Gift or Unconscionability?

21 MARCH 2025 ESTATE DISPUTES
Gift or Unconscionability?

In a recent case decided by the Supreme Court of NSW, a woman named Sophie died on 24 December 2022 at the age of 82. Sophie had a son named Andrew and two daughters, Mary and Margaret. Andrew, took care of their mother, Sophie, before she died. Sophie left a will, leaving each of her children a third of her estate. Before Sophie died, seven withdrawals totaling $1,293,000 were made by Andrew for his or his family's benefit. Mary and Margaret argued that the withdrawals were unconscionable and the money should be returned to the estate. Sophie had appointed Andrew her attorney.

To prove unconscionable conduct, the Court was required to determine that:
1. Sophie was under a special disadvantage that affected her ability to make a judgment in her best interests;
2. Andrew was aware that Sophie was at a disadvantage;
3. Andrew took advantage of the disadvantage;
4. Each of the transactions were unfair, unjust and unreasonable.

The Court held Sophie was under a special disadvantage. She was diagnosed with breast cancer and receiving chemotherapy treatment. She was grieving the loss of her husband and had no regular access to her daughters. There was family tension between Andrew, Mary and Margaret contributing to Sophie's vulnerability. The Court believed that Andrew was aware and took advantage of Sophie's vulnerability. The Court noted Andrew took Sophie to medical and legal appointments. Andrew's email address was used to communicate between Sophie and her lawyer. Sophie had a bank account that Andrew, Mary and Margaret could access. In 2021, a new account was opened which only Andrew had access. In September 2022, Andrew became Sophie's only attorney. Andrew was able to manage Sophie's financial affairs if she lost capacity. The Court believed the withdrawals were not fair, just or reasonable. Sophie had not previously bought any of her children expensive gifts or given them large sums of money. The court found Sophie gifting Andrew and his family with large sums of money to be out of character. One withdrawal appeared to have been intended as a payment to Andrew to keep him looking after her. At this time, Sophie was in full time care at a nursing home. The Court decided that the withdrawals were unconscionable. Andrew was ordered to repay $1,293,000 to Sophie's estate and to pay Mary and Margaret's legal costs.