Mentink v Olsen

Court of Appeal (NSW)|2020-05-04|Before: Sackar J

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE [This headnote is not to be read as part of the judgment] A woman died of a terminal illness at the age of 75, survived by her husband and her daughter from a previous marriage. Before her death, she gave approximately $2.2 million to her daughter. That money was withdrawn from a term deposit account that was solely in the name of the deceased. Some of the funds in the term deposit were inherited from the estate of the deceased's mother. However, the majority of the funds were from other sources and may have been assets of a partnership between the deceased and her husband. Her husband commenced proceeding as an executor of the estate and in his personal capacity against his stepdaughter, the recipient of the gift. He alleged that she had obtained the money by reason of undue influence or unconscionability and was liable to repay that amount to the estate. The primary judge found in favour of the husband and ordered the daughter to repay the money to the estate with interest. His Honour principally based that conclusion upon a finding that the daughter initiated or contrived her mother's change of mind to her own benefit or took advantage of her mother's vulnerability in unconscionable circumstances. His Honour indicated that the factual findings would also support a finding of undue influence. The daughter appealed the decision, submitting that the primary judge erred in his conclusions concerning unconscionable conduct and undue influence, in addition to rejecting defences of conventional estoppel and change of position. The Court held (Meagher and Payne JJA at [1] and [46]; Emmett AJA at [202]) in dismissing the appeal:

Judgment

MEAGHER and PAYNE JJA: We have had the benefit of reading in draft the judgment of Emmett AJA. We agree with his Honour that the appeal should be dismissed. The primary judge did not err in concluding that the gift of $2,203,328 made by the deceased to the appellant on 11 October 2016 should be set aside as resulting from the appellant's unconscionable conduct. The argument on appeal focused on that finding, the appellant accepting that the result of her challenge to it was likely to dictate the same result with respect to her challenge to the primary judge's additional finding that the gift was procured through undue influence. Whilst we agree with Emmett AJA's reasons for dismissing the appeal, we add the following reasons by way of further explanation in support of that outcome. The potential procedural issue about the capacity in which the various parties appeared in the litigation raised by Emmett AJA at [53] was not an issue raised by the parties, and in the absence of any complaint about the manner in which the primary judge addressed that issue it is unnecessary to consider it any further.

Unconscionable conduct (principles)

Where a party seeks to set aside a transaction on the basis of unconscionable conduct, it must be established (1) that one party to the transaction is placed at a "special disadvantage" vis-à-vis the other in the sense that the disabling condition or circumstance is one which seriously affects the ability of that party to make a judgment as to his or her own best interests; and (2) that the other party understood the plaintiff to be at a special disadvantage and its effect with respect to his or her not being in a position to look after his or her interests. Where those circumstances make it prima facie unfair or "unconscientious" that the "stronger party" procure or accept the weaker party's assent to the impugned transaction, the onus is cast on the stronger party to show that it was fair, just and reasonable: Commercial Bank of Australia v Amadio (1983) 151 CLR 447 at 461-462 (Mason J), 474 (Deane J, Mason and Wilson JJ agreeing); [1983] HCA 14.
Both parties are agreed that the deceased had testamentary capacity to make the will of 15 October 2016 and the codicil of 2 November 2016. It did not follow that the deceased could not be under a special disadvantage in the relevant sense. Such a disadvantage may be situational or relational, have been created or exacerbated by an absence of advice or explanation, and may coexist with a "full understanding" of the transaction: as to the latter, see Bridgewater v Leahy (1998) 194 CLR 457; [1998] HCA 66 at [115]. As Mason J explained in Amadio at 461, in cases of unconscionability "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".
The innocent party must have been under a disadvantage that was "special" in the sense that it involved an inability "to make a judgment as to his or her own best interests": Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49 at [64]; or "to make worthwhile decisions in his [or her] own interests": Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392; [2013] HCA 25 at [124]. But the question of whether the deceased was under such a disadvantage is not to be considered separately from the other relevant circumstances, and particularly her relationship with the appellant: Kakavas at [122]-[124].

Findings as to special disadvantage

Emmett AJA summarises the primary judge's findings as to the deceased's being in a position of disadvantage and vulnerability by reason of her sickness and infirmity, and the appellant's knowledge of that being the position, at [131]-[136] below. The primary judge's findings as to special disadvantage and as to the appellant's knowledge of that being the position are not challenged in the appeal.
From June 2016, the deceased moved into her mother and John Olsen's home at Hidden Lake, where she became the full time carer for her mother when she was not in hospital. In July 2016, the respondent took over the role which the deceased had previously carried out in relation to that household's finances. She was added, on 21 July 2016, as a signatory to the A Casa Botanica cheque account because the deceased had trouble signing cheques (Judgment [48]). After periods in hospital between 12 July and 15 August 2016, the deceased returned to live at Hidden Lake.
The deceased was terminally ill and struggling to get her affairs in order, with little time in which to do so. Indeed, on 6 or 7 October 2016, four or five days before the impugned gift was made, the deceased was informed, in the appellant's presence, that her condition was terminal (Judgment [77]). She was "extremely anxious and exhausted" (Judgment [76]), and dependent on the appellant for assistance in running her household and dealing with her medical affairs (Judgment [187]). As Fullagar J observed in Blomley v Ryan (1956) 99 CLR 362 at 405; [1956] HCA 81, "sickness, age, infirmity of body or mind... [and] lack of assistance or explanation where assistance or explanation is necessary" are all paradigmatic examples of special disadvantage. In some degree all were present here.

Unconscionable conduct (grounds of appeal 1 to 5, and 12)

These grounds of appeal focus upon the primary judge's conclusions at Judgment [372], [373] and [374]: [372] The defendant, knowing of her mother's illness, anxiety, change in behaviour, change in mood either was actively involved in or stood by and did nothing as she accepted an extraordinarily large gift. It was an act of self-indulgence, somewhat callous and extraordinarily selfish on the part of the defendant. The defendant took no opportunity to suggest her mother seek independent advice, nor speak to anyone else in the family about such a large gift. The only concern the defendant had was to hurriedly consult her own accountant to ensure that the gift, was ultimately tax neutral in her hands. She knew her mother was otherwise without any independent and objective sounding board. [373] Although the precise sequence of events is not clear. I am satisfied either the defendant initiated or contrived, despite her denials, her mother's change of mind to her own benefit or she took advantage of her vulnerability in circumstances which were unconscionable. I would nonetheless find, that in this case even if she did not specifically initiate the gift, the defendant's passive acceptance of the large gift was, in all the circumstances unconscionable. In particular, if the defendant did not initiate the gift, she witnessed at close range, her mother's indecisiveness and impulsivity, in circumstances where she was receiving a substantial benefit and in circumstances where her mother had no independent or objective advice. [374] As far as the presumption has arisen that the defendant received the gift in unconscionable circumstances, I am not satisfied that the defendant has discharged the burden, she has not shown that the transaction was in any case fair, just and reasonable.
Grounds 1, 2, 3 and 12 address the findings that the appellant initiated or contrived the making of the gift (ground 2), that in making the gift the deceased behaved erratically and made impulsive decisions (ground 3), and that in the circumstances it was unconscionable for the appellant to procure or accept it (ground 1). Grounds 4 and 5, the former because of an asserted absence of adequate reasons, challenge the finding that the making of the gift was not fair, just and reasonable having regard to the deceased's circumstances.

Discussion (grounds of appeal 1, 2 and 3)

In support of these grounds, the appellant submits that the primary judge erred in not making the following findings: (1) that the deceased initiated the gift of $2.2 million on 10 October 2016, and that her intention to do so was consistent, not erratic or unexplained; (2) that the gift was not improvident because if it had not been made, the appellant would otherwise have received a legacy of $2.2 million under the will which was not executed in view of the making of the gift; and (3) that from 10 October 2016, the appellant knew she would receive a gift of $2.2 million, either inter vivos or by the will, and that in participating in the making of that gift (by the transfer of $2.2 million to an account opened in her name) she did not focus on or exploit the deceased's vulnerability. Accordingly, her passive receipt of $2.2 million was not unconscionable. The second of these submissions focuses on the correctness of the primary judge's finding at Judgment [362] that the appellant also "initiated her mother's decision to make changes to her will". The third depends on the acceptance of the first and second submissions, and addresses his Honour's conclusion at Judgment [373], which emphasises the significance of the deceased's "indecisiveness and impulsivity".
The appellant's challenge focuses particularly on the events between 10 October and 15 October 2016. However, that challenge must be considered in the light of the circumstances as they were, and developed from at least June 2016. It must also take account of the fact that later in October, at meetings in which the deceased's testamentary intention and assets were being described, the appellant did not point out that the deceased had made a gift to her of $2.2 million. That fact first became known to Mr Olsen's accountant, and thereafter to John Olsen, in mid-January 2017 (Judgment [115]).
As is already apparent from Judgment [373], the primary judge's findings identify in general terms the circumstances in which the gift was made, but do not resolve all of the factual issues arising with respect to those circumstances. That was in part due to his Honour's rejection of much of the appellant's evidence.
Commencing with the term deposit, the evidence established that the initial deposit of $2 million was made on 6 January 2016 for a term of one month which was to be automatically renewed from month to month subject to a right to withdraw during a "Grace Period", being between the 6th and 12th day of each such month. The initial deposit consisted principally of funds from the sale of the Alfreda Street property, which in turn was funded from the proceeds of sale of the Owlswood property, an asset of the Chapel House Farm partnership between John Olsen and the deceased. It was not contended that any significant part of those funds was derived from the deceased's mother's estate.
However, the primary judge did not make a clear finding that all or a substantial part of that term deposit was an asset of the partnership, and accordingly not available to be gifted away by the deceased. Nevertheless he was satisfied that the "better view" of the evidence was that the vast majority of that deposit was a partnership asset, albeit that the evidence was "ultimately, unclear". His Honour did not consider that that being the position changed "the final outcome of the case". That was no doubt because the position in relation to the deceased's entitlement to gift those funds away was plainly contestable by John Olsen. At the same time, his Honour made a related finding that the evidence showed more generally a "high-level of intermingling of funds" of the deceased and John Olsen (Judgment [376]).
With respect to the appellant's knowledge of the term deposit and its provenance, the primary judge held that the appellant did not know that the term deposit was wholly or partly a partnership asset (Judgment [377]). And while the primary judge found that the appellant was "intimately involved in her mother's affairs" and "intensely interested" in her estate planning (Judgment [351], [355]), to the point of "obsession" (Judgment [355]), there was no finding that the appellant was aware of the existence of the partnership, as John Olsen suggested and as she denied.
Consistently with the appellant's denial that she was aware of the existence of the partnership, at Judgment [351] the primary judge recorded that in giving evidence the appellant "attempted to distance herself from any detailed knowledge of her mother's affairs". His Honour rejected that evidence, concluding that she was "intimately involved in her mother's affairs and intensely interested in how her mother was organising her estate". Her involvement in the affairs of the deceased in September and October 2016 is illustrated by her role in the rescission of the Pinaroo transaction and in corresponding with Ms Summerville about an amendment to her mother's will in September 2016. The primary judge also found that the appellant must have been aware of, and have discussed, the $2.2 million term deposit "with her mother by 10 October at the latest" (Judgment [358]).
Looking forward to the events of 11 October, which are considered below, the position was that the appellant either knew or suspected that the assets of John Olsen and the deceased had been in some respects intermingled or was not in a position at all to answer the question posed by her accountant - "is it her money to give?" - because she had truly attempted to distance herself from any detailed knowledge of her mother's affairs. In either case, from the appellant's perspective, and knowing of the fact and extent of her mother's disability, she was in no position to be satisfied that her mother had and was able to give proper consideration to whether she should be making a gift, and therefore not in need of any accounting or legal advice to inform and assist that consideration.
Returning to the chronology of events in early September 2016, the general intention of John Olsen and the deceased at that time was "to leave the residue of each of their estates to each other" (Judgment [40]), and for the surviving party to then divide their property four ways, with a quarter to the appellant and each of the two surviving children of John Olsen, and the remaining quarter divided between the children of John Olsen's deceased daughter, Jane Olsen.
The deceased had a different intention in relation to the assets distributed from her mother's estate, which it was her "overriding general intention" to leave to the appellant (Judgment [361]). On 9 September 2016, the appellant sent a covering letter to Ms Summerville, a solicitor at Colin Biggers & Paisley, enclosing a letter from the deceased dated 8 September which read (Judgment [71]): A very serious addition to my Will - Immediately please! I want everything that my mother left me to go to my daughter - Karen Howard Mentink when I die - She can then make distributions to her children. Also the two three paintings Bathurst Butter by John Olsen and the large bush landscape by Ray Crooke - And the Michael Taylor seascape exhibited Canberra 2016. Inclusions from my mother include indoor and outdoor furniture, shares considerable money in houses (in my name only) and other financial dealings in my name.
In order to appreciate the content of that intention, it was necessary for the appellant to understand what were the "houses" in the deceased's name purchased directly or indirectly with monies received from her mother's estate. The primary judge's findings do not include any consideration of how the appellant could have done so without acquiring a detailed knowledge of her mother's affairs. That is no doubt because the appellant initially denied reading her mother's letter at all, conceding when pressed that she "may have glanced at it". Ground of appeal 12 takes issue with the primary judge's finding that the appellant denied looking at the correspondence of 8 and 9 September (Judgment [354]) because her initial denial was qualified by her subsequent concession. The primary judge's observation that her initial denial "defied belief" was nevertheless wholly justified. He found that she was, on any view, "entirely privy" to the deceased's testamentary intentions (Judgment [349]), which necessarily includes the deceased's intention to leave the residue of her estate to John Olsen. Those intentions did not include leaving to the appellant funds to which John Olsen had or was likely to have a substantial claim.
The appellant's evidence was that during September and October 2016 she took the deceased to "all her medical appointments and liaised with her medical practitioners as required" (Judgment [187]). On 5 October 2016, the deceased attended an appointment with her general practitioner, Dr Richardson, who noted that she presented "as extremely anxious today". On the following day, 6 October, the deceased had a cerebral CT scan. Each of those appointments was in the Bowral district.
During this same period, the appellant gave instructions to Ms Summerville in relation to the rescission of the deceased's contract to purchase the Pinaroo property. In that capacity, the appellant had email communications with Ms Summerville on her behalf. On 12 September 2016, the deposit from the rescission of the Pinaroo contract was paid by direct credit into the A Casa Botanica cheque account.
On 6 October that amount was transferred from the cheque account to the term deposit account, taking the credit balance in that account to $2,203,328. That transaction was undertaken by someone attending the Bowral branch of the bank. The possibilities were the appellant, the deceased, or both of them. The list of transactions for the term deposit account also records that on 6 October 2016, $30,000 was transferred from that account to an account at the ANZ bank, to enable payment of a credit card debt of the appellant (Judgment [83], [365]). Finally, on 6 or 7 October, the deceased was informed that there was little prospect of "further intervention" by way of treatment of her condition (Judgment [77], [78]).
On 10 October, while in the appellant's car and in her presence, the deceased had a telephone conversation with Ms Summerville in which she told the latter of her intention by her will to leave the appellant the $2.2 million in the deposit account, among other assets (Judgment [79], [357]). Apart from the $2.2 million, the assets discussed were those mentioned in the earlier letter of 8 September, including the three paintings and the Werrington Street property as representing the "considerable money in houses (in my name only)". So far as it concerned the $2.2 million, as a statement of the deceased's testamentary intention that instruction was either a significant departure from her intention as recorded in the September letter or proceeded on the assumption that the $2.2 million comprised funds directly or indirectly received from her mother's estate. That true position at this time was that apart from a holding of shares, the funds received from that estate and her mother's superannuation had been substantially applied to the acquisition of the Werrington Street property.
The primary judge's findings do not address how the deceased was aware on 10 October 2016 that the credit balance in the term deposit, following the two transactions on 6 October, just exceeded $2.2 million. Nor do his Honour's reasons speculate as to how it could be said as at 10 October that the term deposit was "currently being cashed in" unless either the deceased or the appellant was aware of the Grace Period, relevantly ending on 12 October 2016, in which the term deposit could be withdrawn or otherwise dealt with without notice. Rather, the primary judge found that from 10 October "at the latest", the appellant knew that her mother proposed to leave her the $2.2 million by will (Judgment [357]), and had discussed with her mother the term deposit, and how it might be given to her (Judgment [356], [358]).
On the following day, 11 October, the appellant and the deceased visited the Bowral branch of the Commonwealth Bank, where the term deposit account was closed and all of the money on deposit transferred to a separate term deposit account opened in the name of the appellant. That occurred after they had first gone to the bank and after the appellant had then gone to see her accountant, whose office was a short distance from the bank, to ask whether there were tax or "other legal implications" of such a gift (Judgment [231]). According to the appellant, her accountant said, in effect, that if the money belonged to the deceased she was free to transfer it as she wished, and that there would be no tax implications for either the appellant or the deceased. Again according to the appellant, it did not occur to her that the person who would have benefited from such advice was the deceased, who waited in the car while all of this occurred.
On the appellant's case, the decision to go to the bank on the morning of 11 October 2016 was that of her mother, and when they were inside the bank for the first time her mother handed her, without any prior notice, a term deposit withdrawal request and said, "I would like to give this to you". The primary judge rejected this version of events as implausible, holding that the visit was "the result of a discussion between mother and daughter" (Judgment [359]) and that the appellant was "involved in" and "influenced" the deceased's decision to make a gift as opposed to a bequest (Judgment [362], [373]).
Addressing the position in fact by reference to the bank's contemporaneous records, the $2.2 million term deposit was transferred to the appellant in two separate transactions, most likely effected on different days. The first involved the payment of $30,000 to an account the appellant held with the ANZ bank (Judgment [83]), which paid off her credit card debt and expenses (Judgment [231]). The second transfer, of $2,173,328, was deposited in an account that the appellant opened with the Commonwealth Bank on 11 October (Judgment [83]). There is a question, which the primary judge did not resolve (Judgment [365]), as to whether the first transaction occurred at the same time as the second or, as seems much more likely, at the same time the Pinaroo deposit money was paid in, on 6 October 2016.
On the following day, 12 October, the deceased apparently spoke to Ms Summerville to advise her that the "investment worth $2.2 million" had "already" been given to the appellant and should be removed from the will (Judgment [84]). Ms Summerville sent a revised will, with the $2.2 million bequest removed, by an email letter addressed to the appellant. That email was sent at 12:34 pm (Judgment [85], [86]), and is extracted by Emmett AJA at [105] below.
On the same day, and after that email had been received, the appellant attended a meeting she had arranged with Mr Cummins, a local solicitor, for the purpose of discussing amendments to the deceased's will. That meeting was also attended by John Olsen. The appellant did not tell those present about the revised will prepared by Ms Summerville, which she had received only hours earlier, or the fact that on the previous day she had received a cash gift from the deceased of $2.2 million. According to Mr Cummins' notes, the deceased was "at home unwell".
There was a further meeting at Hidden Lake on 31 October at which Mr Cummins, the appellant, the deceased and John Olsen were present. Again there was discussion as to the deceased's assets and her testamentary intention to give the appellant "everything my mother left me". In that context there was a somewhat confusing reference to John Olsen inheriting "the cash" that the deceased received from her mother. At no stage, during this meeting or separately, did the appellant tell Mr Cummins or John Olsen about the $2.2 million gift.

Disposition of grounds 1, 2 and 3

Essentially, the primary judge found that the appellant was intensely involved in her mother's affairs, and showed a degree of obsession with receiving what she thought she was entitled to receive; that by 10 October she was aware of the term deposit, and initiated the amendment of her mother's will to include it; and that she "initiated or contrived" the decision to make her a gift of the term deposit on the following day. The contemporaneous documents, oral evidence and probabilities justify the primary judge's findings in the general terms in which they are made. It follows that the appellant's submission that the deceased initiated the gift of $2.2 million on 10 October 2016 must be rejected.
The most significant general finding is that the appellant became aware of the term deposit before 10 October 2016 (Judgment [358]). There are four bases for this conclusion, which in any event appears to follow from the primary judge's other findings. First, given the appellant's extensive involvement in her mother's affairs, the natural inference is that she came across a Renewal Notice for that deposit in the form of that set out by Emmett AJA at [95], advising the deceased that the deposit was due to mature on 6 October 2016, that it could be withdrawn without notice between 6 and 12 October 2016, and that withdrawal after that period would require 31 days' notice. In effect the deposit could not be withdrawn again until 6 November 2016.
Secondly, the appellant had, as she conceded, assisted her mother with rescinding the Pinaroo contract. The refunded deposit was placed in the A Casa Botanica cheque account, of which the appellant had already become a joint signatory. The Pinaroo deposit money was transferred into the A Casa Botanica term deposit account at the Bowral branch of the Commonwealth Bank on 6 October 2016, on the same day that the appellant accompanied the deceased to see her Bowral-based oncologist, Dr Della-Fiorentina. The appellant denied having any recollection of accompanying her mother to the Commonwealth Bank to transfer the deposit, but conceded it was "possible" she had done so. Again, given the appellant's degree of involvement with the deceased's affairs, in the circumstances it is likely that she accompanied her mother to the bank to transfer the deposit money. And even if she merely waited passively while her mother completed the transaction, it is implausible that she would not have become aware of the existence of the term deposit account and the balance of the monies in that account. It is also implausible that the appellant was not aware by this time that the monies in the account could be withdrawn between 6 and 12 October.
Thirdly, there is the matter of the transfer of $30,000 from the term deposit account to the appellant's ANZ account. The specific transfer had to have been instigated by the appellant, because the deceased would not otherwise have known of the credit card debt linked to the account (Judgment [365]). Emmett AJA concludes that the documentary evidence supports a finding that the transaction was entered into on 6 October 2016, consistent with the recording of "Value Date: 06/10/2016" on the list of transactions for the account and with the "Report Date" in another internal bank document given as 6 October. The contrary evidence, based on the fact the Deposit Withdrawal Request dated 11 October was for the full sum of $2,203,328 and features a handwritten recording of the $30,000 transfer, and that the transfer of the $30,000 is given a "Date" of 11 October on the list of transactions, is comparatively equivocal.
While it is much more likely that the transfer of the $30,000 occurred on 6 October, at the same time as the transfer of the $172,000 Pinaroo deposit, it is not necessary to rely on that finding in view of the two matters addressed above. But there would be no unfairness to the appellant in doing so; the matter was squarely put to her in cross examination. Finally, there is the question (referred to at [25] above) as to how the deceased became aware in the absence of being told by the appellant that the term deposit was "worth $2.2 million". Again, it is implausible that the appellant did not acquire that knowledge in the course of dealing with the Pinaroo deposit.
The appellant submits that neither the deceased's initial decision to make the bequest nor her further decision to make the gift instead of the bequest was behaviour which was erratic or unexplained. In our view the first of those decisions remained unexplained other than as the product of confusion or misunderstanding. The making of such a bequest was inconsistent with the deceased's general testamentary intention, to which the appellant was privy. That intention was expressed both before and after the making of the gift. From the deceased's perspective, the evidence established that she could not have believed, other than on a mistaken basis, that the $2.2 million was made up wholly or mainly of moneys derived from her mother's estate. Her decision to make a bequest of the term deposit was not in accord with her expressed "overriding general intention" (see [19] above), and otherwise unexplained.
The appellant also submits that the deceased's decision to make the inter vivos gift rather than the bequest was explicable, and not likely to be the product of her mother's illness and associated indecisiveness and impulsivity. As explaining the significant change of mind of the deceased from 10 to 11 October, the appellant submits: ... the deceased had an overriding intention to give, in the general sense, the $2.2 million to Karen. She had put the solicitor on notice that it was presently being cashed in to give to Karen, but because it hadn't occurred she was also happy to put it in her will because she didn't know how long she was going to live. I say it was all part of an overriding testamentary disposition of $2.2 million in favour of Karen and that she was seeking to cover both bases.
This submission is made relying on an interpretation of the reference in Ms Summerville's note of 10 October 2016 to the $2.2 million as "currently being cashed in now so happy to put amount in will"; the suggestion being that she would include the amount as a bequest, and that if she lived for a sufficiently long time to perfect the gift, she would do so. The much more likely interpretation of this note is that the proposed bequest could be described in the will as an amount of money because the particular but unidentified "investment" was being "cashed in". Thus the description of the investment says nothing about any intention at the same time to make an inter vivos gift. It follows that the appellant's submission as to this change of mind being wholly consistent with an earlier and overriding intention should be rejected.
It follows from these conclusions that the submission that the gift was not "improvident" must also be rejected. The deceased is not shown to have freely formed a view that the $2.2 million directly or indirectly represented the proceeds of assets received from her mother's estate, or an intention otherwise to make a bequest of it.
On the version of events most favourable to the appellant, the deceased was confused and unsure as to what to do with the term deposit, and whether and to what extent it was composed of funds inherited from her own mother. On learning of the term deposit, the appellant took advantage of the deceased's confusion by persuading her to make a gift of it. The deceased was the party in need of advice and assistance, but the appellant's concern was to ensure that no legal or tax problems stood in the way of her receipt of a gift of $2.2 million. Although her evidence was that she asked about tax implications for both herself and the deceased, it is to be remembered that the appellant visited her own accountant while the deceased waited in the car.
The making of the gift was inconsistent with the deceased's testamentary intentions, to which the appellant was privy. Although the appellant did not know that the term deposit was wholly or partly a partnership asset - she may even have thought the $2.2 million largely represented the proceeds of her grandmother's estate - her subsequent behaviour demonstrates that she was aware the gift was suspect and potentially subject to challenge. And she encouraged the deceased to make a gift of the term deposit, with the result that it could not be as readily discovered or challenged by John Olsen as a bequest might have been.
The primary judge did not err in finding that the procuring of the gift by the appellant was unconscionable. Grounds 1, 2 and 3 should be dismissed.

Disposition of grounds 4 and 5

In these circumstances, the primary judge also did not err in concluding at Judgment [374] that the transaction by way of gift was not fair, just and reasonable. The deceased did not receive any legal or accounting advice as to whether the money was hers to give, or as to whether any part of the money came from the proceeds of her mother's estate. The appellant's remaining argument was that the deceased intended to make a bequest in the amount of the gift, and would have done so if the inter vivos gift had not been made. Thus, it was said, it was fair, just and reasonable that the appellant retain the gift. This argument does not take account of the primary judge's finding that the unconscionable conduct extended to the deceased's initial decision to make the gift by way of a bequest, nor of the possibility of John Olsen bringing a claim against the estate.
Grounds 4 and 5 should be dismissed. As to the former, as Emmett AJA says, the primary judge's reasons for concluding that the appellant did not discharge this onus are clearly explained.

Conclusion

For these reasons, and for those given by Emmett AJA, the appeal should be dismissed with costs.
EMMETT AJA: This appeal is concerned with a gift in the sum of $2,203,328.67 (the Gift Amount) made on 11 October 2016 by the late Mrs Katharine Howard-Olsen to the appellant, Ms Karen Mentink (the Gift). Karen was Katharine's daughter. Katharine died on 23 December 2016. At the time of her death, she was married to the respondent, Mr John Olsen. It is convenient to refer to Mrs Howard-Olsen, Ms Mentink and Mr Olsen by their respective first names without intending any disrespect.
By her will made on 15 October 2016 (the Will), Katharine appointed John as sole executor of her estate. However, by codicil made on 2 November 2016 (the Codicil), Katharine appointed John and Karen as joint executors. On 22 May 2017, probate of the Will and the Codicil was granted to John and Karen.
On 16 April 2019, John commenced proceedings in the Equity Division (the Equity Proceedings) against Karen in which he claimed judgment against Karen in the Gift Amount. John alleged, relevantly, that Karen obtained the benefit of the Gift by reason of undue influence or unconscionability and was therefore liable to repay the Gift Amount to Katharine's estate. There were other issues in the Equity Proceedings but is not necessary to address those issues since they were not raised in the appeal.
On 25 October 2019, for reasons published on 27 September 2019, a judge of the Equity Division (the primary judge) directed the entry of judgment for John, in his capacity as executor of the estate of Katharine, against Karen in the Gift Amount. The primary judge also ordered Karen to pay interest to Katharine's estate in the sum of $369,089.37. In addition, his Honour ordered Karen to pay John's costs of the proceedings on the ordinary basis until 22 July 2019 and on the indemnity basis from 23 July 2019. Finally, his Honour ordered that the judgment sum and the interest be paid to Katharine's estate no later than 25 January 2020. By notice of appeal filed on 23 January 2020, Karen appeals from the orders made by the primary judge.
In the Equity proceedings, John sued in two capacities. The claims made in the Equity Proceedings that are relevant to the appeal were brought by John on behalf of Katharine's estate. In addition to the claims made in respect of the Gift, John also made claims in relation to a partnership between Katharine and John known as Chapel House Farm (the Partnership). The claims against Karen in relation to the Partnership failed and they are not raised in the appeal.
It is not clear whether the Equity Proceedings were brought in accordance with the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). Under UCPR r 7.11, in proceedings relating to an estate, all executors of the will of the deceased must be parties unless one or more of them represents the others. Under UCPR r 7.6, in relation to proceedings concerning the administration of a deceased person's estate where a person or class of persons is or may be interested in or affected by the proceedings, the Court may appoint one or more of those persons to represent any one or more of them. There are qualifications on the power of the Court to appoint a person or persons under that rule. UCPR r 7.11(3) provides that, in proceedings commenced by executors, any executor who does not consent to being joined as a plaintiff must be made a defendant.
Karen was not a plaintiff in the Equity Proceedings. Whilst she was the defendant, she was not joined as a defendant in her capacity as an executor of Katharine's estate. Rather, she was sued in her personal capacity. As I have said, the primary judge made an order that judgment be entered in favour of John in his capacity as executor of Katharine's estate and that Karen pay interest to Katharine's estate. Karen continues to be a joint executor of Katharine's estate and has joint responsibility with John for the administration of Katharine's estate, including the judgment debt and interest when paid in accordance with the orders made by his Honour. It may be that orders will be appropriate to formalise the capacity in which Karen was joined as a defendant and the capacity in which John obtained the benefit of the relevant orders. Similar procedural directions will be necessary in relation to the appeal if the parties so require.
For the reasons that follow, the appeal should be dismissed with costs. However, before dealing with the grounds of appeal and the reasons for dismissing the appeal, it is necessary to say something about the principal parties, the circumstances of the Gift and the reasons of the primary judge.

The Parties

John was born in 1928 and Katharine was born in 1941. John and Katharine were married in 1989. During their 27 years of marriage they had a close and loving relationship. John had three children from previous relationships, Jane Olsen, Tim Olsen and Louise Olsen. Karen was Katharine's child from a previous marriage. She was born in 1961 and her parents separated four years after her birth. She was in her late twenties when John and Katharine were married.
John is a renowned artist. The vehicle employed by John and Katharine to facilitate the sale of John's artwork was John Olsen Pty Ltd (JOPL). In addition, John and Katharine formed the Partnership, which was a vehicle used primarily to finance Katharine's equestrian interests as well as various property investments in which John and Katharine were interested. Katharine saw property investment as a way to secure future income for her and John. Through the Partnership, Katharine and John purchased many properties including a house in Hurlingham Avenue, Burradoo (the Hurlingham Avenue Property) and a property known as "Owlswood", to which I shall refer shortly.
At the commencement of their relationship, John moved into a property in Wentworth Falls owned by Katharine, which was sold in 1989 to finance the purchase of a new residence at Rydal known as "Chapel House Farm". In 1998, they moved to Owlswood, the purchase of which was funded from the proceeds of the sale of Chapel House Farm.
In 2007, Katharine opened an account with Commonwealth Bank of Australia (the Bank), of which Katharine was the sole proprietor (the A Casa Botanica Account). However, the A Casa Botanica Account was an asset of the Partnership.
In 2010, John and Katharine purchased a property at Glenquarry in the Southern Highlands known as "Hidden Lake". They moved into Hidden Lake in 2011 or 2012 and lived together there until Katharine's death in 2016. John continues to live in Hidden Lake.
In 2015, John and Katharine sold Owlswood for $2,900,000. In January 2015, the proceeds of the sale ($2,609,877.22) were deposited into a bank account of JOPL (the JOPL Account). In early February 2015, $1 million of the proceeds were transferred from the JOPL Account into a new term deposit (the JOPL Term Deposit).
Also in 2015, Katharine paid a deposit of $87,500 towards the purchase in her sole name of a property in Alfreda Street, Bowral (the Alfreda Street Property). The $87,500 deposit under the contract for the purchase of the Alfreda Street Property and stamp duty on the contract of $81,760 were each paid from the JOPL Account. In early May 2015, the JOPL Term Deposit matured and the sum of $1,007,924.66 was deposited into the JOPL Account. A few days later, Katharine withdrew the sum of $1,660,448.76 from the JOPL Account to complete the purchase of the Alfreda Street Property.
While the Alfreda Street Property was purchased in the sole name of Katharine, the financial statements of the Partnership for the year ended 30 June 2015 show the Alfreda Street Property as an asset of the Partnership. However, Katharine's individual tax return in 2016 noted that the Alfreda Street Property was purchased in her own name. There was no satisfactory explanation for that discrepancy.
In June 2015, Katharine's mother died and in October 2015, Katharine received a significant sum of money from her mother's estate. The sum of $1,624,024.55 was initially deposited in a superannuation fund of Katharine's and John's (the K Olsen Super Fund). The K Olsen Super Fund was not an asset of the Partnership. A further sum of $129,010.95 from Katharine's mother's estate was later deposited into the K Olsen Super Fund. From early November 2016 until December 2016, Katharine received further cash distributions totalling $783,111 from her mother's estate. All of those funds were deposited into the A Casa Botanica Account. Katharine also received from her mother's estate shares valued in excess of $900,000. At the time of Katharine's death, those shares were still registered in Katharine's name.
In December 2015, the Alfreda Street Property was sold. Proceeds of the sale of $1,679,850.74 were deposited into the A Casa Botanica Account. The deposit from the sale of the Alfreda Street Property, in the sum of $156,390, was paid into the Viridian Account.
In the meantime, in November 2015, Katharine paid a deposit of $202,500 for the purchase of a property in Werrington Street, Burradoo (the Werrington Street Property). The deposit was paid from a line of credit with the Bank that was an asset of the Partnership (the Viridian Account). Stamp duty of $96,885 on the contract for the purchase of the Werrington Street Property was paid from the A Casa Botanica Account. The purchase of the Werrington Street Property was completed in December 2015, when the sum of $75,000 from the proceeds of the sale of the Alfreda Street Property was applied towards the purchase price. The balance of the purchase for the Werrington Street Property of $1,750,000 was withdrawn from the K Olsen Super Fund.
The Werrington Street Property was bought in Katharine's name alone. Katharine's individual tax return for 2016 stated that the Werrington Street Property was purchased and owned by Katharine. No mention was made of it in the 2016 tax return for the Partnership.
In January 2016, Katharine opened a term deposit at the Bowral Branch of the Bank (the A Casa Botanica Term Deposit). The sum of $2 million was transferred from the A Casa Botanica Account to the A Casa Botanica Term Deposit.
In March 2016, Katharine entered into a contract to purchase a property in Sullivan Road, Burradoo (the Pinaroo Property) and paid a deposit of $172,000 from the A Casa Botanica Account. The Pinaroo Property was to be purchased in Katharine's name only. However, in September 2016, Katharine exercised her right of rescission under the contract for purchase. The refunded deposit of $172,000 was paid into to the A Casa Botanica Account on 12 September 2016 and on 6 October 2016 that sum was transferred into the A Casa Botanica Term Deposit.
Over the years, John and Katharine provided financial support to Karen, in particular when she and her husband separated in 2004. As well as lending money to Karen, John and Katharine assisted her with her children's school fees and allowed her to stay rent free for a period of time in the Hurlingham Avenue Property, which they owned as joint tenants. Karen relocated her family to the Hurlingham Avenue Property in 2002. On 1 July 2015, John and Katharine severed the joint tenancy becoming registered as tenants in common in equal shares. In October 2016, John and Katharine transferred the Hurlingham Avenue Property to Karen for a consideration equal to its market value. However, they immediately forgave Karen the amount of the consideration.
Katharine was from time to time annoyed with having to provide for Karen. For example, in November 2015, Katharine wrote in her diary that Karen had complained that Katharine would not be buying her an apartment in the Eastern Suburbs. Katharine recorded in the diary entry that Karen refused to realise that John was ageing and that there may come a time when he would not be able to work, would be incapacitated and would need help.

Katharine's Illness

In 2012, Katharine was treated for serious melanomas. In June 2016 she was admitted to Bowral Hospital and was transferred to Liverpool Hospital. On 15 June 2016, the date of her discharge from Liverpool Hospital, she came under the care of Dr Donnellan, a neurosurgeon. On 29 June 2016, Dr Donnellan recorded that five days prior to their appointment on 15 June 2016, Katharine had presented at Bowral Hospital with confusion and a high temperature and that a CT scan revealed further cerebral lesions. Dr Donnellan noted that, since taking a particular drug, Katharine's confusion had resolved. However, on 4 July 2016, Dr Pelly, a general practitioner treating Katharine, recorded that at a surgery consultation Katharine still seemed confused and was very anxious.
On 6 July 2016, Prof Georgina Long, a Sydney based medical oncologist, recorded that she had had an extensive discussion with Katharine and her family and explained that she had stage IV melanoma, which is a terminal condition. Prof Long expressed concern regarding the size of the brain lesions and advised Katharine to see a neurosurgeon for possible resection. Katharine was also advised not to drive.
In June 2016, Karen moved to Hidden Lake to assist with Katharine's care and management of the household. On 21 July 2016, Karen was added as a signatory to the A Casa Botanica Account. Karen said that that was because Katharine had trouble signing cheques. From that time, Karen became active in managing of the household at Hidden Lake. She said, however, that she did everything at the direction of Katharine.
In July 2016, Karen and John signed a letter to Prof Teo and Prof Long requesting that Prof Teo lead the neurosurgery team for Katharine. The letter said that Katharine's family wished to emphasise that it was imperative that they be included in all decision-making regarding Katharine's treatment options. They requested that the specialists involved nominate the specialist who was to be the contact doctor, willing to communicate clearly and to explain treatment options and implications. The letter said that the family had agreed that Karen would be the point of contact and her email and mobile numbers were provided.
The letter then said that Katharine's behaviour and personality had become erratic in recent weeks and that that could be distressing for family members because "a usually charming and vibrant woman" had become "confused and demanding". The letter said that misunderstandings and miscommunications had led to distress for Katharine and her close family. The letter said that the goal was to provide excellent support for Katharine while managing the stress levels that were manifesting, particularly for John, Karen's "elderly stepfather".
On 12 July 2016, Prof Teo wrote to Dr Donnellan, saying that he had informed Katharine of the risk of surgery and potential complications, which included, but were not confined to, paralysis, thalamic syndrome and death. On 13 July 2016, Katharine was admitted to Prince of Wales Hospital and on that day underwent brain surgery performed by Dr Teo.
On 20 July 2016, Katharine was admitted to Southern Highlands Private Hospital in Bowral to recover from her surgery. On 28 July 2016, Dr Papadatos, a radiation oncologist, wrote to Dr Pelly saying that there had been a discussion in the presence of Karen concerning the implications of Katharine's disease and the role of postoperative radiation treatment to her brain. Dr Papadatos said that he had told Katharine and Karen that, despite recent surgery, there was a high likelihood of residual intracranial disease that may declare itself within the next few months. The letter explained the role of radiation therapy, which was unlikely to translate to any benefit in overall survival. The letter explained the toxicity of treatment as including lethargy, alopecia and the medium to longer term cognitive impairment. The letter said that, given Katharine's present suboptimal performance status, any benefit would be marginal at best. The letter said that both Katharine and Karen were not keen on radiotherapy and had declined to pursue that any further. They were concentrating in optimising home services to facilitate discharge from hospital.
A significant volume of notes by nurses and medical practitioners from Katharine's time at Southern Highlands Private Hospital revealed that, from July 2016 into August 2016, Katharine was frequently anxious, unsteady on her feet, eager to move but extremely fatigued. Other notes recorded that Katharine was unable to reach her face with her hand and experienced facial weakness down her left side. A note of 22 July 2016 recorded that Katharine was alert and compliant and orientated to person, time and place but that she stated she would just like to die. On 25 July 2016, Katharine was reported as alert and orientated but then confused, distressed and moody as well as being resistant or aggressive to staff. A note on 27 July 2016 recorded that Katharine was heard calling out and crying and that Karen was attempting to settle her unsuccessfully. The note recorded that Katharine began hitting herself in the right side of the head repeatedly with her right hand. The note subsequently recorded that Katharine had settled after Karen had left.
Karen was present almost constantly during Katharine's time in Southern Highlands Private Hospital and was actively involved in Katharine's treatment and care. A note of 25 July 2016 recorded discussing Katharine's concerns concerning changes in personality that followed a seizure prior to surgery. A note of 28 July 2016 recorded Karen's presence at the hospital after hours requesting to see Katharine, that Karen was advised that Katharine was asleep, that Karen continued into Katharine's room and that Karen then came to the nurses' station to ask which tablets Katharine was taking.
In August 2016, discussions began about Katharine's return to Hidden Lake. Hospital notes at that time recorded that Karen reiterated that Katharine needed to be safe to go home and expressed concern about how Katharine would manage at night. The hospital notes throughout August recorded that at times Katharine was alert and progressing but quickly fatigued, remained unsteady and lacked insight into her condition. They recorded that Katharine at times was distressed, agitated and rude to staff.
Notes of 3 August 2016 recorded that Katharine was alert and orientated and that the family had been informed and John was contacted as the person to notify. The notes recorded that Karen rang and was upset that John was called and asked that she be the person to be notified. She was advised to speak with staff when she came to the hospital that day. Karen co-ordinated medical staff to organise home visits and care at Hidden Lake. On 3 August 2016, A/Prof Della-Fiorentina, Katharine's Bowral based oncologist, discussed with Karen that the aim of treatment of Katharine was "quality of life".
Hospital notes of 4 August 2016 recorded that Katharine was alert and orientated and was very anxious and agitated. The notes said that Katharine was upset that she had to wait in her chair for 10 minutes for physio, stating it was "exhausting". The notes recorded that the x-ray department rang to say that Katharine was confused and disorientated and that Katharine was agitated when picked up and fixated on a home visit appointment at 2 pm. Katharine was informed that the home visit was cancelled and she became very upset, stating that she wanted to go home the following day and that everyone was lying to her. The notes recorded that Katharine was irrational and unsteady at times and remained verbally combative and resistant to nursing care. A note of 6 August 2016 recorded a long discussion with Karen concerning cognitive state issues, saying that there was little improvement.
On 10 August 2016, Katharine participated in a meeting of JOPL by telephone. The minutes of the meeting recorded that she was seriously ill and unlikely to return to work. The minutes noted further that the name of JOPL was to be changed in the event of Katharine's death and that she had instructed that she did not want her estate to be complicated by having to deal with the company.
On 15 August 2016, Katharine was discharged from Southern Highlands Private Hospital and returned to Hidden Lake. Katharine continued to be treated by multiple practitioners and underwent chemotherapy and later radiotherapy. Karen stayed at Hidden Lake to act as her primary carer.
On 22 August 2016, Dr Tognela, an oncologist, wrote to Prof Long saying that Katharine continued to have some "emotional liability" and some mild fatigue but that that had been improving since her discharge. Dr Tognela said that it was planned to continue Katharine's treatment every three weeks and that she would be reviewed again in the clinic after her next cycle of treatment. On 29 August 2016, Dr Pelly recorded that Katharine was mobilising well and going well at home.
On 17 September 2016, Katharine and Karen travelled to Sydney to visit Sydney Opera House. While at the Opera House, Katharine had a panic attack and she and Karen had to leave the theatre. On 19 September 2016, Dr Pelly recorded that Katharine had "huge anxiety" over getting up the steps at the Opera House and had been fragile since. Karen told Dr Pelly that the medication that Katharine was taking was causing anxiety.
On 21 September 2016, A/Prof Della-Fiorentina wrote to Prof Long saying that Katharine and Karen had been seen and that Katherine had been home for the past five weeks. The letter said that Katharine's main troubles had been with fatigue, lack of energy and sleeplessness. On 30 September 2016, Dr Richardson, a general practitioner treating Katharine, noted that Katharine had developed a lump. On 5 October 2016, Dr Richardson noted that Katharine was again "really unwell", presenting as extremely anxious and exhausted.
It appears that on either 6 or 7 October 2016, Katharine was informed that her condition was terminal. On 6 October 2016, Katharine had a CT scan of her brain. Dr Grattan-Smith noted that Katharine was again unwell and there were new lesions on the brain "most likely reflecting further metastases". On 7 October 2016, A/Prof Della-Fiorentina wrote to Prof Long recording that Katharine had been seen that day, with John and Karen. The letter said that Katharine was struggling with fatigue and had had a fall at home, which she said was a trip. The letter recorded there was no syncope before or after and no symptoms of arrhythmia and no head trauma with the falls. A/Prof Della-Fiorentina discussed the possibility of no further intervention because of Katharine's poor fitness and her wishes not to undergo additional treatment if there was no clear benefit. The letter said that A/Prof Della-Fiorentina would see how Katharine went with steroids and a CT scan and would keep Prof Long informed of her decision. A further CT scan on 10 October 2016 revealed that there had been rapid progression in metastatic lung disease.

The Making of the Gift and the October Will and the Codicil

The making of the Gift must be considered in the light of Katharine's medical condition as outlined above. It is necessary to do so in the context of the events that led to Katharine's making of the Will and the Codicil. The relevant events began with Katharine giving instructions for the Will in September 2016.
On 9 September 2016, Karen wrote a letter to Ms Michelle Summerville, a solicitor at Colin Biggers & Paisley, enclosing a letter from Katharine dated 8 September 2009. Katharine's letter was addressed to Ms Summerville and was in the following terms: "A very serious addition to my Will - Immediately please! I want everything that my mother left me to go to my daughter - Karen Howard Mentink when I die - She can then make distributions to her children. Also the two three paintings Bathurst Butter by John Olsen and the large bush landscape by Ray Crooke - And the Michael Taylor seascape exhibited Canberra 2016. [signed K Howard Olsen] Inclusions from my mother include indoor and outdoor furniture, shares considerable money in houses (in my name only) and other financial dealings in my name." [signed K Howard Olsen]
On 6 October 2016, the $172,000 deposit refunded from the contract for the purchase of the Pinaroo Property was transferred from the A Casa Botanica Account into the A Casa Botanica Term Deposit. On the same day, the sum of $30,000 was transferred out of the A Casa Botanica Term Deposit. That sum was paid to Karen and was applied in reduction of her credit card debt.
On 10 October 2016, Karen telephoned Ms Summerville while driving her car, with Katharine as a passenger in the car with her. Ms Summerville made a file note of the telephone conversation. She had no independent recollection of what was said beyond what is contained in her file note. The note was in the following terms: "Katharine Olsen 11.10am 10/10 Karen called while in the car with Katherine and put Katherine on the phone to talk to me about the changes Katherine wants to make to her Will. Katherine told me she wants to give Karen 1. 43 Werrington St Burradoo 2. All of her shares - over 200 companies 3. An investment worth $2.2 m - currently being cashed in now so happy to put amount in will I will make these changes to Will together with the changes I have already made - Bathurst Butter already dealt with - Ray Crooke - Michael Taylor - Indoor and outdoor furniture given to Katherine from her mum."
Items numbered 1 and 2 are consistent with the handwritten letter of 8 September 2016, in expressing the desire that everything that Katharine inherited from her mother was to go to Karen. Thus, the Werrington Street Property was purchased with the proceeds of the distribution from Katharine's mother's estate and the shares were inherited from Katharine's mother's estate. The references to the three paintings is also consistent with the letter of 8 September 2016.
The acutely curious and critical difference between the letter of 8 September 2016 and the telephone conversation is the reference in the latter to "an investment worth $2.2 million". That is clearly a reference to the balance standing to the credit of the A Casa Botanica Term Deposit. That fund was not derived from Katharine's mother's estate, except to a very minor extent. However, it appears that Karen believed that it was derived from her grandmother's estate.
The reference in Ms Summerville's file note to the investment of $2.2 million "currently being cashed in now so happy to put amount in will" is quite obscure. The first obscurity is what the reference to the investment "being cashed in" signified. The terms of the deposit are not entirely clear. A Renewal Notice for the deposit dated 24 February 2026 stated as follows: Your Term Deposit is due to mature on 6 February 2016 and will be automatically renewed for the same term of 1 month if you do not contact us. … When you renew your current Term Deposit or open a new one, please be aware that any requests for withdrawal in advance of maturity will require that you give us 31 days' notice by visiting any branch or contacting your Relationship Manager. … Grace period You have a 7 day grace period commencing 6 February 2016 and ending 12 February 2016 during which you may withdraw your Term Deposit funds or make changes to your Term Deposit without penalty. Requests for withdrawal after the grace period will be subject to 31 days' notice and may incur a fee and Interest penalty
The effect appears to be the term deposit was renewed on the sixth of each month unless prior notice was given to the Bank. Thus, it had been renewed on 6 October 2016 and would fall due for repayment unless renewed on 6 November 2016. The reference to the deposit "being cashed in" suggests that notice of withdrawal had been given.
The second obscurity is the use of the word "so" to introduce "happy to put amount in will", which suggests some causal connection between the investment being "cashed in" and Katharine's preparedness "to put amount in will". That is to say, it suggests that she was happy to put that amount in her will because it was currently "being cashed in".
It is highly significant that Ms Summerville's file note recorded Katharine as saying that she wanted to give "the investment" to Karen. That is a highly significant departure from the wishes expressed in the handwritten letter of 8 September 2016, since Katharine was well aware that the A Casa Botanica Term Deposit was not, except that very minor extent, derived from her mother's estate. To that extent, the instruction that that amount was to be given to Karen was a very significant development.
On 10 October 2016, following her telephone conversation with Katharine, Ms Summerville prepared a draft will. Clause 3 of the draft was, relevantly, in the following terms: "3. I make the following gifts and bequests free of all duties payable upon or by reason of my death: (a) to my daughter Karen Howard Mentink the following: (i) large oil painting "Bathurst Butter"…; (ii) large bush landscape by Ray Crooke; (iii) large Michael Taylor seascape exhibited Canberra 2016; (iv) indoor and outdoor furniture which belonged to my mother; (v) $2,200,000; (vi) all of my shares; (vii) [the Werrington Street property]; (viii) all of my jewellery; … (ix) the ballooned backed chairs with tapestry seats which belonged to my grandmother …; …" Various other bequests to Karen were set out in (x) to (xvi). Bequests to other people were included after the alphabetical list that dealt with Karen. The draft will contained some handwritten amendments (not reflected in above extract) and was apparently approved by Mr Simon Fraser, a partner of Colin Biggers & Paisley on 10 October 2016.
On 10 October 2016, Ms Summerville wrote to Katharine enclosing a revised will for her signature saying that the changes to the will included paragraphs 3(a)(i) to 3(a)(vii). Ms Summerville said in the letter that the remaining provisions of the will were identical to the will signed by Katharine on 6 December 2012. Ms Summerville's letter then set out instructions for signing the will.
The critical events for the purposes of this appeal occurred on 11 October 2016. On that day, Katharine and Karen travelled by car to the Bowral branch of the Bank. On that day, Karen opened a term deposit account with the Bank, Katharine withdrew the sum of $2,173,326.67 from the A Casa Botanica Term Deposit and Karen deposited the sum of $2,173,326.67 into that new term deposit account. That process involved Katharine filling out a withdrawal slip in the amount of $2,203,328.67. The figure of $2,173,326.67 reflects the remaining funds in the account as the sum of $30,000.00, [1] which formed part of the Gift Amount and had been transferred out of the account on 6 October 2015.
In an affidavit made on 10 July 2019, Karen said that, on 11 October 2016, Katharine asked her to drive her to the Bowral branch of the Bank. Karen said that, after she did so and parked in front of the branch of the Bank, she and her mother walked into the branch. When inside, Katharine took a bank statement out of her handbag and said: "I want to transfer this to you." Karen looked at the statement. She described it as a statement from the Bank for a term deposit in Katharine's name. Karen said that she said to her mother: "Mum, I don't know that you can do that. I think I'd better see my accountant to see if there are any tax implications for you or for me". Karen said that she then walked her mother back to the car and then walked to the office of her accountant, a short distance away.
Karen said that she met with her accountant and explained the situation to her. The accountant asked her if the money was her mother's and Karen said that she believed it was. The accountant said that, in that case, Katharine was free to transfer the funds as she wished. The accountant was not called to give evidence. Karen said that she then returned to her mother in the car and said to her: "The accountant says if it's your money it's OK to transfer the funds." Karen and Katharine then went back into the branch of the Bank, where they were seated at a desk and Katharine was served by a bank officer. Karen said that her mother handed the bank statement to the bank officer and said: "I want to withdraw this amount and give it to my daughter." Karen then said that the bank officer completed a withdrawal form, which was handed to Katharine, who signed it.
On 12 October 2016, Katharine telephoned Ms Summerville, who prepared a file note of the telephone conversation. The file note recorded that Katharine wanted to transfer the Hurlingham Street Property to Karen and that Ms Summerville advised that "they" would need a valuation and that she would prepare a transfer. The file note recorded that stamp duty on $1 million was about $40,000. The file note also recorded the following: "The investment worth $2.2 [sic] has already been given to Karen. I will remove that from the Will and send by email."
At 12.34 pm on 12 October 2016, Ms Summerville sent an email to Karen attaching a copy of the letter of 10 October 2016 and a revised form of will for signature by Katharine. The letter said: "As instructed, in the attached Will I have removed the gift to you of $2,200,000." The form of will that was attached to the email was in the same terms as the earlier draft, except that the reference to "$2,200,000" (previously item (v) of the earlier draft) was removed and item (v) now referred to "all shares held in my sole name" instead of "all of my shares". [2]
On 12 October 2016, John and Karen attended a meeting with Mr David Cummins of Wilkinson Throsby and Edwards, solicitors in Bowral. They discussed Katharine's will and general estate planning. Karen had arranged the meeting with Mr Cummins after he had been recommended to her by an associate. Katharine did not attend the meeting because she was unwell and Mr Cummins suggested a home visit.
Mr Cummins made a file note of the meeting in which he recorded that John and Katharine wanted to transfer the Hurlingham Avenue Property to Karen by way of a gift. Mr Cummins also recorded that Katharine owned the Werrington Street Property in her own name. He also made a note that he would prepare a Will for Katharine including that the provision for Karen would include the three paintings described above, Katharine's inheritance from her mother and the Werrington Street Property. It is significant that no mention was made of the transfer of funds made the previous day by Katharine to Karen from the A Casa Botanica Term Deposit.
On 15 October 2016, Katharine's executed the Will in the form that had been sent to Karen on 12 October 2016. The Will was witnessed by Ms Leanne Jones and Ms Sally Rankin. The Will named John as the only executor.
On 17 October 2016, Ms Summerville sent an email addressed to Katharine and Karen referring to her conversation with Katharine on 12 October 2016 and noting Katharine's instructions to transfer the Hurlingham Avenue Property to Karen. The email attached a form of transfer to be signed by John and Katharine, as transferor, and Karen, as transferee, with instructions for execution. The email said that the consideration had been left blank to be completed once a valuation had been obtained. The email explained the steps that would be necessary to effect registration of the transfer.
Also on 17 October 2016, Mr Cummins attended on Katharine at Hidden Lake. John and Karen were also present. Mr Cummins' file note of the attendance recorded that the Will had been made on 15 October 2016 and that the original had been given to him for safe keeping. The file note recorded that a copy was to be given to Karen. The file note also recorded that Katharine had confirmed that the Will, of 15 October 2016, reflected her current testamentary intentions and that no changes were required. Finally, the file note referred to the transfer of the Hurlingham Avenue Property from Katharine and John to Karen, noting that a valuation was to be obtained that day.
On 17 October 2016, Mr Cummins sent a tax invoice addressed to Katharine recording legal work and advice "in respect of your estate planning". The invoice noted that the legal work included an initial meeting with John and Karen to review Katharine's current estate structure and to discuss her assets and a further conference with Karen and John at Katharine's home to review the Will, which had been prepared by Colin Biggers & Paisley.
On 19 October 2016, the Hurlingham Avenue Property was transferred by John and Katharine to Karen. On 20 October 2016, the sum of $39,390 was withdrawn from the A Casa Botanica Account to pay stamp duty in respect of the transfer of the Hurlingham Avenue Property. Also on 19 October 2016, John and Katharine signed a letter addressed to Karen dealing with the Hurlingham Avenue Property. The letter said that they had that day signed documents prepared by Colin Biggers & Paisley to transfer the Hurlingham Avenue Property to Karen as a gift. The letter confirmed that, while the transfer specified that the consideration was $975,000, no part of that amount was payable by Karen and payment was forgiven by John and Katharine.
On 20 October 2016, Mr Cummins wrote to Katharine a letter that was delivered by hand to her. The letter was in the following terms: "On 12 October 2016, your husband John Olsen and your daughter Karen Mentink conferred with the writer in relation to your then current Will, providing him with an overview of your assets and your testamentary intentions. On 17 October, the writer conferred with you at your residence when you produced a Will which had been prepared by Colin Biggers & Paisley (your former solicitors) and signed by you on 15 October 2016. You told the writer that that Will was a correct reflection of your testamentary intentions at the time of its signature. We enclose a copy of the Will as requested. … At the meeting at your residence (also attended by John and Karen) you told the writer that you had given instructions to Colin Biggers & Paisley to prepare the documents necessary to transfer the joint ownership of you and John in the [Hurlingham Avenue Property] to your daughter Karen by way of gift, and that you were expecting those documents to be in your hands shortly. Karen advised that a valuation of the property was being made for stamp duty purposes, as the transfer will attract full stamp duty (based on its valuation). John concurred in the arrangement that the transfer be by way of gift. This morning, Karen attended our office with the documents that had been received from Colin Biggers & Paisley and the writer completed and had her swear the Purchaser Declaration in his presence. For convenience, Karen will provide us with a bank cheque for stamp duty and we will send all the documents back to Colin Biggers & Paisley so they can complete the transaction. …"
On 26 October 2016, Karen attended a meeting with Mr Cummins. Mr Cummins made a file note of the meeting in the following terms: "Re will of K H Olsen Wanted to confirm she is an executor with John No, only John then 2 substitute executors She thinks her mother wants her jointly with John Will, I will see KHO (alone) To take her instructions on this POA Confirmed John is sole attorney I will similarly see KHO on this if she wants to change."
The attendance is evidence of Karen's continuing desire to have significant involvement in her mother's affairs. Karen followed that matter up the following day, when she left a message for Mr Cummins making an appointment for him to go to see Katharine. Karen said that her mother wanted to make changes to her executor and attorney as she had discussed with Mr Cummins on the previous day. On 28 October 2016, Karen left a further message with Mr Cummins asking him to bring all the necessary documents to a proposed meeting on the following Monday.
On the afternoon of 28 October 2016, Katharine telephoned Mr Cummins. Mr Cummins made a file note recording that Katharine had said: "I'm not sure what I want to do". Mr Cummins recorded that he told Katharine he would call her on the following Monday at 9.30am to discuss with her and take her instructions.
On the following Monday, 31 October 2016, Mr Cummins visited Hidden Lake. He initially met with Katharine alone. He made a file note indicating that Katharine was in bed and recording the following: "Power of Attorney raised by her She now wants Karen + John as POA J + S [joint and several] (i.e. she said one may know (?) more about something than the other) & executors together if both can't, [then] WTE She does not know if she has an executor - 'It would be John but I want both John & Karen' Today, to C'town, 2 x week, for treatment: which should work Both John + Karen have her full support - they have been fantastic I'm v proud of them She approves of my sharing this with John + Karen."
Mr Cummins' file note then records that he conferred with John and Karen and explained "this" to them and that they "understood". The note then records that Katharine joined the meeting with John and Karen. The file note then says as follows: "Discussed correcting will to add reference to Katharine's intention to give Karen 'everything my mother left me'. Katharine concluded she was content that will as ("Moore Pottery" collection to Karen) signed by her on 15/10 (with addition of "Moore Pottery" collection to Karen) was true reflection of her wishes. I discussed what Katharine had inherited from her mother. It was largely SHARES & CASH The shares are sufficient in the 15/10 will already other personal items were already mentioned in 15/10 will as passing to Karen Katharine wants John to inherit the cash she got from her mother and Karen accepts this."
On the basis of those instructions, Mr Cummins drafted a codicil for Katharine appointing Karen and John as co-executors. He also prepared a power of attorney for both John and Karen to act on Katharine's behalf.
Later on 31 October 2016, Mr Cummins made a file note when he provided the draft documents to Katharine: "Mrs Katharine Olsen (in car in WTE driveway) She had just returned from radiotherapy at C'town and I inferred she was not up to reading docs there and then. Gave her them to take away. She (Karen) will return on 12:30 Wed 2/11."
On 2 November 2016, Katharine executed the Codicil while in her car in the driveway of Wilkinson Crosby & Edwards. Mr Cummins made a file note recording the following: "Mrs Katharine Olsen (in her car in WTE driveway) She had previously been given copies of Codicil POA Letter of advice Revoke POA Rule 12 To read She confirmed she had read and approved and understood docs She signed codicil in presence of [first witness name] and [second witness name] She signed other docs in my presence."
On 16 November 2016, Dr Kuwahata noted that issues with Karen's behaviour had continued to be the main problem and that she continued to be very unpleasant to family and visiting nursing staff. A facsimile communication from Dr Richardson to Dr Kenna on 18 November 2016 noted that Dr Richardson had just spoken to Karen who agreed that her mother needed a "full-time GP". In mid-November 2016, Karen and Katharine arranged for Dr Cooney to provide at home palliative care for Katharine. Dr Cooney's consultation record of 21 November 2016 noted that Katharine was irritable and verbally abusive at times. He noted that: "[Katharine] confused and stating that someone had put her in the position way down the bed sitting upright in bed" Dr Cooney's notes of 23 November 2016 recorded persisting agitation and aggression on the part of Katharine although there was improvement and Katharine was eating and drinking well. Katharine died on 23 December 2016.

The Pleadings

The allegations made by John in his statement of claim filed on 16 April 2019, as relevant to the appeal, may be restated as follows:

From at latest June 2016 until her death (the Relevant Period), Katharine suffered from cognitive impairment in that she had two cerebral lesions involving the right thalamus and left temporal lobe and suffered from confusion, paranoia, anxiety and aggressive behaviour towards family members and visiting medical professionals;
On 13 July 2016, Katharine underwent brain surgery for the removal of two metastases located in her brain;
Prior to 6 October 2016, a further cerebral lesion appeared in Katharine's right frontal lobe;
Katharine suffered from lack of insight into her illness and tiredness and fatigue;
Katharine was a vulnerable person during the Relevant Period;
Katharine was at a special disadvantage during the Relevant Period in that, she suffered from cognitive impairment, was unable to care for herself, was under palliative care from mid October 2016, was reliant on Karen for support and care together with her medical professionals and was reliant on Karen for medication;
Karen was aware of all of the matters set out above during the Relevant Period;
Karen was aware that the circumstances surrounding Katharine's illnesses were stressful upon John;
During the Relevant Period, John was unable properly to provide care and support to Katharine given her illness;
During the Relevant Period, Karen resided at Hidden Lake having taken up residence in a separate cottage on Hidden Lake which was John and Katharine's matrimonial property;
Karen became responsible for the administration of medication to Katharine during the Relevant Period;
Karen began to involve herself in Katharine's financial affairs;
There was a degree of inequality in the relationship between Karen and Katharine during the Relevant Period;
There was a degree of inequality in the relationship between John and Karen during the Relevant Period;
On 11 October 2016, Karen completed a withdrawal slip for the A Casa Botanica Term Deposit in the sum of $2,203,328.67;
On 11 October 2016, Katharine executed the withdrawal slip;
Karen then lodged the withdrawal slip with the Bank and the proceeds of it were placed in an account to the benefit of Karen;
Katharine received no benefit in undertaking the withdrawal; and
In the circumstances, Karen obtained the benefit of the said sum by reason of undue influence or unconscionability over Katharine and is liable to repay the funds. By the statement of claim, John sought judgment, relevantly, in the Gift Amount. He also sought interest on that amount.

In her defence to John's statement of claim, which was filed on 14 May 2019, Karen made allegations that may be summarised as follows:

On 11 October 2016, Katharine represented to Karen that the withdrawal from the term deposit was by way of gift in consequence of which that representation constituted the conventional basis of the relationship between Katharine and Karen concerning the transaction (the First Convention).
In reliance upon the First Convention, Karen acted to her detriment in dealing with some of the sum of $2,203,328 in purchasing properties at Hawthorn and Bellevue Hill, paying stamp duty on those purchases, contributing to her superannuation fund, lending money to a company operated by Karen's father, renovating the Hurlingham Avenue Property, repaying credit card debts and incurring living expenses, paying legal fees, incurring medical expenses for her children, purchasing shares in public listed companies, purchasing garden ornaments, discharging a HECS debt of one of her children and incurring travel expenses;
In the circumstances, John, as one of the executors of the estate of Katharine, is estopped at common law by the First Convention or, in the alternative, in equity, by an estoppel by representation from resiling from the representation that the transfer of the sum of $2,203,328 on 11 October 2016 was by way of gift; and
In the alternative, in reliance upon the representation referred to above, Karen has changed her position in the respects referred to above such that it would be inequitable to permit John as one of the executors of Katharine's estate to resile from the representation. Karen also filed what might be characterised as a defensive cross-claim seeking a declaration that, in the events that had occurred, the withdrawal and transfer by Katharine to Karen of the Gift Amount was by way of gift.

In support of his allegation of unconscionability, John relied on the following matters: 1. the long-standing testamentary intention of Katharine, as recorded in numerous wills and codicils from 1996 at the latest, was that she intended to leave the bulk of her estate to John with the exception of certain specific legacies; 2. the moral duty to provide for John in the event of her death, borne out by her consistently drawn wills; 3. the contemporaneous record in Katharine's diary of Karen making demands again and Katharine's appreciation of the need for there to be sufficient assets to provide for care for her and John in their old age; 4. Karen's sense of entitlement and receipt of constant support from Katharine and John by way of loans, rent free accommodation, monthly payments and payment of school fees; 5. Katharine's medical condition from 10 June 2016 and, at the time of the Gift, in particular her confusion and anxiety, coupled with falls, lack of insight and speech difficulty; 6. Karen's knowledge of Katharine's cognitive impairment and confusion and her own evidence that the surgery performed by Prof Teo did not improve the symptoms suffered by Katharine as was hoped; 7. Karen had become the primary carer for Katharine from about August 2016 and Katharine was dependent upon Karen; 8. Karen took advantage of the circumstances to enrich herself at the expense of John; 9. the exceptionally large size of the Gift by Katharine to Karen; 10. the fact that, after receiving a significant legacy of $3,600,000 from her mother, Katharine determined to leave the bulk of that to Karen, thus making the Gift completely unnecessary; 11. Katharine and John had taken steps to provide Karen with her principal place of residence, namely the Hurlingham Avenue Property; 12. the fact that Katharine was confused by the timing and monetary amounts involved in the transactions concerning the purchase of the Werrington Street Property and the sale of the Alfreda Street Property on the one hand and the funds from her mother's estate on the other hand: on 2 December 2015, Ms Summerville sent an email to Katharine estimating that she would need $1,823,394.56 to settle the purchase of the Werrington Street Property, and in the same email, that the balance on the sale of the Alfreda Street Property was $1,754,850.74; 13. the Gift was effected with considerable haste after Katharine was informed on 6 October 2016 that her condition was terminal; 14. Karen was involved in Katharine's affairs including speaking to her solicitor to have amendments made to her Will and to make a codicil; 15. Karen was directly involved in the Gift; 16. Katharine had no legal or accounting advice in relation to the Gift; 17. Karen arranged for Katharine to see Mr Cummins rather than her solicitors with whom she had had a long-established relationship, in order to have the Will executed; 18. Karen failed on at least two occasions in the presence of John and Mr Cummins to mention the Gift in circumstances when it might be expected that she would have mentioned it; and 19. neither the manager of the Bowral branch of the Bank nor Karen's accountant was called to give evidence in relation to the Gift.

Reasons of the Primary Judge

The primary judge concluded that Katharine's decision to transfer funds to Karen from the A Casa Botanica Term Deposit and make the Gift to Karen was the result of unconscionable conduct "and/or" undue influence on the part of Karen. His Honour observed that many of his factual findings would support unconscionability as well as a finding of undue influence. His Honour was satisfied that Katharine's change from a bequest to a gift, in the absence of any independent or objective advice, was not an exercise of her free and informed judgment.
The primary judge was satisfied that Katharine was at a special disadvantage, in the relevant sense, because of her extreme ill health. His Honour referred to the circumstances outlined above concerning Katharine's admission to hospital in June 2016 and the subsequent complex and difficult surgery undergone by her in July 2016.
The primary judge did not consider that Katharine overall significantly improved upon her return to Hidden Lake. His Honour referred to evidence that Katharine's behaviour and personality changed as acknowledged by Karen. His Honour accepted John's account in relation to Katharine's condition. His Honour found that in early September Katharine could not, by herself, send letters to her lawyers and, in late September 2016, Katharine experienced a panic attack at the Opera House. By early October, his Honour found, Katharine was "really unwell" and was told that her condition was terminal. His Honour referred to contemporaneous medical records from October indicating that Katharine was extremely unwell, fatigued, not at her previous level of fitness, anxious and irritable. His Honour was satisfied that Katharine was too unwell to attend a meeting with her lawyer on 12 October 2016.
The primary judge found that Katharine's condition, apart from short episodes, steadily deteriorated from July 2016. His Honour found that Katharine was both physically and psychologically frail and thereby vulnerable from July 2016 onwards. His Honour observed that Katharine was coping with not only somewhat intense and debilitating treatments but with the devastating realisation that she was soon going to die.
The primary judge found that Katharine was almost entirely dependent upon Karen for most or many of her needs and that her approach to estate planning was somewhat erratic. His Honour considered that Katharine's frequent and unexplained changes of mind indicated a level of confusion and vulnerability about the process of getting her estate in order. His Honour considered that Katharine approached her decision-making from an emotional and impulsive frame of mind. His Honour referred expressly in that regard to the telephone conversation with Mr Cummins in late October 2016 in which she told Mr Cummins she did not know what she wanted to do.
The primary judge found that Karen knew only too well of her mother's condition in that she was actively and daily involved in her mother's care and privy to her condition "as it ebbed and flowed". His Honour referred to the fact that Karen was present on 3 August 2016 when Katharine was informed that her condition was incurable. His Honour held that Karen was aware of Katharine's ongoing confusion and unsteadiness while in care. His Honour considered that the portrait of Karen to be drawn from the hospital notes showed a person wanting to take control of or seeking to take control of the flow of information between doctor and patient as well as between medical staff and family. His Honour did not consider that Karen was a person who would sit back passively and take whatever instructions her mother might issue.
The primary judge concluded that Katharine was clearly very unwell during the latter half of 2016 and that Karen, as her primary carer, was clearly aware of that fact. His Honour found that Katharine was moody, unsteady in her movements and irritable, unsurprisingly given her surgery and the knowledge that her condition was terminal. His Honour had regard to the fact that Karen attended nearly all of her mother's medical appointments, in particular, on 6 October 2016, when she was told that her condition was terminal.
The primary judge referred to the direct correspondence between Karen and Katharine's solicitors about Katharine's affairs. Thus, the email from Ms Summerville on 12 October 2016 was sent to Karen, referring to the attached letter "I sent to you on Monday" (his Honour's emphasis). His Honour considered that that suggested that the letter of 10 October 2016, even though it was addressed to Katharine, was in fact posted to Karen. His Honour found that Karen, despite her denials, was entirely privy to her mother's testamentary intentions.
The primary judge did not accept Karen's apparent inability to recall any details of important conversations in the latter half of 2016, being conversations that culminated in her being the recipient of the Gift. His Honour referred to Karen's multiple repetitions that she could not recall details of the events in the latter part of 2016, which his Honour found wholly unpersuasive. On the other hand, his Honour observed, Karen recalled consulting her own accountant on the day of the Gift but could not recall any conversation with anyone working at the Bank. His Honour referred to the fact that Karen was asked about the Gift as early as January 2017, only a few months following the incident. His Honour considered that Karen knew a very short time after the events that they would be the subject of scrutiny. His Honour did not accept that, when she posted her mother's letter of 8 September 2016 she did not even glance at it as she asserted. His Honour found that Karen somehow had come to the knowledge that Katharine intended to leave to Karen everything that her mother had left to her, yet she strongly denied seeing any correspondence or documents that corroborated that fact. His Honour rejected Karen's denials.
The primary judge considered that Karen and Katharine were in active discussions about Karen being made co-executor of Katharine's estate. His Honour characterised the contemporaneous material as showing persistence on the part of Karen in contacting Mr Cummins to arrange a meeting so as to change the effect of the Will in that respect. His Honour considered that those actions demonstrated a degree of obsession over getting in or sharing control of Katharine's estate and ensuring that she received what she thought was her just entitlement.
The primary judge was satisfied, despite Karen's denials, that she was in the car on 10 October 2016 while Katharine conveyed her wishes to Ms Summerville. His Honour considered that Karen's evidence on that point was totally unsatisfactory. His Honour accepted Ms Summerville's file note as an accurate record of what in fact happened. Thus, the file note recorded that Karen called while in the car with Katharine and that Karen put Katharine on the phone. His Honour considered that it was important that, from that point on, Karen knew that Katharine proposed to leave $2,200,000 to her. His Honour therefore concluded that Karen must have discussed the $2,200,000 with her mother by 10 October 2016 at the latest. His Honour concluded that, when in the car with Karen prior to making the call to Ms Summerville, Katharine must have discussed that she wanted to speak to Ms Summerville about her will and in particular about leaving $2,200,000 to Karen.
The primary judge considered that it was implausible that the trip to the Bowral branch of the Bank on 11 October 2016 was spontaneous. His Honour was satisfied that it was the result of a discussion between Katharine and Karen. His Honour accepted that Katharine was struggling to put her affairs in order "in an imprecise and somewhat erratic way".
The primary judge observed that Katharine was giving instructions to multiple solicitors and concluded that it was her overriding general intention to give Karen everything that her mother had left to her. His Honour considered that it was curious that, after having given instructions for affairs to be put in a particular order, there was a sudden change of mind to "cash in" the $2,200,000 without any indication to her solicitors or anyone else about why she had such a change of mind.
The primary judge was persuaded that Karen initiated Katharine's decision to make changes to her will and was involved in Katharine's decision to make the Gift as opposed to a bequest of the sum of $2,200,000. His Honour rejected Karen's denials that she had influenced her mother into giving her the $2,200,000 or influenced her to change her mind.
The primary judge considered that Katharine may well have been persuaded to give Karen immediate access to cash so as to remove a possible challenge to the Will and that, if that is what occurred, it was a result of discussion between Katharine and Karen in the absence of any independent legal or accounting advice. His Honour observed that it was entirely in Karen's interest, which she could not have failed to have appreciated, that Karen receive the gift in cash rather than as a bequest. His Honour observed that it was clearly in Karen's interest to get her hands on the money immediately without having to worry about a grant of probate or wait until Katharine died in order to use the money to pay off her credit card debts. Having regard to the state of Katharine's health as at October 2016, the primary judge was not satisfied that Katharine was capable of making any informed judgment call on what may or may not be the best course to adopt, namely, bequest or gift inter vivos. His Honour considered that, with the benefit of independent advice, Katharine's wishes could properly have been assessed, including, more importantly, what was truly hers to deal with.
The primary judge observed that Karen was the only person who benefited from Katharine's sudden change. His Honour referred to the fact that, apart from the very substantial cash gift, Karen's credit card was paid off by her mother during October. His Honour considered that Karen must have requested Katharine to authorise the payment of her credit card debt.
The primary judge considered that the mere fact that Karen seemed concerned with identifying whether there was any personal tax liability as a result of the gift, and not whether Katharine was in a fit position to give the money nor whether John knew of and was agreeable to the gift nor whether any legal professional should be consulted, showed a degree of selfishness and utter self-indulgence on Karen's part. His Honour concluded that Karen was plainly ignoring Katharine's vulnerability and instead was focused on her own material gain.
The primary judge also referred to the conduct of Karen and Katharine after the Gift, which his Honour considered was "particularly telling". Although Katharine spoke to lawyers on 12 October 2016, requesting that the $2,200,000 be removed from her Will because she had already given the money to Karen, she appears to have forgotten that fact at the meeting with Mr Cummins on 31 October 2016. Indeed, on that day, Katharine told Mr Cummins that John, not Karen, should have the cash from her mother's estate. His Honour accepted that Mr Cummins' diary note was unclear in that it could have meant the residue of the cash from the mother's estate and not all of the cash. Even on that view, however, his Honour considered that it was significant that that involved another change of mind on Katharine's part. Nevertheless, his Honour considered that the better view was that "the cash" referred to what Katharine had received from her mother and Karen, who was present at the meeting, did nothing to indicate that Katharine was mistaken and had already given the money from her mother's estate to her. His Honour considered that those circumstances supported the fact that Katharine was confused about what had occurred so recently and also supports the fact that Karen was then aware of or at least must have suspected that Katharine was confused. Nevertheless, Karen remained silent and clearly chose not to divulge the Gift.
Karen agreed that at no stage did she raise the Gift with anyone and did not discuss with her mother ever again the Gift or what she might do with money. His Honour considered that there was no impediment to the Gift being raised other than that Karen wanted to keep it a secret. There was no suggestion that Katharine had ever asked Karen to keep the Gift a secret.
The primary judge found that as Katharine succumbed to her illness, she struggled not only with the consequences of the various treatments, including chemotherapy, radiotherapy and surgery, but also with the knowledge that she would soon die. His Honour found that not only did Katharine undergo physical and mental changes, as observed by John, Karen and various medical staff, she was clearly unable to act as she once had acted. His Honour found that Katharine became dependant on Karen and that made her vulnerable. His Honour found that Karen, knowing of Katharine's illness, anxiety, changing behaviour and changing mood, either was actively involved in or stood by and did nothing as she accepted an extraordinarily large gift. His Honour characterised Karen's conduct as an act of self-indulgence, somewhat callous and extraordinarily selfish. His Honour had regard to the fact that Karen took no opportunity to suggest that Katharine seek independent advice or speak to anyone else in the family about such a large gift. His Honour considered that the only concern that Karen had was to consult her own accountant hurriedly to ensure that the gift was ultimately tax neutral in her hands. His Honour found that Karen knew that Katharine was otherwise without any independent and objective sounding board.
The primary judge was satisfied either that Karen initiated or contrived Katharine's change of mind to her own benefit or she took advantage of Katharine's vulnerability in circumstances that were unconscionable. His Honour found that, even if Karen did not specifically initiate the gift, her passive acceptance of such a large gift was, in all of the circumstances, unconscionable. His Honour found that, if Karen did not initiate the gift, she witnessed at close range Katharine's indecisiveness and impulsivity, in circumstances where she was receiving a substantial benefit and Katharine had no independent or objective advice.
The primary judge found that a presumption had arisen that Karen received the Gift in unconscionable circumstances. His Honour was not satisfied that Karen had discharged the burden of showing that the transaction was in any case fair, just and reasonable. His Honour held that defences pleaded by Karen of estoppel by convention and change of position could not arise. His Honour considered that, having found unconscionability and undue influence, such defences had no application and would in fact be antithetical to his findings.
The primary judge accepted that Katharine had the requisite capacity to execute the Will on 15 October 2016 and then later execute the Codicil on 2 November 2016. However, his Honour did not consider that the existence of capacity to execute such documents necessarily detracted from a finding of undue influence or unconscionability. His Honour observed that Katharine had received clear independent and legal advice in relation to the Will and Codicil but did not receive any such advice on 11 October 2016. His Honour considered that to the extent that Katharine lacked the ability to make an informed decision about the Gift, that was relevant to a finding of unconscionable conduct or undue influence, not a lack of capacity.

Grounds of Appeal

Karen's notice of appeal filed on 23 January 2020 raised some 12 grounds of appeal. Grounds 1 to 5 challenged the conclusions of the primary judge in relation to unconscionable conduct. Grounds 6 to 10 challenged his Honour's conclusion as to undue influence. Ground 11 challenged his Honour's rejection of the defences of conventional estoppel and change of position. Ground 12 challenged a particular finding that would not be determinative.
Karen challenges the following findings made by the primary judge: 1. it was uncontroversial that the A Casa Botanica Account was an asset of the Partnership in that his Honour should have found that that fact was disputed by Karen; 2. the A Casa Botanica Term Deposit was named A Casa Botanica in that his Honour should have found that it was named Katharine Howard Olsen trading as A Casa Botanica; 3. Karen enquired of her accountant whether there were any taxation implications for her and Katharine in that his Honour should have found that Karen enquired of her accountant whether there were any taxation and legal implications arising from the Gift; 4. Katharine's change from a bequest to a gift absent independent or objective advice was not an exercise of her free and informed judgment; 5. Katharine had frequent and unexplained changes of mind about the process of estate planning, which indicated a level of confusion about the process of estate planning; 6. Karen asserted that she did not even glance at her mother's correspondence on 8 and 9 September 2016; 7. the following inferences could be drawn from the file note of the conversation between Katharine and Ms Summerville on 10 October 2016:

"cashed in" is more likely Katharine's wish to change the arrangement for the Bank;
"happy to" indicates that Katharine was uncertain about what she wanted to do; and
the two positions were completely inconsistent and indicative of Katharine's state of confusion or indecision; 1. an inference should be drawn that Katharine must have discussed with Karen prior to the telephone call to Ms Summerville that she wanted to speak about her Will in that his Honour should have drawn the inference that Katharine and Karen also discussed in the car prior to the call to Ms Summerville not only leaving the sum of $2,200,000 in her Will but cashing it in and giving it to her; 2. Katharine was struggling to put her affairs in order in an erratic and imprecise way; 3. there was a "sudden change of mind" on Katharine's part; 4. Katharine made a "sudden change" from bequest to gift; 5. Karen initiated her mother's decision to make changes to her will and must have been involved in Katharine's decision to make the Gift; 6. given Katharine's state of health in October 2016, she was not capable, without the benefit of independent legal advice, of making an informed judgment on what may be the best course to adopt; 7. Karen's conduct showed "a degree of selfishness and utter self-indulgence" and was focused on "her own material gain"; 8. "the cash" mentioned to Mr Cummins referred to what Katharine had received from her mother, in that his Honour ought to have found that "the cash" referred to the remainder existing as at 31 October 2016; 9. Karen kept the Gift a "secret", in that she disclosed it to her accountant; 10. Karen was actively involved in the Gift, which was "an act of self-indulgence, somewhat callous and extraordinarily selfish"; 11. Karen initiated and contrived Katharine's change of mind to her own benefit or took advantage of Katharine's vulnerability in circumstances that were unconscionable; 12. Karen did not discharge the burden of showing that the Gift was in any case fair, just and reasonable; and 13. Katharine received independent advice in relation to the Will. Several of those findings were the subject of express grounds of appeal.

Unconscionable Conduct - Grounds 1, 2 and 3

Grounds 1 to 3 may be restated as follows: 1. the primary judge erred in finding that Katharine's decision to make the Gift of $2,200,000 was the result of unconscionable conduct on the part of Karen; 2. the primary judge erred in finding that Karen initiated or contrived Katharine's change of mind to make a gift rather than a bequest of the $2,200,000 or took advantage of Katharine's vulnerability in circumstances that were unconscionable; 3. the primary judge erred in finding that Katharine had frequent and unexplained changes of mind about the process of getting her estate in order;
Grounds 2 and 3 challenge specific findings made by the primary judge. Karen contends that the conclusion by his Honour that the Gift was the result of unconscionable conduct should not stand if Grounds 2 and 3 are established.
Karen contends that the primary judge erred in drawing the inference that the words "cashed in" would not necessarily mean that Katharine intended to withdraw the entire balance in the term deposit but simply sought to change the arrangements with the Bank. She contends that it is inconsistent with the inference drawn by his Honour that it was likely that Katharine had already been discussing the options with Karen. Further, Karen says, the words "cashed in now" should be understood as referring to steps being put in place to withdraw the balance of the term deposit and give it to Karen.
Karen also contends that the primary judge erred in drawing the inference that the words "happy to" indicated that Katharine was unsure about what she wanted to do with the money, namely, whether she intended it to pass under her will or go directly to Karen. Karen points to the fact that Katharine had recently been told, on 7 October 2016, that her condition was terminal and that she should get her affairs in order. She asserts that Katharine was seeking to cover both options, namely, gift or bequest that the proper inference to be drawn from the words "happy to" is that Katharine intended to withdraw the balance of the term deposit and give it to Karen as an advance on her inheritance but was concerned "to cover both bases" by providing for it in her will until the gift had been made.
Karen also contends that the inference should be drawn that Katharine had an overriding consistent intention to make a gift of the balance of the term deposit to her, either by gift or by bequest. She contends that the primary judge also erred in drawing the inference that the two options were inconsistent and were indicative of Katharine's confusion or indecision.
Karen points out that, by the time of the conversation with Ms Summerville on 10 October 2016, Katharine had already discussed options with Karen. She says that an inference should be drawn that the options had been discussed in the car prior to the conversation with Ms Summerville. She asserts that there is no evidence that she initiated or contrived the making of the Gift of $2.2 million, or that she was responsible for raising the topic of Katharine making the gift, as opposed to providing for that sum to go to her under her will. Karen asserts there is no evidence of any fact from which any such inference could reasonably be drawn.
Karen contends that the evidence as to Katharine's testamentary intentions in October and November 2016 does not support findings that Katharine had frequently unexplained changes of mind, behaved somewhat erratically and had a sudden change of mind, as the primary judge found. She asserts that the evidence does not support his Honour's conclusions that Katharine changed her mind about making the gift to Karen as opposed to leaving her the amount in her will. Karen asserts that the evidence supports the conclusion that the Gift was part of an overall plan to give that sum to Karen either by gift inter vivos or by bequest in her will.
Karen asserts that the file note made by Ms Summerville does not indicate a change of mind or indecisiveness on Katharine's part. Rather, she says, it reflects a desire by Katharine "to cover both bases" by referring to the sum of $2.2 million in the Will until the gift had been made. Thus, Ms Summerville prepared a draft will which included a legacy of $2,200,000. She deleted that legacy in the subsequent draft, after she had been informed that the sum had already been given to Karen.
Karen then points to the note made by Mr Cummins on 17 October 2016 that the Will, which had been executed by Katharine on 15 October 2016, reflected her current testamentary intention and that no changes were required. That, however, is quite equivocal in that, on John's case, the absence of any mention of such a legacy in the Will reflected Katherine's intention. There was no reference to the Gift to Karen in the Will, as executed, because Katharine had no intention of giving the term deposit to Karen.
Karen contends that the statement by Katharine to Mr Cummins on 31 October 2016 that she wanted John to inherit "the cash" that she received from her mother was a reference to the cash that remained. Otherwise Mr Cummins would have advised that a codicil should be made revoking the gift of the Werrington Street Property to Karen because the cash from her grandmother had been used to buy the Werrington Street Property. In any event, Karen says, the occurrence on 21 October 2016, some 20 days after the Gift, was not evidence of indecision as at 11 October 2016.
Karen contends that once the finding of frequent and unexplained changes to the process of estate planning on the part of Katharine is set aside, it follows that the finding of confusion in estate planning should also fall away. She contends that there is no other evidence to support the conclusion of the primary judge that Katharine was confused in the process of estate planning prior to 11 October 2016. She points to the fact that Katharine had made several wills previously: Katharine made two wills in 1996, two wills in 2002 and a will in 2003, 2004, 2005 and 2012.
Karen contends that Katharine formed the intention to make the Gift, and that that intention was consistent and was not erratic or unexplained. Karen asserts that, since Katharine intended to make the Gift to her, either by will or inter vivos, the Gift should not be characterised as improvident or imprudent. Thus, she says, the making of the Gift did not affect John's ability to live comfortably, given the financial circumstances that John and Katharine enjoyed, since the Gift did not reduce the residue that was otherwise available to John under the Will. That contention, of course, is based on the premise that Katharine had decided to give Karen the amount in the term deposit and that the only question was whether the Gift would be made inter vivos or by will.
Karen gave evidence that she believed that the sum of $2,200,000 in the term deposit came from her grandmother's estate and that she believed that Katharine had the capacity, on 11 October 2016, to make the Gift. Karen focuses on the events between 10 October 2016 and 15 October 2016 to support her contention that the facts established that Katharine had capacity to make a will and therefore was not subject to any special disadvantage, such that the Gift was considered by Katharine as a viable alternative to a legacy by will.
A very significant difficulty for Karen is that that contention depends on her evidence being accepted. However, the primary judge rejected Karen's evidence in all respects that may be relevant to the assertion of a gift between mother and a passively recipient daughter. The findings of the primary judge established overwhelmingly that Karen was an active promoter of the Gift and inveigled herself into Katharine's affairs and life, so much so that a finding of undue influence was open on the facts.
Karen asserts that, since she believed that Katharine intended to give her the balance in the term deposit either by gift inter vivos or by will, the primary judge should have found that her state of mind fell within the category of heedlessness or indifference to the best interests of the other party, and not within the category of unconscionability. Thus, she contends, her conduct fell short of the victimisation or exploitation that must be established for unconscionability. She says that the passive receipt of the Gift was not unconscionable because it was seen by her as part of a wider estate planning scheme on Katharine's part to give to her the Hurlingham Avenue Property, the Werrington Street Property and the balance standing to the credit of the term deposit. She contends that the fact that Katharine consistently expressed the intention to make the Gift, together with her own belief that she would receive that sum from her grandmother's estate, was not consistent with her exploiting, victimising and taking advantage of Katharine by passively accepting the Gift.
Karen disputes the finding by the primary judge that a lack of independent or objective advice supported the finding of unconscionability arising from the passive acceptance of the Gift. His Honour linked the importance of independent or objective advice to Katharine's indecisiveness and impulsivity. Karen disputes that Katharine suffered from indecisiveness and impulsivity. She contends that a lack of independent legal advice does not support a finding of unconscionability unless the advice was denied. Karen asserts that there is no evidence to support a finding that the two sets of solicitors acting for Katharine denied her independent legal advice much less that she was aware of such a denial.
However, Karen's contentions ignore the fact that there was no reason for Katharine to leave a further $2,200,000 to her when Katharine's manifest intention in making the changes reflected in the Will, which she executed on 15 October 2016, was only to give to Karen everything that Katharine had inherited from her mother. That inheritance amounted to approximately $3,500,000, which was represented by the gift of the Werrington Street Property, which Katharine had purchased for $2,025,000 using the inheritance, together with the shares still owned by Katharine.
Karen's contentions also ignore the fact that John and Katharine had a long and loving marriage and that the manifest testamentary intention of Katharine was to leave everything to John, with the exception only of some specific legacies and the inheritance that she had received from her grandmother. It would represent a significant change for Katharine to decide suddenly to deprive John of the benefit of the balance of the A Casa Botanica Term Deposit, which was constituted by their joint funds.
Karen accepted on the hearing of the appeal that she discussed with Katharine the question of a bequest or gift of $2.2 million. However, at the trial, she steadfastly denied any prior knowledge of it. The primary judge's finding flowed comfortably and naturally from his Honour's evaluation of Karen and her role in dominating Katharine or alternatively her meek acceptance of an extraordinarily large gift, in circumstances where it was clear that Katharine was confused by giving various sets of instructions concerning her testamentary intentions.
Karen concealed the fact of the Gift on occasions when an objective bystander would have expected her to mention that Katharine had made such a large gift to her. The primary judge was justified in having regard to Karen's lack of frankness in concluding that she had acted unconscionably.
The primary judge found that Katharine was at a special disadvantage because of her extreme ill health. His Honour accepted John's evidence as to Katharine's parlous state of health and her change in personality and his Honour set out in some detail the medical evidence that was before him. There is no basis for challenging those findings and they are not challenged.
Karen was intimately involved in the running of the household and moved into John and Katharine's matrimonial home in order to provide personal care and assistance to Katharine, which John could not adequately provide because of his age. Karen signed cheques for Katharine and became a signatory to the accounts of Katharine and John. The primary judge found that, from June 2016, Karen essentially took over all of Katharine's affairs. His Honour did not accept Karen's assertion that she sat back and took whatever instructions she received from her mother. Further, his Honour found that Karen was a person wanting to take control of or seeking to take control of the flow of information between medical practitioners and Katharine. There was no error in those findings.
While Karen denied that she was privy to testamentary intentions on her mother's part, the primary judge found her to be untruthful in that regard and found specifically that she was indeed privy to Katharine's intentions. Karen arranged meetings with solicitors. His Honour found that Karen was intimately involved with Katharine's affairs and how she was organising her estate. All of those matters were sufficient to establish a special disadvantage on Katharine's part, such that the onus was cast on Karen to establish that the Gift was fair and just.
Karen's contentions on the appeal failed to grapple with the critical assessment of her credit made by the primary judge, which had the consequence that any positive matter advanced by her in support of her case required independent corroboration or evidentiary support. For example, Karen was only too well aware of the significant and permanent changes in Katharine's behaviour and her medical condition and health with the consequence that Katharine was under a special disadvantage. Karen herself wrote to Prof Teo on 12 July 2016 referring to Katharine's behaviour and personality as having become erratic and confused. Before confronted with the letter in oral evidence, Karen asserted that there is no confusion evident in relation to Katharine. Her evidence changed once confronted with the letter.
Karen sought to suggest in cross-examination that some of Katharine's symptoms had improved after her surgery. Once confronted with the assertion in her affidavit that Katharine's behaviour changed after an episode on 12 June 2016 after which she became unsettled and her mood was affected and that the surgery did not improve the symptoms suffered by Katharine as was hoped, Karen was evasive but finally accepted that the statement in her affidavit was the truth. The findings by the primary judge as to the medical evidence supported his conclusion of special disadvantage and there was material to support his Honour's finding that Karen had influenced Katharine into making the Gift.
Ground 2 challenges the findings by the primary judge that Karen initiated or contrived Katharine's change of mind or took advantage of her vulnerability. The primary judge found that Katharine was very unwell and could not correspond with her solicitors, that she suffered a panic attack when she attended the Opera House and was unable to attend a meeting with her solicitors on 12 October 2016. Karen knew only too well of Katharine's parlous condition yet she corresponded directly with Katharine's solicitors, her denial having been rejected by his Honour. By October 2016, Katharine was unable to travel to Sydney to see her usual solicitors, Mr Fraser and Ms Summerville, necessitating the engagement of Mr Cummins of Bowral. None of those findings is challenged.
The primary judge rejected Karen's assertions that she was not intimately involved in Katharine's affairs. His Honour did so expressly on the basis of his assessment of Karen's demeanour and the way she answered questions. His Honour found positively that Karen was intimately involved in Katharine's affairs and intensely interested in how Katharine was organising her estate. That finding is not challenged. The finding goes to the heart of unconscionability, in demonstrating that Karen was much more than a mere passive recipient of the Gift. His Honour's finding establishes a motivation for Karen to exhort Katharine to make a gift or a bequest in her favour, in circumstances when she was already going to receive a windfall to the extent that Katharine proposed to give her what she, Katharine, had inherited from her mother. Karen was also, through the generosity of Katharine and John, to receive the Hurlingham Avenue Property by way of gift.
Karen herself asserted that, after June 2016, she had responsibility, control and authority over many matters in Katharine's life. By August 2016, Karen was Katharine's primary carer. By October 2016, Karen was operating Katharine's bank accounts on her behalf. She became aware of, at least, the Term Deposit, since the refund of the deposit of $172,000 following the rescission of the contract to buy the Pinaroo Property. Karen herself said in her affidavit that she was intimately involved in the giving of instructions that culminated in the rescission of that contract.
The primary judge found that Karen was in the car with her mother when she spoke to Ms Summerville on 10 October 2016. Karen, on the other hand, categorically denied that she was in the car and was present during that conversation. Ms Summerville's file note records that it was Karen who telephoned her. In her submissions on appeal, Karen appears to embrace his Honour's finding that she and Katharine had already been discussing the options of either a gift or a bequest in relation to the sum of $2.2 million in the A Casa Botanica Term Deposit account. No reason has been advised as to why this Court should not accept the findings made by primary judge in relation to those matters.
The primary judge found that Karen's denial of involvement was totally unsatisfactory, implausible and entirely contrived. In those circumstances, it was appropriate for his Honour to draw the inferences that were available. While it is true to say that there was no direct evidence that Karen raised with her mother the question of a gift of the fund in the A Casa Botanica Term Deposit account, an inference can clearly be drawn from the circumstances of the conversation with Ms Summerville and the other surrounding circumstances that Karen raised the matter with her mother. Karen is the only person who could give evidence as to the discussions. In circumstances where the primary judge rejected her as a truthful witness as to those matters, the inference can readily be drawn that she and her mother discussed the question of the gift rather than Katharine raising the matter out of the blue, unexpectedly.
No evidence was adduced by Karen from her accountant, whom she consulted while Katharine remained in the car in the street outside the Bowral branch of the Bank. The evidence of Karen's accountant may have corroborated her evidence, although the primary judge accepted Karen's version of her consultation with the accountant. Indeed, his Honour drew adverse conclusions from the fact that Karen consulted the accountant about the tax consequences of the proposed gift. Karen said that she consulted the accountant both in relation to legal and accounting questions. Nevertheless, if the question of the proposed gift came "out of the blue" as Karen asserted, one might expect that that is something she would have told her accountant in circumstances where, according to her version of events, she consulted her accountant without an appointment while her mother remained in the car.
The primary judge concluded that the circumstances surrounding the making of the Gift militated overwhelmingly in favour of the conclusion that Karen and no one else stood to gain from the Gift. It was open to his Honour to find that the absence of any legal or taxation advice for Katharine preponderated against her acting of her own volition and with appropriate information. His Honour's conclusions and the inferences drawn by him were based on the objective surrounding circumstances and the rejection of Karen's evidence to the contrary, and were clearly open on the evidence.
The evidence before the primary judge overwhelmingly supports a finding of a woman in a state of severe ill health, confusion and anxiety endeavouring to put her affairs in order before dying, all the while being watched over by Karen. The unchallenged evidence was that John and Katharine had a close and loving relationship and that Katharine was concerned to ensure that John, who was quite elderly and becoming infirmed, would be properly provided for. It is highly unlikely that, in those circumstances, Katharine would surreptitiously reduce the residue of her estate to which John would become entitled by the very substantial sum of $2,200,000. It is unlikely in the extreme that Katharine would have chosen to deprive John of the support that she had recorded in her diary before her illness that she believed John needed.
Karen's case was that Katharine wanted to give her Katharine's inheritance from her own mother's estate. That estate and superannuation consisted of shares valued in excess of $900,000 and cash of about $2,500,000. The money received by Katharine from her mother's estate had been applied principally in the purchase of the Werrington Street Property for $2,025,000 plus stamp duty of nearly $97,000. To give effect to her intention, Katharine would have given Karen the shares and the Werrington Street Property. Both were given to Karen under the Will, in accordance with the instructions of the handwritten letter of 8 September 2016. The sudden gift of a further $2,200,000 was an entirely unexplained change in Katharine's testamentary intentions. It is clear enough that Karen received the proceeds of the A Casa Botanica Term Deposit over and above what Katharine had received from her mother's estate. The effect was to deplete the residue of Katharine's estate by the amount of standing to the credit of the A Casa Botanica Term Deposit. That gives rise to a clear inference that Katharine was in some way confused.
None of Grounds 1, 2 or 3 is made out.

Unconscionable Conduct - Grounds 4 and 5

Grounds 4 and 5 may be restated as follows: 1. the primary judge erred in failing to give any or adequate reasons for the finding that Karen had not discharged the burden and had not shown that the Gift was in any case fair, just and reasonable; 2. the primary judge should have found that Karen had discharged the burden of establishing that the Gift was fair, just and reasonable.
The primary judge found that Karen had failed to discharge the burden of establishing that the gift was fair, just and reasonable. Karen complains that she made submissions to his Honour that the transaction was fair, just and reasonable and that it was not sufficient for his Honour to dismiss that submission without explaining why or exposing the process of reasoning involved in reaching that conclusion.
The requirement to establish that a gift is fair, just and reasonable calls for an assessment of the impugned transaction from the perspective of both Karen and John in the objective circumstances. Karen asserts that the Gift was fair, just and reasonable because it was an inter vivos recognition of Katharine's testamentary intention. Karen asserts that she disbursed the funds in reliance on the fact that Katharine had made a valid Will that excluded an intended legacy of $2.2 million in her favour.
However, that contention begs the question. That is to say, it assumes that Katharine's intention was to benefit Karen to the extent of the A Casa Botanica Term Deposit. It is not simply a question of whether the making of a gift inter vivos was substituted for the giving of a bequest in a will. The question is whether it was fair, just and reasonable for Katharine to confer a benefit in the order of $2,200,000 on Karen at all.
Karen also contends that, from John's perspective, it was fair, just and reasonable that she should retain the benefit of the Gift. Her contention is that the making of the gift did not reduce the size of the residue because, had the gift inter vivos not been made, the legacy in the same amount would have remained in the Will, which was executed on 15 October 2016. Karen asserts that, if the Gift was set aside, the size of the residue would be increased by that amount, contrary to the overriding intention of Katharine that Karen receive the benefit of that amount.
However, that contention again begs the question. The question is not whether it was fair, just and reasonable that Karen receive a benefit of $2,200,000 by gift inter vivos rather than by bequest in a will. The question is whether Karen should have received that benefit at all. There is no evidence that Katharine ever turned her mind to the question of giving $2,200,000 to Karen either by gift inter vivos or by bequest, prior to 10 October 2016. In circumstances where Katharine's intentions were reflected in her instructions to Ms Summerville in her handwritten letter of 8 September 2016, either a gift inter vivos or a bequest in the sum of $2,200,000 gave a huge benefit to Karen at the expense of John, who knew nothing of the proposal until well after Katharine's death.
To suggest that Karen and John, as joint executors of Katharine's estate, applied for probate of the Will on the basis that it had been made by Katharine on the assumption that the investment of $2,200,000 had been "cashed in" as Karen asserts, also begs the question. As just indicated, John knew nothing of the Gift until well after Katharine's death. There was nothing in the Will to suggest that the residue of Katharine's estate had been depleted by over $2 million only weeks before her death. None of the communications between Katharine and Ms Summerville were made known to John prior to Katharine's death.
Conveniently for Katharine, Mr Cummins was consulted for the purposes of the Codicil. Mr Cummins, of course, had no knowledge of the Gift. The Will was witnessed by employees of John and Katharine, who were not lawyers. The idea of the bequest was a fleeting one. It went into a draft will but was removed within days before the Will was executed on 15 October 2016. The Will reflected the instructions given by Katharine in her handwritten letter of 8 September 2016. That letter clearly reflected Katharine's testamentary intentions of passing to her daughter the inheritance that she had received from her mother. There is no explanation at all for the sudden change of mind on Katharine's part other than being confused by her daughter. There was nothing fair, just or reasonable about that sudden change of mind. The primary judge's reasons for reaching that conclusion are clearly explained. There is no substance in Ground 4 or Ground 5.

Undue Influence - Grounds 6-10

In the light of the conclusion that grounds 1 to 5 are not made out, it is unnecessary to deal with the grounds of appeal that challenge the conclusions of the primary judge that the Gift was made as the result of undue influence on the part of Karen. His Honour made independent findings that the Gift was the result of unconscionable conduct on the part of Karen as well as being the result of undue influence. It is therefore unnecessary to deal with the grounds challenging his Honour's conclusion as to undue influence.

Estoppel and Change of Position - Ground 11

The primary judge considered that the defences of estoppel by convention and change of position could not arise in the circumstances of the case. His Honour concluded that, having found unconscionability, the defences had no application and would be antithetical to his Honour's findings.
It is indeed a curious contention that the beneficiary of a transaction that was held to be unconscionable could resist a claim by the victim of the unconscionable conduct on the ground that the recipient had enjoyed the benefit of the impugned transaction. The proposition needs only be stated for it to be rejected as untenable.
This is not a case where, for example, Katharine knowingly and intentionally represented to Karen that she was making a gift in reliance upon which Karen expended the money given. The finding made by the primary judge is that Katharine did not knowingly and intentionally make the Gift. John, as legal personal representative of Katharine, is not seeking to resile from the gift. Rather, he is impugning the making of the gift. The defences were not available and ground 11 must fail.

Conclusion

The orders of the Court should be as follows:

Order that the appeal be dismissed; and
Order that the appellant pay the respondent's costs of the appeal. No suggestion was made, in circumstances where the essential dispute related to the administration of the estate of Katharine, that any special order for costs should be made.

Endnotes

See above at [91].
See item (vi) of the earlier draft. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 August 2020

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