[2005] NSWCA 261
Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1
[2019] HCA 18
Blomley v Ryan (1956) 99 CLR 362
[1956] HCA 81
Bridgewater v Leahy (1998) 194 CLR 457
[1998] HCA 66
Collins v May [2000] WASC 29
Commercial Bank Australia Limited v Amadio (1983) 151 CLR 447
Source
Original judgment source is linked above.
Catchwords
[2005] NSWCA 261
Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1[2019] HCA 18
Blomley v Ryan (1956) 99 CLR 362[1956] HCA 81
Bridgewater v Leahy (1998) 194 CLR 457[1998] HCA 66
Collins v May [2000] WASC 29
Commercial Bank Australia Limited v Amadio (1983) 151 CLR 447[1983] HCA 14
Drivas v Jakopovic [2019] NSWCA 218
Gibbons v Wright (1954) 91 CLR 423[1954] HCA 17
Guthrie v Spence (2009) 78 NSWLR 225[2009] NSWCA 369
Hanna v Raoul [2018] NSWCA 201
Hill v Zuda Pty Ltd (2022) 275 CLR 24[2022] HCA 21
Johnson v Smith [2010] NSWCA 306
Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392[2013] HCA 25
Landers v Landers (1914) 19 CLR 222[1914] HCA 74
Louth v Diprose (1992) 175 CLR 621[1992] HCA 61
Mentink v Olsen [2020] NSWCA 182
Murphy v Doman (2003) 58 NSWLR 51[2003] NSWCA 249
Nitopi v Nitopi (2022) 109 NSWLR 390[2022] NSWCA 162
Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 52596 ALJR 271
Thorne v Kennedy (2017) 262 CLR 85
Judgment (26 paragraphs)
[1]
JUDGMENT
On 26 July 2020, Dr Harry Nespolon signed a "Binding Death Benefit Notice" (BDBN) in relation to the Nespolon Superannuation Fund (Fund) that directed the Fund trustee to pay Dr Nespolon's member benefits to his de facto partner, Lindy van Camp, in the event of his death.
Dr Nespolon signed the BDBN in hospital on the day he died from cancer at the age of 57, at which time he was the sole member of the Fund and the sole director and secretary of the Fund trustee, Bellahealth Pty Ltd (Bellahealth).
Following Dr Nespolon's death, Bellahealth did not pay Dr Nespolon's member benefits, which have an estimated value of $4,722,000, to Ms van Camp. Bellahealth claimed the BDBN was invalid as it had not been executed in accordance with the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act) and the regulations under the SIS Act and also raised concerns about Dr Nespolon's capacity.
In these proceedings, Ms van Camp, the plaintiff, seeks a declaration that the BDBN executed by Dr Nespolon is valid and binding and an order that the Fund benefits be paid to her forthwith.
The first defendant is Bellahealth. The second and third defendants are Walter Nespolon and James Dickson. Mr W Nespolon, Mr Dickson and Ms van Camp are the directors of Bellahealth and the executors of Dr Nespolon's last will made on 23 July 2020.
In their defence and cross claim, the defendants contend that Dr Nespolon lacked capacity to enter the transaction at the time he signed the BDBN, allege unconscionable conduct on the part of Ms van Camp in procuring the BDBN and seek an order that the BDBN executed by Dr Nespolon be set aside or a declaration that it is void or unenforceable.
Ms van Camp's statement of claim also sought, in the alternative, additional provision from Dr Nespolon's estate pursuant to Chapter 3 of the Succession Act 2006 (NSW), which claim was not pressed at the hearing. The defendants also no longer contend that the BDBN is invalid due to non-compliance with the SIS Act or its regulations.
Accordingly, the issues for determination are:
1. whether Dr Nespolon lacked capacity to make the BDBN when he signed it on 26 July 2020; and
2. whether the BDBN is liable to be set aside by reason of unconscionable conduct on the part of Ms van Camp.
[2]
The evidence and witnesses
The evidence comprised affidavit and oral evidence from the parties and non-party witnesses and a range of documents, including medical records relating to Dr Nespolon's hospital admissions, text messages, phone call records and documents from the file of the solicitor who prepared the BDBN. In assessing the evidence and making my findings, I have had regard to my notes taken during the hearing, the transcript and the submissions of the parties.
Ms van Camp read three affidavits that she had affirmed and an affidavit from Jarrod Bramble, an accountant at Cutcher & Neale, Accounting and Financial Services (Cutcher & Neale), a firm that provided financial and accounting advice to Dr Nespolon. Ms van Camp and Mr Bramble were both cross-examined.
The defendants read three affidavits from Mr Dickson, an affidavit from Caitlin Smith, a solicitor for the defendants, and affidavits from Dr Wade Stedman, Intensive Care Staff Specialist at North Shore Private Hospital (NSPH), and Dr David Chan, Medical Oncologist. Mr Dickson is a Partner at Piper Alderman lawyers, knew Dr Nespolon for over 30 years and assisted with his business interests from 1994. Dr Stedman and Dr Chan witnessed Dr Nespolon's signature to the BDBN. Mr Dickson, Ms Smith, Dr Stedman and Dr Chan were not cross-examined and I accept their evidence.
The defendants called Donna Benge, a solicitor and partner at Piper Alderman who provided estate planning advice to Dr Nespolon, prepared Dr Nespolon's last will made on 23 July 2020 and the BDBN he signed on 26 July 2020. Ms Benge who gave oral evidence and was cross-examined about her dealings with Dr Nespolon.
The parties jointly engaged Ian Raspin, a specialist in the taxation of deceased estates and managing director of BNR Partners, whose expert reports dated 29 July 2022 and 28 April 2023 opined on the tax consequences of payment of the Fund benefits to Dr Nespolon's estate, Ms van Camp or in accordance with Dr Nespolon's will. Mr Raspin was not cross-examined and I accept his evidence.
The defendants also relied on expert evidence from Professor Jason White, Pharmacologist, on the issue of capacity. Professor White's report opined on the effects or likely effects of the medications administered to Dr Nespolon during the period 24-26 July 2020 and his ability to understand, know and approve the BDBN. Professor White was cross-examined.
[3]
Background facts and summary of evidence
The following is drawn from the affidavit, oral and documentary evidence. Unless otherwise indicated, I am satisfied of the following matters.
[4]
Dr Nespolon and Ms van Camp
Dr Nespolon was born in February 1963. He was involved in general medical practice for many years and had degrees in medicine, economics and law and a masters in business administration.
Dr Nespolon was appointed president of the Royal Australian College of General Practitioners in October 2018 and was on the board of various medical companies and associations. Through his corporate and trust structures, Dr Nespolon owned and operated general practice clinics (one of which was a COVID-19 testing clinic from 2020) from properties in Dee Why, Pitt Street, Sydney and Neutral Bay.
Dr Nespolon was the sole shareholder of the following companies and a beneficiary of trusts (some of which also benefitted Ms van Camp), as follows:
1. Second Practice Pty Ltd, the trustee of the Second Practice Trust and the sole shareholder of Third Practice Pty Ltd. Third Practice Pty Ltd was the trustee of the Third Practice Unit Trust and the owner of the property on which the Pitt Street clinic operated;
2. Harley Level 1 Pty Ltd, the trustee of the Harley Level 1 Property Trust and the owner of the property on which the Neutral Bay clinic operated;
3. PMC 633 Pty Ltd, the trustee for the PMC 633 Trust and the owner of the property on which the Dee Why clinic operated;
4. Pterygium 5 Pty Ltd, which was set up in mid-2020 in relation to the Covid testing clinic.
5. NBMP 156 Pty Ltd, the trustee of the NBMP 156 Unit Trust; and
6. Medical Practice Australia Pty Ltd, the trustee of the Nespolon Trust and the CBDMP 70 Unit Trust.
Dr Nespolon met Ms van Camp (born in June 1977) in 2013. Their relationship became official in June 2014. They started living together in January 2015 and have two daughters, who were born in July 2015 and December 2017. They lived together in a property that was owned by Dr Nespolon in Cremorne (Cremorne Property).
Ms van Camp was born and raised in South Africa. She came to Australia in 2009 and became a permanent resident in 2012. Ms van Camp has degrees in marketing and business management, an honours degree in human resources and has worked as a business manager, a management consultant for a recruiting and personality profiling firm and a performance consultant. She ceased paid employment in 2015, after the birth of her and Dr Nespolon's first daughter.
[5]
The Fund
The Fund is a self-managed superannuation fund that was established by deed dated 5 February 2003 as amended by Deed of Amendment dated 3 October 2012 (Fund Deed).
The Fund Deed provides the following:
1. "Binding Death Benefit Nomination" means the process whereby a member gives a notice to the Trustee requiring the member's benefit to be paid on his or her death to dependants or the legal personal representative: cl 1.1;
2. "Dependants" means the spouse and children (including posthumous) of a member who are at the relevant time dependant in whole or in part upon the member for their financial maintenance and support: cl 1.1.
3. any death benefit shall be paid, as the Trustee in its absolute discretion decides, by way of purchased annuities, pensions or other periodical payments (in each such case upon such terms as the trustee may decide), or lump sum payments, or any combination of such methods of payment, either to one or more of the nominated beneficiaries (if any) or other dependants of the member and in such proportions as the trustee in its absolute discretion decides, or to the legal personal representative of a member: cl 13.5(a);
4. if the Trustee of the Fund holds, at the time of the member's death, a Notice of Binding Death Benefit Beneficiary Nomination, which is effective and valid, the Trustee must pay a member's superannuation death benefit to the nominated beneficiary referred to in the notice: cl 13.5(b); and
5. a member may nominate to the Trustee one or more Beneficiaries to receive the death benefit from the Fund provided the member completes the Binding Death Benefit Beneficiary Nomination Form and provides the Nomination to the Trustee, the nominated beneficiary must, at the time of the member's death, be either a Dependant or legal personal representative, and the Nomination must be current (made not more than 3 years before the date of death): cl 18.4.
As noted above, at the hearing, it was common ground that if the BDBN is found to be a valid document, Bellahealth would be compelled to pay the whole of Dr Nespolon's member benefits to Ms van Camp, by virtue of cl 13.5(b) of the Fund Deed. If it is found to be invalid or should be set aside, Bellahealth will have a discretion to pay the benefits in whole or in part to one or more of Dr Nespolon's dependants (being Ms van Camp and their two daughters) and/or to the executors of his estate, in accordance with cl 13.5(a) of the Fund Deed.
[6]
October 2019 - 4 December 2019: Dr Nespolon's diagnosis and dealings with Ms Benge
In late October 2019, Dr Nespolon was diagnosed with inoperable pancreatic cancer. Dr Nespolon underwent chemotherapy, was given a range of medications (such as morphine) and had various admissions to Royal North Shore Hospital (RNSH) and NSPH in connection with his illness.
After his diagnosis, Dr Nespolon requested assistance from Mr Dickson's law firm, Piper Alderman, in preparing his will.
On 4 November 2019, Dr Nespolon had a telephone call with Ms Benge during which they discussed his estate, his financial affairs and the preparation of a will.
Ms Benge's typed note and her handwritten estate planning instruction sheet prepared that day record that they discussed the following:
1. Dr Nespolon did not think Ms van Camp was a good saver, the structure of his will should ensure that Ms van Camp is protected and that the assets are protected for the long-term benefit of the children, and his concern that if something happened to him then Ms van Camp would re-partner and re-marry and therefore, he wanted to protect the assets (typed note at [2] and [7.4]);
2. Dr Nespolon had "Assets" comprising shares, the Cremorne Property, "parents had 2 rental properties", property at Neutral Bay and cash, and that he had "Interest in Companies or Trusts" comprising practices located in Sydney's central business district, Neutral Bay and Dee Why, superannuation and the Nespolon Family Trust "used to distribute income";
3. in relation to superannuation, Dr Nespolon had a "SMSF - $1.5 mil - shares - trustee Bella Health PL - sole director/member + $3 million life insurance" and the "[s]uper" should be "paid to estate - authority to apply towards discharge of debts/loans"; and
4. Ms Benge explained that any cash payment made to Ms van Camp from the superannuation fund would be tax-free. When discussing the options, Dr Nespolon preferred that the super fund policy be paid to his estate and the executors be authorised to discharge any liabilities from that life insurance (typed note at [7.2]);
Ms Benge's oral evidence about the instructions that were taken during the call was generally consistent with her file notes (T110.23-112.3). She referred to Dr Nespolon wanting to protect Ms van Camp and their children and his assets for them, that Ms van Camp had not worked during their relationship nor brought any assets into the relationship, Dr Nespolon was concerned that Ms van Camp would not be able to manage assets on her own and would re-partner in the future and the assets he had accumulated would not be protected if there was an outright gift or sole control.
[7]
12 December 2019 - May 2020: Dr Nespolon's appointment of Cutcher & Neale and discussion of finances with Mr Dickson
On 12 December 2019, Dr Nespolon appointed Cutcher & Neale to provide him accounting and financial advisory services in relation to his personal and business structures, Ms van Camp's income tax returns and, as an "optional" further service, the Fund.
Dr Nespolon first met Mr Bramble at Cutcher & Neale offices on 9 October 2019 when he asked for a quote about such services. After their meeting, Dr Nespolon sent Mr Bramble a summary of his assets and liabilities, the financial statements for the Fund for the financial year ending 2018 and a summary of the share portfolio held in the Fund. The financial statements identified the value of the new assets and accrued member benefits at that time as $1,284,763.
The Cutcher & Neale proposal signed by Dr Nespolon records that: Dr Nespolon's property portfolio (including the Cremorne Property) was valued at $10,400,000; he had debt of approximately $4,600,000 on the properties; his other assets were valued at $3,000,000 with debt of $1,763,000; and he had approximately $1,500,000 in his superannuation fund.
On 24 December 2019, Ms van Camp sent an email to Dr Nespolon asking him to share details of his will and his business dealings and voicing concerns about the future, in the following terms:
"Im so very worried about you darling, watching you being in so much pain and lacking energy without eating is torterous (sic). I wish there was something I could do to change this all for you and we could go back to the good old days.
I know you haven't wanted to share or felt that the time wasn't right to share any details of your will or business dealings or any finances with me in case something should happen but I'm growing more and more concerned about things especially for the sake of the girls plus the sake of your legacy as to how you would like things to run and operate. Its also been mentioned that there are quite a few debts at the moment both personal and business and that you are highly concerned about Dee Why, although none of the specific details have been shared.
I would really like to help and make sure we can sort out any concerns and issues. So far our discussions haven't resulted in any information and as a suggestion Im thinking it is probably much better if you share these details above plus any additional with James as he is your closest friend and has much knowledge about these areas and may make you feel more comfortable. I would also like to mention that I have a great concern about taking care of our girls as I have been the primary caretaker over the past five years and stayed at home how will I be able to take care of them as we have never had any access to any bank accounts and finances, would we have any access to finance immediately if something should happen?
Things that concern me are about where we will live, how will I feed them and take care of day to day costs, education etc? Another question is am I liable as your partner for any of the personal and business debt and your preferences/advice regardless of whether I am for what I would do about them? Then your businesses, how you would like them run and what you'd like to do with Dee Why. Other things such as details of finances which banks are you with? How does it work with the financial obligations and whom is the debt owed to etc. All of these things please can you share them with James for us to have. someone whom has the information and can assist to sort it out.
It really saddens me to talk about all of this, please for the sake of the girls talk to James soonest in the next few days so this can all be put to rest, then we can have this all sorted out so you can concentrate all your energies on getting well…"
[8]
16 June - 15 July 2020: Dr Nespolon's admission to the NSPH, Ms van Camp's directorship appointments and discussion with Mr Bramble regarding a BDBN
On 16 June 2020, Dr Nespolon was admitted to the RNSH with abdominal pain. He was diagnosed with a small bowel obstruction and discharged to the NSPH on 18 June 2020 where he remained for ongoing management until his discharge on 6 July 2020.
During this admission, Ms van Camp had a conversation with Dr Nespolon to the following effect:
"van Camp: If you die, there is no money for me and the children. I will not be able to survive financially.
Nespolon: There is plenty of money in the accounts.
van Camp: But on your death, the accounts will be frozen and I won't be able to access any funds.
Nespolon: Ok I'll transfer some money to your account."
Ms van Camp deposed that Dr Nespolon then transferred $10,000 into her bank account.
A day or so later, Ms van Camp had a conversation with Dr Nespolon to the following effect:
"van Camp: Harry, how am I going to live from month to month if something happens to you?
Nespolon: You will get money from Laverty Neutral Bay and CBD of about $10,000 per month. If it is not enough, ask Sacha [the practice manager at Neutral Bay] to give you money. You will get dividend payouts from the super fund shares and the Yeo St rent of about $5,000 per month."
In or about June 2020, Dr Nespolon also gave Ms van Camp access to the passwords for his iPad, computer and internet banking accounts, having told her that he thought it was time that he give her some information.
On 23 June 2020, Dr Nespolon sent a text message to Mr Bramble stating, "I am free most of the day so call when [you] have a moment."
At 12.36pm that day, Mr Bramble called Dr Nespolon and they spoke for about 16 minutes, primarily about control of the corporate structure of Dr Nespolon's medical practices. During the conversation, Mr Bramble said to Dr Nespolon the following: Dr Nespolon should consider putting in place a BDBN for the Fund; a BDBN creates a certainty of outcome as to where superannuation is directed rather than the uncertainty that can occur under a will; there can be a potential tax saving on the payment of a death benefit of up to 17% of the member's balance if the BDBN goes to a financial dependant; there could be a potential tax saving due to being able to keep the monies inside the Fund and avoiding or deferring capital gains tax on the sale of investments; and there is the potential to create a death benefit pension which would create tax-free investment earnings within the Fund, though care needs to be taken with pensions for recipients under the age of 60.
[9]
15 - 20 July 2020: Dr Nespolon's final admission to the NSPH and further dealings with Cutcher & Neale
On 15 July 2020, Dr Nespolon was admitted to the NSPH.
During this admission, Cutcher & Neale continued to liaise with Dr Nespolon and Ms van Camp about Dr Nespolon's affairs, including about the Fund.
On 17 July 2020, Ms Brown sent Dr Nespolon and Ms van Camp two emails, both copied to Mr Bramble.
The first email proposed a draft agenda for a meeting on 20 July 2020 of five headline items, which included "ASIC" and "SMSF - Matters to Consider". The "SMSF - Matters to consider" were recorded as "Advisor", the appointment of Ms van Camp as a member of the Fund and officeholder of the trustee of the SMSF, and "Rollover Industry Super to SMSF (consider insurance)".
The second email forwarded Mr Bramble's 25 June email (referred to at [64]), describing it as "for discussion on Monday" and being in relation to moving the SMSF to Cutcher & Neale, and also stating that Mr Bramble would talk more in relation to the proposed fee and what they could do. As events transpired, the meeting scheduled for 20 July did not take place (T47.38).
At 12.00am on 20 July 2020, Ms van Camp sent Dr Nespolon an email stating as follows:
"… I'm still concerned as to how I can cover monthly living, school, childcare, sports etc costs for me and the kids with a monthly and yearly income. Please can you clarify as it is not stated in the will and James and Walter would not know how you see this to come about and from where.
Please can you send me an email response where you clearly lay it out as you see it so that it can be clear and no confusion or misunderstanding…"
Dr Nespolon responded at 12.07am as follows:
"I am still fucking concerned that you don't listen. We discussed this at least 5 times. You read the will today. What the fuck is wrong with you?"
Ms van Camp sent another email to Dr Nespolon at 12.22am, seeking to clarify what Dr Nespolon had said in relation to her future income as follows:
"So this Is what you said.
Lindy's income:
1. Laverty neutral bay and the city income $10K approx after Covid as reduced rates during Covid.
2. Lindy to ask Sascha for monthly income from neural (sic) bay
3. Lindy to use all dividend payouts from
Shares as contributing to yearly income
4. Yeo street rent as monthly income 5K approx after Covid reduced rates during Covid
That's what you have outlined.
You also said Superfund dividend but tyere (sic) will be no superfund dividends as your superfund is being paid out to debt - correct?
Let me know if all correct and if I missed anything?"
[10]
23 July: Dr Nespolon makes his last will
At about 1.00pm on 23 July 2020, Dr Nespolon executed his last will (Will). It was witnessed by two solicitors from Piper Alderman who Ms Benge had been arranged to attend on Dr Nespolon that day.
Ms van Camp was at NSPH when the Will was signed and she executed an acceptance of a Power of Attorney at that time. She had been given access to the Will and read it earlier it but could not remember exactly when (T60.34-6).
The Will was prepared by Ms Benge and its terms reflect the matters addressed in her advice and the instructions received from Dr Nespolon in November 2019.
The Will records that it had been made to complement the plan and structure of Dr Nespolon's estate and financial affairs (cl 3) and contains an acknowledgement that it was a complex document (cl 4). Under the Will, Dr Nespolon:
1. appoints Ms van Camp, Mr Dickson and Mr W Nespolon as the executors and provided that decisions shall be made jointly or by majority if there was a deadlock between them: cll 8 and 9;
2. directs that the executors appoint themselves as directors of any company in which he owned shares at the date of his death and that all shares of any company and units in unit trusts held at the date of his death form part of the residue of his estate: cl 15;
3. expresses his wish that the trusts and companies be administered in a manner consistent with the intentions set out in the Will: cl 16;
4. gives the executors the power to apply superannuation and life insurance proceeds towards the payment of any outstanding debts, mortgages or loans: cl 17;
5. gives Ms van Camp all of his household furniture, contents, personal effects (including any motor vehicle owned by Dr Nespolon), clothing, jewellery and other articles of personal use and adornment: cl 18;
6. gives Ms van Camp a right of residence at the Cremorne Property subject to her keeping the improvements in a reasonable state of repair, maintenance and condition; directs the trustee of the Harry Nespolon Testamentary Trust (established by cl 21 of the Will) to pay the outgoings, insurance premiums and costs of keeping the residence in a state of reasonable repair, maintenance and condition; and directs the executors, upon the written request of Ms van Camp, to sell the Cremorne Property and purchase a substitute residence: cl 19;
7. provides for the residue of the estate to be settled on a trust to be known as the Harry Nespolon Testamentary Trust, the primary purposes of which was to provide for or promote the maintenance, education, advancement or benefit of the beneficiary(s); appoints the executors as the initial appointors and trustees of the trust, Ms van Camp and their two daughters as the primary beneficiaries, and the issue of his daughters and Dr Nespolon's mother as other discretionary objects of the trust; and provides for the trustees to have a discretion as to the application of the income and capital of the trust: cll 21 and 30;
8. expresses his wish that, where the primary beneficiary has not attained the age of 25 years, the trustees preserve the capital of the fund as far as is reasonably possible and limit the application of capital to the primary beneficiary's medical and dental treatment, education (including vocational training), reasonable maintenance and welfare: cl 33; and
9. gives the executors the power to hold all or part of a primary beneficiary's share of a superannuation lump sum death benefit in a separate superannuation proceeds trust: cl 41.
[11]
23 and 24 July: Communications with Cutcher & Neale and text messages between Ms van Camp and Dr Nespolon
Following execution of the Will, Dr Nespolon told Ms van Camp that: "Now that I have signed my Will I still need to sort out my super fund. This is the last item on my list that I have to deal with".
In cross-examination, Ms van Camp said that she did not know at that point what Dr Nespolon was referring to, just that he was referring to the topic of his superfund and that it was not discussed further. She described the superfund as "one of the items that we'd made earlier on the list", said that she was relieved that Dr Nespolon was looking into that topic and later gave evidence that it was important that they got the list complete because she had been chasing Dr Nespolon to wrap up his affairs since December 2019 (T69.11- 15, T70.34-6).
At 4.43pm on 23 July, Ms van Camp called Cutcher & Neale and left a voice message. At 5.21pm, she spoke with someone at Cutcher & Neale for 67 seconds.
Shortly after the call at 5.21pm, Ms van Camp had a telephone call with a social worker at the NSPH. Ms van Camp could not recall what she discussed with the social worker. The social worker's progress note of the conversation records that Ms van Camp sounded "stressed" and that "she has been better" and that their call was interrupted by another call that Ms van Camp "had been waiting for".
At 5.23pm, Ms van Camp had a call with Cutcher & Neale that lasted approximately 17 minutes.
It is not clear whether it was Mr Bramble or Ms Brown that Ms van Camp spoke to during the call at 5.23pm. Ms van Camp and Mr Bramble both gave evidence that they spoke that day and the Cutcher & Neale records for Mr Bramble for 23 July 2020 suggest that he spoke to Ms van Camp at this time as the entry for him of 5.30pm to 6.00pm stated, "Nespolon SMSF issues". However, the number that called Ms van Camp at 5.23pm was not Mr Bramble's number and Mr Bramble gave evidence that it could have been Ms Brown's mobile (T50.38). The Cutcher & Neale records in respect of Dr Nespolon's matters also records an entry by Ms Brown for 60 minutes on 23 July that states, "Lindy + check ASIC + phone call and see JHB + email".
Ms Brown sent two emails to Dr Nespolon that were copied to Ms van Camp and Mr Bramble, after the 5.23pm call.
[12]
24 July 2020: Dr Nespolon gives instructions to Ms Benge to prepare the BDBN
Between about 2.30pm to 4.00pm on 24 July 2020, Ms van Camp visited Dr Nespolon in hospital.
During Ms van Camp's visit, at approximately 3.00pm, Dr Nespolon called Ms Benge (2.30pm in Adelaide where Ms Benge was located at the time of the call: T131.36) and they spoke for 2 minutes and 25 seconds. During the call, Dr Nespolon gave Ms Benge instructions to prepare a BDBN in favour of Ms van Camp.
Ms Benge prepared a handwritten file note of her call with Dr Nespolon, which states as follows:
"(1) Wants to prepare a BDBN urgently
- accountant said it has to go to Lindy o/wise will pay tax
- doesn't want to pay any tax
(2) Pointing out his will purposely allows super to be used to discharge debts
-->
doesn't matter as life insurance is separate??
I understand it is not [therefore] part of super benefit
explaining $ [therefore] won't go to estate - how will debts be paid??
(3) Sounds confused. Medication?? - 3.34pm
Accountant says I have to do it
Advising need copy of SMSF trust deed which hasn't been sent to me to date.
Needs to comply with deed o/wise not binding
(4) H to email & we will discuss on Monday morning when I've reviewed it.
Suggesting it would reverse his intention in will.
(5) Concerned re capacity --> sounded drugged up."
Ms Benge gave oral evidence of her conversation with Dr Nespolon on 24 July 2020, as follows (T116.31-117.14):
"I received a phone call from Dr Nespolon during which he indicated that he needed to urgently prepare a binding death benefit nomination. That the accountant had told him that all of the super needed to go to Lindy otherwise he would pay tax on it. That he didn't want to pay any tax on the superannuation. I then asked him or reminded him of the conversation that we had had, and his instructions back in November 19, in regards to the payment of a superannuation death benefit. I reminded him at that time that the decision was that this superannuation benefit should be used towards the discharge of debts under his estate, and to do so, those proceeds would need to be paid to his estate. That if he wished to prepare a binding death benefit in favour of Lindy, yes, while that would be tax free, it wouldn't be available to his estate as it would be paid outside of his estate.
I then asked, "If that was the case, how would the mortgage and the liabilities over the property and the shares be paid?". He indicated to me that the accountant said he had to do it. I then asked for the accountant's name. Up until that point, advisor details hadn't been provided to me by Dr Nespolon. He didn't provide me with that name. I asked again, and offered to speak with the accountant about the structure we'd put in place, and what he wanted to achieve. He then told me that it didn't matter, because the life insurance was not part of the self managed super funds, so it didn't matter if the super fund on its own went to Lindy. I then again asked for the accountant's name. He did not provide me with that name. He continued to say that the accountant told him to do it.
I then indicated that to do that, as I had requested before, I would need a copy of his self-managed super fund deed, which I hadn't received to date. That if he was able to provide that to me, that I would review that deed over the weekend, and that was because that phone call came at about 3.34pm or 3.30-ish on the afternoon of a Friday. I said I'd review it over the weekend, and I would call him on Monday morning to discuss whether he still wanted to continue with the binding nomination, or whether he could in fact prepare a binding nomination under the terms of the deed."
[13]
26 July 2020: Dr Nespolon signs the BDBN
Dr Nespolon's condition deteriorated on the morning of 26 July.
Dr Nespolon was nauseated and vomiting early in the morning, his stomach was decompressed with a nasal gastric tube and, following three "Rapid Responses" for respiratory distress, hypoxia and hypotension, he was later transferred to the Intensive Care Unit (ICU).
The hospital progress notes record that Dr Nespolon was reviewed at 10.34am and "looks terrible" but "probably the best he's felt in last 3 hours" and, at his review at 11.45am (by Dr Stedman and Dr Tan from the ICU), he was "very frail. Alert, orientated and uncomfortable". It was noted that he was going to be transferred to the ICU after a CT scan and that ongoing discussions about his goals for care had been had.
Dr Stedman's file note of his reviews with Dr Nespolon that day record that during his reviews at 9.05am and 11.45am, they discussed Dr Nespolon's medical career, his role as President of the College of General Practitioners and general practice, and that they had a "frank discussion" about Dr Nespolon's advanced pancreatic cancer, the likelihood that he would die in the coming days, Dr Nespolon's beliefs about end-of-life care and that comfort was the most important thing for him at that stage. Dr Stedman's file note records that he "found our discussion appropriate and informed" and that Dr Stedman wanted to bring Dr Nespolon to the ICU so he could get more intensive palliative nursing care than was available on the ward and because he felt that it was a courtesy to a colleague to provide Dr Nespolon "a good death which he deserved and had asked me for".
At around 12.00pm on 26 July 2020, Ms van Camp received a call from Dr Chan telling her that Dr Nespolon's condition had deteriorated and he was going to be transferred to the ICU. Dr Chan recommended that she come to the hospital soon, told her they were taking steps to make Dr Nespolon comfortable and asked for her "position on life support", from which Ms van Camp inferred that there was a possibility that he could pass away. Ms van Camp told Dr Chan that she would come to the hospital and mentioned that there was a last document that Dr Nespolon needed to sign.
At 12.04pm, Ms van Camp sent an email to Ms Benge, using Dr Nespolon's email address, in response to Ms Benge's email (at [119] above), that stated: "Urgently need this today is [sic] possible".
[14]
4 August - 21 January 2022: Events after Dr Nespolon's death
On 4 August 2020, Ms van Camp sent the signed BDBN to Mr Dickson, describing it as "the document outstanding signed by [Dr Nespolon] 26/7 for your files".
On 17 August 2020, Bellahealth received the sum of $2,954,911 into the member account of Dr Nespolon, which were the proceeds of the life insurance policy that Bellahealth held on Dr Nespolon's life.
That day, Ms van Camp sent an email to Mr Dickson in which she suggested that the transfer of the Fund to Cutcher & Neale be put on hold to allow time to investigate whether the extra cost was worth it.
On 9 November 2020, Ms van Camp sent an email to Ms Benge asking her to explain "in simple terms" what the BDBN was giving her "entitlement to / instruction for".
Ms van Camp deposed she had read the terms of the BDBN sometime after Dr Nespolon's death and saw that she was named as a beneficiary but she was not sure what that meant for her "practically". She gave evidence that, at a meeting with Ms Benge, Mr Dickson and Mr W Nespolon, she asked about the BDBN and Ms Benge said to her, "I wouldn't pay too much attention to that document if I were you, we are not sure you want to exercise it", and during a telephone call with Ms Benge after sending the 9 November email, Ms Benge told her that she would need to seek her own legal advice if she wanted to know the answer to her questions regarding the BDBN.
On 21 December 2020, Ms Benge sent an email to Ms van Camp, Mr Dickson and Mr W Nespolon that referred to a conference on 1 December 2020 and attached a draft "Resolution of [Bellahealth's] Directors without a Meeting" in relation to a determination of "Bellahealth PL atf Nespolon Superannuation Fund in regard to the payment of [Dr Nespolon's] superannuation death benefits". The draft resolution stated that the BDBN was not validly executed in accordance with SIS Act and Regulation, on the basis of a failure to comply with reg 6.17A(3) and resolved that Dr Nespolon's death benefits in the Fund would be paid as follows: the sum of $2,954,911 to Dr Nespolon's legal personal representative of the Dr Nespolon and the balance to Ms van Camp, in accordance with cl 13.5(a) of the Fund Deed.
Pausing here, it was common ground at the hearing, that reg 6.17A does not apply to the Fund, as a self-managed regulated fund: Hill v Zuda Pty Ltd (2022) 275 CLR 24; [2022] HCA 21, at [27]-[32].
[15]
Other financial matters
At the hearing, the total value of Dr Nespolon's member benefit was estimated to be $4,722,000, of which approximately $1,700,000 comprised the value of shares.
The gross value of Dr Nespolon's estate was valued at $9,229,067, which included the Cremorne Property valued at $4,425,000. Liabilities of the estate were estimated to be $2,147,753 comprising, in the main, a NAB home loan of $1,811,979.29.
Dr Nespolon was a guarantor of loans (including mortgages in relation to the Dee Why and Neutral Bay properties) to PMC 633 Pty Ltd, Harley Level 1 Pty Ltd and Pterygium 5 Pty Ltd (Medfin Loans), and his contingent/guaranteed debts are estimated to total $3,650,092.
The executors have agreed that the Dee Why and Neutral Bay properties, which have an estimated value/market sale price of $3.8 million, will be sold and the proceeds applied to discharge the Medfin Loans. On the assumption that occurs, Dr Nespolon's estate is not likely to be called on to pay the Medfin Loans.
On that basis, the estimated net value of Dr Nespolon's estate is $7,081,314 (the gross estate less liabilities but excluding non-estate assets after repayment of the Medfin Loans), from which some tax and accrued interest will need to be deducted.
The Pitt Street property, which is owned by Third Practice Pty Ltd, as trustee for the Third Practice Unit Trust, was valued at $3,000,000 in September 2020 and was subject to an option to purchase for $5,183,946.37 which appears not to have been exercised. Ms van Camp holds all the units in the Third Practice trust as trustee for the LVC Trust.
[16]
Other medical evidence
Prior to and during his final admission, Dr Nespolon was prescribed and administered opioid medications for pain, including morphine (administered subcutaneously) and targin and endone (administered in oral tablet form).
The hospital progress notes and records indicate that on his discharge from RNSH to NSPH on 18 June 2020, Dr Nespolon was taking targin tablets of 40 milligrams (mg) twice a day and suggest that he had been taking targin tablets of 60 mg twice a day on his admission to NSPH on 15 July 2020.
During his final admission, in the period 15-25 July, Dr Nespolon was administered morphine subcutaneously and endone and targin on 15 and 16 July, as follows:
1. on 15 July, 60 mgs of targin;
2. on 16 July, 5 mgs of endone, 60 mgs of targin and 10 mgs of morphine;
3. on 17, 18, 19, 20, 21 and 22 July, morphine in varying doses throughout the day, from a high of 55 mgs (in total) on 17 July to a low of 22.5 mgs (in total) on 22 July;
4. on 23 July, 42.5 mgs of morphine, which included doses of 7.5 mgs at each of 12.40pm, 3.10pm, 6.10pm and 10.20pm;
5. on 24 July, 37.5 mgs of morphine, which included doses of 7.5 mgs at each of 10.15am, 12.50pm and 6.25pm; and
6. on 25 July, 62.5 mgs of morphine, comprising doses of 10 mgs at 2.00am and 6.06am, 7.5 mgs at 8.30am, 5 mgs at 12.00pm and 7.5 mgs at each of 3.15pm, 6.15pm, 8.30pm and 10.15pm.
As to 26 July, the NSPH medication records and Dr Stedman's evidence record that Dr Nespolon was administered the following:
1. morphine given subcutaneously of 7.5 mgs at 1.00am, 10 mgs at 7.10am and 10 mgs at 12.10pm;
2. ondansetron, given intravenously of 4 mgs at 9.00am and 4 mgs at 11.55am;
3. 1 mg of ativan (lorazepam), given sublingually at 11.50am; and
4. an infusion of 1 mg of morphine and 1 mg of midazolam (Infusion) at around 2.30pm.
Dr Stedman believes that morphine and lorazepam, but not ondansetron, could have affected Dr Nespolon's capacity to know and approve of the contents of the BDBN. He could not say with any degree of certainty what specific effect any particular medication in fact had on Dr Nespolon's capacity to know and approve of the contents of the BDBN and he was unable to say to what extent those medications would have such an effect in the circumstances.
Dr Chan also gave evidence that some of the medications administered to Dr Nespolon could have had an effect on his capacity to know and approve of the contents of the BDBN but could not say what that particular effect might have been.
[17]
Did Dr Nespolon have capacity to make the BDBN on 26 July 2020
[18]
Legal principles
The parties accepted that Gibbons v Wright (1954) 91 CLR 423; [1954] HCA 17 (Gibbons v Wright) is the leading authority on the question of the nature and degree of mental capacity to affect an inter vivos transaction.
In Gibbons v Wright, Dixon CJ and Kitto and Taylor JJ said (at 437-39):
"The law does not prescribe any fixed standard of sanity as requisite for the validity of all transactions. It requires, in relation to each particular matter or piece of business transacted, that each party shall have such soundness of mind as to be capable of understanding the general nature of what he is doing by his participation.…
[In Ball v Mannin (1829) 1 Dow & Cl 380; 6 ER 568, the House of Lords] approved a statement in the charge that as one test of the requisite capacity the jury was at liberty to consider whether the person concerned was capable of understanding what he did by executing the deed, when its general purport was explained to him. The principle which the case supports … appears to us to be that the mental capacity required by the law in respect of any instrument is relative to the particular transaction which is being effected by means of the instrument, and may be described as the capacity to understand the nature of that transaction when it is explained. As Hodson LJ remarked in [Estate of Park [1953] 2 All ER 1411 at 1436],
'… one cannot consider soundness of mind in the air, so to speak, but only in relation to the facts and the subject-matter of the particular case.' …
Ordinarily the nature of the transaction means in this connection the broad operation, the 'general purport' of the instrument; but in some cases it may mean the effect of a wider transaction which the instrument is a means of carrying out: Manches v Trimborn (1946) 174 LT 344, at p 345. In the present case, it was necessary, we think, that the two sisters should have been capable of understanding, if the matter had been explained to them, that by executing the mortgages and the memorandum of transfer they would be altering the character of their interests in the properties concerned, so that instead of the last survivor of the three joint tenants becoming entitled to the whole, each of them would be entitled to a one‐third share which would pass to her estate if she still owned it at her death."
The principles in Gibbons v Wright establish that the standard of capacity required by law is specific to the particular transaction or instrument entered into. In that sense, the concept of 'mental capacity' is to be assessed relative to the nature, terms, purpose and context of the particular transaction and complexity of the instrument in question: Scott v Scott [2012] NSWSC 1541 at [197]-[200]; Szozda v Szozda [2010] NSWSC 804 (Szozda v Szozda) at [27]-[35].
[19]
Parties' submissions
The defendants contended that Dr Nespolon had lost capacity to understand and enter into the transaction at the time the BDBN was signed and, for that reason, the BDBN is void and unenforceable. They submitted that the evidence of Ms Benge as to what occurred on 24 July and the evidence given by Dr Stedman, Dr Chan and Professor White raised a medical and factual issue as to Dr Nespolon's capacity that was sufficient to displace their evidentiary burden of showing there is sufficient evidence to raise the issue of capacity. They said that the capacity issue is not met by any other evidence, such that the Court should be not satisfied that Dr Nespolon had the requisite capacity at the time he executed the BDBN.
The defendants' submissions referred to both the "general purport" and "wider transaction" components of the principles relevant to assessing capacity, as referred to in Gibbons v Wright, and the relevance of the provenance of the transaction, citing Hanna v Raoul.
While accepting that these proceedings do not concern Dr Nespolon's testamentary capacity, the defendants submitted that authorities relevant to testamentary capacity are relevant because of the nature of the transaction entered into by Dr Nespolon, which has the character of a power of appointment of Dr Nespolon's member interest in the Nespolon Superannuation Fund that takes effect after his death.
The defendants submitted that the capacity to enter into a BDBN requires, at a minimum, the capacity to understand the nature and extent of the superannuation member interest disposed of, to comprehend the range of dependent persons able to be the subject of a binding nomination and the available choices when they are explained (namely, binding the trustee to pay the member benefit to one or more dependents or to the executors named in the will, or making no nomination and allowing the trustee to exercise a discretion as to payment of the death benefit) and to be able to weigh up and discriminate between those options. They submitted that where the member's will provides the executors with optionality as to the way in which a member's benefit can be utilised, the wider transaction component of Gibbons v Wright requires the capacity to appreciate, when they are explained, the options available as to the use of the member benefit in accordance with the will, which in this case, was the ability of the executors to use part of the member benefit to retire debt, even if there is a tax consequence and to establish one or more separate superannuation proceeds trusts, and to weigh up and discriminate between those options.
[20]
Consideration and determination
Having considered the parties' submissions and the evidence in this case, I am not satisfied that the defendants have established that Dr Nespolon lacked the mental capacity to make the BDBN on 26 July 2020. For the following reasons, the totality of the evidence satisfies me, on the balance of probabilities, that Dr Nespolon was capable of understanding the nature of the act of making the BDBN and the broad effect it would have.
In considering the issue of capacity, it is necessary to focus on the BDBN, as the particular instrument signed by Dr Nespolon and the effect it would have. As was stated by the High Court in Gibbons v Wright at 438:
"…the mental capacity required by the law in respect of any instrument is relative to the particular transaction which is being effected by means of the instrument, and may be described as the capacity to understand the nature of that transaction when it is explained."
I accept that the BDBN had the character of a binding power of appointment or voluntary disposition of all of Dr Nespolon's member's interest in the Fund to a nominated Dependant that was to take effect on his death. However, I am not persuaded by the defendants' submissions that the minimum capacity requirements are all of those set out at [178] above or that suggest that entry into the BDBN involved a particularly complex transaction. The defendants' references to comprehending, weighing up and discriminating between options seem to me to take the analogy with testamentary capacity too far and overlook that the key focus of the inquiry is on Dr Nespolon's capacity to understand the general nature and effect of the BDBN, had such an explanation been given to him.
Unlike Dr Nespolon's Will, the BDBN itself was not complex. It is a short document and straightforward in its terms.
The essential general nature and broad operation of the BDBN is apparent from its terms, namely that Dr Nespolon, the sole member of the Fund, was specifying how his member benefits were to be paid on his death in a manner binding on the Fund Trustee, rather than leaving the decision as to how they were to be paid to the discretion of the Trustee. The express terms of the BDBN provide for the Trustee to pay 100% of Dr Nespolon's member benefits to Ms van Camp, as one of Dr Nespolon's dependants. The effect of that direction is that Dr Nespolon's member benefits would not be paid to his executors or estate and dealt with in accordance with the terms of Dr Nespolon's Will, which included the options for the executors to pay debt (cl 17), form part of the residue (cl 21) and to establish a separate superannuation trust to the benefit of Dr Nespolon's dependents (cl 41).
[21]
Should the BDBN be set aside by reason of unconscionable conduct on the part of Ms van Camp?
[22]
Legal principles
The principles relating to unconscionable conduct were set out in Commercial Bank of Australia v Amadio (1983) 151 CLR 447 at 459-460, 461 and 474; [1983] HCA 14 (Amadio). The Court held that unconscionability involves: a relationship that places one party at a special disadvantage vis-à-vis the other; knowledge of that special disadvantage by the stronger party; and unconscientious exploitation of the stronger party of the weaker party's disadvantage. These "considerations" were approved by the plurality in Stubbings v Jams 2 Pty Ltd [2022] HCA 6; 96 ALJR 271 (Stubbings) at [39] (Kiefel CJ, Keane and Gleeson JJ), subject to the caution that they "should not be understood as if they were to be addressed separately as if they were separate elements of a cause of action in tort".
In Amadio at 474-5, Deane J stated:
"Unconscionable dealing looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity or good conscience that he should do so. The adverse circumstances which may constitute a special disability for the purposes of the principles relating to relief against unconscionable dealing may take a wide variety of forms and are not susceptible to being comprehensively catalogued. In Blomley v Ryan [(1956) 99 CLR 362 at 405; [1956] HCA 81], Fullagar J listed some examples of such disability: 'poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary'. As Fullagar J remarked, the common characteristic of such adverse circumstances 'seems to be that they have the effect of placing one party at a serious disadvantage vis-à-vis the other'."
In Mentink v Olsen [2020] NSWCA 182 (Mentink v Olsen) at [2], Meagher and Payne JJA, explained the principles in the following terms:
"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)."
[23]
Parties' contentions
The defendants submitted that the BDBN should be set aside by reason of the unconscionable conduct on the part of Ms van Camp on the basis of Austin J's formulation in Turner v Windeyer, as the evidence established the first three elements and improvidence (with the last two elements presumed) or all five elements (T223.28).
The defendants contended that, at the time he signed the BDBN, Dr Nespolon suffered from a special disadvantage vis-à-vis Ms van Camp, having regard to the following matters: Dr Nespolon was a patient in the ICU suffering from terminal cancer, the deterioration of his condition over the course of the morning of 26 July, and the impact of the medications he received that day to relieve his pain. They contended that Dr Nespolon's special disadvantage seriously affected his capacity to judge and protect his own interests and the interests of his estate and that Ms van Camp knew, or ought to have known, of Dr Nespolon's special disadvantage, referring to Ms van Camp's text messages with Ms Dickson about Dr Nespolon's condition, which would have worsened the following day, the day of his death.
The defendants submitted that Ms van Camp took advantage of the opportunity presented by Dr Nespolon's disadvantage by:
1. acting to persuade Dr Nespolon to make a BDBN in her favour during his July 2020 hospital admission when he did not intend or desire to do so by impressing her claims for income on Dr Nespolon. They submitted that Ms van Camp is the only possible source of the information provided to Dr Nespolon that he had to make a BDBN in her favour for tax reasons because nothing further arose from the 23 June advice from Mr Bramble and it was not mentioned again until Ms Brown raised it an hour after Mr Bramble or Ms Brown spoke to Ms van Camp on 23 July (T236.17-21);
2. facilitating the making of the BDBN by using Dr Nespolon's email account on 25 and 26 July 2020 to request Ms Benge to prepare the BDBN without disclosing to Ms Benge that the email came from her rather than Dr Nespolon; and
3. printing the BDBN and taking it to Dr Nespolon in the ICU to sign without giving a copy of Ms Benge's written advice to Dr Nespolon or explaining the advice to him. They submitted that Ms van Camp knew or ought to have known the tenor of the BDBN that Ms Benge had prepared when she printed it out and her evidence that she was not aware of the contents should not be accepted.
[24]
Consideration and determination
To establish unconscionability, the defendants must prove that: Dr Nespolon was at a special disadvantage vis-à-vis Ms van Camp in the sense that the disadvantage adversely affected his ability to make a judgment about the BDBN; that Ms van Camp had actual or constructive knowledge of the existence and effect of Dr Nespolon's special disadvantage; and that Ms van Camp unconscientiously took advantage of Dr Nespolon's special disadvantage, with the BDBN being the product of the unconscionable conduct.
My finding that Dr Nespolon did not lack mental capacity to make the BDBN does not mean that he could not be in a special disadvantage in the relevant sense. 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: Mentink v Olsen at [3] (Payne and Meagher JJA), citing Bridgewater v Leahy at [115]. Louth v Diprose was such a case; the special disadvantage arose from a strong emotional dependence and attachment.
The disadvantage must be "special", in that Dr Nespolon must have been unable to make a judgment or worthwhile decisions as to or in his own best interests. The issue of special disadvantage is not to be considered separately from the other circumstances, particularly the relationship between he and Ms van Camp and the nature of the transaction, but rather as part of the broader question, which is whether the BDBN (the impugned transaction) was made in circumstances where Ms van Camp took advantage of an inability on the part of Dr Nespolon to make worthwhile decisions in his own interests, which inability was sufficiently evident to Ms van Camp to render her conduct unconscionable: Stubbings at [39], Kiefel CJ, Keane and Gleeson JJ; Kakavas at [124]; Thorne v Kennedy at [64].
Dr Nespolon had been diagnosed with a terminal illness in November 2019, at which time he started to put his affairs in order by making arrangements to instruct Ms Benge about his Will and then appointing Cutcher & Neale in relation to his financial affairs in December. He had various hospital admissions and was medicated with opioids from around 18 June 2020, with morphine administered on a regular basis from 16 July during his last admission.
During his June and July hospital admissions, Dr Nespolon was seriously ill, in pain at times and his medications may have impacted his cognitive functioning to a degree. As I have found, by 24 July, Dr Nespolon was in the advanced stages of his terminal illness and his physical condition deteriorated over the next two days. By 25 July, Dr Nespolon was very weak, uncomfortable and in pain, for which he received increased doses of morphine on 25 July that continued on 26 July when he was transferred to the ICU. However, having considered the totality of the evidence and the parties' submissions, I am not satisfied that the BDBN was procured and signed by Dr Nespolon by reason of any unconscionable conduct on the part of Ms van Camp. This is primarily because I am not persuaded that the BDBN came into existence as a result of Ms van Camp taking advantage of an inability of the part of Dr Nespolon to make worthwhile decisions in his own interests, which inability was sufficiently evident to Ms van Camp, or that Ms van Camp's failure to make Ms Benge's email advice available to Dr Nespolon on 26 July was unconscientious in the circumstances of this case.
[25]
Conclusion and orders
The defendants have failed to establish that the BDBN should be set aside or is void and unenforceable on the grounds of lack of capacity and unconscionable conduct.
It follows, in my view, that it is appropriate to grant the relief sought in Ms van Camp's Statement of Claim in relation to the validity of the BDBN claim by declaring that the BDBN dated 26 July 2020 executed by Dr Nespolon is valid and binding and making an order for Bellahealth to pay Dr Nespolon's member benefits to Ms van Camp. I consider that payment should be made within 21 days, noting that Dr Nespolon's member benefits comprise shares as well as cash and there may be some administrative issues involved with arranging payment to be made forthwith.
The defendants' Cross Claim should be dismissed, as should Ms van Camp's claim for additional provision, given it was not pressed at the hearing.
As Ms van Camp experienced success in obtaining the primary relief she claimed and the Cross Claim is to be dismissed, there appears to me to be no reason why costs as between the parties should not follow the event other than in respect of the costs relating to Ms van Camp's claim for additional provision. My tentative view is that as the claim for provision was a discrete claim that raised separable issues to the validity of the BDBN, Ms van Camp should bear the costs of that claim, or at least they should not be borne by the defendants. For that reason and as the parties did not address on costs, I have not made a cost order at this stage.
The parties should confer to see if they can agree on the terms of the cost order to be made. I will make directions for Ms van Camp and the defendants to serve and provide to my chambers their short written submission as to costs (not to exceed three pages) by 31 January and 2 February 2024 respectively in the event that they cannot agree the costs order to be made, with the issue of costs to be determined on the papers.
For these reasons, I make the following orders:
1. Declare that the Binding Death Benefit Nomination dated 26 July 2020 executed by the late Dr Harry Nespolon (the Deceased) is valid and binding.
2. Order that the First Defendant pay to the Plaintiff within 21 days, the Deceased's Member Benefits from the Nespolon Superannuation Fund.
3. Dismiss the Plaintiff's family provision claim, as set out in prayer 3 for relief in the Statement of Claim filed on 19 November 2021.
4. Dismiss the Amended Cross Claim filed on 16 September 2022.
5. Direct the parties to notify Henry J's Chambers by 29 January 2024 if costs are agreed. If there is no agreement, direct that:
1. the Plaintiff/Cross Defendant serve and provide to Henry J's Chambers a written submission as to costs (not to exceed three pages) by 31 January 2024;
2. the Defendants/Cross Defendant serve and provide to Henry J's Chambers a written submission as to costs (not to exceed three pages) by 2 February 2024; and
3. the issue of costs be determined on the papers.
[26]
Amendments
22 January 2024 - Insertion of new [143].
[140] and [141] combined into [140].
Updated cross-reference in [197].
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: 22 January 2024
In addition to the issue of Dr Nespolon's capacity, there are factual disputes about Ms van Camp's knowledge and role in procuring Dr Nespolon's signature on the BDBN. The defendants submitted that aspects of Ms van Camp's evidence were not credible and should not be accepted.
In general, I have accepted much of Ms van Camp's evidence, particularly that which described her interactions with Dr Nespolon and his condition. Ms van Camp gave evidence in a clear and direct manner and her affidavit and oral evidence was generally consistent with the contemporaneous records. She came across as seeking to answer questions truthfully and to the best of her recollection. She acknowledged when she could not recall conversations and was open about the concerns for her financial position prior to Dr Nespolon's death. Ms van Camp's description of Dr Nespolon as someone who could not be challenged and who, "when [he] makes up his mind or has his affairs, he does them his way" (T67), was consistent with the picture painted by the text messages he sent. Her evidence that she was distressed and panicked at different times, particularly on 26 July, was convincing having regard to the circumstances she was facing at the time.
That said, given Ms van Camp's self-interest in the proceedings, her evidence that she "didn't remember all the details" and "was trying to piece them altogether after the event" (at T101.44-5) and Mr Bramble's evidence that he spoke to Ms van Camp about binding death benefit nominations, I have carefully considered her testimony about her knowledge and role in the creation and signing of the BDBN against the objective facts and the logic of events before making my findings on matters in dispute.
As to the other lay witnesses, Mr Bramble impressed me as a truthful witness who endeavoured to give evidence to the best of his recollection. Other than pointing out his lack of recall about some matters, no issues were raised by the defendants about Mr Bramble and I accept his evidence.
Ms Benge had a good recollection of her dealings with Dr Nespolon in relation to his will and the BDBN and acknowledged that her evidence was based on refreshing her memory from documents on her file. Her oral evidence about those matters reflected the contents of the contemporaneous handwritten and typed file notes she made at the time, and I accept it. I am not persuaded by Ms van Camp's submission that Ms Benge's evidence should be treated with caution because the file note of her call with Dr Nespolon on 24 July was created well after her conversation and her oral evidence expanded on matters and amounted to a reconstruction of what was discussed (T191.40-193.24). Ms Benge's file note was in a summary form and required some explanation and the time noted, of 3.34pm, was only one hour after the call took place.
Ms Benge gave evidence that she explained that Dr Nespolon's personal assets he owned formed part of his estate and could be dealt with by his will, that the assets that he owned in his family trust and corporate structures did not form part of his estate and would continue to be held by those structures after his death, and that superannuation that he had accumulated in his self-managed super fund (of which was the sole member and director of the corporate trustee) did not automatically form part of his estate either. In relation to superannuation, she gave the following evidence (T111.16-112.3):
"He advised me that at that time he understood his super fund was worth about $1.5 million, but in addition to the superannuation account he had a life insurance policy of about $3 million. I asked him whether that policy was owned by himself personally or part of the SMSF, a policy owned by the super fund, and he was fairly certain at that time it was owned by the super fund.
I then explained to Dr Nespolon that there were certain options for him in regards to super, because it did not automatically form part of his estate. Some of those options were traditionally that dependent spouses and children could receive superannuation benefits. It was an option for him to leave his superannuation to his partner, Lindy, which she would receive tax-free. If he did decide to do that, there was no guarantee that those proceeds could be used to discharge the mortgages of the property and the share portfolio, because that would be paid outside of his estate. And so the executors would not be able to call on those funds to discharge those debts. We discussed the possibility of leaving a death benefit pension to his daughters, as they would qualify as minors, but he very quickly disregarded exploring that option, because of his desire to discharge the mortgages, and for them to have somewhere to live.
And so, I explained then at that point, that a legal personal representative of an estate could receive the superannuation benefits. However, in doing so, firstly, it would be necessary to prepare a binding death benefit nomination, directing the trustee of the super fund to pay the death benefit in the manner he directed. If that were to occur, then I would need to consider the SMSF trust deed to ascertain whether the deed permitted binding death benefits to be firstly prepared. And if they were able to be prepared, the format in which it needed to comply with the requirements of that deed to remain valid. I also indicated that generally superannuation and life insurance are not capable of being used to discharge debts as a matter of principle, and if they - if it was his intention to direct the super into his estate for that purpose, we would need to give that specific direction or ability for the executors to do so under the terms of his will.
Following that discussion, he was - at the end decided he needed to think about it but was leaning towards paying the superannuation benefit to his estate."
In cross-examination, Ms Benge gave evidence that they discussed the potential tax implications in relation to superannuation and Dr Nespolon liked the idea of Ms van Camp receiving the money tax-free and then using it to pay estate debts (T122.1-17), that she did not provide information to Dr Nespolon about the potential quantum of the tax that might be incurred on his superannuation moneys as she did not have the information (T124.30-125.34); and that they discussed another option of providing tax free benefits, which was "if the executors did not exercise the option to pay the debt or the debts, then they could have paid the superannuation via the testamentary trust and use the powers to create the superannuation proceeds trust", which would empower the executors to segregate superannuation for death benefits beneficiaries at the time, being Ms van Camp and their daughters (T139.10-22).
On 7 November 2019, Dr Nespolon sent an email to Ms Benge confirming that Mr Dickson would be the other executor and he would send her the Fund Deed next week.
On 9 November 2019, Ms Benge sent Dr Nespolon a letter of advice, a draft will, a draft enduring power of attorney and a draft appointment of enduring guardian. The letter summarised the documents and relevantly records that:
1. Dr Nespolon's superannuation death benefit does not automatically form part of his estate and its payment is generally at the discretion of the trustee under the terms of the deed creating the fund;
2. to ensure that the executors can receive the superannuation proceeds to apply towards discharging the mortgage and margin loan, Ms Benge recommended that Dr Nespolon instruct her to prepare and that he execute a binding death benefit nomination in favour of his legal personal representatives and to enable her to do so, to provide her with a copy of the Fund Deed(s);
3. under the will, Dr Nespolon gives superannuation and life insurance proceeds to the executor to firstly repay any outstanding loans owing at the date of his death, with the balance to form part of the residue; and
4. part 4 of the will provides the executors with the ability to create separate superannuation proceeds trusts in the event that superannuation death benefits are paid to the estate for the benefit of any of the primary beneficiaries named in the will, which will ensure that any superannuation benefits paid to Dr Nespolon's estate will be received by those beneficiaries tax free if they satisfy the requirements set out in the SIS Act at the date of death.
On 14 November 2019, Ms Benge had a telephone call with Dr Nespolon about the draft documents she sent him, during which they discussed the following: Dr Nespolon wanted his brother, Mr W Nespolon, to be the third executor of his will; Dr Nespolon wanted super, which included a life insurance policy, to go to the estate; Dr Nespolon thought that there was about $5 million in the Fund with the insurance policy; Ms Benge told Dr Nespolon that he needed to prepare a binding death benefit nomination to deal with the super funds but she would need access to the Fund Deed to prepare it; Dr Nespolon said he had been "reading up on those" and would send her the Fund Deed when he was discharged from hospital so she could prepare the BDBN; Dr Nespolon did not believe that Ms van Camp would need any additional lump sum because of existing income from the trusts of at least $200,000 per annum; and Ms Benge would amend the will and email it to him for review.
In cross-examination, Ms Benge accepted that on 14 November, she did not give Dr Nespolon advice as to the tax consequences of his superannuation moneys being used to discharge estate debts (T127.1-4).
On 15 November 2019, Dr Nespolon sent an email to Ms Benge requesting an execution version of the will. Ms Benge responded that she would send one that day.
On 19 November 2019, Dr Nespolon was discharged from the NSPH. The Fund Deed was not sent to Ms Benge at this time. As events transpired, she did not receive it until 24 July 2020.
On 4 December 2019, Dr Nespolon sent an email to Ms Benge advising that he had executed his will. Ms Benge did not receive the original or a copy of the will (T127.26-41). The only will in evidence is the one he signed on 23 July 2020.
On 26 December 2019, Ms van Camp sent a copy of her email to Mr Dickson and asked him to speak with Dr Nespolon, in the following terms:
"… I've tried resolving this between [Dr Nespolon and I] for the past two months but we aren't getting anywhere and as you can see below there are a few matters and concerns that would be beneficial addressing. I'm particularly concerned about the practices and a summary of how he currently runs them and what his preferences are for their future. And of course concerned about the future of being able to take care of our girls.
I wanted to please ask you as someone Harry trusts and greatly respects that if you do have any opportunities over the next few preferably days or weeks to discuss the below with him so that it can be in line with his vision and also for the transition period to be smooth to prevent negatively affecting the businesses. He has worked so hard in building the practices up.
I'm not sure if it's necessary to leave business and personal passwords anywhere so that systems and documents can be easily accessible if you could give him advice as a lawyer on these topics and how this can easily be done it would be greatly appreciated. We have none of this in place at the moment.
I'm also greatly concerned because with each chemo session his body has become weaker and weaker. He is also unable to eat much some days nothing at all. He has been bed ridden since the last session, hence the urgency of this email. The sooner this is sorted out the better and there is currently a great sense of urgency…"
In cross-examination, Ms van Camp gave evidence that she sent these emails as she had become concerned about her and her daughters' future, such as where they would live and how she would take care of costs. She said that she did not have any detailed knowledge of Dr Nespolon's financial affairs and business dealings and described Dr Nespolon as someone who "always kept …everything close to his chest" (T58).
Mr Dickson spoke to Dr Nespolon regularly after he found out about his diagnosis and visited him in Sydney in December 2019 and February 2020. During the second visit, on 28 February 2020, Mr Dickson and Dr Nespolon had a conversation in words to the following effect:
"Nespolon: If I do not make it out of this I want you to make sure my girls have a good private school education. Lindy doesn't value education.
Dickson: Sydney private school education is very expensive. Its $30,000 for finger painting! What is it about $60,000 by the time they get to year 12?
Nespolon: About that.
Dickson: Is there enough money there?
Nespolon: There is a lot of assets, a fair bit of debt but there is plenty of insurance.
Dickson: Okay."
In another telephone conversation, Dr Nespolon told Mr Dickson that Ms van Camp was "not capable of handling this amount of money. She will need a lot of help."
In April 2020, Dr Nespolon and Ms van Camp completed Registry Wedding and Marriage Certificate forms, having discussed the prospect of getting married in the months leading up to his death.
Also in April 2020, Mr Bramble and Dr Nespolon had discussions during which Mr Bramble gave advice to Dr Nespolon about his business affairs, including about the tax benefits of having a company owned by a discretionary trust. Following those discussions, on around 22 April 2020, Pterygium 5 Pty Ltd was incorporated as the company to conduct the Covid testing clinic owned and operated by Dr Nespolon.
In cross-examination, Mr Bramble accepted that what he told Dr Nespolon was his "typical advice" about self-managed superannuation funds and binding death benefit nominations (T46.28-32). He said that he did not tell Dr Nespolon that it was essential to make a BDBN and said that he would have made Dr Nespolon aware of who a dependent was for "super purposes" (T53.44).
At 6.30pm on 23 June, Nicole Brown of Cutcher & Neale sent an email to Dr Nespolon and Ms van Camp, copied to Mr Bramble, advising that she had prepared the Australian Securities and Investments Commission (ASIC) forms to appoint Ms van Camp as a director of Second Practice Pty Ltd, Medical Practice Australia Pty Ltd, NBMP 156 Pty Ltd and Pterygium 5 Pty Ltd. Ms Brown's email stated that the only company that did not have Ms van Camp appointed as a director was the "Trustee of the Superannuation Fund" and that she would be in touch the next day in relation to the Fund and the fee to attend to compliance work into the future, in addition to appointing Ms van Camp as a member of the fund and completion of Super rollovers, as discussed a couple of weeks earlier.
Ms van Camp had been appointed as a director of Harley Level 1 Pty Ltd, PMC 633 Pty Ltd and Third Practice Pty Ltd on or with effect from 16 June 2020. She was appointed as a director of Second Practice Pty Ltd on 19 July 2020 with effect from 23 June 2020 and a director of Medical Practice Australia Pty Ltd and NBMP 156 Pty Ltd with effect from 23 June 2020.
On 25 June 2020, Mr Bramble and Dr Nespolon exchanged text messages about signing ASIC forms and super top-up contributions for he and Ms van Camp, in which Mr Bramble noted that the timing and need for making contributions was one of the reasons why Mr Bramble needed control of Dr Nespolon's SMSF.
Later on 25 June, Mr Bramble sent an email to Dr Nespolon with the subject line "SMSF". The email stated that Cutcher & Neale could not compete with Dr Nespolon's "current provider" (a reference to SuperEasy, the company that managed the Fund at that time), identified Cutcher & Neale's costs of, "$1500 upfront and $2600 on going (sic)", that there could be benefit in Ms van Camp becoming a director and a member "as per my text messages" and that having everything at "C&N will make a big difference in light of your current medical condition."
On 2 July 2020, Ms van Camp and Ms Brown exchanged emails (that were copied to Dr Nespolon and Mr Bramble) about documents and actions outstanding and the companies with joint directorships in which Ms Brown confirmed that the only company which Ms van Camp was not appointed as a director was the trustee of the Fund.
On 14 and 15 July 2020, Dr Nespolon exchanged emails with Alex Simonic of SuperEasy about adding Ms van Camp as a second member of his Fund. In an email dated 15 July 2020, Dr Nespolon stated:
"I would like to have my life partner as a second member of my SMSF. So if I have a corporate trustee I can only have one member, is what I understood you tell me."
At 1.10pm that day, Mr Simonic sent an email to Dr Nespolon that requested Ms van Camp's personal details and stated:
"Given the fact you have a Corporate Trustee, your partner will become second director and member of the fund. We will need to upgrade your Trust Deed to reflect the change…"
At 12.27am, Dr Nespolon responded: "And you wonder why I am angry".
At 12.31am, Ms van Camp sent a further email to Dr Nespolon again summarising the matters outlined in her email sent at 12.22am and asking what she had missed, to which there was no response.
In cross-examination, Ms van Camp was asked about the email exchange and gave the following evidence (at T60.46-T61.46; T66.5-11): she did not know if she actually read Dr Nespolon's will that day but she had read it prior; Dr Nespolon was incorrect when he said they had discussed the income from his estate and entitles "at least five times"; it was in the June admission that Dr Nespolon had mentioned income; the ability to afford living expenses and the like was a major issue for her; the information she set out about sources of income was based on what Dr Nespolon had told her in the June admission; she asked the question about "superfund dividends" to clarify as Dr Nespolon had mentioned something along the lines of "receiving dividends from the super fund shares" and she wasn't clear and she was asking Dr Nespolon if she had understood correctly when he said she was supposed to be receiving dividends from the Fund; and she accepted that Dr Nespolon never addressed her query about that matter or addressed her income concerns. Ms van Camp accepted that Dr Nespolon's reaction was "hostile", explained that Dr Nespolon was hostile a lot of the time during his illness and he took it out on her as his partner and support.
On 20 July 2020, Ms van Camp was told by Dr Reid, a palliative care doctor, that Dr Nespolon's prognosis was poor (T59.40). Dr Reid's progress note records that he had a long discussion with Ms van Camp; that Dr Nespolon had been in severe pain; that Ms van Camp was finding it very difficult to manage as he will not allow her to call doctors or nurses when he was in pain; and that she had very little support as all her family was in South Africa.
The first email, sent at 7.01pm, referred to discussions with Mr Bramble and a BDBN, in following terms:
"… Jarrod and I have spoken about the SMSF fee and propose a reduction in the $2,600 fee by 50% for 2020 and 2021 Financial Statements and Audit.
To ensure we hold the correct permanent file information into the future we do however need to complete the SMSF due diligence; the upfront fee as outlined for this is $1,500. All fees outlined are GST exclusive.
In light of your medical condition, I will draft an email for you to forward to the current SMSF Advisor to authorise for the information to be passed on to our office. We can then complete the ASIC documentation to appoint Lindy as an officeholder of Bellahealth Pty Ltd (Trustee of the SMSF); we can also prepare the information to appoint Lindy as a member of the SMSF.
Do you hold a current Binding Death Benefit Nomination (BDBN) for your SMSF? I will send you through a form to sign shortly[.] In case you are unsure; the BDBN requires original signatures and two witnesses (nurses at the hospital can witness). We should also consider Super SA Triple S Scheme and ensure your nomination is up to date.
Please do not hesitate to let us know If you require any assistance in relation to anything. Also, thank you for signing the documentation to appoint Lindy, these forms have been lodged successfully with ASIC…" (emphasis in original)
The second email from Ms Brown was sent at 7.02pm and attached a draft email for Dr Nespolon to send to the current manager of the Fund to arrange for the transfer of the management of the Fund to Cutcher & Neale.
Ms van Camp deposed that Mr Bramble called her on 23 July and said words to the following effect:
"Harry should consider transferring the administration of his super fund from SuperEasy to Cutcher & Neale. I am concerned that it will be difficult to obtain information from SuperEasy after Harry has died."
In cross-examination, Ms van Camp could not remember exactly what she discussed with Mr Bramble. She recalled that Mr Bramble was concerned about not having information on the superfund when Dr Nespolon died, with the main concern being to bring all the finances under the umbrella of Cutcher & Neale. She said that moving Dr Nespolon's "superannuation over to (sic) SuperEasy" was the only topic of conversation that she could remember. Ms van Camp was asked and rejected that it was likely that she "spoke with the accountant" about the income from Dr Nespolon's superfund and gave evidence that it was "not likely at all" as "he had nothing to do with the income", since it concerned the Will, which she described as private. She could not remember telling Mr Bramble that Dr Nespolon intended to use his superannuation to pay down his debts but that was one of her understandings having read the Will, explaining that Dr Nespolon had said she was receiving dividends from the superfund and the Will looked different, which was why she was confused and had been double checking with Dr Nespolon what the position was (T66.41-67.42).
Ms van Camp was asked about Ms Brown's email (at [91] above) and gave the following evidence:
(T68.5-28)
"Q. In that email, Ms Brown raises two topics. One, the transfer of Dr Nespolon's superannuation from SuperEasy to Cutcher & Neale.
A. Yes.
Q. Two, the making of a binding death benefit nomination.
A. Yes and this specifically with the subject heading of grouping the two together is where my confusion came in. Because she goes, SMS have fears (sic: SMSF fee) reduction and binding death benefit nomination. So I grouped the two concepts together.
Q. Given the proximity of the email to your conversation with Mr Bramble, it's likely that you had discussed the making of a binding death benefit nomination‑‑
A. No, we had not. We had definitely not.
Q. ‑‑in your phone conversation?
A. No. We had not. We had not. I didn't even know what a binding death nomination was. I thought that a binding death nomination was a document that you sign to hand over the control of the superfund ‑ from SuperEasy to Cutcher & Neale, which is also why I said in Harry's text message, "Are you going to deal with this via the accountants or the lawyers", because I thought it could be legally binding and that he could do it either way. But I ‑ obviously I got it wrong. Even Harry said I got it wrong, which I have subsequently realised."
Mr Bramble deposed that, to the best of his recollection, he called Ms van Camp to follow up an email sent by Ms Brown earlier that day and to check on Dr Nespolon's wellbeing. In cross-examination, he said that his conversation with Ms van Camp would have been about chasing up about control of the Fund and whether a binding deal benefit nomination had been signed or one was being prepared. He accepted that he may have covered the topics of his usual advice (referring to the matters he had told Dr Nespolon about, as referred to at [59] above) but said that was a big assumption and could not recall covering those matters (T51.21-T52.2).
At 8.44pm on 23 July, Ms van Camp sent Dr Nespolon a text message in which she expressed concern about her ability to afford her expenses and there was an exchange of texts between them, in the following terms:
"van Camp: Hi Harry as all the accounts freeze we need to put more money in my cash account for us to survive on for 3 months please. $10K is not enough as school fees alone are $4k a month which alone is 12K for the 3 months before we even buy food. Then what about house bills lights, electricity water etc and then some.
van Camp: What do you suggest we do please. Looking to you for direction as to how to sustain your daughters in that time. Please can you help me and them.
van Camp: At this rate I'll be forced to pull them out if school. If you're not going to do anything let me know and I'll hand in their resignation tomorrow.
Nespolon: Fuck off. You have not listened. Not understood. Usual threats. Really? I don't think so. Why don't you go and have a look at the accounts?
van Camp: They will be frozen when you die!!!!!
van Camp: We have no access to cash then!!!! Do you have a brain tumour???????
Nespolon: No. This is where u r so wrong. Do u want to try and understand? No. You have a scenario stuck in your thick head there is nothing I can say because it is what you think is going to happen. You only listen to people who agree with you. You are so gullible.
Nespolon: You do nothing. You don't have to do anything other than shut the fuck up and try and listen. You have not followed a single thing that I have told you. You love to catastrophies (sic). So before you continue to fuck everything up just come to earth.
Nespolon: You are impatient have no plan. No idea about anything. You are just going to fuck everything up. Not only do I have to deal with my cancer I have to deal with the stresss (sic) of you ringing people up behind my back. Breaching my privacy because you cannot be patient and have absolutely no boundaries. If you keep going this way I will give u something to worry about.
Nespolon: Let's face it you have not been able to follow a single instruction correctly.
Nespolon: Pull your head in."
In cross-examination, Ms van Camp rejected that Dr Nespolon's statement that she was "ringing people behind my back" was a reference to her call with Mr Bramble and said it was about speaking with the social worker and Dr Nespolon's oncologist, which she said made Dr Nespolon angry (T69.28-45). I accept Ms van Camp's evidence on this issue. It is supported by the contents of Dr Reid's progress note (at [79] above) and the fact that she had spoken to the social worker that day.
At 12.54am on 24 July 2020, Ms van Camp sent a text message to Dr Nespolon which said:
"Hi I've just seen the emails from Nicole and the reduction in fees offered. What do you think of their proposal? Or do you want to contact Donna today and arrange for the Superfund that way instead? Hope you're sleeping well and not in too much pain xx"
At 8.01am, Dr Nespolon responded by text stating: "…Two completely different things."
Ms van Camp deposed that she did not respond to Dr Nespolon's text message because she did not understand Dr Nespolon's statement at the time and it was her belief that he knew what he was doing. She said that when she sent her text message (at 12.54am), she understood that all Dr Nespolon needed to decide in relation to his super fund was whether the administration would be left with SuperEasy or transferred to Cutcher & Neale, which she thought could be done by Dr Nespolon signing documentation prepared by Cutcher & Neale or by signing documentation to be prepared by Ms Benge, and that she thought a BDBN was part of the documentation needed to change the administration of the Fund to Cutcher & Neale.
At 9.03am on 24 July, Ms Brown sent an email to Dr Nespolon, copied to Ms van Camp and Mr Bramble, that attached a form of "Notification of Member Preferred Beneficiaries" to the Trustee of the Fund (a document in the form of a BDBN), which Ms Brown's email stated was to be used in the event Dr Nespolon did not have a BDBN signed and witnessed for the Fund.
The form of BDBN sent to Dr Nespolon by Ms Brown provided that the Notification would not be binding on the Trustee unless, amongst other things, it was witnessed by two persons and only identified as the nominated beneficiary either "the Executor of My Estate" (if the super was to be dealt with in accordance with the Will) or persons who were Dr Nespolon's dependants. The form identified that it was to be binding on the Trustee (by the marking of a cross in a box) but was left blank in the section that was to identify who the preferred beneficiary(s) was, their relationship to the Member and the percentage of the benefits to which they would be entitled.
At 10.22am, Ms van Camp called Mr Bramble and they spoke for about 10 minutes.
Ms van Camp cannot remember the phone call or its contents. In cross-examination, Ms van Camp said that she definitely did not remember speaking to him about a binding death nomination, she did not know what a binding death nomination meant and thought it was connected with the control of the superfund. She rejected that Mr Bramble told her that a BDBN created a certainty of outcome as to where the superannuation will be directed, that if Dr Nespolon made a BDBN appointing her as a beneficiary she would be entitled to receive it and that there were potential tax savings that could come about if Dr Nespolon's superannuation was paid to her. She accepted that Mr Bramble had mentioned the concept of the potential to create a death benefit pension which would create tax‑free investment savings in the Fund but said she could not remember if it was in this conversation and that nothing was discussed about a binding death nomination that she could recall (T72.4-29).
Mr Bramble also could not recall what they discussed during this call. He assumed that Dr Nespolon's superannuation was a topic of conversation, that they would have discussed the BDBN sent by Ms Brown and that he would have been following up whether the BDBN was signed or not (T53.7-29). He did not recall giving Ms van Camp his usual advice about SMSF's during the call but accepted that it was likely that he had communicated that advice in one of the calls he had with her.
At 11.00am, Dr Nespolon was assessed by Professor Clarke who granted Dr Nespolon "gate leave" from the hospital to go home on Sunday and attend his daughter's birthday if he felt well enough.
At 2.07pm, Dr Nespolon sent two text messages to Mr Bramble in response to a text message from Mr Bramble sent at 7.35am that day asking whether he would like him to drop into the hospital that weekend and noting that things were "tough". Dr Nespolon's text messages stated:
"Hi Jarrod. I never like things being done in a super (no pun intended) rush.
If we had $75k spare I would rather pay tax and pay off a loan. Sending it to Lindy's fund and then withdrawing it means that they get a bigger percentage to keep in the transfer. To the SMSF.
AS I said I don't qualify for a big contribution because I am a PAYG tax payer this year (I could be wrong). Other than a deduction I am not sure what the benefit will be sending it to her superfund.
Lindy needs to get rid of the debt rather than planning for her retirement at the moment.
While I am happy to make Lindy a director of the operating companies I don't"
…
"I forgot to send this a couple of months ago".
I infer from the second message and the contents of his first message, that Dr Nespolon's first message was an overdue response to the text message sent to him by Mr Bramble on 25 June (at [63] above).
In cross-examination, Ms Benge gave the following evidence when asked about the comment in her file note, "sounded drugged up", (T117.24-30):
"My observation was - I think - I used the term "drugged up" at the end of my note, because during the conversation, I found Dr Nespolon to be very slow in his speech. I wasn't sure whether he could remember the accountant's name to provide me. That he had told me that the life insurance was not in super, when during our discussions in the November 19, he was very clear that the life insurance was owned by his super. And it caused me to be concerned. He seemed confused by that, and he sounded drowsy more so."
Ms van Camp gave evidence that when she visited him on 24 July, Dr Nespolon was not in pain and the best she had seen him in a long time. She rejected that he appeared drowsy, confused, had difficulty concentrating, could not really speak or move much and was very weak that day (T73.24-T74.11). She recalled speaking to Dr Nespolon about her conversation with Mr Bramble "about the moving" of the super fund, but said that they never discussed a binding death benefit nomination and that she did not discuss tax with him (T75.36-T76.3).
Ms van Camp deposed that she was seated at a table on the other side of the room when Dr Nespolon made the call to Ms Benge and she did not listen to the conversation. She said that after the phone call, Dr Nespolon told her that he had sorted everything out, that Ms Benge needed the Fund Deed for the super fund and he was unable to send it by email due to connectivity problems and he asked her to send it from home, which she did at 10.10pm that evening. Ms van Camp sent a copy of the Fund Trust Deed to Ms Benge using Dr Nespolon's email address. The email did not identify that Ms van Camp sent the email.
In cross-examination, Ms van Camp gave evidence that she was assisting Dr Nespolon and following his instruction when she sent the email to Ms Benge (T78.15-79.13; T96.32-40). She said she knew that Dr Nespolon had given an instruction to Ms Benge about the superannuation fund and what Ms Benge had been asked to do was important to him but said that she did not know that Ms Benge had been asked to prepare a document which benefited Ms van Camp and denied that she knew that she was a beneficiary. Ms van Camp said that she did not hear the content of his call with Ms Benge, she was not aware that Dr Nespolon told Ms Benge that the accountant said that he had to make the "nomination" appointing her as a beneficiary, and the only thing he said was that he needed to send the Fund Deed. She also rejected that Dr Nespolon's superannuation was critical to her, describing her concern as wanting to know where she was going to get income as she had $10,000 in her bank account (T76.5-8, 77.20-34, T78.15-79.13, T96.32-40).
At 10.46pm on 24 July, Ms van Camp sent a text message to Mr Dickson in which she stated that Dr Nespolon had spoken to Ms Benge that day about his superannuation, and that they had received an email message back after sending her the Fund Deed stating that Ms Benge would only be available on 3 August. She asked Mr Dickson whether there was "any chance we can get it done sooner that that". Ms van Camp's text message also stated:
"van Camp: … Not sure what exactly it is he's asked for, will you be speaking to her at all this coming week? Thanks so much!"
The following day, Mr Dickson sent a text message to Ms van Camp advising that Ms Benge was on leave the following week, that he had asked her to deal with it when it came through and that he was sure she would address it while on holidays. On 25 July 2020 at 6.34am, Ms Benge sent an email to Dr Nespolon's email address advising that she would revert on Sunday, being the following day.
On 25 July, Ms van Camp visited Dr Nespolon in hospital.
At 2.02pm that day, Ms van Camp sent a text message to Tammy Dickson (Mr Dickson's wife) stating that Dr Nespolon was not going home the following day and referred to him as "feeling absolutely awful… so weak he only weighs about 74kg now… He's really in a bad way… he's very weak can't really speak or move much… in severe pain he says".
When asked about her text message, Ms van Camp gave evidence that Dr Nespolon "changed from day to day", she did not know why he was weak and not well on the 25th and queried whether it was the morphine that he had been given that day (T75.27-9).
At 12.30pm Sydney time (12.00pm Adelaide time), Ms Benge sent an email to Dr Nespolon's email address that attached the form of BDBN to be completed (identified as Attachment "Death benefits notice.pdf") and provided advice to Dr Nespolon about the BDBN and its interaction with Dr Nespolon's Will in following terms:
"Dear Harry
As requested, please find attached the binding death benefit nomination in favour of Lindy with respect to the payment of your superannuation benefits. The nomination must be signed in the presence of two independent witnesses as you will note on the document.
Prior to your execution of your nomination, I thought prudent to point out that:
(1) Payment of your death benefit directly to Lindy will not be caught by the trusts created in your Will and Lindy can spend those funds at her own discretion;
(2) The trustee of the fund can only make a maximum of two payments from the fund prior to its wind up therefore the trustee cannot make hasty payments. Consequently, it is unlikely that the trustee will be in a position to make a payment immediately and due to the limit of the times they can make payment, often. If the intention is to provide funds to Lindy quickly then this is unlikely to achieve that outcome and I would recommend that cash is retained in a bank account that Lindy can access - either in her sole name or an account in joint names;
(3) You Will anticipates:
(a) That if your executors need to use the funds towards payment of any debts, they can (clause 17.1). The payment directly to Lindy means that those funds won't be available to your executors for that purpose;
(b) The tax treatment of superannuation is determined by the ultimate beneficiary of the benefit. Clause 41 of your will provides your executors with the ability to create a superannuation proceeds trust for tax dependent beneficiaries of which they are the trustee. This means that in the event superannuation is paid to your estate, if those proceeds are accounted for separately to your other estate assets and Lindy and the children are the beneficiaries of those funds, then the payment will be tax free.
The executors will not have those powers on the benefit being paid directly to Lindy.
Should you wish to discuss the nomination or any of the above then please let me know."
In cross-examination, Ms Benge gave evidence that accepted that the matters referred to in her 26 July email was advice that she had previously given Dr Nespolon, other than the advice about the number of payments to be made by the trustee (referring to point 2 of her email) (T138.35-8).
The form of BDBN prepared by Ms Benge that was attached to her email was a typed two page document. The first page is headed "Binding Death Benefits Notice" and is addressed to "The Trustee of the Nespolon Superannuation Fund". It includes seven clauses which provide that Harry Nespolon (as Member) hereby: revokes any BDBN previously executed by him (cl 1); declares that the document is a BDBN in accordance with cl 13.5(b) of the Fund Deed (cl 2); acknowledges that different tax consequences apply depending on the features of the recipients of Dr Nespolon's member benefits on his death (cl 3); acknowledges that the Trustees have the power and discretion to pay any member benefits not the subject of the BDBN in accordance with cl 13.5(a) of the Fund Deed (cl 4); acknowledges that the Trustees may be prohibited by law from making payment in accordance with the notice (cl 5); declares that the notice remained effective unless and until revoked by Dr Nespolon (cl 6); and nominates and requires that Ms van Camp receive 100% of the benefits payable by the Trustees of the Fund in respect of Dr Nespolon's membership in the event of his death (cl 7). The first page also includes a section for Dr Nespolon (as Member) to date and sign and a section, headed "Declaration of Witnesses", that provide for two persons over the age of 18 years to declare that the BDBN was signed by the member in their presence.
The second page is headed, "Trustee Acknowledgement, Consent and Agreement", states that the Trustees of the Fund acknowledge, consent and agree to be bound by the notice made by the member and provides for execution by Bellahealth, by its sole director and sole company secretary.
Ms van Camp saw Ms Benge's email at around the time it was sent. She printed the BDBN form attached to the email and took it with her to the NSPH. She did not print the email from Ms Benge or take it with her to the hospital.
At around 1.00pm, Ms van Camp arrived at the NSPH. Dr Nespolon was in the ICU and Dr Stedman and Dr Chan were with him. Based on the NSPH progress notes, it appears that Dr Nespolon was admitted into the ICU sometime between 12.50pm and 1.40pm that day.
Ms van Camp observed that Dr Nespolon was receiving oxygen and asked how he was feeling, to which he responded that he was "terrible", but that Dr Nespolon appeared not to be drowsy or confused, was alert and could have brief conversations (T98.14-30).
Ms van Camp showed the BDBN to Dr Nespolon, who said "yes" in response. Ms van Camp gave the BDBN to Dr Nespolon with a book to lay it on, Dr Nespolon then read and filled it out without needing any assistance in doing so. Ms van Camp did not tell Dr Nespolon that Ms Benge had sent an email with advice that day or discuss the contents of the advice with him.
While Dr Nespolon was filling out the BDBN, Dr Stedman asked Dr Nespolon, "do you know what you are signing?". Dr Nespolon said that the document related to his will and words to the effect that it would prevent Ms van Camp from being "taxed out of her brains". Dr Stedman does not recall whether Dr Nespolon mentioned whether it was a BDBN. According to Ms van Camp, Dr Stedman then said, "[a]ll right then, that's fine."
Dr Nespolon wrote and signed his name in his capacity as member of the Fund and inserted the date on the first page of the BDBN, and printed and signed his name on the Trustee Acknowledgement on the second page, in his capacity as the sole director and company secretary of Bellahealth.
Ms van Camp asked Dr Stedman and Dr Chan to witness the BDBN. Dr Stedman deposed that he and Dr Chan had a brief conversation during which they asked each other whether they should witness Dr Nespolon's signature and agreed it was reasonable to do so. Dr Stedman and Dr Chan wrote their names and addresses and signed their names in the "Declaration of witnesses" sections.
Dr Stedman was initially reluctant to witness the BDBN but thought it was reasonable because of his conversations with Dr Nespolon and Ms van Camp, which led him to believe that Dr Nespolon knew the nature of the document and he had been wanting to sign it for some time. Dr Stedman deposed that Ms van Camp had told him that Dr Nespolon had reviewed his Will only a few days earlier, he had not been able to come to terms with the fact that he might be dying and that was why the BDBN had not yet been finalised. Dr Stedman had also spoken to Dr Nespolon's pancreatic surgeon at the NSPH who told Dr Stedman that Dr Nespolon had had some difficulty in coming to terms with the end of his life. Dr Stedman did not perform a cognitive assessment on Dr Nespolon at the time. He said that it was not routine practice to do so when treating a patient at the end of their life and he did not believe such an assessment would have added to his clinical assessment or changed his assessment of his medical care as Dr Nespolon had been able to give him details of his medical condition, treatment and profession and when he signed the BDBN, Dr Nespolon was aware he was in the NSPH ICU, had cancer and was dying. Dr Stedman observed Dr Nespolon to be physically weak, drowsy and he fell asleep at times, however, said he was quick to wake and could then be easily engaged in conversation.
Dr Chan gave evidence that he acquiesced to the request to witness the BDBN because there were not many staff in the immediate vicinity of Dr Nespolon's bed and he thought his prognosis was guarded.
Ms van Camp gave evidence that she did not know the document (the BDBN) nominated her as a beneficiary at the time and she only found that out after signing (T99.30-40).
At about 2.30pm on 26 July, Dr Nespolon was given an infusion of 1 milligram of morphine and 1 milligram of midazolam, and he fell asleep. Ms van Camp stayed with Dr Nespolon until he fell asleep, returned home and then came back to the hospital. Dr Nespolon died at 8.50pm that evening.
Ms van Camp obtained legal advice and correspondence ensued between the solicitors acting for Ms van Camp and the solicitors acting for Mr W Nespolon and Mr Dickson, in their capacity as directors of Bellahealth. It is not necessary to detail that correspondence other than to note that the issue of Dr Nespolon's capacity was first raised by the defendants' solicitors in a letter dated 19 February 2021.
On 19 November 2021, Ms van Camp commenced these proceedings by statement of claim filed that day.
On 21 January 2022, probate of the Will was granted to Ms van Camp, Mr Dixon and Mr W Nespolon.
Professor White was asked to opine on the effects or likely effects of the medications administered to Dr Nespolon between 24 and 26 July 2020 on Dr Nespolon's mental condition and his ability to understand, know and approve the BDBN. In his report dated 9 May 2022, Professor White opined that:
1. the medications administered to Dr Nespolon would have had an impact on his mental condition but said it was not possible to know the extent to which Dr Nespolon's cognitive function was impaired due to the medications administered;
2. morphine at the doses administered to Dr Nespolon in the period from 24 to 26 July 2020 would have produced effects such as sedation and cognitive impairment, although the degree of effect would have fluctuated over time depending on the recency of the administration;
3. the effect of morphine commences in minutes, with the concentration of the drug and its impacts reaching a peak approximately 15 minutes after administration and then decreasing gradually, with the effects being minimal around 3-4 hours after administration. Some cumulative effect of morphine would be expected for doses given at intervals of less than three to four hours, likely resulting in an increasing level of sedation and cognitive impairment;
4. on 24 July, for doses given at intervals of less than 3-4 hours some cumulative effect would be expected, likely resulting in an increasing level of sedation and cognitive impairment;
5. on 25 July, significant cumulative effects would be expected because the intervals between doses varied from less than 2 hours to up to 4 hours;
6. on 26 July, no cumulative effect would be expected from the second and third morphine doses at 7.10pm and 12.10pm due to the 5 hour interval and there would have been no significant effect of morphine on Dr Nespolon when he spoke to Dr Stedman at 11.45am;
7. Dr Nespolon's mental state on 26 July would have been affected by the combination of lorazepam given at 11.50am and morphine at 12.10pm from the time he was administered the morphine, which would have included impaired cognitive functioning and sedation and is likely to have caused drowsiness (which he noted appeared to have been confirmed by the entry in the hospital notes) but would not necessarily prevented him from responding to verbal requests or other communications;
8. the time of commencement of the infusion is unclear but it is presumed to have started shortly after 2.30pm. At that time, Dr Nespolon would still have been experiencing some effects from the previous doses of lorazepam and morphine. The infusion of midazolam and morphine would have produced similar effects to lorazepam and morphine but would have increased the degree of the effect;
9. the hospital records suggest that Dr Nespolon was drowsy prior to the infusion (in contrast to Dr Stedman's report of his "appropriate" and "informed" conversation with Dr Nespolon at 11.45am) and a person who is affected by morphine and lorazepam to the extent they are drowsy will also experience effects of difficulty concentrating and impaired comprehension, particularly in matters of some complexity;
10. it is possible to state that Dr Nespolon's ability to comprehend material of significant complexity would have been impaired and if the approval necessitated a degree of concentration for more than a brief period of time, then he was unlikely to have been able to maintain that concentration; and
11. tolerance develops rapidly to the effects of morphine, such that a person who is administered the drug repeatedly experiences a lesser degree of effect and use of other opioid drugs will also result in the development of tolerance but the extent of Dr Nespolon's tolerance could not be determined from the available records.
During cross-examination, Professor White gave evidence that tolerance to opioids (which includes medications such as morphine, targin and endone) begins once a person starts taking the drug. He described a person who had taken 60 mg of an oral morphine equivalent for seven days as having "opioid tolerance" and that such a person has a reduced responsiveness to the opioid, which means that they have a lesser susceptibility to the therapeutic and adverse effects of the opioid. He said that he had assumed that Dr Nespolon had some degree of tolerance to opioid use and unless he had very large doses during prior hospital admissions, that information would not alter his view in any way (T146.12-24, T147.32-T148.9).
Professor White accepted that he did not analyse the medication charts prior to 24 July and was only asked to comment on the effects of Dr Nespolon's medication on 24 to 26 July, but he did not accept that the failure to include an analysis of the earlier doses resulted in a skewing of his opinion. He said that the medication given prior to 24 July was relevant to the issue of tolerance and that he had reviewed records relating to that period with regard to that issue, but it was not necessary to provide the information in detail given that there had been a significant increase in the dose of morphine on 25 July which exceeded the threshold of about 30% that was usually given in these situations where you expect the person will experience additional adverse effects beyond that which they are accustomed to with the lower doses. He also said that the increased dosage was largely maintained on 26 July and the earlier amounts of medication would not have been equivalent to the amounts on 25 and 26 July (T167.3-19, T171.42-T172.13).
The requisite degree of capacity may be described as the capacity to understand the nature and effect of the transaction when it is explained. In some cases, it may mean the effect of a wider transaction which the instrument is a means of carrying out. A person must be capable of understanding the 'general purport' and 'broad operation' of the transaction, but not necessarily its precise legal consequences. A person's motivation for entering into a transaction, their understanding of the financial implications of doing so and their appreciation of available alternatives are not matters that go to determining capacity: Hanna v Raoul [2018] NSWCA 201 (Hanna v Raoul) at [47]-[53] and [60] (Beazley P, with whom Macfarlan and White JJA agreed) and [161] (Macfarlan JA), referring to Gibbons v Wright and Guthrie v Spence (2009) 78 NSWLR 225; [2009] NSWCA 369.
As Ward J (as Her Honour then was) explained in A v N [2012] NSWSC 354 at [445]:
"[T]he question as to capacity is not whether [the person executing the deed] in fact understood (though that would be of relevance when considering the allegations of undue influence or unconscionable conduct and the like) or whether he acted in a rational manner in making the decisions that he did, but whether he was capable of understanding had an appropriate explanation been given." (emphasis in original)
The defendants, as the parties seeking to have the BDBN set aside or declared invalid, have the burden of establishing, on the balance of probabilities, that Dr Nespolon did not have the mental capacity to make the BDBN on 26 July 2020: Collins v May [2000] WASC 29 at [54]-[55]. They must affirmatively displace the "presumption of sanity" that arises from Dr Nespolon being of age and presumed to have been capable of managing his affairs: Murphy v Doman (2003) 58 NSWLR 51; [2003] NSWCA 249 at [36]; Szozda v Szozda at [26].
They submitted that the decision to enter into a binding death benefit notice for a member of a SMSF involved a level of complexity and, at the time of making the BDBN, Dr Nespolon's ability to comprehend material of significant complexity would have been impaired as he was suffering from impaired cognitive functioning due to the effects of his medications in the context of a significant deterioration of his health condition.
Reference was made to the manner in which the instructions were given to Ms Benge on 24 July, which was said to be confirmatory of Dr Nespolon's inability to understand the proposed BDBN as he appeared confused and did not understand that the BDBN would affect his life insurance, did not engage in a discussion with Ms Benge about his options and his previous instructions, and said his accountant told him he had to it but did not provide Ms Benge the accountant's details or the information she needed to help him.
The defendants submitted that Dr Nespolon's description of the BDBN as something that would prevent Ms van Camp from "being taxed out of her brains" was a superficial statement which did not resolve the capacity issues arising from the medical evidence. They also submitted that the absence of a detailed record of signs of cognitive impairment in the hospital notes was not conclusive and when the wider circumstances are considered, the Court should conclude that Dr Nespolon lacked capacity on 26 July 2020 when he signed the BDBN. The wider circumstances included, in particular, the deterioration of Dr Nespolon's condition, the increase in his pain medication and his admission to the ICU, the fact that the BDBN affected a valuable asset and cut across the Dr Nespolon's estate planning objectives as explained to Ms Benge in December 2019 and that no professional person gave evidence about any structured process by which the BDBN was explained to Dr Nespolon.
Ms van Camp submitted that the evidence establishes that Dr Nespolon plainly knew and understood that he had the right to issue a BDBN and the general purport of giving instructions for and executing the BDBN in favour of Ms van Camp, which had the effect of conferring a direct benefit on her.
Ms van Camp referred to the following matters in support of that submission:
1. the fact that there was no dispute that Dr Nespolon had testamentary capacity and knew and approved the contents of the Will, which he made on 23 July 2020;
2. there was no deterioration in Dr Nespolon's condition from 23 July 2020 to 24 July 2020, with Ms van Camp giving evidence that "[o]n the 24th he was the best I'd seen him in a long time" (T73.30);
3. Dr Nespolon telephoned Ms Benge on 24 July and instructed her to prepare the BDBN and the reason he gave was the advice from the accountant that the money had to go to Ms van Camp otherwise tax would be paid, and he did not want to pay tax, with the source of that advice being the call with Mr Bramble on 23 June in which he told Dr Nespolon that there could be a potential tax saving of up to 17% if the BDBN was made in favour of a financial dependent. It was submitted that the fact that Dr Nespolon was able to act on the advice given by Mr Bramble a month earlier was powerful evidence that Dr Nespolon had capacity on 24 and 26 July as he was able to recall and apply the advice;
4. there was no positive evidence that Dr Nespolon could not understand the consequences of signing the BDBN; and
5. Dr Nespolon confirmed on 26 July that he understood the reason for making the BDBN was to avoid Ms van Camp "being taxed out of her brains.
Ms van Camp submitted that Professor White's report was of no material assistance on the issue of capacity as he expressly stated that it is not possible to know the extent to which Dr Nespolon's cognitive function was impaired such that his evidence is rendered meaningless.
She contended that the evidence demonstrated that Dr Nespolon had received greater doses of opioids prior to and upon his admission to the NSPH on 15 July than he received on 24 and 26 July, that Dr Nespolon had become opioid tolerant during the period he was admitted to NSPH from 18 June to 6 July and, referring to the evidence of Professor White, that a person who has developed an opioid tolerance has a reduced responsiveness to the opioid which means that they have a lesser susceptibility to both the therapeutic and adverse effects of the opioid.
Ms van Camp also submitted that if the Court had residual doubt about Dr Nespolon's capacity on 26 July, the BDBN was nonetheless valid as it was executed in accordance with the instructions that Dr Nespolon gave Ms Benge on 24 July (at which time Dr Nespolon fully understood what he was doing), relying on the principle in Parker v Felgate (1883) LR 8 PD 171 , as applied in Landers v Landers (1914) 19 CLR 222 at 227-8; [1914] HCA 74 (Griffiths CJ). (T207.46-208.18).
In assessing capacity, consideration should be given to whether Dr Nespolon was capable of understanding that the act of making the BDBN would have the particular effects described above, in particular, whether he had the capability of understanding that all of his member benefits would be paid directly to Ms van Camp and would not be used by the executors in accordance with the terms of his Will, if such an explanation had been provided to him. In my view, a general understanding of these matters would not require a particularly complicated explanation in the circumstances of this case. This is particularly as Dr Nespolon was educated in business as well as medicine, a director of various companies and experienced in dealing with his financial affairs and businesses, he had received advice about the nature and effect of making a BDBN and the Will from Ms Benge in November 2019, at which time Dr Nespolon informed Ms Benge that he had been reading up and researching them and understood what they meant (T126.34-40), and Dr Nespolon had received further advice from Mr Bramble on 23 June 2020 about a BDBN and the tax benefits of making payments to a dependant. In other words, prior to his admission to NSPH on 15 July, Dr Nespolon was well aware of the general nature of making a BDBN and the terms of his Will (as prepared by Ms Benge).
It is clear that by 24 July, Dr Nespolon was in the advanced stages of his terminal illness and his physical condition deteriorated over the next two days. By 25 July, Dr Nespolon was very weak, uncomfortable and in pain, for which he received increased doses of morphine on 25 July that continued on 26 July.
Professor White's evidence and the evidence from Dr Stedman and Dr Chan satisfy me that Dr Nespolon's cognitive functioning when he signed the BDBN on 26 July 2020 may have been adversely impacted from the combination of the lorazepam and morphine that Dr Nespolon had been administered at 11.50am and 12.10pm respectively that day. However, I do not consider their evidence about those matters to be persuasive on the issue of Dr Nespolon's mental capacity. Their opinions were not conclusive or, in my view, weighty evidence of a lack of mental capacity and competence on the part of Dr Nespolon at the time of signing the BDBN or prior.
Like Dr Stedman and Dr Chan, Professor White could not identify the likely extent or degree to which Dr Nespolon's cognitive function was impaired by the medications Dr Nespolon received on 26 July (or prior). As to the effects of such medication, Professor White identified sedation and drowsiness but accepted that those effects would not have prevented Dr Nespolon responding to communications. He also said that the other impact, of impaired concentration, would only arise if more than a brief period of time was needed for matters of some complexity. As I have said, I do not consider the BDBN to have been particularly complex in the circumstances of this case.
I am not persuaded by Ms van Camp's submission that I should find that Dr Nespolon received greater doses of opioids prior to his admission to NSPH on 15 July and had developed a tolerance to them by 26 July. However, I accept that the opinions expressed by Professor White were weakened by three matters: his instructions to only analyse the effects of the medications given to Dr Nespolon for the period from 24-26 July; his statement that the amounts of oxycodone (which is an opioid contained in targin) administered prior to 24 July could not be determined from the hospital records given it was not possible to ascertain the number and size of doses administered from 15 July, and there was evidence of oral medications having been prescribed to Dr Nespolon prior to that time; and his evidence in cross-examination about the development and likely effect of opioid tolerance.
The ICU nursing admission progress notes record that Dr Nespolon was "drowsy" but they also describe him as "orientated", indicating that Dr Nespolon was aware and able to focus, consistent with evidence given by Dr Stedman and Ms van Camp (at [135], [137] and [140] above). Overall, their evidence paints the picture of Dr Nespolon as frail and drowsy but sufficiently alert, oriented and cognitively capable of reading and understanding the BDBN when he signed it at around 1.00pm on 26 July. He indicated his assent to the document when it was shown to him, answered a question about it from Mr Stedman and signed in his dual capacities as sole member of the Fund and director and secretary of Bellahealth without requiring assistance.
Dr Nespolon's response to Dr Stedman, that the BDBN related to his Will and would prevent Ms van Camp "being taxed out of her brains", was somewhat superficial, in the sense that it was an imperfect answer. However, it was not meaningless or nonsensical having regard to the effect of the BDBN on Dr Nespolon's Will and the nature of the advice he had received from Ms Benge (in November 2019 and on 24 July) and Mr Bramble (on 23 June) that a death benefit payment by the Trustee to a Dependant/Ms van Camp in accordance with a valid BDBN would be tax free (which advice was confirmed by the expert evidence given by Mr Raspin).
More significantly, in my view, Dr Nespolon's response supports, rather than detracts, from a finding that Dr Nespolon understood the general nature and effect of the BDBN as it indicates that Dr Nespolon appreciated that Ms van Camp would receive the member benefits, understood that his member benefits could be reduced by the incidence of taxation and knew there was an advantage from a tax perspective in using the BDBN to pay the benefits directly to Ms van Camp. The response also indicates that Dr Nespolon was aware that his Will would be impacted by the BDBN, from which I infer that Dr Nespolon understood (or was capable of understanding) that his member benefits would not be available to his estate or to his executors to pay debts (in which case tax would have been payable). In my view, that inference is also supported by what Ms Benge told Dr Nespolon on 24 July, as recorded in her file note and in her oral evidence (referred to at [112]-[114] above).
While not determinative, the fact that Dr Stedman and Dr Chan considered it was reasonable to witness the BDBN when asked to do so on 26 July and did not consider it necessary for a formal cognitive assessment to be undertaken are also matters which suggest that Dr Nespolon's mental functioning was not so obviously impacted by the medications such as to raise real reservations or concerns about his capacity at the time.
Ms Benge's evidence of her call with Dr Nespolon on 24 July indicates a concern about his mental capacity and ability to understand the nature and effect of his instructions to prepare a BDBN in favour of Ms van Camp. Given that it was recorded in her file note, I do not doubt that Dr Nespolon sounded drowsy to Ms Benge and might have raised a question for her about his capacity. However, having regard to the above matters and for the following reasons, I do not consider that Ms Benge's evidence to be compelling on the issue of capacity.
First, Dr Nespolon had executed the Will, a complex document, at 1.00pm on 23 July, around 20 minutes after being administered 7.5 mgs of morphine and close to the time when, according to Professor White's evidence, the impacts of the morphine would have been at its peak. Yet, no concerns were raised with or by Ms Benge that Dr Nespolon was drowsy or unable to comprehend the terms of the Will at that time. Ms Benge gave evidence that she spoke to Dr Nespolon on 20 July before the Will was executed, did not have any concerns about his capacity to execute the Will on 23 July and for that reason, was content for two relatively junior solicitors to attend on execution (T134.20-45). In those circumstances and noting there was no challenge to the validity of the Will (with probate granted on 22 January 2022), it may be inferred that Dr Nespolon had testamentary capacity and knew and approved the contents of the Will when he signed it on 23 July.
Second, and as Ms van Camp pointed out in her submissions, there was no evidence that Dr Nespolon's mental (or physical) condition had deteriorated between 1.00pm on 23 July and 3.00pm on 24 July, when he spoke to Ms Benge. The most recent dose of morphine administered to Dr Nespolon prior to that telephone call was at 12.50pm on 24 July, such that the effect on Dr Nespolon would have decreased from the peak at the time they spoke, based on Professor White's evidence.
Third, and accepting that Ms Benge was a solicitor with experience in estate planning and presumably had dealt with clients where capacity issues had been raised, her observations were based on a very short phone call with Dr Nespolon, rather than an in-person meeting where she could properly observe and test the issues with him: cf Drivas v Jakopovic [2019] NSWCA 218 at [52] and [53]. In my view, it is also telling that there is an absence of evidence of Ms Benge raising a concern about Dr Nespolon's capacity with Mr Dickson, who presumably had been in contact with Ms Benge following receipt of Ms van Camp's text message (at 10.46pm on 24 July), and Ms Benge sent the BDBN and her email advice to Dr Nespolon on 26 July without expressing any written reservation or concern about his capacity in the email.
Fourth, to my mind, the terms of the emails and text messages sent from Dr Nespolon to Ms van Camp during his last admission (on 20 July at 12.07am and 12.27am, 23 July at or around 8.04pm and 24 July at 8.01am) do not raise a doubt about Dr Nespolon's capacity at the time. While using strong language and conveying irritation and hostility on the part of Dr Nespolon towards Ms van Camp, they were clearly and coherently expressed. In particular, Dr Nespolon's text message to Ms van Camp at 8.01am on 24 July (as referred to at [100] above) indicates that he was able to comprehend that Ms Brown's emails sent on 23 July raised different issues, one of which related to moving the Fund to Cutcher & Neale and the fee proposal, and another, the making of a BDBN.
Fifth, notwithstanding that Ms Brown's 23 July email attached a form of BDBN that Dr Nespolon could have completed, Dr Nespolon chose to call Ms Benge on 24 July and instruct her to prepare the BDBN in favour of Ms van Camp. This indicates that Dr Nespolon was capable of and had been thinking about the BDBN and the impact on his Will.
Sixth, while acknowledging that the last sentence of the initial text message that Dr Nespolon sent to Mr Bramble at 2.07pm was incomplete, I do not accept the defendants' submission that this matter shows that Dr Nespolon was "struggling" or lacked capacity. The content of Dr Nespolon's text message, particularly the references to the "pun", his status as a PAYG taxpayer and consideration of options, together with his follow up message, indicate that Dr Nespolon was capable of understanding and communicating about matters relating to his business affairs, including superannuation, and had the ability to recall and reflect on such matters at that time.
Ms Benge's evidence of the call on 24 July does suggest that Dr Nespolon may have been under the impression that the life insurance policy proceeds would not form part of his death benefits. His concerns about tax and instructions to pay the member benefits to Ms van Camp were seemingly inconsistent with and cut across what he had told Ms Benge in November 2019, when giving her instructions in relation to the Will. But I am not persuaded by the defendants' submission that these matters are weighty indicators of a lack of capacity on the part of Dr Nespolon because it establishes that Dr Nespolon did not understand the extent of property disposed by the BDBN, was not able to engage in a discussion about how it related to his previous instructions and was not able to give Ms Benge the assistance (namely, the name of his accountant) that she needed to adequately help him.
As to Dr Nespolon's understanding of the property to be disposed of, the evidence is unclear as to the basis on which Dr Nespolon, when asked about payment of the mortgages and liabilities on his property and shares, told Ms Benge on 24 July that the life insurance was not part of his self-managed super fund, so it did not matter if the super fund "on its own" went to Ms van Camp, when what he told Ms Benge suggested otherwise in November 2019. One possibility is that Dr Nespolon's understanding was based on the financial statements relating to the Fund and the information given to him by Mr Bramble (as referred to at [44] and [45] above) that did not identify life insurance proceeds as part of his member benefits. In that regard, I note that the Financial Statements for the Fund for the 2019 financial year, which were approved and signed by Dr Nespolon on 6 March 2020, identified the value of his "Total Death Benefit" as $1,446,512 (the value of the share portfolio and a small amount of cash), and did not refer to the insurance proceeds. The terms of the Will, which Dr Nespolon executed the day before, could also have been a factor given that cl 19 referred to both his Superannuation and the Life Insurance Proceeds in a manner that could be read as contemplating that they could be dealt with separately by Dr Nespolon.
In any event, the question of capacity is determined not by reference to what Dr Nespolon, in fact, understood but whether he had the capacity to understand if the matter was explained to him. For the reasons set out above, I am not satisfied that Dr Nespolon was incapable of understanding that matter on 24 July or following.
I do not take much from the fact that Dr Nespolon did not give Ms Benge his accountant's name and did not engage in a discussion about the impact of his prior instructions on the issue of Dr Nespolon's capacity. As Ms Benge said, she had not been provided with advisor details previously and I see no reason to infer that Dr Nespolon lacked capacity because he did not give her the name of his accountant during the call or want to debate the change in his position.
It is plain from Dr Nespolon's instructions to Ms Benge that his motivation for the change was advice received from his accountant about the tax advantage of paying the super benefits to Ms van Camp. Leaving to one side that Dr Nespolon's motivation and whether he acted rationally are not determinative of capacity, Dr Nespolon's approach could not, in my view, be characterised as irrational given what Dr Nespolon had been told by Mr Bramble (and Ms Benge) and the need to complete a BDBN prior to his death if his direction was to take effect. Regardless, during the call with Dr Nespolon on 24 July, Ms Benge confirmed the tax-free status of the payment to Ms van Camp and the effect of the BDBN as operating to supplant the Will, when she told him that his benefits would not be available to his estate to pay debts.
In conclusion, while accepting that Dr Nespolon likely experienced some impact in cognitive function from the morphine and lorazepam, I am not satisfied that Dr Nespolon lacked the mental capacity to understand the nature of the act of making the BDBN in favour of Ms van Camp and the general effect it would have. Accordingly, the defendants' claim that the BDBN should be set aside or declared void and unenforceable for the reason that Dr Nespolon lacked capacity to understand and enter the transaction when he signed the BDBN on 26 July fails.
Actual knowledge of the special disadvantage or vulnerability is not essential. Constructive knowledge is sufficient: Nitopi v Nitopi (2022) 109 NSWLR 390; [2022] NSWCA 162 (Bell CJ at [4]-[9], Ward P at [118]) (Nitopi).
The defendants' submissions referred to the summary of the elements of unconscionable dealing by Austin J in Turner v Windeyer [2003] NSWSC 1147 (Turner v Windeyer) at [105]-[106] (based on cases such as Blomley v Ryan (1956) 99 CLR 362; [1956] HCA 81, Louth v Diprose (1992) 175 CLR 621; [1992] HCA 61 (Louth v Diprose), Amadio and Bridgewater v Leahy (1998) 194 CLR 457; [1998] HCA 66) (Bridgewater v Leahy), which was as follows:
"… a case of unconscionable dealing involves the following:
(a) the weaker party must, at the time of entering into the transaction, suffer from a special disadvantage vis-à-vis the stronger party;
(b) the special disadvantage must seriously affect the weaker party's capacity to judge or protect his or her own interests;
(c) the stronger party must know of the special disadvantage (or know of facts which would raise that possibility in the mind of any reasonable person);
(d) that party must take advantage of the opportunity presented by the disadvantage; and
(e) the taking of advantage must have been unconscientious.
I would only add that, as cases such as Blomley v Ryan show, once ingredients (a), (b) and (c) are established, and the improvidence of the transaction is shown, the plaintiff's task is made easier by an equitable presumption to the effect that the improvident transaction was a consequence of the special disadvantage, and that the defendant has unconscientiously taken advantage of the opportunity presented by the disadvantage."
Ms van Camp's submissions referred to the summary in Thorne v Kennedy (2017) 262 CLR 85; [2017] HCA 49 at [38] (Thorne v Kennedy), where the plurality said:
"A conclusion of unconscionable conduct requires the innocent party to be subject to a special disadvantage "which seriously affects the ability of the innocent party to make a judgment as to [the innocent party's] own best interests". The other party must also unconscientiously take advantage of that special disadvantage. This has been variously described as requiring "victimisation", "unconscientious conduct", or "exploitation". Before there can be a finding of unconscientious taking of advantage, it is also generally necessary that the other party knew or ought to have known of the existence and effect of the special disadvantage."
She also referred to Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392; [2013] HCA 25 at [161] (Kakavas), where the Court, stated:
"Equitable intervention to deprive a party of the benefit of its bargain on the basis that it was procured by unfair exploitation of the weakness of the other party requires proof of a predatory state of mind. Heedlessness of, or indifference to, the best interests of the other party is not sufficient for this purpose. The principle is not engaged by mere inadvertence, or even indifference, to the circumstances of the other party to an arm's length commercial transaction. Inadvertence, or indifference, falls short of the victimisation or exploitation with which the principle is concerned."
In Nitopi, the Court of Appeal considered the references to the need for a "predatory state of mind" and the concept of "victimisation" in relation to unconscionable conduct in Kakavas and cases such as Thorne v Kennedy and Louth v Diprose, and the existence of a presumption, as referred to by Austin J in Turner v Windeyer. Nitopi was a case involving gifts that were alleged to have been procured by a daughter's asserted unconscionable taking advantage of her father.
Bell CJ, at [32], considered that it may be that the unqualified observations in Kakavas as to the requirements of proof of a predatory state of mind and that the transaction in question be caused or procured by unconscientious conduct are properly confined to a circumstance involving arms' length commercial transactions and not gifts, although noting that where a gift is so procured, equity may intervene, citing Louth v Diprose.
As to whether the need for proof of a predatory state of mind could be satisfied on a prima facie basis by the operation of a presumption, as his Honour stated, at [41]:
"As this issue was not the subject of full argument and as it is not necessary to resolve it in order to dispose of this appeal, I express only the provisional view that the existence of a predatory state of mind may be presumed once it is established that the gift was made by a person suffering under a special disadvantage in the Amadio or Blomley sense and the recipient of that gift had actual knowledge of that special disadvantage. There is no indication in Kakavas that the long-established presumption derived from Earl of Aylesford and Permanent Trustee, which requires unconscientiousness to be rebutted by demonstration of the fact that the gift (or transaction) in question was fair, just and reasonable, is no longer part of Australian law. The forensic significance of the presumption and the essential common sense underpinning it would be undermined by requiring the party impugning the gift positively to establish the predatory state of mind of the recipient of the gift(s), although such a party may seek to do so."
At [145] of Nitopi, Ward P considered that the language of presumption was inconsistent with what was said in Kakavas, but it seemed that what was contemplated by the authorities nevertheless concerned the shifting of an evidentiary onus once the requisite elements of the cause of action were established. Her Honour stated, at [147] and [153]:
"What is clear is that, once the requisite elements of a special disadvantage, knowledge of that special disadvantage and improvidence of the transaction are established, there is at least an evidentiary onus on the stronger party to show that the transaction was fair, just and reasonable or it may more readily be concluded that the improvident transaction was procured by the unconscientious taking of advantage of that special disadvantage.
….
… the presumption … is nothing more than an aid in making evidentiary determinations where the gravamen of unconscionable conduct has been proven to the requisite standard. In such circumstances, a court may more readily infer that the impugned and improvident transaction amounted to unconscientious exploitation of a person labouring under a special disadvantage, when that disadvantage is known to the author of the transaction."
The defendants alleged that the taking advantage was unconscientious as Dr Nespolon had no real degree of intelligent appreciation of the matters involved, no opportunity for sober reflection and could not conduct an adequate analysis of his options with respect to the disposal of his superannuation benefits particularly in circumstances where the advice from Ms Benge had not been provided to or discussed with him.
They also submitted that the concept of victimisation does not add anything to the formulation that the party must take advantage of the opportunity presented by the disadvantage and that the taking of advantage must be unconscientious. They said that, in this case, it was the collection of matters outlined at [226]-[227] above that made the conduct unconscionable, referring in particular, to the denial of the provision of independent advice to a person when an important legal document is to be executed which has significant monetary consequences.
While contending that improvidence is not essential to their unconscionable conduct claim, the defendants submitted that Dr Nespolon's entry into the BDBN was improvident in the circumstances of this case. This was because it involved a voluntary disposition of property valued in excess of $4.5 million, which bound Bellahealth to payment of the whole of the death benefit to Ms van Camp and thus undermined the executors' ability to repay the debts owed and guaranteed by Dr Nespolon. The defendants submitted that this course raised doubts about the ability of the estate to meet the debts and contingent debts and achieve Dr Nespolon's testamentary objectives, namely, to provide a residence for Ms van Camp and their daughters, and to protect his assets long term for the benefit of his daughters, including in relation to education expenses.
Ms van Camp submitted that the unconscionable conduct claim fails for various reasons. She submitted that the mere fact that Dr Nespolon was dying and was being administered with opioids does not amount to a "special disadvantage", referring to the elements of unconscionable conduct as set out in Amadio. She also contended that the defendants' real complaint concerned the interests of the executors and the estate and that they had to demonstrate that Dr Nespolon was unable to make a judgment as to his own best interests, which they had not done.
She submitted that the Court would not find that she unconscientiously took advantage of Dr Nespolon's special disadvantage as she was not a party to the instruction by Dr Nespolon to Ms Benge for the preparation of the BDBN, she did not procure the making of the BDBN by Dr Nespolon, she did not engage in any transaction with him in relation to the BDBN and Dr Nespolon was the person responsible for initiating and implementing the BDBN.
In support of that submission, Ms van Camp referred to the statement by Dr Nespolon to Ms van Camp that he would deal with his superannuation after he made his Will on 23 July, his telephone call to Ms Benge on 24 July instructing her to prepare the BDBN (and his reasons for doing the BDBN), the verbal advice given by Ms Benge to Dr Nespolon in respect of the BDBN on 24 July 2020, and the fact that the email she sent to Ms Benge at 10.10pm providing a copy of the Fund Deed was at the request of Dr Nespolon.
Ms van Camp submitted that as she was not the cause of the transaction, the claim must fail, referring to Kakavas at [20] and Stubbings at [38].
Ms van Camp also submitted that her conduct in relation to the BDBN on 26 July did not involve a "high level of moral obloquy" or discreditable, disgraceful or reviled conduct, referring to Attorney-General (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557; [2005] NSWCA 261 at [121] (Spigelman CJ); Paciocco v Australia and New Zealand Banking Group Ltd (2016) 258 CLR 525; [2016] HCA 28 at [188] (Gageler J); and Australian Securities and Investments Commission v Kobelt (2019) 267 CLR 1; [2019] HCA 18 at [119] (Keane J).
In support of that contention, Ms van Camp referred to the following matters: the significant stress and panic she was under on 26 July; the failure to print Ms Benge's email to give to Dr Nespolon was a simple mistake made in a highly stressful moment; the information contained in the email was predominantly advice that Ms Benge had already provided to Dr Nespolon, with the only aspect that Dr Nespolon had not previously been told about being the number of payments the trustee could make, which was not material; Ms Benge did not give Dr Nespolon any tax advice in relation to use of the Fund to pay estate expenses and that Dr Nespolon's dependants, namely Ms van Camp and their two daughters, were the persons to whom the money should be paid in order to avoid the incidence of tax. She also submitted that she did not have any knowledge of the nature of the BDBN when it was signed, referring to her communications and conduct following Dr Nespolon's death (as described at [144]-[149] above), which she said demonstrated that she did not appreciate the nature and effect of the BDBN, until 2021, when she obtained independent advice.
Ms van Camp also took issue with the defendants' characterisation of the BDBN transaction as improvident. She submitted that the execution of the BDBN was not improvident in circumstances where the destination of the superannuation monies could only arise upon his death and the transaction had no material impact on Dr Nespolon personally, and the BDBN was an effective and efficient mechanism for minimising tax and preserving a greater proportion of the benefits available to his dependants.
Up until late on 24 July, Dr Nespolon had access to and was in direct communication with his legal and financial advisors and made decisions in relation to his affairs, such as appointing Ms van Camp as a director of his companies, making his last Will on 23 July, instructing Ms Benge to prepare the BDBN on 24 July and signing the BDBN on 26 July. Other than in relation to the BDBN, there is no suggestion that Dr Nespolon's medical condition and medications caused him to approach his decision making in relation to his affairs in a confused or erratic manner. I also do not consider that being in hospital or his relationship with Ms van Camp placed Dr Nespolon in a position of particular disadvantage, or of emotional or other dependence on Ms van Camp, or gave her a position of great influence on his actions and decisions (cf Louth v Diprose).
It is obvious that Ms van Camp was very concerned about her future financial position, particularly her ability to pay living expenses, from shortly after Dr Nespolon's diagnosis and wanted to have access to information. Given their relationship, their young daughters and Dr Nespolon's diagnosis, it is not unexpected that Ms van Camp wanted comfort about those matters or that Dr Nespolon started to provide Ms van Camp with access to some information and included her in matters relating to his affairs during the June admission. She was copied into correspondence with Cutcher & Neale from late June, was appointed as director of Dr Nespolon's companies, given the draft agenda for the proposed 20 July meeting and was made aware of the terms of Dr Nespolon's Will before it was signed.
The conversations with and emails and texts that Ms van Camp sent to Dr Nespolon (such as at [46], [54], [56], [73] and [97] above) might be characterised as placing emotional pressure on Dr Nespolon to deal with her anxiety about income. Nevertheless, the evidence does not suggest that Ms van Camp was a person who had authority and sway over Dr Nespolon or was seeking control or taking over the running of Dr Nespolon's affairs. The hospital notes record that Dr Nespolon would not let Ms van Camp call hospital staff when he was in pain and the content of Dr Nespolon's forceful responses on 20 and 23 July (including to what appears to have been a not unreasonable request by Ms van Camp for clarification regarding the superfund dividends and Dr Nespolon's will) make plain that Dr Nespolon was a person who did not accept what Ms van Camp told him and could make decisions to protect what he considered to be his own interests (and that of his estate). I accept Ms van Camp's submission that the evidence paints a picture that Dr Nespolon was "not a man who was going to tolerate any attempt by Ms van Camp to vary his approach or to impinge upon his decision-making", and that he had a firm control over both his affairs and Ms van Camp.
As to the events of 23 and 24 July, the defendants submitted that the Court should find that Ms van Camp sought advice from Mr Bramble, he told her about BDBNs, Ms van Camp attempted to persuade Dr Nespolon to make a legal instruction that his interest in the fund be left to her and that Ms van Camp was the source of Dr Nespolon's belief that he had to make a BDBN in her favour. They submitted that Ms van Camp's denials that she would have spoken with an advisor about what she should do (T67.7-12) and that she never spoke to Dr Nespolon about BDBNs (T75.46) were not credible.
The call records show that Ms van Camp made the first call to Cutcher & Neale on 23 July. Based on Ms van Camp's evidence at [93] and [94] above, the timing of the call after the making of Dr Nespolon's Will and the fact that it was an agenda item for the 20 July meeting, I consider it likely that Ms van Camp contacted Cutcher & Neale to speak to Ms Brown or Mr Bramble about a range of matters, including Dr Nespolon's SMSF, noting that the draft agenda identified as matters to consider, Ms van Camp's appointment as a member and officeholder of the Trustee.
I find that Mr Bramble spoke to Ms van Camp about BDBNs during one or both of their calls, asked whether Dr Nespolon had one in place and told Ms van Camp the matters that he discussed with Dr Nespolon on 23 June (Mr Bramble's usual advice), but I consider it unlikely that Mr Bramble advised Ms van Camp that Dr Nespolon had to make a BDBN in her favour. This is based on Mr Bramble's evidence (referred to at [96] and [106] above), the fact that Ms van Camp could not recall everything they discussed and the contents of Ms Brown's 23 and 24 July emails.
Thus, I do not accept Ms van Camp's evidence in cross-examination that she and Mr Bramble did not discuss the making of a BDBN. Ms van Camp's testimony that she did not know what a BDBN meant on 24 July and thought it related to a change of control of the Fund is also difficult to accept given the contents of the BDBN form attached to Ms Brown's 24 July email (from which it could be discerned that it related to Dr Nespolon's member benefits and where they should be paid upon his death), her calls with Mr Bramble and Ms van Camp's education and background in business.
That said, I do not consider that Ms van Camp was giving knowingly dishonest evidence about those matters or the events on 23 and 24 July more generally. Memories can fade and I accept that she was under a deal of stress around this time due to Dr Nespolon's illness and may have misunderstood the nature and effect of a BDBN when she received Ms Brown's emails on 23 July. Ms van Camp's text message to Dr Nespolon at 8.44pm on 23 July made no reference to a BDBN or allocating his member interest in the Fund to her and the later text she sent, in the early hours of 24 July (at [99] above), does suggest some confusion on her part, given it asks whether Cutcher & Neale or Ms Benge was going to deal with the issues raised by Ms Brown's emails, which primarily concerned moving control of the Fund to Cutcher & Neale and completion of ASIC documentation in relation to Ms van Camp.
I do not accept the defendants' submission that the timing of Ms Brown's 23 July email inquiry, as to whether Dr Nespolon held a BDBN, was out of the blue and the email Ms Brown sent with the BDBN form on 24 July would not have happened had the topic not been discussed with Ms van Camp the day before. It is true that Cutcher & Neale had not been formally appointed to act in relation to the Fund at this time, but the contemporaneous documents make clear that they hoped to take over control and were providing advice to Dr Nespolon (and Ms van Camp) in writing about matters relating to its management "in light of his medical condition". Further, Mr Bramble had raised the making of a BDBN with Dr Nespolon in late June. In that context, it is unsurprising that Ms Brown enquired about whether Dr Nespolon had a BDBN and sent a form the next day. I reject that the emails came about due to discussions with Ms van Camp on 23 July or that it should be inferred that she had been impressing upon Dr Nespolon the need to make a BDBN or other legal instruction in relation to his member interest in the Fund in her favour.
I consider it likely that Ms van Camp spoke to Dr Nespolon about making a BDBN when she saw him on 24 July but do not accept that she was the source of Dr Nespolon's belief that he had to make a BDBN in her favour as beneficiary in order to save tax or that she was giving untruthful evidence when she said that she did not know at the time that she was to be the beneficiary of all of his member benefits. It seems inevitable that the topic of a BDBN would have arisen between Ms van Camp and Dr Nespolon having regard to the contents of Ms Brown's 24 July email, Ms van Camp's call with Mr Bramble, the exchange of texts between Ms van Camp and Dr Nespolon on the morning of 24 July and Dr Nespolon's call with Ms Benge later that day in which he instructed her to prepare a BDBN, when Ms van Camp was present. However, the tone of the text messages that Dr Nespolon sent to Ms van Camp on the morning of 24 July (including the somewhat terse response that the emails from Ms Brown were about two completely different things) and the fact that Dr Nespolon had sent a message to Mr Bramble about an outstanding matter relating to this superannuation at 2.07pm, lead me to conclude that it is more likely than not that Dr Nespolon's belief that he should make a BDBN in favour of Ms van Camp for tax reasons was based on the discussions he had with Mr Bramble on 23 June (which was not inconsistent with the advice he received from Ms Benge in November 2019 about tax) and his decision to instruct Ms Benge to prepare a BDBN in favour of Ms van Camp was prompted by the receipt of Ms Brown's emails on 23 and 24 July, his desire to get his affairs in order before his death and wanting his member benefits to be paid out in a manner that was most tax effective, rather than any discussion with Ms van Camp about making a BDBN.
I accept that Ms van Camp's requests for information about income, superfund dividends and the Will, and the concerns she expressed to Dr Nespolon about her ability to pay expenses, was likely a factor that contributed to Dr Nespolon's decision to instruct Ms Benge to prepare a BDBN in favour of Ms van Camp, which reflected a change in the position he had discussed with Ms Benge late in 2019. However, I do not consider the fact that on 23 July, Dr Nespolon made the Will, which gave power to the executors to apply superannuation and/or life insurance proceeds towards debt or apply to residue or to a superannuation proceeds trust (cll 17 and 41), to be necessarily indicative of a sudden change in position, in circumstances where the Will contemplated that Dr Nespolon had prepared a BDBN and expressly provided for the Trustees to check for one (cl 39), and where the Will was also drafted on the basis that his superannuation and/or the life insurance proceeds might be paid to the estate as a consequence of his death (c 17), given that the making of a BDBN was the way in which Dr Nespolon could control where his member benefits were to be paid.
Dr Nespolon's statement to Ms Benge that his "accountant told him that all of the super needed to go to [Ms van Camp] otherwise he would pay tax on it" is not what Mr Bramble said to Dr Nespolon on 23 June in express terms. Mr Bramble did not tell Dr Nespolon that it was essential to make a BDBN or that his fund benefits had to go to Ms van Camp. However, it is not hard to see how Dr Nespolon came to that belief and changed his position from that discussed with Ms Benge in late 2019 based on the advice given by Mr Bramble about BDBNs and the potential tax saving of 17% if his benefits were paid to a financial dependent. I accept Ms van Camp's submission that Dr Nespolon would have understood from he was told by Mr Bramble was that he "really should think about putting a binding death benefit nomination in place, the advantages of doing so [being] that if it goes to a financial dependent, then [he was] going to save some tax", which was the substance of what Dr Nespolon conveyed to Ms Benge on 24 July and consistent with what Dr Nespolon said to Dr Stedman on 26 July. Similarly, I accept that the emails that he received from Ms Brown about making a BDBN, while saying nothing about tax, may have prompted Dr Nespolon's decision and call to Ms Benge.
Ms Benge's evidence does suggest that when Dr Nespolon spoke to her on 24 July, he did not consider that the life insurance proceeds would form part of the member benefits for the purposes of the BDBN and would thus remain available to the Trustee or his executors to pay debt. That understanding appears to have been incorrect, based on the parties' position at the hearing, which accepted that Dr Nespolon's member death benefits included the life insurance proceeds that were received by Bellahealth after Dr Nespolon's death, on 17 August 2020. I have already explained how Dr Nespolon's understanding may have come about (at [209] above). In any event, irrespective of those matters, Dr Nespolon's explanation to Ms Benge about life insurance and his decision to make the BDBN in favour of Ms van Camp for tax reasons do not, in my view, reflect the actions of an ill, confused or vulnerable man who was making erratic decisions due to impacts on his cognitive function and who had the appearance of someone who was not capable of making judgments in his own best interests.
I found Ms van Camp's evidence of the events relating to and following the call between Dr Nespolon and Ms Benge on 24 July to be convincing in the context of the relationship between Dr Nespolon and Ms van Camp, my findings at [245] and [251]-[255], and Ms Benge's evidence (which also did not suggest that Ms van Camp was a participant in the 24 July call). I accept Ms van Camp's evidence that: Dr Nespolon told her he was going to call Ms Benge to sort out his superannuation; Ms van Camp was not involved in the call when he did so; Ms van Camp did not know that Dr Nespolon had told Ms Benge that the accountant said he had to make the nomination in her favour; Dr Nespolon told her everything was sorted out after the call and asked for her assistance in sending the Fund Deed to Ms Benge; Ms van Camp was aware that Dr Nespolon had given an instruction to Ms Benge about the Fund that needed to be completed and that it was important to Dr Nespolon; and Ms van Camp was assisting Dr Nespolon and following his instructions when she sent the Fund Deed and email to Ms Benge on 24 July. I also accept her evidence that she did not know that the instruction provided for her to be the beneficiary of all his Fund member benefits. In my view, Ms van Camp's evidence about this last matter is supported by the email she sent to Mr Dickson on the evening of 24 July in which she states that she was not sure exactly what Dr Nespolon had asked for.
The contemporaneous emails show that from late on 24 July, Ms van Camp took control of getting the BDBN prepared by Ms Benge and signed by Dr Nespolon, indicating that Dr Nespolon was more reliant on Ms van Camp than previously. I do not take much from that matter nor the fact that Ms van Camp did not disclose her role in sending the Fund Deed to Ms Benge on 24 July or the follow up email on 26 July and showed some persistence in getting the BDBN prepared urgently. Ms van Camp's actions are consistent with Ms van Camp assisting Dr Nespolon and acting on his instructions in respect of an important document that Dr Nespolon had to sign in relation to the Fund about which he had already given Ms Benge instructions to prepare. Further, Ms van Camp disclosed her role to Mr Dickson when she asked for his assistance late on 24 July.
As to the events on 26 July, for the reasons set out earlier in relation to Dr Nespolon's capacity, I do not consider the evidence indicates that Dr Nespolon was experiencing actual difficulties with his cognitive function in relation to the BDBN that day such that I can be satisfied that he was unable to make a judgment in his own best interests (or that of his estate). That said, I accept that Dr Nespolon's condition had declined and he had received increased amounts of morphine on 25 July and following, and that Ms van Camp was aware of those matters, having regard to the terms of her message to Ms Dickson on 25 July.
That leads me to the fact that Ms van Camp did not print out and give a copy of Ms Benge's advice to Dr Nespolon on 26 July or discuss it contents with him. Ms van Camp was challenged about this in cross-examination and gave the following evidence:
(T82.7-40)
"Q. You printed the binding death benefit notice?
A. I did. I'd gone - I'd organised the kids. Tried to get someone to look after them gone to the door and thought, what's the chance of her responding today. But I'd looked. I'd seen the email. I just saw attachment. I printed it and raced to the hospital. Just the attachment, which is why I didn't read the email. I was in an extreme hurry, as you can imagine.
Q. You knew that the email was an email from Dr Nespolon's lawyer to Dr Nespolon.
A. Donna Benge, yes.
……
Q. You must have considered it important to read the covering letter?
A. No.
Q. You must have known it was important for Dr Nespolon to receive a detailed email from his lawyer?
A. No. He instructed her to do something and I printed the document that he'd ask (sic) for. So, why? ..(not transcribable).. to be honest, I didn't see the email had a body. I was in such a panic. I think - I think you can imagine if someone told you your partner was dying.
Q. When you printed the binding death benefit notice, you read that document?
A. No. I literally saw attachment. Printed it. Printer. Ran out the door and raced to the hospital.
Q. You read it before you got to the hospital.
A. No. I literally grabbed it from the hospital. Raced to the hospital. I didn't want to - I didn't get involved in Harry's affairs. Whatever he'd asked for, I'd instructed to do. He was the controller. It didn't matter to me. Whatever it was.
(T97.14-8)
Q. When you saw the email from Ms Benge, you understood that there was an attachment to it, which was described as, "Death benefits notice.pdf"?
A. I didn't even read it. I'd gone to the computer. I saw her email - I think literally as I was staring at the screen [it] came in. I saw an attachment. I printed it, and then left.
Q. You knew at the time of printing the attachment that the document was a legal instruction concerning what was to occur to Dr Nespolon's super fund after his death?
A. I knew it was about the super fund, and that he instructed Donna to prepare that for him. And then he wanted to just sign it before he died.
Q. You knew before you attended at the hospital that the document needed to be signed in the presence of two witnesses?
A. I didn't necessarily know. No, I didn't. I knew Harry had to sign it, so I was taking it to Harry. I didn't know it had to be signed by witnesses.
Q. You understood the attachment was an important legal document?
A. Yes.
Q. But you disagreed when you gave evidence yesterday with the suggestion that it was important for Dr Nespolon to receive the covering email from his lawyer?
A. I - he knew what it was about. He instructed for the document, so he knew what he was doing.
Q. You agree, don't you, that when an important legal document is provided by a lawyer with a covering email, it's important to read the covering email?
A. I agree that it's good to read an email, yes. It's my usual circumstances, and he had given instruction. He knew what he was doing. I didn't question that or him.
Q. In your affidavit, you gave evidence that you understood it was your role to provide hard copies of documents to Dr Nespolon that had been sent to him?
A. When he asked me, yes. I guess he was in hospital. He needed documents printed, yes.
Q. You made a conscious decision not to provide Ms Benge's email to Dr Nespolon?
A. No, I did not. I didn't even see the email. I was in complete panic. The doctor had just phoned me. It was my daughter's birthday party. There were 25 people coming over at 2 o'clock. I had a two-year-old and a five-year-old. I had no-one to look after them. They just phoned me. They didn't bother phoning me earlier that morning. They'd just phoned me that late, and said, 'They were moving him to ICU'. I was in a flat panic."
Ms van Camp's evidence about these matters was compelling and I accept it. It is not difficult to believe that Ms van Camp was significantly stressed and in a "state of panic" after she had been told that Dr Nespolon (who Ms van Camp characterised as her life-partner) was being moved to the ICU and she should come to the hospital as soon as she could as it was unclear how long Dr Nespolon would remain alive. I accept that, in her hurry to get to the hospital, and given knowledge that Dr Nespolon had instructed Ms Benge to prepare an important document that he had to sign in relation to his superannuation, Ms van Camp focussed on and printed the attachment (the BDBN) and not the cover email which set out Ms Benge's advice, and did not read the details of the documents at the time. I am entirely satisfied that Ms van Camp's act of printing the BDBN without giving a copy of Mr Benge's written advice to Dr Nespolon or explaining the advice to him was not due to some contrivance on the part of Ms van Camp or focus on her own material gain.
A position of disadvantage which renders a person subject to exploitation by another, such that the benefit of an improvident transaction by the disadvantaged party may not in good conscience be retained, may arise from a lack of opportunity to obtain and reflect on independent legal advice about the transaction: Bridgewater v Leahy at [100]. My finding that Ms van Camp did not act dishonestly or engage in some form of trickery to prevent Dr Nespolon from accessing Ms Benge's written advice is, thus, not determinative of the question of whether Ms van Camp's conduct was unconscionable, but it does point to an absence of a predatory state of mind and conscious victimisation or taking advantage on her part.
Further, in determining whether Ms van Camp took advantage and knew of Dr Nespolon's disadvantage in a manner that was unconscientious (in the manner alleged by the defendants), regard should be had to the fact that, in this case, Dr Nespolon had the benefit of legal and accounting advice from late 2019 about the making of a BDBN. Importantly, during the call with Dr Nespolon on 24 July, Ms Benge provided advice which confirmed that payment of his member benefits to Ms van Camp would be tax free, the money would not be available to Dr Nespolon's estate as the member benefits would be paid outside the estate and the BDBN would reverse the intention of the Will. These matters were the subject of Ms Benge's later written advice in the email sent on 26 July. Considered in that context and the other circumstances of this case, I am not persuaded that not providing Dr Nespolon with a copy of Ms Benge's written advice on 26 July or discussing it with him placed Dr Nespolon in a position of special disadvantage vis-à-vis Ms van Camp or amounted to an unconscientious taking advantage of any special disadvantage in relation to the signing of the BDBN. This is particularly as, according to Ms Benge's evidence (at [112]-[114] above), she did not tell Dr Nespolon that his life insurance proceeds would form part of his member benefits under the BDBN during their call on 24 July and her 26 July email advice did not address the matter of the life insurance proceeds at all.
Accepting that Dr Nespolon suffered a special disadvantage by reason of his ill health, position in the ICU and the medications he received at 26 July, I am not persuaded that Ms van Camp actually knew or ought to have known of the existence and effect of that special disadvantage, in the sense of knowing that Dr Nespolon's ability to make a worthwhile decision in his own interests when he instructed Ms Benge to prepare a BDBN in Ms van Camp's favour and signed it on 26 July was seriously affected by those matters. In my view, the facts do not suggest that Ms van Camp knew or suspected that Dr Nespolon was confused, could not recall things or was in a very vulnerable state in relation to decision making concerning his financial affairs. Nor do I consider that there were clear signs pointing to such matters which Ms van Camp failed to see at the relevant times.
Irrespective of whether Ms van Camp was aware that Dr Nespolon's instruction to Ms Benge to prepare the BDBN and direct payment of the member benefits to Ms van Camp represented a change in his position and cut across his testamentary objectives, that does not, in my view, suggest confusion or vulnerability, particularly in the context of the tax advantages of directing a payment to financial dependents, as referred to above.
As to the Dr Nespolon's potential misunderstanding about life insurance, there is no evidence to suggest that Ms van Camp discussed the position in respect of the life insurance proceeds with Dr Nespolon or that she was aware of any confusion or misunderstanding about that matter on Dr Nespolon's part. It seems that Ms van Camp's knowledge about superannuation and life insurance proceeds was limited to what Dr Nespolon had told her about the super dividends and what she had read in the Will about using superannuation to pay debt.
It is also noteworthy that Dr Nespolon made the call and instructed Ms Benge to prepare the BDBN, a document that was specific and personal to Dr Nespolon (albeit benefitting Ms van Camp), rather than completing the form of BDBN that Ms Brown had prepared. If, as the defendants contend, Dr Nespolon was confused about what he was doing, Ms van Camp was the basis for his belief that he had to make a BDBN in her favour for tax reasons and she procured Dr Nespolon to do so in the full knowledge of what it meant to her, one would expect that Ms van Camp would have given Ms Brown's document to Dr Nespolon to sign when she saw him on 24 July. The fact that she did not do so tends against a finding that Ms van Camp was conducting herself in a manner that sought to, or did in fact, take advantage of Dr Nespolon's position.
As to improvidence, from the perspective of Dr Nespolon himself, the transaction was not improvident in the usual sense as the BDBN only took effect on his death.
In final submissions, the defendant submitted that the BDBN is improvident as it has the effect of "disposing of four and a half million dollars in a way that binds the trustee of [the Fund] to a course of conduct that the executors can't do anything about" (T245.36-38).
There are two issues with that submission.
First, it fails to take account of the tax advantages from making a payment to Ms van Camp as a financial dependent, a matter which seems to me to be legitimate and reasonable for Dr Nespolon and the Court to consider given the amount of tax could have run to hundreds of thousands of dollars (noting that the parties accepted the death benefits include the life insurance proceeds and are valued at $4,722,000).
Second, the real impact of the BDBN is on Dr Nespolon's estate, as Dr Nespolon's Fund death benefits will not be available to his estate to pay debt of $2,147,753 (noting that there is agreement between at least a majority of the executors as to payment of Dr Nespolon's guaranteed and contingent debts) and will, thus, reduce the amount that is available as residue for the purposes of the testamentary trust established under the Will. In that sense, I accept that Dr Nespolon's estate will be "worse off". (I assume that the estate would likely be worse off by the amount of $2,954,911 less tax having regard to the terms of the draft resolution at [149] above, which suggests that the Trustee intended (by majority) to direct that the life insurance proceeds be paid to the estate and the balance to Ms van Camp). However, in the context where the net value of the estate is estimated to be $7,081,314 (after payment of debts and without the death benefits), I am not convinced by the defendants' submission that the BDBN undermines the executors' ability to achieve Dr Nespolon's testamentary objectives stated in cl 21 of the Will or to cover private school tuition fees for both children, which Mr Dickson estimates will total $715,000.
Even if the requisite elements of special disadvantage and knowledge of that special disadvantage had been established, I do not consider the BDBN to be improvident such that a presumption arises or the Court should more readily draw an inference that the BDBN involved an unconscientious exploitation of Dr Nespolon by Ms van Camp, with the onus shifting to her to establish the transaction contemplated by the BDBN was fair, just and reasonable.
The concern of the unconscionable conduct doctrine is whether advantage is taken of another who is vulnerable and has a special disadvantage that is known to that person: Johnson v Smith [2010] NSWCA 306 at [5]. While relief against unconscionable conduct may, in some circumstances, be justified by a donee accepting a transaction and its benefits, albeit at the invitation of the donor (Bridgewater v Leahy at [76]), this case was run (and pleaded) on the basis that the BDBN was procured by Ms van Camp allegedly taking advantage of Dr Nespolon in a manner that was unconscientious.
For the above reasons, I am not satisfied that the BDBN was the result of Ms van Camp taking advantage of any known special disadvantage of Dr Nespolon in circumstances that were unconscionable.