern in teaching unconscionability and estates I was interested to see Bosschieter v Howitt [2024] NSWSC 1676.
In that judgment the Court states
Margaret Norma Howitt died from Covid 19 on 24 February 2022 aged 93. After making several specific gifts, in her will of 2 March 2021 the deceased divided the substantial remaining asset of her estate, her house in the Sydney suburb Forestville, equally five ways among her four children and one of her grandchildren, the plaintiff, Justine Bosschieter. She gave the plaintiff a first testamentary right to purchase the Forestville property, provided the plaintiff paid 80% of its market value to the four children, the other major beneficiaries.
The plaintiff did not exercise her testamentary right to purchase the Forestville property, which was sold for $2,850,000. The balance of the deceased’s estate is now held in cash. On 8 May 2023, this Court granted probate of the deceased’s estate to the defendant, David Howitt, one of Margaret Howitt’s children.
In these proceedings the plaintiff seeks an order under Succession Act 2006, s 59 for further provision out of her grandmother’s estate. She claims she needs more than was provided to her under the deceased’s will to enable her to buy a house and to provide her with a cushion against the contingencies of life.
On behalf of the estate, the defendant resists the plaintiff’s claim and contends that no further provision should be made for her from the estate. The defendant puts in issue whether the plaintiff qualifies as an “eligible person” under the Succession Act, whether there are factors warranting the making of an order for further provision out of the deceased’s estate, and he contends that adequate provision for the plaintiff’s proper maintenance education and advancement in life has already been made under the deceased’s will.
The defendant also cross claims to set aside a gift the plaintiff contends that the deceased made to her approximately 3-months before her death. The deceased and the plaintiff had together attended a branch of a bank, the Commonwealth Bank of Australia (CBA), where the deceased closed a recently matured term deposit held in her name. This term deposit in the sum of $202,247.29 represented the deceased’s then lifesavings. The term deposit was transferred into the plaintiff’s name. Since then, the plaintiff has applied these funds to various objects.
The defendant/cross-claimant contends that the transfer of the deceased term deposit was not voluntary but was the product of the plaintiff’s undue influence or unconscionable conduct. The defendant/cross-claimant seeks to have the transfer set aside and consequential orders made that these funds should be repaid to the estate. If the plaintiff/cross-defendant is otherwise successful in her claim, the defendant/cross-claimant claims that the transfer should be designated as notional estate under the Succession Act Part 3.3 and treated as satisfying the plaintiff’s claim. ...
The judgment subsequently states
In October 2020 Justine took the deceased down to the CBA to request a new ATM card for the deceased’s account. The deceased was out of breath and in some physical distress due to her exertion and lack of oxygen by the time she got to the bank. The bank manager refused to issue card to Justine and the deceased as he was concerned about its potential misuse. Justine was not the deceased’s attorney. It appears that because of this Justine resolved to become the deceased’s attorney.
In November 2020, the deceased appointed Justine as her enduring Attorney and as her enduring Guardian, in place of the March 2018 appointment of her four children to these roles. Shortly, thereafter she executed her final will in March 2021, which gave Justine and her children one fifth each of the Forestville property and her residuary estate. During this period the deceased was generally isolated due to the pandemic and being cared for by Justine. Her general health was declining as this section of these reasons finds.
On 10 March 2021 the deceased obtained a medical certificate from her doctor regarding her inability to go to the bank. The doctor said that she suffered “from an end-stage medical condition” and that “she is housebound, frail, and susceptible to infections. She is not able to attend any community appointments including banks and shops.” This medical certificate raises real questions as to why Justine needed to take the deceased to the CBA in November that year. ...
On 17 November 2021, during Covid-19 restrictions, Justine and Luke drove the deceased with her oxygen tank, to the CBA branch at Frenchs Forest. Whilst at the CBA, the deceased and Justine attended on Mr Nickson Adamson a bank manager with the CBA.
Mr Adamson was not called to give evidence. During their attendance on Mr Adamson, the deceased caused the sum of $202,247.29 from a matured term deposit account in her name to be transferred into her personal account. Then shortly afterwards the deceased caused the funds to be transferred from her personal account into a term deposit account in Justine’s name. ...
The Court states that it
does not accept Justine’s evidence that the deceased spontaneously wanted her to have the $200,000. Justine has not provided any written evidence supporting her contention that the deceased intended for her to have the term deposit funds. The deceased did not act on the independent advice of Ms Ghadirian-Marnani when she transferred the term deposit funds to Justine. From the evidence available, it is apparent that the deceased had considered gifting Justine the term deposit but not including her in the will, but ultimately decided against that course.
However, it is now Justine’s case that the deceased’s intention was for to receive the term deposit and her entitlement under the will. The Court does not accept the deceased freely intended that course.
Moreover, it was clear that at the time the term deposit funds were transferred to Justine from the deceased in November 2021, that there was a strong relationship of trust and confidence between Justine and the deceased. Justine was not only the deceased’s carer, but the deceased had appointed her as her enduring guardian and attorney. Appointment to these positions is only explicable based on the deceased reposing a high degree of trust, confidence and dependence upon Justine to act in her best interests. ...
Justine commenced these proceedings on 9 February 2023. Her supporting affidavit foreshadowed the case made on her behalf. Justine seeks further provision from the deceased’s estate so she could buy her own home, by a good quality second-hand car top up her savings account with the contingency for future unplanned expenses of $250,000 and top up her superannuation in the sum of $150,000 and provide a fund for future medical expenses of $100,000.
Probate of the deceased’s will was granted to David on 8 May 2023. Between June and August 2023, he made attempts were made to ascertain from Justine whether she would seek to exercise her right of first refusal to purchase the property. The estate’s solicitors took steps to realise the Forestville property. Justine resisted these steps adding unnecessarily to the cost of administering the estate the administration of the estate. Justine did not reply to letters from the estate of 13 April 2022, 24 October 2022, 24 November 2022 and 19 April 2023. No reasonable excuse was offered by Justine for ignoring the estate’s correspondence inquiring when she would be vacating the Forestville property.
On 26 May 2023, the estate filed its Cross Claim seeking repayment of the November 2021 $200,000 transfer to Justine on the basis that Justine procured the transfer by undue influence and/or unconscionable conduct. Alternatively, should the transfer be found to be a valid act of the deceased, the estate seeks that the transfer ought to satisfy any entitlements to further provision from the estate which Justine is found to have. ...
Equity students will note the discussion of unconscionability -
The Cross Claim contends that the transfer was procured by presumed or actual undue influence that Justine had over the deceased and/or Justine’s alleged unconscionable conduct. The presumed undue influence is alleged to have arisen out of the circumstances of the relationship between Justine and the deceased and the ascendancy and dominance Justine had over the deceased.
Unconscionable Conduct.
The applicable legal principles in relation to the estate’s claim of unconscionable conduct may be shortly stated. The elements required for a court to conclude that unconscionable conduct has occurred were extracted in summary form from Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 at 461-462 and other cases decided in the High Court and restated in Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49, at [38] (Kiefel CJ, Bell, Gageler, Keane and Edelman JJ) as follows (omitting case references):
“A conclusion of unconscionable conduct requires the innocent party to be subject to a special disadvantage "which seriously affects the ability of the innocent party to make a judgment as to [the innocent party's] own best interests". The other party must also unconscientiously take advantage of that special disadvantage. This has been variously described as requiring "victimisation", "unconscientious conduct", or "exploitation". Before there can be a finding of unconscientious taking of advantage, it is also generally necessary that the other party knew or ought to have known of the existence and effect of the special disadvantage.”
More recently the necessary elements of unconscionable conduct were summarised in Nitopi v Nitopi (2022) 109 NSWLR 390; [2022] NSWCA 162 at [147] (per Ward P, with whom Bell CJ and White JA agreed):
“What is clear is that, once the requisite elements of a special disadvantage, knowledge of that special disadvantage and improvidence of the transaction are established, there is at least an evidentiary onus on the stronger party to show that the transaction was fair, just and reasonable or it may more readily be concluded that the improvident transaction was procured by the unconscientious taking of advantage of that special disadvantage.”
Other general statements of legal principle should be noted. Unconscionability is a concept that is applied with considerable restraint, going beyond what is 'fair' or 'just' to circumstances which are highly unethical: Attorney General (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557; [2005] NSWCA 261, at [120] – [121] per Spigelman CJ.
There are many statements to similar effect. One such comprehensive statement is that of Allsop P (with whom Bathurst CJ and Campbell JA agreed) in Tonto Home Loans Australia Pty Ltd v Tavares; FirstMac Ltd v Di Benedetto; FirstMac Ltd v O’Donnell (2011) 15 BPR 29,699; [2011] NSWCA 389 at [291], which also discusses how the concept of unfairness and unconscionability under the CRA may be differentiated from unconscionability at general law:
“Aspects of the content of the word "unconscionable" include the following: the conduct must demonstrate a high level of moral obloquy on the part of the person said to have acted unconscionably: Attorney General of New South Wales v World Best Holdings Ltd [2005] NSWCA 261; 63 NSWLR 557 at 583 [121]; the conduct must be irreconcilable with what is right or reasonable: Australian Securities and Investments Commission v National Exchange Pty Ltd [2005] FCAFC 226; 148 FCR 132 at 140 [30]; Australian Competition and Consumer Commission v Samton Holdings Pty Ltd [2002] FCA 62; 117 FCR 301 at 316-317 [44]; Qantas Airways Ltd v Cameron [1996] FCA 1483; (1996) 66 FCR 246 at 262; factors similar to those that are relevant to the [Contracts Review Act] are relevant: Spina v Permanent Custodians Ltd [2009] NSWCA 206 at [124]; the concept of unconscionable in this context is wider than the general law and the provisions are intended to build on and not be constrained by cases at general law and equity: National Exchange at 140 [30]; the statutory provisions focus on the conduct of the person said to have acted unconscionably: National Exchange at 143 [44]. It is neither possible nor desirable to provide a comprehensive definition. The range of conduct is wide and can include bullying and thuggish behaviour, undue pressure, and unfair tactics, taking advantage of vulnerability or lack of understanding, trickery, or misleading conduct. A finding requires an examination of all the circumstances.”
Other authorities also speak to the great variety of circumstances in which equitable intervention to relieve against unconscionable conduct is available and the need for close scrutiny of the exact relationships established between the parties: Jenkyns v Public Curator (Queensland) (1953) 90 CLR 113; [1953] HCA 2 at 118-119 and Karavaz v Crown Melbourne Ltd (2013) 250 CLR 392; [2013] HCA 25 at [18] and Wu v Ling [2016] NSWCA 322 at [8] per Leeming JA. In Wu v Ling Leeming JA explained (at [7]) that one should not expect to find a bright line separating circumstances which place an impugned transaction inside or outside the reach of equitable principle. Leeming JA cited Lord Selborne’s rejection of the notion that there is an “indispensable condition of equitable relief”: Earl of Aylesford v Morris (1873) LR Ch App 484, at 491 and referring to Fullagar J’s statement in Blomley v Ryan [1956] HCA 81; (1956) 99 CLR 362, at 405, that the circumstances in which equitable relief will be granted “are a great variety and can hardly be satisfactorily classified”.
But this also means, as Leeming JA further explained in Wu v Ling (at [8]) that the absence of proof of immoral or dishonest motives is not sufficient to preclude equitable intervention: cf Johnson v Smith [2010] NSWCA 306 at [5] and [98] – [102]; and Paciocco v Australia and New Zealand Banking Group Limited (2015) 236 FCR 199; [2015] FCAFC 50 at [305].
Undue Influence.
The principles to be applied in evaluating a claim for alleged undue influence may also be shortly summarised. A claimant may seek to set aside a transaction by showing that another party had, in fact, come to occupy or assume a position of practical ascendency, power or dominion over the claimant who had taken a co-relative position of dependence or subjugation: JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (5th ed, 2014, LexisNexis Butterworths) at paragraph 15-105. Making out a relationship of actual undue influence involves establishing a relationship involving ascendancy or influence on the part of one person over another and that other is in a position of dependence, reliance, trust, or confidence on the stronger party: PW Young, C Croft, ML Smith, On Equity (2009, Thomson Reuters) at [5.440]. Much of the Australian and English law on this subject finds its origins in the classic statements of relevant legal principle in Allcard v Skinner [1887] UKLawRpCh 151; (1887) 36 Ch D 145.
The applicable law in relation to undue influence in Australia was comprehensively stated and applied by the High Court in Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49 at [34] (“Thorne”) as follows (omitting citations):
“There are different ways to prove the existence of undue influence. One method of proof is by direct evidence of the circumstances of the particular transaction. That was the approach relied upon by the primary judge in this case. Another way in which undue influence can be proved is by presumption. This presumption was relied upon by Ms Thorne in this Court as an alternative. A presumption, in the sense used here, arises where common experience is that the existence of one fact means that another fact also exists. Common experience gives rise to a presumption that a transaction was not the exercise of a person's free will if (i) the person is proved to be in a particular relationship, and (ii) the transaction is one, commonly involving a "substantial benefit" to another, which cannot be explained by "ordinary motives", or "is not readily explicable by the relationship of the parties".
Although the classes are not closed, in Johnson v Buttress Latham CJ described the relationships that could give rise to the presumption as including parent and child, guardian and ward, trustee and beneficiary, solicitor and client, physician and patient, and cases of religious influence. Outside recognised categories, the presumption can also be raised by proof that the history of the particular relationship involved one party occupying a similar position of ascendency or influence, and the other a corresponding position of dependency or trust. In either case, the presumption is rebuttable by the other party proving that the particular transaction or transfer, in its particular circumstances, was nevertheless the result of the weaker party's free will.
Thorne discussed (at [36]) whether the relationship of fiancé and fiancée should be recognised as one to which the presumption of undue influence attaches. The relationship between a granddaughter such as Justine and her grandmother, the deceased, is not one of the traditionally identified presumptive relationships of influence and is not treated as such a presumptive relationship in these reasons. Here, the method chosen to determine whether the relationship between Justine and the deceased was one of actual undue influence is to look to the direct evidence of the transaction and the relationship between the parties from the narrative of findings above.
In Amadio, Mason J also drew a distinction (at 461) between a transaction that is sought to be set aside on the grounds of unconscionable conduct, and one that is sought to be set aside on the grounds of undue influence:
“Although unconscionable conduct in this narrow sense bears some resemblance to the doctrine of undue influence, there is a difference between the two. In the latter the will of the innocent party is not independent and voluntary because it is overborne. In the former the will of the innocent party, even if independent and voluntary, is the result of the disadvantageous position in which he is placed and of the other party unconscientiously taking advantage of that position.
There is no reason for thinking that the two remedies are mutually exclusive in the sense that only one of them is available in a particular situation to the exclusion of the other. 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 interest.”
Deane J also explained in Amadio (at 474) that undue influence “looks to the quality of the consent or assent of the weaker party” whereas “unconscionability looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, dealing with the person under a special disability in circumstances where it is not consistent with equity and good conscience that he should do so”.
Recent United Kingdom legal authority has tended to simplify the remedy for undue influence. That authority states that there are two principal requirements to make out a case to establish a rebuttable presumption of undue influence – first there must be a relationship of influence, and second, the transaction must not be readily explicable on ordinary motives, such that the nature and contents of the transaction must in the context of the relationship of influence, absent evidence to the contrary, make one conclude that undue influence has been exercised: Nature Resorts Ltd v First Citizen Bank Ltd [2022] 1 WLR 2788, [2022] UKPC 10[11] – [13] and Royal Bank of Scotland plc v Etridge (No. 2) [2002] 2 AC 773; [2001] UKHL 44. The relationship of influence may be established on the facts that the gift was a result of influence expressly used by the done. But in respect of some relationships what is commonly referred to as a rebuttable legal presumption of a relationship of influence arises.
