Nitopi v Nitopi

BELL CJ: The background to this appeal is set out in the detailed judgment of the President and this judgment assumes familiarity with her Honour’s reasons. The President also sets out the detailed arguments of the parties in respect of the various grounds of appeal in this matter, which involved the setting aside of six significant monetary gifts made subsequent to June 2009 by the late Edigio Nitopi to his daughter, Cristina Nitopi, the appellant. From this point in time, the primary judge held that the appellant “ought to have known” that her father was subject to a special disadvantage: Estate of Nitopi (No 2) [2021] NSWSC 748 at [286] (the primary judgment or PJ).

Implicit in the primary judge’s conclusion was that Edigio Nitopi’s special disadvantage continued over the 12 month period from June 2009 during which the six impugned gifts were made, and that his condition and circumstances did not ameliorate over that time. In cases such as the present where multiple gifts are bestowed or payments made, it is essential to be satisfied that the special disadvantage subsists at the time of each gift or transaction. That may not always be the case as some debilitating conditions may improve with time or treatment.

The primary judge ordered that the appellant repay to her late father’s estate the six payments which she had received in the relevant period. After the calculation of interest, this was reflected in an award in the sum of $2,220,335.02 in favour of the respondent, Giuseppe Nitopi, in his capacity as administrator of the estate.

Much attention was given in the course of the hearing of the appeal to the question of the appellant’s knowledge of her late father’s special disadvantage for the purposes of the doctrine of unconscionability. In the dispositive part of his judgment (PJ [286]), the primary judge expressed himself in terms that the appellant “ought to” have known of her later father’s special disadvantage. Earlier, he had said that the appellant “was clearly on notice that there were concerns about [her father’s] mental state”: PJ [278]; see also PJ [163]. In the following paragraph, his Honour said:

Although the use of the word “notice” is sometimes (but loosely) equated with knowledge of a particular matter and noting that there is some ambiguity in the primary judge’s use of the phrase “even if” in the passage extracted in the previous paragraph, his Honour’s language, especially that used in PJ [278]-[279], supports the President’s conclusion (at [121]) that the primary judge’s findings fell short of the state of actual knowledge (or wilful ignorance) of a person’s special disadvantage that the joint judgment of the High Court in Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392; [2013] HCA 25 (Kakavas) held was required as an essential element in establishing a claim of unconscionable dealing.

Kakavas rejected any role for constructive notice in the doctrine of unconscionable dealing. It appeared also to reject any role for constructive knowledge (as opposed to constructive notice), and Kakavas has certainly been interpreted in that way by the Western Australian Court of Appeal: Mavaddat v HSBC Bank Australia Ltd [No 2] [2016] WASCA 94 at [79]; Serventy v Commonwealth Bank of Australia [No 2] [2016] WASCA 223 at [18]; Dewar v Ollie [2020] WASCA 25 at [178]. Constructive knowledge in this context is to be understood as knowledge of facts from which a person ought to have known that another person was suffering under the relevant special disadvantage.

Two decisions of the High Court subsequent to Kakavas, namely Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49 (Thorne) and Stubbings v Jams 2 Pty Ltd (2022) 399 ALR 409; [2022] HCA 6 (Stubbings), appear to represent something of a retreat from Kakavas’s apparent insistence on actual knowledge or wilful ignorance. In the former case, the plurality at [38] said that “it is also generally necessary that the other party knew or ought to have known of the existence and effect of the special disadvantage” (emphasis added). In the latter case, Kiefel CJ, Keane and Gleeson JJ said that a finding of actual knowledge was “not essential to the appellant’s case for relief”: at [44]. Their Honours observed at [45] that the Kakavas Court at [6] had “approved of the emphasis laid by Mason J” in Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 462; [1983] HCA 14 (Amadio) on the point that the other party to the transaction “knows or ought to know” of the other party’s special disadvantage. It is, with respect, extremely difficult to reconcile this suggestion of approval of this aspect of Amadio with [155]-[156] of Kakavas, where the Court went to some length to read down Mason J’s statement in Amadio at 462 in relation to knowledge as being confined to actual knowledge or wilful ignorance.

On the other hand, the passage from Thorne at [38] to which I have referred expressly cites Mason J in Amadio at 462 in support of the requirement that a party “knew or ought to have known” of a special disadvantage. This was despite the Court stating in the previous paragraph of its reasons that there was no controversy in Thorne concerning the principles of unconscionable conduct in equity and that “[t]hose principles were recently restated” in Kakavas.

In my view, the only way to reconcile Kakavas and Thorne in relation to questions of knowledge is that Kakavas must be understood as standing as authority only for the negative proposition that constructive notice is insufficient but not as standing for the additional proposition that constructive knowledge of a special disadvantage in the sense I have explained is also insufficient. This reading has recently been proffered by Y K Liew and D Yu in their article, “The Unconscionable Bargains Doctrine in England and Australia: Cousins or Siblings?” (2021) 45(1) Melbourne University Law Review 206 at 223. On this basis, the trilogy of decisions of the Western Australian Court of Appeal referred to at [6] above may be in error but, if error there be, the unqualified language of Kakavas may have contributed to that position.

As the President has explained, the primary judge in the present case expressed himself at various stages in his reasons in terms that the appellant ought to have known of something while in other parts of his reasons, his Honour described the appellant as being on notice of certain facts. It is difficult to be confident as to whether the primary judge was ultimately expressing himself in terms of constructive knowledge or constructive notice, a distinction which on the current state of Australian law is of real significance, as has been explained. Constructive notice, in the sense of being on notice of facts that might lead on inquiry to discovery of the existence of a special disadvantage, is insufficient.

It is ultimately not necessary to reach a concluded view on this issue as I agree with the appellant’s complaint, reflected in her eighth ground of appeal, that there was no finding of actual knowledge of the particular special disadvantage which the primary judge held that the deceased laboured under, namely the lack of a “sufficient level of memory to recall prior requests” for money and the lack of a “sufficient degree of independence to decide for himself whether to accede to the latest [request]”: PJ [267].

Nor, to my mind, was there a proper basis for concluding that the appellant ought to have been aware of these matters. In that context, the fact that the deceased may have been depressed and vulnerable at a particular point in time when he had been removed by one of the appellant’s siblings to an unfamiliar environment in Redleaf in mid-2009 and the appellant was aware of that does not mean that she was aware that that condition remained when he returned to Queensland and lived alone, albeit with various medical episodes from time to time, for almost a year. As the President points out, the deceased’s own general practitioner (Dr Fisher) made no notes of any concerns of cognitive ability during the relevant period (as one would expect a competent medical practitioner to do) and the primary judge does not refer to any evidence of interactions between the appellant and the deceased after that time.

The deceased evidently had sufficient cognitive ability to transfer moneys from Hong Kong to put in the local account from which he withdrew the impugned payments in favour of both of his daughters. Moreover, his son Giuseppe gave evidence that in December 2009, he considered that his father “was aware of what was going on” and that it was not until mid-2010 that he noticed his father’s health deteriorating: PJ [128]-[129].

As far as the appellant was concerned, nothing further was relied upon to establish her knowledge of the deceased’s special disadvantage beyond her visit to her father at Redleaf in mid-2009, and a discussion with him at that time. The primary judge referred at PJ [278] to the deceased having told the appellant on that occasion that he did not think he had dementia and then said “the fact that he explicitly denied having the disease indicates that he had, at some point, been told that he did have it” and that this put the appellant “on notice that there were concerns about his mental state”. I do not agree with the logic of the primary judge’s conclusion that the deceased’s denial of dementia pointed to the fact that someone, let alone someone with expertise, had told him that he did have it or that that was in fact correct but, even putting that to one side, the primary judge’s conclusion in relation to the appellant’s knowledge was only in terms of constructive notice at best which is insufficient for the purposes of the doctrine of unconscionable dealing.

Although this conclusion suffices to dispose of the appeal, the appellant also raised a further important issue relating to the operation of the equitable doctrine of unconscionable dealing and what must to be established before equity will intervene.

Apart from the issue of knowledge, a specific question presented by this appeal was whether an actual or implied request for money by an adult daughter to her wealthy father (assuming the requisite actual knowledge of the donee’s relevant vulnerability) was, itself and without more, conduct of a kind sufficient to engage the equitable jurisdiction to set aside the gift, or whether there must be, as there was in Louth v Diprose (1992) 175 CLR 621; [1992] HCA 61 (Louth), some added pressure such as Ms Louth’s threats to kill herself unless the enraptured Mr Diprose made the gift in question.

On the findings of the primary judge, there was moral or emotional pressure, although such pressure was neither pleaded nor was it put to the appellant in cross-examination that she subjected her father to such pressure. The primary judge held that the impugned payments were “the result of [the appellant] unconscientiously taking advantage of” her late father: PJ [286]. At PJ [247], the primary judge held that:

There is a question as to whether an adult child’s making known a need to a parent for money for one purpose or another, absent any trickery or pretence in the making of the request (and none was found by the primary judge), could amount to the kind of moral pressure sufficient to attract equitable intervention.

In this context, Mr Cook SC contended that there must be some positive exploitative act or conduct directed towards the weaker party amounting to an unconscientious taking advantage of or victimisation of that weaker party. He drew upon the judgment of Sir Gerard Brennan in Louth at 626 which commenced with the observation that:

The parts of this passage which have been emphasised suggest the need for a party seeking to impeach a gift to establish some active form of conduct (exploitation) which has a particular character (unconscientious) and which antedates the donor’s decision to make a gift. So much is confirmed by the later passage in the judgment (at 632) upon which particular reliance was placed:

The requirement in this passage for the gift to have been caused or brought about by exploitative conduct raises an issue, discussed further below, where it is the retention as opposed to the procuring of a gift which is alleged to be unconscientious. In such a case, the making of the gift will antedate and thus not be caused or procured by any unconscientious conduct, but the gift may still be set aside or reversed if its retention is considered to be contrary to conscience. In this context, the respondent in fact pleaded the case as one involving the unconscionable retention of moneys, although this was not the basis upon which the primary judge upheld the claim and no notice of contention was filed to the effect that the judgment could be justified on this alternative basis.

In Thorne at [38], Kiefel CJ, Bell, Gageler, Keane and Edelman JJ observed that the unconscientious taking advantage of a special disadvantage has been “variously described as requiring ‘victimisation’, ‘unconscientious conduct’, or ‘exploitation’” (omitting footnotes). Their Honours also stated that the principles of unconscionable conduct in equity “were recently restated by this Court in Kakavas”: at [37] (emphasis added).

Mr Cook referred to the following important passage of the judgment of the Court in Kakavas (at [161]):

Earlier in Kakavas, their Honours had identified “the concern which engages the principle” as being “to prevent victimisation of the weaker party by the stronger”: at [117]. The use of the language of “victimisation” in this field of discourse in Australia may be traced to the judgment of McTiernan J in Blomley v Ryan (1956) 99 CLR 362 at 386; [1956] HCA 81 (Blomley). In the same case, Kitto J at 429 spoke of “‘the poor and ignorant man’ who figures in the cases as a ready victim for the unscrupulous”.

The concept of victimisation was referred to by Deane J in Louth v Diprose who said at 638 that “the intervention of equity is not merely to relieve the plaintiff from the consequences of his own foolishness. It is to prevent his victimisation”, citing Allcard v Skinner (1887) 36 Ch D 145 at 182; Nichols v Jessup [1986] 1 NZLR 226 at 227-229 (Nichols) and Commonwealth v Verwayen (1990) 170 CLR 394 at 440; [1990] HCA 39 (Verwayen). His Honour’s conclusion in Louth was that, consistent with the conclusions of both Mason CJ and Brennan J, the appellant “deliberately used [the respondent’s] love or infatuation and her own deceit to create a situation in which she could unconscientiously manipulate the respondent to part with a large proportion of his property”: at 638.

Although it was referred to in Nichols, Deane J did not in Louth refer to the speech of Lord Brightman, delivering the advice of the Privy Council in Hart v O’Connor [1985] AC 1000, in which it was said (at 1024) that:

That the concept of “victimisation” has both an active and passive application in this area of the law was not made explicit in the general “restatement” of principle in Kakavas extracted at [23] above. Indeed, their Honours’ inclusion of the requirement that an equitable wrongdoer must have a “predatory state of mind” could be taken to imply that the Court intended that any victimisation must be active. This apparent requirement has been “condemned as an unexplained and unjustified reining in of the doctrine’s reach”: P Ridge, “Sir Anthony Mason’s Contribution to the Doctrine of Unconscionable Dealing: Amadio’s Case” in B McDonald, B Chen and J Gordon (eds), Dynamic and Principled: the Influence of Sir Anthony Mason (2022, Federation Press) 376 at 385, in turn citing R Bigwood, “Still Curbing Unconscionability: Kakavas in the High Court of Australia” (2013) 37 Melbourne University Law Review 463 at 478. Some support, however, for the requirement of active victimisation is found in the passages from the judgment of Brennan J in Louth cited earlier in these reasons and relied upon by the appellant although his Honour’s observations were qualified by the word “ordinarily”: see [19] above. A conclusion that a person had a predatory state of mind will usually only be able to be established by inference drawn from that person’s conduct vis-à-vis the donor.

In Wu v Ling [2016] NSWCA 322 at [14], Leeming JA observed in considering the passage from Kakavas extracted at [23] above that “victimisation in this context is no narrow concept”. His Honour was surely correct in so doing. Not only was that observation consistent with Hart v O’Connor but, were it otherwise, it becomes almost impossible to accommodate statements of high authority to the effect that the passive acceptance or retention of a benefit may, in certain circumstances, be unconscionable and result in a transaction being set aside or a gift successfully impeached. Thus, in Louth, Deane J observed that:

The passages quoted and referred to above in relation to the unconscientious retention (as opposed to procurement) of a benefit were not doubted or called into question in Kakavas and it may be that the “restatement” of the principles of unconscionable conduct in that case does not fully accommodate them and in this respect cannot be regarded as exhaustive. As already observed, Thorne at [38] and Stubbings at [44] demonstrate a retreat from Kakavas’ apparent insistence on a requirement of actual knowledge or wilful ignorance.

That “victimisation” when used in this area ought be afforded a broad meaning is consistent also with the observation of Sir Anthony Mason in Amadio at 461 that “[i]t goes almost without saying that it is impossible to describe definitively all the situations in which relief will be granted on the ground of unconscionable conduct”. To similar effect, in National Westminster Bank Plc v Morgan [1985] AC 686 at 709, Lord Scarman counselled that “[d]efinition is a poor instrument when used to determine whether a transaction is or is not unconscionable”, emphasising that all will depend upon the particular facts of the case.

One point that must be made in this regard is that it is perhaps somewhat difficult to assign a “predatory state of mind”, to use the language of Kakavas, to a passive recipient of a gift who comes to learn of the donor’s impairment (or the full extent of it) after receipt of the gift, but who nevertheless chooses to retain it or declines to repay or restore it to the person labouring under the special disadvantage or, as in the present case, to his or her estate. The retention of a gift in such circumstances may be characterised as unconscientious just as the retention of a mistaken payment may be so characterised: see, for example, Black v S Freedman & Co (1910) 12 CLR 105 at 109; [1910] HCA 58; South Australian Cold Stores Ltd v Electricity Trust of South Australia (1957) 98 CLR 65 at 75; [1957] HCA 69; Heperu Pty Ltd v Belle (2009) 76 NSWLR 230; [2009] NSWCA 252 at [130]–[164]; Aboody v Ryan [2012] NSWCA 395 at [80]. But to describe such a recipient as having “a predatory state of mind” may be a stretch of language.

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 to be confined to a circumstance involving apparently arms’ length commercial transactions and not gifts. Of course, where a gift is so procured, equity may also intervene, as was the case in Louth. However, the converse does not follow, that is to say, a gift or transaction may still or also be impeached where unconscionability lies not in the predatory procuring of the gift but in its retention in all the circumstances of the particular case. Bridgewater was a case in point. The majority in that case stated that “[t]he equity to set aside the deed [of forgiveness] may be enlivened not only by the active pursuit of the benefit it conferred but by the passive acceptance of that benefit”: at [122].

These observations are consistent with those made by Allsop P, as he then was, in Johnson v Smith [2010] NSWCA 306 at [5] who said:

The present case was not resolved at first instance as one of unconscionable retention of gifts, but of gifts having been procured by the appellant’s asserted unconscionable taking advantage of her father by her express or implied requests for financial assistance, which were held to have been occasioned by the application of moral pressure. Although the primary judge rejected the appellant’s evidence that the payments were not requested by her, there was in fact little evidence as to the circumstances in which the requests were made. Indeed, the primary judge acknowledged that “[i]t may be that [the appellant] did not expressly ask her father for all of the payments in so many words”: PJ [247]. If the requests were in relation to any genuine need of the appellant, it would be difficult to characterise the appellant as having a “predatory” state of mind in making them, especially if they were of such a quantum (which they were) so as to leave her late father with millions of dollars (which they did) after they had been made.

The primary judge did not find that the express or implied requests for financial assistance were not genuinely made, but reached his conclusion that there had been the requisite unconscientious taking of advantage of the father by reference to an equitable presumption and shifting of evidential onus: see PJ at [284]. In this regard, the primary judge referred (at PJ [239]-[240]) to the decision of Ward CJ in Eq (as the President then was) in Turner v O’Bryan-Turner [2021] NSWSC 5 at [399] which in turn referred to the decision of Austin J in Turner v Windever [2003] NSWSC 1147 at [106].

Austin J had said in Turner v Windever that a 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” where it was established that (i) the weaker party, at the time of entering into the transaction, suffered from a special disadvantage vis-à-vis the stronger party; (ii) the special disadvantage seriously affected the weaker party’s capacity to judge or protect his or her own interests; and (iii) the stronger party knew of the special disadvantage.

Support for the existence of such a presumption is supplied by the decision of Kitto J in Blomley v Ryan at 429, in turn citing the decision of Lord Selborne in Earl of Aylesford v Morris (1873) LR 8 Ch App 484 at 490 (Earl of Aylesford) and Permanent Trustee Co Ltd v Bridgewater (1936) 36 SR (NSW) 643 at 651-652 (Permanent Trustee), a decision of Lord Russell, delivering the advice of the Privy Council in a New South Wales appeal. It is also reflected in Deane J’s reference to “prima facie unfair or unconscientious” in Amadio at 474 and “prima facie unfair or ‘unconscionable’” in Louth: see the passage extracted at [28] above.

Further, as the President points out, Austin J’s summary of principles including as to the operation of the presumption was referred to with apparent approval by Santow JA when that case went on appeal: Turner v Windever [2005] NSWCA 73 at [99].

It should be noted parenthetically that there may be a slight difference as between Deane J in Amadio and Louth and Brennan J in the latter case as to the operation of the presumption, given that Brennan J appeared to contemplate that evidence (even if only slight) would be required to “show that the gift has been procured by unconscionable conduct”: at 631.

Were it not for my conclusion as to the lack of actual or constructive knowledge (see [11]-[14] above), it would have been necessary to consider whether what the High Court referred to in Kakavas at [161] as the need for “proof of a predatory state of mind” could be satisfied at least on a prima facie basis by the operation of the presumption recognised in the cases of high authority noted at [37] above, or whether that matter needed to be positively established by the party seeking to impeach the gifts on grounds of unconscionable conduct.

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.

Although it is also not strictly necessary to decide, if the presumption was not available in relation to the requirement of proof of a predatory state of mind, I would have been inclined to hold that insufficient had been established in the conduct of the appellant to have demonstrated the requisite predatory mental state. The evidence fell short of establishing unscrupulous victimisation or exploitation of a vulnerability “in a way that is unreasonable and oppressive to an extent that affronts ordinary minimum standards of fair dealing”: Verwayen at 441 per Deane J. A request or series of requests by a daughter of a wealthy albeit elderly father who was relevantly living by himself and evidently was able to operate a foreign bank account in order to transfer funds to his daughter may have been predatory, but it may equally have been occasioned by genuine need or may have been consistent with a lifetime of affection and love between an indulgent father and his youngest daughter. The state of the evidence and the findings by the primary judge as to the circumstances in which the payments came to be made in the present case were far removed from the findings in Louth which plainly established the unconscientious taking advantage of the besotted Mr Diprose by his former lover.

As to the appellant’s contention that, as between her father and herself as donor and donee, the gifts were fair, just and reasonable, and the challenge to the primary judge’s conclusion that the appellant had failed to demonstrate this (appeal ground 7), it must be said, with respect, that the primary judge’s reasoning on this issue was terse. It comprised the following two paragraphs (at PJ [284]–[285]):

The appellant contended that a number of matters which were uncontroversial on the evidence before the primary judge supplied a proper basis for the rebuttal of the presumption. Those matters were that the deceased:

It was submitted on behalf of the appellant that the circumstances surrounding the impugned transfers served to underscore that they were neither so contrary to Mr Nitopi’s interests, nor so capricious in the way that they favoured Cristina over his other children, that a conclusion of unconscientious exploitation could be said to flow merely from the fact that Cristina had, on one occasion, seen her father in a depressed and confused state in June 2009.

The primary judge’s finding of moral pressure (see [17] above) must inevitably have coloured his assessment as to whether or not the appellant had demonstrated that the gifts were fair, just and reasonable. This no doubt accounts for his very brief treatment of this issue in the reasons for judgment.

As Mr Cook pointed out, the notion of moral pressure was introduced into the case by the primary judge himself in the course of final submissions: T 283.32 (26 March 2021). This can be seen in the following passage from the transcript:

Although not a ground of appeal, I have some considerable disquiet that what became such an important aspect of the judgment was introduced in this way and at this late stage of the proceedings. Fairness, in my view, dictated that there should have been a clear articulation by the plaintiff either in the pleadings or at the very least in the opening of the case that it was going to be alleged that the appellant applied moral or emotional pressure on her father for money. That this was not done is apparent from the primary judge’s invitation to the plaintiff’s counsel in the course of closing submissions to articulate his case theory. The timing of the articulation of this case theory necessarily also meant that it was not squarely put to the appellant in cross-examination, contrary to the requirement in Browne v Dunn (1893) 6 R 67 (HL), that she had applied moral pressure to her father in securing his bounty.

In any event, as with the question of predatory state of mind, it is not necessary to determine the ground of appeal relating to whether or not the presumption of unconscientious taking advantage had been rebutted.

The following general observations may, however, be made about this last ground. Plainly enough, had the appellant had actual knowledge of the special disadvantage her father was under at the relevant times, the factors set out in [44] above and relied upon by the appellant to justify the gifts would have been less compelling. The more acute or severe the disadvantage, and the more extensive the knowledge of that disadvantage, the more difficult it will be to justify any transaction as fair, just and reasonable. This both illustrates and serves to reinforce the fact that questions of unconscionable dealing are notoriously fact intensive and intimately associated with the nature of the special disadvantage and the degree of knowledge of that special disadvantage by the stronger party.

Further, where there is a positive finding of an unconscientious taking advantage or exploitation of the weaker party, for example by engaging in deceit or threats (as in Louth), as opposed to a case where the presumption is simply relied upon, it will obviously be far more difficult to establish that a gift or transaction is fair, just and reasonable.

To the extent that the appellant raised pleading points in grounds 1 and 2 of the Notice of Appeal, I agree with the President’s analysis of that issue and her Honour’s reasons for rejecting those grounds.

WARD P: This is an appeal from a decision in which the appellant (Cristina Nitopi), one of the three children of the late Edigio Nitopi (the deceased) was found liable to repay the sum of $2,220,335.02 to the deceased’s estate, being the sum of a number of payments made to the appellant by the deceased between June 2009 and June 2010 that were found to have been obtained by unconscionable dealing (those payments totalling $1,261,000), together with interest at statutory rates (see Estate of Nitopi (No 2) [2021] NSWSC 748). The respondent (Giuseppe Nitopi) is the appellant’s brother and the administrator of the estate of the deceased. With no disrespect, various of the family members will be referred to by their first names.

The background to the dispute, as largely drawn from the factual findings in the primary judgment, is as follows.

The deceased was a successful businessman, whose businesses included hardware wholesaling and property development (see the primary judgment at [3]). The deceased died in May 2014, aged 73, leaving an estate worth more than $21 million (see the primary judgment at [1]-[2]).

The deceased and his wife (Tina), from whom he had been separated for a number of years before his death, together had three children (Giuseppe, Rosaria and Cristina), each of whom survived the deceased. Cristina is over ten years younger than each of Giuseppe and Rosaria (see at [4]-[5] of the primary judgment).

In 1998, following his separation from Tina, the deceased moved to the Gold Coast in Queensland (see at [28] of the primary judgment). In about 2000, the deceased had a falling out with the respondent and they remained estranged for a number of years (see at [29] and [116]-[117] of the primary judgment). On 27 October 2008, while at the Gold Coast Hospital after a fall, the deceased executed an enduring power of attorney appointing Rosaria (with whom he had had the most contact out of the three children after his move to Queensland) as his attorney for personal and health matters. On 31 October 2008, after the deceased had been transferred to a psychiatric clinic (the Currumbin Clinic) following concerns raised by hospital staff as to his cognition, the deceased executed a further enduring power of attorney, appointing Rosaria as his attorney in respect of his financial affairs (see at [33]).

The deceased was discharged from the Currumbin Clinic on 6 November 2008. The discharge summary of Dr Penny King, a psychiatrist and psychogeriatrician who had treated the deceased at the clinic, recorded that the deceased had significant short term memory deficits (elsewhere this was referred to as impairment) and symptoms of alcohol withdrawal (see at [66] of the primary judgment). The discharge summary recorded that the deceased’s “family” (without there identifying which member(s) of his family) was informed that he had an “alcohol related dementia syndrome with not only cortical but cerebrovascular changes on his MRI scan” (see at [67]). The deceased was referred to a neurosurgical registrar in relation to aneurysms and to the Aged Care Assessment Team (ACAT) for increased levels of home care (see at [68]). (I interpose to note that the primary judge considered that there was a doubt as to whether the appellant was informed by Dr King of the dementia diagnosis as early as November 2008 and was not prepared to infer that she was – see at [282]-[283].)

On 22 May 2009, the deceased was again admitted to Gold Coast Hospital (see at [75]); and on 27 May 2009, the deceased was assessed by ACAT. The primary diagnosis recorded by the ACAT delegate was of alcoholic dementia. The deceased was assessed as being eligible for “high care – respite residential” and “high care – permanent residential” in a secure environment (see at [78] of the primary judgment). Also on 27 May 2009, a doctor at the hospital (Dr Veevek Thankey) recorded that it was the decision of the medical treating team that the deceased did not have the capacity to make decisions regarding his personal life, and financial life and legal matters (see at [79] of the primary judgment).

Arrangements were made by Rosaria for the deceased to be admitted to an aged care facility in Sydney (Redleaf Manor) following the deceased’s discharge from the Gold Coast Hospital. The deceased was unhappy with that decision and returned to Queensland on 1 July 2009 (see at [80]). However, during the time in June 2009 that the deceased was at Redleaf Manor, the appellant visited him and her evidence at the hearing was that she observed him to be bedridden, depressed and confused and in a “very vulnerable state” (see the primary judgment at [276]-[278]).

The primary judge did not accept the appellant’s evidence that the reason for the deceased’s confusion at Redleaf Manor was because Rosaria had simply transported him to Sydney without telling him where he was going (and not because of his mental state), saying that there was too much independent evidence to the contrary for it to be credible that his confusion had nothing to do with his mental capacity (see at [277]).

On 29 September 2009, the deceased executed an instrument purporting to revoke Rosaria’s power of attorney. The notes of the deceased’s doctor (Dr Fisher) of that day record a discussion with the deceased about the power of attorney and that “both daughter and son agree” (a reference that his Honour found could only be to Giuseppe and Cristina, the respondent and appellant respectively) (see at [85] of the primary judgment). The primary judge noted (at [36]) that, by this stage, the deceased had reconciled with the respondent and the deceased appeared to have fallen out with Rosaria (see at [36]).

During another admission to the Gold Coast Hospital, on 30 November 2009, the deceased was diagnosed with chronic myeloid leukaemia (see at [86]).

On 14 December 2009, the deceased executed an enduring power of attorney, prepared by a solicitor (Mr Renaldo Polo), in favour of the respondent (see at [36]-[37] and [88]); the validity of which Rosaria subsequently disputed (as she also disputed the validity of the revocation of the power of attorney in her favour) (see at [38]).

Proceedings were commenced by Rosaria in the Queensland Civil and Administrative Tribunal (QCAT), which conducted a hearing and in due course held (in reasons published on 25 March 2010) that the instruments executed by the deceased on 29 September 2009 and 14 December 2009 were ineffective because the deceased had lacked sufficient capacity at the time he executed them (see at [40] of the primary judgment). QCAT appointed an independent attorney to look after the deceased’s accommodation, health care and provision of services, but left in place Rosaria’s power of attorney so far as it concerned the deceased’s financial affairs (see at [40]). The respondent and the appellant unsuccessfully sought leave to appeal from this decision (see at [41]). The primary judge found that it was clear that the appellant was aware that QCAT’s decision concerned the deceased’s capacity to revoke Rosaria’s power of attorney (see at [146]).

On 1 June 2010, the deceased was again admitted to hospital, following which, in August 2010, the deceased was discharged to a care facility at Robina (see at [42] of the primary judgment).

Pausing here, the six payments which were found by the primary judge to have been the result of unconscionable dealing on the appellant’s part were made between July 2009 and June 2010 but only one of those was made after the appellant was aware of the QCAT decision (that being a payment of $202,000 made on 4 June 2010 – see the impugned payments listed at [6M] of the fourth further amended statement of claim – about which there was little information). The respondent’s claim failed in relation to the remaining six impugned payments which had been made before June 2009 (see at [287] of the primary judgment). It is also here relevant to note that there were a number of substantial payments made by the deceased to Rosaria at least in the period before the deceased’s falling out with Rosaria (to which the appellant makes reference in her submissions as illuminating the context in which the impugned payments to her should be seen).

In October 2013, the deceased was relocated to a care facility in Sydney, where he died on 16 May 2014 (see at [43] of the primary judgment).

Under the deceased’s last Will, made in September 1997, the deceased appointed his wife, Tina, and a solicitor in Western Sydney (Mr Mervyn Cathers) as his executors; and the deceased left his estate to his children in equal shares. Mr Cathers declined to take up appointment as the deceased’s executor. Probate was granted to Tina in March 2015 (see at [7] of the primary judgment).

Complaint was subsequently made by the respondent as to delay by Tina in the administration and distribution of the deceased’s estate and the respondent commenced proceedings in February 2016 against Tina, in her capacity as executor, making allegations to that effect (see at [9] of the primary judgment). By agreement between the parties, and each of the deceased’s children, a timetable was agreed whereby interim distributions totalling $6.3 million were subsequently made to the children (see at [9]).

After most of the estate had been distributed, the respondent discovered that there had been a number of payments out of the deceased’s bank account between February 2008 and June 2010 in favour of Rosaria and the appellant (as well as one payment in favour of Tina), those payments totalling about $5 million (see at [10] of the primary judgment), of which a total of $3.2 million had been transferred to the appellant between February 2008 and June 2010 (see at [14]).

The payments were from an account held with the Commonwealth Bank of Australia at its branch in Southport, Queensland. The primary judge noted (at [47]) that credits into that bank account must have come from other accounts controlled by the deceased; and his Honour referred to evidence as to the deceased dealing with a banker in Hong Kong as well as to moneys being raised from the sale of business assets. (To the extent that the making of the impugned payments involved the deceased first making arrangements with his banker in Hong Kong to ensure that there was sufficient money in his local account to cover those payments, this suggests at least a level of cognitive ability on the deceased’s part.)

In about April 2017, the respondent amended his statement of claim to join Rosaria and the appellant as defendants (see at [127]) and brought claims against each of Tina, Rosaria and the appellant in respect of the payments made to them during the period between 2008 and 2010. The claims against each of Tina and Rosaria were settled at the commencement of, or prior to, the hearing. This had some consequences in terms of the evidence that was ultimately before the primary judge at the hearing. So, for example, Rosaria’s affidavit evidence was ultimately not read (although extracts from two of Rosaria’s affidavits (sworn 25 January 2018 and 30 May 2019) had been provided to one of the medical experts, Dr Tuly Rosenfeld –see Appendix 2 of Annexure A of Dr Rosenfeld’s report dated 30 January 2020). Moreover, Rosaria had served an affidavit from a friend of the deceased, Mr Terence Raftery, in which Mr Raftery was critical of the payments made to the appellant; but Mr Raftery was not willing to give evidence at the hearing and ultimately his affidavit was not read. Instead, Mr Raftery’s affidavit was tendered as part of the court book (see at [114] and [246] and T 149.1-6), which had the consequence that Mr Raftery was not cross-examined on his affidavit evidence. The primary judge treated that evidence as independent and uncontested – see below – and said that it established that at least some of the payments made to the appellant were made by way of response to her saying that she needed money (see at [115]) and that on at least one of those occasions money was said to be needed for the appellant’s fashion business (see at [115]). The evidence being uncontested needs to be seen, however, in light of Mr Raftery’s unwillingness to comply with the request that he give evidence at the hearing.

The final iteration of the plaintiff’s claim was the fourth further amended statement of claim, filed by leave (granted over the appellant’s objection) on 25 March 2021, the penultimate day of the hearing before the primary judge. The relevant amendment was to introduce a claim for unconscionable dealing as an alternative to the only then existing claim – the undue influence claim against the appellant. On the last day of the hearing, the respondent abandoned the undue influence claim (see at [23]). The timing of the introduction of the unconscionable dealing claim is of relevance when considering the ambit of the evidence that the appellant had adduced prior to the hearing – in that, up to that point, the appellant was simply called upon to meet a claim of undue influence based upon an allegation of the deceased’s dependence on her (which, on the facts at the hearing, was shown to be untenable).

The unconscionable dealing claim (as pleaded at [6O-II]; [6O-V]) followed allegations (at [6AA]) that, from at latest 28 October 2008, the deceased was incapable of the management of his financial affairs by reason of disease or impairment of his mental condition (particularised by reference to his age, frailty and “high degree of cognitive impairment”) and (at [6B]) that, from at latest that date, the deceased was dependent on the appellant for the provision of domestic services, personal care and the administration of his financial affairs. (As adverted to above, there was no evidence to support the allegation as to the deceased’s dependency on the appellant for domestic services, personal care and the administration of his financial affairs – an allegation that was originally pleaded in respect of each of Tina, Rosaria and the appellant without distinguishing between them.)

At [6II] and [6JJ], respectively, it was alleged that there was a relationship of influence and a relationship of dependence between the deceased and the appellant.

At [6M], the impugned payments were pleaded, the proceeds of which were alleged (at [6NN]) to have been retained or dealt with by the appellant for her own use and not for the benefit of the deceased.

At [6O-II] and [6O-V], the unconscionable dealing was pleaded as follows:

As will be explained in due course, it is contended for the appellant that an essential element of the unconscionable dealing cause of action was not pleaded – namely, the unconscientious exploitation by the appellant of the special disadvantage of the deceased of which it is alleged she was or ought to have been aware (see grounds 1 and 2 of the grounds of appeal).

The appellant denied the claim on the merits and contended that the claim was statute barred (see at [24] of the primary judgment). The statutory limitations defences were subsequently abandoned at the hearing (see at [25]), it being accepted that the statutory provisions that had been relied upon did not apply to the defendant’s equitable claims. Leave was unsuccessfully sought during the hearing for the appellant to amend to plead the equitable defence of laches (see at [25]-[27]).

The primary judge concluded that, at the time of the impugned payments, the deceased lacked a sufficient level of memory to recall previous requests (by the appellant) for money and a sufficient degree of independence to decide for himself whether to accede to the latest one; that he was easily swayed and lacked the insight to appreciate that his memory had failed; that he had no real ability to evaluate the appellant’s requests for money and to bring a proper judgment to bear on them; that, in addition to his cognitive difficulties, he was lonely and plagued with serious ailments, including severe pain; and that he was in a very vulnerable state (see at [267]-[268]). Thus, the primary judge concluded that the deceased was subject to a special disadvantage in his dealings with the appellant (from November 2008 onwards (see at [286](1)). (There is no challenge to this finding; although the appellant emphasises that the special disadvantage was comprised of an inability to recall previous requests for money and to exercise judgment as to whether to accede to further requests.)

The primary judge found that the appellant was on notice that there were concerns about the deceased’s mental state; that, even if she lacked actual knowledge of the full extent of the deceased’s disabilities in June 2009, the appellant could not have failed to see the signs of his vulnerability; and, relevantly, that the appellant was on notice of the deceased’s special disadvantage from that point, i.e., from June 2009 (see at [278]-[279]).

While his Honour considered that it was implausible to suggest that, when the appellant spoke to Dr King (as the appellant accepted she did over the telephone on a couple of occasions), Dr King did not tell the appellant about the November 2008 diagnosis of the deceased’s dementia, there was doubt as to when those conversations took place and his Honour was unwilling to infer that the appellant was informed of the dementia diagnosis as early as November 2008 (see at [281]-[282]). Hence, his Honour was not satisfied that the appellant was on notice of the deceased’s special disadvantage before June 2009 (see at [283]). His Honour thus concluded (at [286](2)) that the appellant “ought to have known” that the deceased was subject to a special disadvantage in his dealings with her from June 2009. (There is a challenge to the finding of knowledge; including as to whether the finding was incorrectly one of constructive rather than actual knowledge.)

As to the circumstances in which the impugned payments were made, the primary judge found the appellant to be an unreliable witness; and his Honour made clear that he was not prepared to accept without corroboration the appellant’s conclusory assertions as to those matters (see at [245]).

At [247], in a passage that was the subject of much focus on the appeal (in its reference to moral pressure), his Honour said:

Leaving aside a small $15,000 payment in September 2008, his Honour rejected the appellant’s version of events in relation to the impugned payments (i.e., her affidavit evidence that each of the twelve payments in question was made by the deceased “on a wholly spontaneous, and unrequested, basis” and her oral evidence that she was unaware of some of the payments that were going to be made and only became aware of them when she noticed them in her bank account) (see at [243]-[244]). In that context, the primary judge referred to the evidence (which was described as independent and uncontested) from a friend of the deceased (Mr Raftery) to the effect that the deceased had told him (in conversations as to the time of which Mr Raftery was not precise) that the appellant “needed money” and “wants more money” (see at [246]).

From [284], under the heading “Presumption of unconscionability”, the primary judge said:

The primary judge concluded (at [286]) that: (1) the deceased was subject to a special disadvantage in his dealings with the appellant from November 2008 onwards; (2) the appellant ought to have known this from June 2009 onwards; and (3) the payments made to the appellant after June 2009 were the result of the appellant unconscientiously taking advantage of the deceased. Pausing here, while the appellant complains that there was no finding as to an essential element of the cause of action, namely, that she had unconscientiously exploited the deceased’s special disability (a lacuna said to be reflected in the final form of the respondent’s pleading, to which I have referred above), the conclusion at [286](3) appears to encapsulate just such a finding.

In summary, the appellant complains that, in approaching the question of her knowledge of the deceased’s special disadvantage, the primary judge proceeded upon the (incorrect) premise that constructive notice is sufficient to engage the equitable concept of unconscionable dealing (cf Kakavas v Crown Melbourne Limited (2013) 250 CLR 392; [2013] HCA 25 (Kakavas)); and that, in concluding that she had unconscientiously exploited the deceased’s special disadvantage, the primary judge incorrectly referred to and applied an equitable presumption that there had been such exploitation.

The appellant contends that, in order to be satisfied that unconscionable dealing had occurred in the circumstances of this case, the primary judge was required to find, as an essential element of that cause of action, that (independent of her knowledge of the deceased’s position of special disadvantage) she had, in a predatory fashion, exploited that position of disadvantage.

Further, the appellant argues that, even if she did bear an evidentiary onus (or an equitable presumption applied) to require her to show that the transactions were fair, just and reasonable, or were not the result of the unconscientious exploitation of a special disadvantage of the deceased, then such an onus was discharged. The appellant contends that, having regard to the deceased’s significant wealth and the fact that the impugned transfers did not impede the realisation of the deceased’s testamentary wish to bequeath the generous sums to his children upon his death, there was nothing inherently sinister or suggestive of unconscionable conduct in the transfers themselves. The appellant maintains that there was an obvious explanation for the transactions, namely, that an old man with significant health issues wanted to enjoy, while he was still alive, the act of giving away part of his significant financial wealth to his younger daughter, rather than having that occur after his death.

The grounds of appeal are as follows:

The appellant characterises grounds 1 to 6 and 10 to 12 as raising errors in the primary judge’s approach to the question of exploitation of the deceased’s disability; grounds 8 to 9 as going to the finding of the appellant’s knowledge; and ground 7 as going to the reasonableness of, or justification for, the impugned payments. Ground 13 is the conclusion that follows from acceptance of one or more of the preceding grounds.

I will address first what the respondent characterises as pleading points (grounds 1 and 2) before turning to the complaints made as to the reasoning and findings in respect of various elements of the cause of action for unconscionable dealing (knowledge and unconscionable exploitation) and finally as to the contention that the appellant had discharged any onus (or presumption) that applied.

The appellant emphasises the distinction between “knowledge” of a special disability and “exploitation” of that disability (referring to what was said by Deane J in Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; [1983] HCA 14 (Amadio) at 474), arguing that the former is not of itself sufficient to render the impugned transaction unconscionable (or to cast upon the stronger party an onus to prove the reasonableness of the transaction) and that the latter (unconscientious exploitation of the disadvantage) is a separate and additional element of unconscionable dealing. Reference is made in this regard to what was said by Brennan J, as his Honour then was, in Louth v Diprose (1992) 175 CLR 621; [1992] HCA 61 (Louth v Diprose) at 626 (see as extracted below).

The complaint here made is that neither the case pleaded by the respondent (see as extracted above) nor the reasoning of the primary judge disclosed a sufficient recognition of the need to establish the (unconscientious) exploitation of the deceased’s position of special disadvantage, independently of knowledge of that disadvantage.

As to the pleading, the appellant contends that, by omitting any allegation of unconscientious exploitation on the appellant’s part in procuring the gifts (i.e., by simply pleading awareness of the special disadvantage at [6O-II]), there was not a proper pleading of a claim that the impugned payments had been obtained as a consequence of unconscionable dealing. The appellant makes clear that complaint is not here made as to the grant of leave for the filing of the fourth further amended statement of claim (nor is there a complaint as to any lack of procedural fairness); rather, it is said that, at the conclusion of the hearing, the only claim before the primary judge was one that involved a cause of action an essential element of which had not been pleaded (the undue influence by then having been abandoned).

As to the manner in which the case was conducted, the appellant says that unless the respondent could show that this essential element of the cause of action had been sufficiently addressed in opening or was otherwise the subject of proper articulation (such that the appellant could be said to have been given sufficient notice of the case that she was required to meet), then the primary judge was obliged to dismiss the proceeding. The appellant says that the respondent failed to identify anything in her conduct that gave it the character of being exploitative beyond the assertion that she knew of the deceased’s special disability.

In relation to grounds 1 and 2, at the outset the respondent cavils with any suggestion that there was a denial of procedural fairness in relation to the amendment that was allowed to the pleading in the circumstances explained in the primary judgment (at [16]-[22]). However, as noted above, the appellant disavows any such complaint. More relevantly, for present purposes, the respondent points to the fact that there was no application or submission by the appellant before the primary judge to the effect that the proceeding should be dismissed on the basis of any deficiency in the pleading.

As to the reliance by the appellant on what was said by Brennan J in Louth v Diprose at 632, the respondent observes that his Honour’s formulation differs from that of Deane J (with whom Dawson, Gaudron and McHugh JJ agreed) (see at 637), pointing to the reference by Deane J to the onus being cast upon the stronger party to show that the transaction was fair, just and reasonable where there is a special disability “with the consequence that there was an absence of any reasonable degree of equality between them” and that special disability was “sufficiently evident to the other party to make it prima facie unfair or ‘unconscionable’ that that other party procure, accept or retain the benefit of, the disadvantaged party’s assent to the impugned transaction in the circumstances in which he or she procured or accepted it”. The appellant in this context emphasises the reference in the second of those elements to “the circumstances” in which the assent was procured or accepted as encompassing the element of unconscientious exploitation of the special disadvantage or disability and says that this makes clear that mere knowledge of the special disability does not render the impugned transaction unconscionable.

I consider in due course the requirement for it to be shown that there was an unconscientious exploitation of the (known) special disability or disadvantage. Suffice it here to note that I accept that mere knowledge of a special disadvantage or disability is not enough but that unconscientious exploitation of such a special disadvantage or disability may in some circumstances be established in circumstances where there is a passive acceptance or retention of the benefit of the impugned transaction.

Addressing simply the pleading points at this stage (and accepting that the pleading of unconscionable dealing in the present case was hardly a model pleading), it is well recognised that cases must be determined on the issues as raised by the pleadings but also that the parties may choose “to fight the case on a different basis” (see Vines v Australian Securities and Investments Commission (2007) 62 ACSR 1 at [36] and [57] per Spigelman CJ, his Honour applying what had been said by Mason CJ and Gaudron J in Banque Commerciale SA En Liquidation v Akhil Holdings Limited (1990) 169 CLR 279; [1990] HCA 11 (Banque Commerciale) at 286 and Dare v Pulham (1982) 148 CLR 658; [1982] HCA 70; and see Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (2008) 73 NSWLR 653; [2008] NSWCA 206 at first instance (Ingot Capital Investments Pty Ltd v Macquarie Equity Capital Markets Ltd (No 6) (2007) 63 ACSR 1; [2007] NSWSC 124) and on appeal).

Here, the pleading raised the issue of the appellant’s awareness of the deceased’s inability to judge or protect his own interests ([6O-II]) and the unconscionability of retention by the appellant of the benefit of the impugned transactions ([60-V]). It is evident that the case was conducted on the basis that in issue were the circumstances in which the impugned payments were made by the deceased (including evidence by the appellant as to whether the payments were unprompted by her) and the circumstances in which the benefit of those payments accepted and retained by the appellant (including evidence by the appellant as to whether she had prior knowledge that the payments were going to be made). Thus, to the extent that the pleading was deficient in not separately alleging the fact of unconscientious exploitation, the parties may be said to have acquiesced in the widening of the pleaded case. See, for example, the observation by Mason CJ and Gaudron J in Banque Commerciale at 286-7 to the effect that, ordinarily, the question whether the parties have chosen some issue different from that disclosed in the pleadings as the basis for the determination of their respective rights and liabilities is to be answered by inference from the way in which the trial was conducted but that “in a clear case, mere acquiescence by one party in a course adopted by the other will be sufficient to ground such an inference”. In Ingot, on appeal, Ipp JA observed (at [424]), for example, that acquiescence giving rise to a departure from the pleadings might arise from a failure to object to evidence that raised fresh issues.

In the present case, the conduct of the appellant in relation to the making and retention of the impugned payments was the subject of both evidence and submissions at the hearing; and there was no complaint made as to the deficiency of the pleading nor any submission to the primary judge that the case should be dismissed on the basis of the now perceived deficiency in the pleading. In those circumstances, the grounds of appeal based on the perceived pleading deficiency are not made good.

I consider in due course the complaint made as to the reasons and findings in relation to the unconscientious exploitation issue. Suffice it here to note that I accept that unconscientious exploitation of the known special disability or disadvantage is required to be established in order for equity’s jurisdiction to grant relief based on the principle against unconscionable dealing to be enlivened. How that is expressed differs in the various judgments to which this Court was referred on the present appeal. Nevertheless, as the High Court made clear in Kakavas (see at [118]):

Next, I turn to the issue of knowledge of the deceased’s disability (there being no challenge to the finding of special disability). Grounds 8 and 9 raise issues as to the finding of knowledge: ground 9 being a complaint that the primary judge erred in finding that constructive notice of special disability was sufficient to ground a finding of unconscionable conduct; ground 8 being a complaint that there was no evidence of actual notice of the special disability that his Honour found (inability to recall previous requests for payments and to decide whether to accede to further requests for payment), the only relevant finding being of awareness (on an occasion in June 2009) that the deceased was depressed and confused and in a very vulnerable state.

Reliance is placed by the appellant on the rejection by the High Court in Kakavas of the proposition that constructive notice is sufficient to engage the principle against unconscionable dealing (see at [152] and [154]), their Honours there noting that unconscionable dealing is a species of equitable fraud and referring to Garcia v National Australia Bank Ltd (1998) 194 CLR 395; [1998] HCA 48 (at [39]), saying that the plurality there “did not welcome the use of constructive notice to establish that a transaction is impeachable for equitable fraud”. It is noted that in Kakavas, the High Court read Mason J’s observation in Amadio at 467 (as to awareness of the facts that would raise the possibility in the mind of any reasonable person) as speaking of wilful ignorance, i.e., something “not different from actual knowledge” (see Kakavas at [156]). Reference is also made in this context to the statement by Lord Cranworth LC in Owen v Homan (1853) 4 HL Cas 997 at 1035; 10 ER 752 at 767 to the effect that, if the dealings are such as fairly to lead a reasonable person to believe that fraud must have been used in order to obtain the relevant advantage, then that person is “bound to make inquiry” and cannot shelter “under the plea that he was not called on to ask, and did not ask, any questions on the subject”.

The appellant complains that the finding (at [278] of the primary judgment) that (from June 2009) she was on notice of concerns about the deceased’s mental state because the deceased had told her that he did not think he had dementia (and therefore was on notice of the deceased’s special disadvantage – see at [279]; i.e., of the disadvantage constituted by the deceased’s deficient memory and failing judgment) is not a finding of wilful ignorance; rather, it is a finding of constructive notice (which was explicitly rejected by the High Court in Kakavas as being sufficient for the purpose of a claim of unconscionable dealing).

The appellant says not only that the primary judge did not make a finding of wilful ignorance but also that there was no proper basis for any such finding. The appellant argues that there is a distinction between observation on one occasion of the deceased in a very vulnerable state (bedridden, depressed and confused) and a failure to make broader inquiries as to the deceased’s mental condition on the basis of that one occasion (such as to bespeak wilful ignorance as to the deceased’s failing memory and compromised judgment). The appellant maintains that there is a significant difference between observation of a person in such a state and an inference that the person might be afflicted by dementia.

Insofar as the primary judge considered that the appellant’s recollection of a conversation with the deceased in which he told her he did not think he had dementia indicated that the deceased must have been told at some point that he did have dementia, the appellant submits that there are several equally plausible reasons why the deceased might have denied having dementia (including that he objected to being brought to a facility such as Redleaf Manor). Thus, it is contended that it cannot be said that the appellant must have inferred from the deceased’s denial of dementia that the deceased had, or had been diagnosed with, dementia (so as to be taken as having had actual knowledge of the deceased’s special disability or having been wilfully ignorant of his disability from that point).

Thus, the appellant submits that the findings as to her knowledge proceeded upon an erroneous understanding of the level of knowledge that the respondent was required to prove, and in any event, were not supported by the evidence.

The respondent contends that the findings at [276], [278] and [279] of the primary judgment amount to findings of actual knowledge that the deceased was under a special disadvantage, June 2009 being the point at which his Honour found that, even if the appellant lacked actual knowledge, she could not have failed to see the signs of the deceased’s vulnerability. Pausing here, the finding was in terms expressed as being that even if the appellant lacked “actual knowledge of the full extent of the deceased’s disabilities”, she could not have failed to see the signs of his special disadvantage.

In reply submissions, the appellant cavils with the proposition that there was a finding of actual knowledge and says that the paragraphs of his Honour’s reasons relied upon by the respondent in this regard do not amount, either individually or cumulatively, to such a finding. Further, the appellant says that the premise of [279] of the primary judgment is that she may not have had actual knowledge of the full extent of the deceased’s disabilities. The appellant contends that, because of the specific special disadvantage that was found, it was necessary (if she were to be visited with liability for unconscionable dealing), that she be found to have had actual knowledge of the deceased’s inability to recall prior requests for money on her part and his inability independently to decide whether he should accede to any present or future request); and that there was no such finding.

The High Court in Kakavas made clear that the requisite knowledge for a claim of unconscionable dealing is actual knowledge (not constructive knowledge), although wilful ignorance amounting to actual knowledge would suffice (see at [152], [154], [156]), the High Court there reading Mason J’s observation in Amadio (at 467) as speaking of wilful ignorance.

In that respect, the language used by the primary judge at [286](2) (i.e., that the appellant “ought to have known”) and at [278] and [279] of the primary judgment (that the appellant was “on notice” that there were concerns about the deceased’s mental state and of his special disadvantage) is typically the language of constructive (not actual) notice or knowledge. If that was the ultimate finding (i.e., a finding of constructive notice), then, on the authority of Kakavas, this would be insufficient to enliven the principle against unconscionable dealing. In this regard, the oral argument during submissions in the hearing before the primary judge (to which this Court was taken on appeal) suggests that attention was there being focused on constructive notice at least at one point in the course of argument, though that is not determinative.

There is, to my mind, an indication in the reasons at [279] that his Honour was going further than making a finding of constructive notice and was there speaking of wilful ignorance (i.e., that the appellant could not have failed to see the signs of the deceased’s vulnerability, such that a failure to enquire further might be said to be turning a blind eye to such vulnerability or the cause of that vulnerability). However, the difficulty is that this is not clear. Nor does it necessarily follow that failing to make enquiries as to the deceased’s mental state after becoming aware of the deceased being (in June 2009) in a depressed, confused and very vulnerable state, would amount to wilful ignorance of the deceased suffering from dementia or of the special disability that his Honour found (being the inability to recall previous requests for money or to exercise judgment in relation to future requests for money), in effect a susceptibility or vulnerability to the exertion or imposition of moral pressure by the appellant or others.

Thus, applying Kakavas, one would conclude that to the extent that the findings made by the primary judge were findings of constructive knowledge or notice (not actual knowledge or notice) of the deceased’s special disadvantage would have been in error (ground 9 being made good in that event).

The issue is, however, complicated by the fact that in more recent High Court decisions (Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49 (Thorne); Stubbings v Jams 2 Pty Ltd (2022) 96 ALJR 271; [2022] HCA 6 (Stubbings) there appears to have been a move away from the requirement in Kakavas of actual knowledge (or at least wilful ignorance) and an acceptance that constructive knowledge may suffice. In Stubbings (to which this Court was not taken on the present appeal), the plurality (Kiefel CJ, Keane and Gleeson JJ), where there was a finding by the primary judge couched in terms that the defendant “should have known” the relevant matter, considered that a “sufficient” or “lively” appreciation of vulnerability was sufficient (see at [44]-[47]). At [45], referring to what seems to have been a recitation in Kakavas (at [6]) of the appellant’s submissions in that case, the plurality in Stubbings said that the Court in Kakavas had approved of the emphasis laid by Mason J in Amadio on the point set out in the passage there extracted (which included reference to what a defendant “ought to know”, i.e., constructive knowledge).

Moreover, in Stubbings, the plurality (at [39]) eschewed an approach of addressing the requirements of special disadvantage, knowledge and unconscious exploitation as if they were separate elements of a cause of action in tort.

While judgment was reserved, submissions were invited from Counsel in the present case as to the import of Stubbings on this appeal. Unsurprisingly, the respondent contends that the primary judge’s finding as to knowledge (at [279]) is entirely consistent with the approach adopted by the plurality in Stubbings at [46]. The appellant, in contrast, takes comfort in the observation of the plurality (at [39]) that unconscionability involves a relationship of special disadvantage, knowledge of that special disadvantage and unconscientious exploitation of that special disadvantage (i.e., that knowledge of the special disadvantage does not of itself constitute unconscientious exploitation of that disadvantage); an issue dealt with under grounds 1 and 2 above. However, the appellant also maintains that nothing in Stubbings detracts from the rejection in Kakavas of the notion that constructive notice of the special disability is sufficient to engage the principle against unconscionable dealing. The appellant argues that the observation at [44] in Stubbings that it was not necessary for there to be a finding of actual knowledge was directed to whether (assuming knowledge of the special disadvantage) there was a sufficient appreciation of the catastrophic consequences of the impugned transactions so as to make the conduct in procuring those transactions exploitative (an issue that the appellant contends does not here arise as the impugned transfers in the present case did not produce any disastrous consequences for the deceased.

I do not consider that the reasoning in Stubbings can be so confined as the appellant suggests. The plurality endorsed the statement of Mason J in Amadio (referred to above), in which his Honour spoke in the language of constructive knowledge both as to the existence of the disabling condition or circumstance and of its effect on the innocent party. Similarly, Steward J at [155] implicitly endorsed the principles as stated by the plurality in Thorne, which also encompassed constructive knowledge of the existence and effect of the special disadvantage. Applying the reasoning in Stubbings, it must be concluded that ground 9 of the present grounds of appeal is not made good.

To the extent that his Honour’s findings are properly understood as being of wilful ignorance (and hence of actual knowledge) the evidence to my mind does not support the inference that the appellant was wilfully ignorant of the special disadvantage the deceased was found to have suffered (whether based on the appellant’s observations of the deceased at Redleaf Manor, or the conversation in which the deceased denied that he had dementia). Indeed, it is not insignificant in this regard that the deceased’s own general practitioner (Dr Fisher) made no notes of any concerns of mental ability during this period; and that some cognitive ability must have been required for the transfer of moneys from Hong Kong to put in the local account funds from which to withdraw the impugned payments.

To the extent that his Honour’s findings are findings of constructive knowledge, nor does the evidence in my opinion support the inference that the appellant had constructive knowledge of the special disability that his Honour found existed. Ground 8 is thus made good, with one qualification.

The one qualification to which I refer is that the appellant concedes that she was aware of the deceased’s lack of capacity after the QCAT decision on 25 March 2010 (see above), and therefore that the transfer that took place on 4 June 2010 (in the sum of $202,000) occurred at a stage when the appellant had actual knowledge of the deceased’s lack of capacity (see at [272] of the primary judgment).

The appellant nevertheless contends that there was not a proper basis for finding that her conduct, throughout the period from June 2009 to June 2010, was informed by a predatory state of mind, and hence it is submitted that even this last gift is not amenable to being set aside. I address that submission in due course. At this point, I simply observe that ground 8 is not made good in relation to that last (June 2010) transfer.

I turn next to the issues raised as to the requirement for it to be established that there was unconscientious exploitation of the deceased’s (on this hypothesis, known) special disadvantage or disability.

The appellant places significance on the statement of Brennan J in Louth v Diprose (at 632) that “[o]nce it is proved that substantial property has been given by a donor to a donee after the donee has exploited the donor’s known position of special disadvantage, an inference may be drawn that the gift is the product of the exploitation”. The appellant argues that exploitation of the (known) special disadvantage must first be determined before an inference may be drawn that the impugned gift is the product of that exploitation.

Further, and the appellant places no little emphasis on this, it is noted that Brennan J also there said that such an inference must arise from the facts of the case and that it is not a presumption which arises by operation of law.

The appellant thus says that what Brennan J was describing in the passage at 632 of Louth v Diprose, to which reference is here made, were the circumstances in which the existence of a causal link (between the donee’s exploitation of the donor’s special disability and the consequence of that exploitation; i.e., the gift of the relevant property) may be inferred; not how it might be inferred that the donor’s position of special disadvantage had in fact been exploited.

The appellant thus contends that his Honour erred in concluding, by reference to an equitable presumption of the sort that Brennan J had rejected in Louth v Diprose, that she unconscientiously took advantage of the opportunities presented by that special disadvantage (see at [284] of the primary judgment). The appellant argues that the primary judge (at [284]) was not directing himself to an inference as to the existence of a causal link between any exploitation by her of the deceased’s special disability and the impugned payments; rather, that his Honour was inferring exploitation from the (mere) fact that the appellant was on notice of the relevant disability.

The appellant maintains that such a process of inferential reasoning was not available and that, to the extent that the primary judge drew support for this position from the decision of Austin J in Turner v Windever [2003] NSWSC 1147 (Turner v Windever) at [106] (see as extracted below) (to which decision I referred in Turner v O’Bryan-Turner [2021] NSWSC 5 (Turner v O’Bryan-Turner)), this was inconsistent with Louth v Diprose and the decision in Turner v Windever was plainly wrong in this regard. (The appellant also points out that, even in Turner v Windever, Austin J required the improvidence of the transaction to have been shown before the presumption arose.) The appellant reiterates the proposition that merely being on notice of a special disability does not, of itself, afford a basis for inferring (or presuming), that such a disability was exploited or that such exploitation was the cause of the impugned gift.

The appellant contends that, properly understood, the observations of Deane J at 637 in Louth v Diprose were to the effect that where the elements of special disadvantage, knowledge and unconscientious exploitation are established, it falls on the stronger party “to show that the transaction was fair, just and reasonable”. The appellant says that this is quite different from an equitable presumption, in the absence of proof of exploitation, that the impugned transaction had been procured by means of such exploitation.

While the appellant accepts that in Bridgewater v Leahy (1998) 194 CLR 457; [1998] HCA 66 (Bridgewater v Leahy) Gaudron, Gummow and Kirby JJ observed (at [76]) in effect that unconscientious exploitation can consist of “either the active extortion of a benefit or the passive acceptance of a benefit in unconscionable circumstances”; the appellant emphasises that, in Kakavas (at [161]), the High Court noted that 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”; that “[h]eedlessness of, or indifference to, the best interests of the other party” is not sufficient for this purpose; and that 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”, the majority there going on to say that “[i]nadvertence, or indifference, falls short of the victimisation or exploitation with which the principle is concerned”. The appellant points to the facts considered in cases such as Amadio and Louth v Diprose in this regard as showing more than inadvertence or indifference in the sense referred to in Kakavas.

The appellant accepts that the burden upon a plaintiff asserting unconscionable conduct is not necessarily a heavy one (citing Brennan J’s observation that “slight evidence” may be required); but emphasises that there must be proof not merely of a relationship of special disadvantage but also of the fact of exploitation of that disadvantage before an inference can be drawn, having regard to the whole of the circumstances, that the exploitation was the effective cause of the gift (to use the language of Brennan J in Louth v Diprose at 631).

The respondent submits that the primary judge was correct (on the law as cited by his Honour at [239]-[241] and [284] of the primary judgment) to conclude that, from the time that the appellant knew of the deceased’ s special disadvantage, there was a presumption that the retention by the appellant of the large sums transferred to her by the deceased was unconscionable.

The respondent says that the primary judge was further correct to hold (at [284]), on the facts as found, that the appellant had the onus of rebutting a presumption that the appellant had unconscientiously taken advantage of the opportunities afforded to her by the deceased’s special disadvantage (citing Turner v O’Bryan-Turner at [399] in that context). It is submitted that the requisite “unconscientious taking of advantage” or “exploitation” in this case is the retention of the moneys by the appellant (the respondent pointing to the reference in oral argument by the primary judge at T 7.9 and T 12.36 to “catching bargains” and to the framing of the case by the respondent as the taking of advantage or exploitation or unconscionable conduct in the retention of the benefit (see T 15.29, T 21.9 and T 22.17)).

The respondent cavils with the proposition that the primary judge was required to make a finding as to the appellant’s motives in procuring and/or retaining the gifts (namely, that she “had a predatory state of mind”). It is noted that the statement in Kakavas that there must be “proof of a predatory state of mind” was expressly concerned with cases involving “an arm’s length commercial transaction” and it is submitted that it has no application to the facts of this case. In this regard, the appellant says that there is no basis for seeking to confine the remarks made in Kakavas (at [161]) to arm’s length commercial transactions; and that, as a matter of principle, there is no reason why the elements of unconscionable dealing should be different depending upon whether the impugned transaction occurred in the course of commerce conducted on an arm’s length basis; particularly because the line distinguishing commercial from non-commercial transactions will often be porous.

As to the respondent’s submission that the relevant exploitation involved the retention of moneys, the appellant says that there is nothing inherently sinister or exploitative in retaining moneys that one receives and hence that it is necessary to ask what it was that conferred upon her conduct in retaining the moneys the character of being exploitative in the circumstances of this case. The appellant maintains that the primary judge’s reasons (and the respondent’s submissions) point only to the finding of her awareness of the special disability under which the deceased laboured at the time of the impugned payments (and do not identify any exploitation or predatory state of mind separate from the alleged knowledge of the deceased’s position of special disadvantage).

Turning first to the complaint made as to the invocation and application of an equitable presumption (or the availability of inferential reasoning as to the requirement for unconscientious exploitation), it is relevant to note the way in which the language of equitable presumption came to be used.

In Turner v Windever, Austin J adopted a statement of the elements of unconscionable dealing that had been put forward in that case by counsel for the defendants, there setting out five elements: special disadvantage; that the special disadvantage must seriously affect the weaker party’s capacity to judge or protect his or her own interests; knowledge of the special disadvantage (or, his Honour added parenthetically, of facts which would raise that possibility in the mind of any reasonable person); the taking of advantage of the opportunity presented by the disadvantage; and that the taking of advantage must have been unconscientious.

His Honour then added (at [106], by reference to “cases such as Blomley v Ryan”) that once the first three ingredients (i.e., special disadvantage that seriously affects the weaker party’s capacity to judge or protect his or her interests and knowledge of the special disadvantage) 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”. On appeal, Turner v Windever [2005] NSWCA 73, Santow JA referred (without demur) at [99] to the statement by Austin J that cases such as Blomley v Ryan (1956) 99 CLR 362; [1956] HCA 81 establish that once the first three ingredients of unconscionable dealing quoted above are made out there is an equitable presumption that the stronger party has taken advantage of the opportunity presented by the weaker party’s disadvantage and that the stronger party’s taking of advantage must have been unconscientious.

In Turner v Windever, lack of knowledge of the special disadvantage made it not possible (see at [101] per Santow JA) for Mrs Turner to show that the Windevers unconscientiously took advantage of the opportunity presented by the special disadvantage.

In Turner v O’Bryan-Turner (at [398]-[399]), having quoted the well-known passage of Deane J in Amadio (at 474), in which his Honour referred to Morrison v Coast Finance Ltd (1965) 55 DLR (2d) 710 at 713, I set out the elements of an unconscionable bargain as set out Davey JA in that case (in which there was a reference to the creation of “a presumption of fraud which the stronger must repel by proving that the bargain was fair, just and reasonable”; and quoted from Turner v Windever at [105]; as well as the reference to the presumption at [106]). I also referred to what I had set out earlier in that judgment from Kakavas.

In Kakavas, the High Court said:

I accept that the language of presumption or equitable presumption is inconsistent with what was said in Kakavas but in context it seems to me that what is being contemplated is the shifting of the evidentiary onus once the requisite elements of the cause of action are established and that the real complaint here by the appellant is as to the time at which the onus is said to have shifted (i.e., before a finding that there had been unconscientious or prima facie unconscientious exploitation of the known special disadvantage or disability).

In that context it is relevant to note the nature of presumptions (which I have discussed elsewhere – see Amit Laundry v Jain [2017] NSWSC 1495), namely that they are aids to evidentiary determination (aptly described as “the bats of the law, flitting in the twilight, but disappearing in the sunshine of actual facts” in Mackowik v Kansas City St J & C B R Co 94 SW 256, 262 (1906), as quoted with approval in Neilson v Letch (No 2) [2006] NSWCA 254 at [26] per Mason P with whom McColl and Basten JJA agreed).

What is clear is that, once the requisite elements of a special disadvantage, knowledge of that special disadvantage and improvidence of the transaction are established, there is at least an evidentiary onus on the stronger party to show that the transaction was fair, just and reasonable or it may more readily be concluded that the improvident transaction was procured by the unconscientious taking of advantage of that special disadvantage. I do not read the primary judge’s decision in the present case as in substance going further than this.

Returning then to Louth v Diprose, Mason CJ expressly agreed with Deane J as to the great advantage enjoyed by the primary judge in assessing the character and capacities of the personalities in this class of case and the burden confronting the appellant in challenging concurrent findings of fact; and with Deane J’s conclusion that, viewed from the respondent’s perspective, it was an improvident transaction; indeed, it was so improvident, judged in the light of the respondent’s financial position, that it is explicable only on the footing that he was so emotionally dependent upon, and influenced by, the appellant as to disregard entirely his own interests. His Honour said that the appellant’s dishonest conduct played upon the respondent’s susceptibility where the appellant was concerned and that her conduct was unconscionable in that it was dishonest and was calculated to induce, and in fact induced, the respondent to enter into a transaction which was improvident and conferred a great benefit upon the appellant.

Brennan J adopted as applicable to cases of gift what was said as to cases of bargain in Amadio by Dawson J, namely that “[w]hat is necessary for the application of the principle is exploitation by one party of another’s position of disadvantage in such a manner that the former could not in good conscience retain the benefit of the bargain”. His Honour noted that there were explicit findings by King CJ of an unconscientious exploitation by the defendant of the plaintiff’s weakness in D v L (1990) 54 SASR 438, at 448; and said that “[w]hen a donor who stands in a relationship of special disadvantage vis-à-vis a donee makes a substantial gift to the donee, slight evidence may be sufficient to show that the gift has been procured by unconscionable conduct”.

His Honour said that “where it is proved that a donor stood in a specially disadvantageous relationship with a donee, that the donee exploited the disadvantage and that the donor thereafter made a substantial gift to the donee, an inference may, and often should, be drawn that the exploitation was the effective cause of the gift” but made it clear that the drawing of that inference depended on the whole of the circumstances.

His Honour said that:

Deane J said:

It becomes clear that the presumption that is here spoken of 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 appellant contends that, because there was no proper basis for a finding of any soliciting of funds by her or any other form of unconscientious exploitation, there was no occasion for casting an onus upon her (as to the reasonableness of the transaction). (Further, it is said that, even if, as a matter of principle, it had been open to the primary judge to infer, by reference to the state of her knowledge alone, that the appellant had exploited the deceased’s special disability, the primary judge’s conclusions would still have been infected by error, given the approach taken to the question of knowledge – which I have considered above.)

The respondent says that, applying the facts found to the test applied (correctly) by the primary judge (at [239]), the primary judge was bound to find that the onus had shifted to the appellant to rebut the presumption. Further, the respondent says that the appellant’s characterisation of the primary judge’s findings as to the deceased’s special disadvantage is inaccurate. It is noted that the primary judge makes various findings (at [259]-[269]) in concluding (at [269]) that the deceased was under a special disadvantage from late October 2008 onwards. It is said that, in so doing, his Honour was not purporting to define the deceased’s special disadvantage in a certain way. In this context it is noted that at [241] the primary judge cited the reference in Turner v O’Bryan-Turner at [400] to the requisite disadvantage or disability being one which “seriously affects the ability of the weaker party to make a judgment as to his or her own best interests”.

In reply to the above submission by the respondent, the appellant contends that, given the centrality of her knowledge of that special disadvantage (both to the case advanced by the respondent and the reasoning of the primary judge), it was necessary to identify the matters knowledge of which was said to render her liable for unconscionable dealing. The appellant maintains that it cannot be sufficient for her to have had some awareness of the deceased being afflicted by some unspecified disadvantage that may or may not have had a bearing upon his assent to the impugned payments (noting that Deane J in Louth v Diprose at 637 spoke of the weaker party’s special disadvantage being “sufficiently evident” to the stronger party). It is said that one cannot properly assess whether a special disadvantage is “sufficiently evident” without some identification of what that special disadvantage was.

Insofar as the respondent is here contesting whether the primary judge found that the deceased’s special disadvantage consisted of a lack, in the face of a request for money, of “a sufficient level of memory to recall prior requests and a sufficient degree of independence to decide for himself whether to accede to the latest one” (see at [267]), the appellant says that this should be rejected having regard to the primary judge’s reasons at [267]-[268]. It is submitted that, having described at [267]-[268] the matters that placed the deceased in a position of special disadvantage relative to the appellant, his Honour was required, in granting the relief sought by the respondent, to make findings concerning her exploitation of those matters (and the appellant’s complaint is that there are no such findings in his Honour’s reasons).

Ground 5 raises the question whether the evidentiary onus had shifted to the appellant in the absence of a finding that the appellant had exploited the special disadvantage.

Insofar as it is recognised in Bridgewater v Leahy that the unconscientious exploitation can consist of the passive acceptance and retention of moneys, I do not consider that his Honour erred in concluding that an evidentiary onus fell on the appellant to provide an explanation for the last of the impugned payments (it is not necessary to consider the earlier payments as the element of knowledge was not made out for those payments and hence the question of unconscientious exploitation does not arise). The appellant was aware at the time of receipt of the 4 June 2010 payment that the deceased had been found to lack capacity to make the payment; and the appellant accepted the benefit of and retained that payment. In those circumstances it is not mere knowledge that constitutes unconscientious (or prima facie unconscientious) exploitation, it is the implicit decision to take advantage of that lack of capacity in the acceptance of a gift that must have been understood to be made without capacity.

As to ground 6, this is a complaint as to the lack of evidence to establish that had the deceased been able to give proper consideration to the requests, the deceased would not have acceded to them.

The appellant contends that there was no basis for the observation by his Honour (at [285] of the primary judgment) to the effect that, had the deceased been able to give proper consideration to her requests, he may not or would not have acceded to them. In that regard, the appellant again notes his Honour’s observation that “it would have been natural for the deceased to have wished to benefit Cristina” (see at [267] of the primary judgment). It is said that, if it were legitimately to be reasoned that, had he been in his right mind, the deceased would not have made the impugned transfers and therefore that, because those transfers were made, the deceased must have been the victim of unconscientious exploitation, then it was necessary for the respondent to establish the relevant premise (i.e., that had he been cognitively sound the deceased would not have made those payments).

Reference is made again in this context to what was said by Brennan J in Louth v Diprose at 632; and Amadio at 474. The appellant contends that it amounted to a reversal of the onus for the primary judge to find that the impugned payments were not spontaneous (and thus not free from exploitation) because there was no evidence that the deceased would have made those payments had he been cognitively sound (at a stage of the enquiry when a burden had yet to be cast on the appellant to show that the transfers were fair, just and reasonable).

This does not arise because the only gift now in contention is one in respect of which there is no dispute that the deceased lacked capacity (and therefore he was beyond being able to give proper consideration to any such request at that stage).

As to ground 10, the appellant argues that, to the extent that the conclusion of unconscientious exploitation is said to be supported by the primary judge’s finding that each of the impugned payments was made after some form of prompting by her, that finding was at odds with the evidence.

It is noted that one reason given by the primary judge for rejecting the appellant’s case that the payments were made spontaneously was that the appellant “presented no clear context for the payments”, as a consequence of which it was said “[t]here [was] no reliable evidence which would establish that, had the deceased been able to give proper consideration to [the appellant’s] requests, he would have acceded to them” (see at [285]).

In that regard, the appellant says that there was ample evidence of the context for at least some of the payments (namely, by reference to the creation and expansion of her fashion label). In this regard, the appellant points to her affidavit of 29 January 2018 (at [12]), in which she referred to the creation of her fashion label and to the deceased being a great source of emotional and financial support and she deposed that the deceased had encouraged her to expand her fashion label. It is noted that this evidence is consistent with Mr Raftery’s evidence that on one occasion the deceased told him that the appellant needed money for her fashion label. The appellant submits that it is entirely plausible that the deceased (“a man of means”) would have sought to support the appellant in the launch of an international fashion label (which is said to be a risky endeavour) and to do so by transferring funds to the appellant (without prompting), which she could then use to assist in realising her business aspirations.

It is accepted that, in cross-examination, the appellant gave evidence that most of the funds transfers occurred after she had informed the deceased that she had placed deposits for the purchase of properties, including in Pyrmont and Leichhardt (see at T 204.18-49); that she had prior notice of some of these transfers and not others (see at T 206.33), and that these funds were then used to finance the purchase of the relevant properties. However, it is submitted that this is not inconsistent with the proposition that some of the impugned transfers were made spontaneously and with the proceeds being used to finance the appellant’s fashion business (reference being made in that context to the appellant’s evidence in cross-examination at T 255.33-34).

Thus, the appellant contends that the primary judge overstated her oral evidence about needing the money for property purchases rather than for her fashion label (when saying that this was a “prominent example” of an inconsistency between her oral testimony and her affidavit evidence – see at [161]). The appellant contends that, to the extent that this supposed inconsistency was relied upon in aid of the conclusion that she did not present any clear context for the impugned payments (and thus also relied upon in aid of the finding that not one of those payments was made spontaneously), his Honour erred. It is submitted that if at least some of those transfers (whether used to finance the appellant’s fashion line or to assist the appellant in the purchase of real estate) were made without prompting by her, then there is no cogent answer to the question as to how the appellant could be said to have exploited the deceased’s special disability, whether by the exertion of moral pressure or otherwise, for the purpose of extracting funds from the deceased (and, on that basis, it is said that ground 10 is made out).

The respondent argues that, based on the primary judge’s finding that the appellant was an unreliable witness, his Honour was entitled to find that the appellant had not presented a clear context for the payments. It is noted that the lack of a clear context for the payments was only one of the reasons for his Honour’s rejection of the appellant’s evidence that the payments were made to her spontaneously by the deceased (see at [285]). The respondent says that the evidence of Mr Raftery provided another reason upon which his Honour was entitled to reject the appellant’s evidence that the payments were made spontaneously; namely, that the deceased told Mr Raftery that he made payments to the appellant because she “wants more money” ([246]).

There is no challenge to the primary judge’s findings as to the unreliability of the appellant as a witness. In any event, the observation by his Honour that the appellant had presented no clear context for the impugned payments was, as I read his Honour’s reasons, made in the context of the finding that the appellant had not satisfied the onus (or rebutted any presumption that might be said to have arisen) required to show that the transactions were fair, just and reasonable (not to support the conclusion that there was unconscientious exploitation in the first place). This raises the issue covered by ground 7 and I deal with it in that context.

Grounds 11 and 12 relate to the finding of “moral pressure”, which the appellant contends did not suffice to support a conclusion of unconscientious exploitation.

As already noted, the appellant places significant weight on the lack of a finding by the primary judge that she had a “predatory state of mind” in procuring the impugned transfers of funds from the deceased or that her conduct otherwise amounted to the exploitation or victimisation of the deceased; noting that the finding made by his Honour was that, before each of the payments, the appellant had at least implicitly made it known to the deceased that she needed money for one purpose or another “and thereby imposed a degree of moral pressure on him to give her what she wanted” (see at [247]).

The appellant complains that what was there meant by “moral pressure” is unclear. The appellant argues that, to the extent that the phrase “moral pressure” was intended to denote the ordinary expectation that a parent would assist a child if he or she were able to do so, then such an expectation was not created or “imposed” on the deceased by the appellant. In this regard, it is said (in what seems to be an excursus into anthropological debate) that this is a basic feature of almost all societies; and it is noted that the primary judge observed that “it would have been natural for the deceased to have wished to benefit [the appellant]” (see at [267]). However, to the extent that the primary judge was there referring to some additional expectation or pressure (i.e., beyond that to which the appellant refers as the natural parental desire to benefit or assist one’s children), the appellant makes the following submissions.

First, the appellant submits that the finding of moral pressure was made without any foundation in the evidence. The appellant says that, while the primary judge rejected her evidence that the impugned payments were made without prompting on her part, there was no direct evidence as to the content of any communication between her and the deceased that might be said to have constituted a request for funds. The appellant says that there was no such evidence from Mr Raftery; his evidence being simply that on a number of occasions, particularly in 2008, he had conversations with the deceased during which the deceased later spoke of giving money to the appellant and of the appellant either needing or wanting more money (see the primary judgment at [112]). The appellant maintains that this does not constitute evidence of the imposition of any moral pressure above and beyond the natural parental desire to benefit or assist one’s children.

Second, the appellant says that there was no finding that any such (additional) moral pressure was exerted by her intentionally and for the purpose of extracting benefits from the deceased. Thus, it is said that there was no finding of predatory conduct on the appellant’s part.

Third, the appellant cavils with the proposition that the exertion of moral pressure by her could amount to exploitation of the disability that the deceased was found by his Honour to be suffering (that being a compromised ability to recall previous requests for money and an insufficient degree of independence to accede to such requests in the future).

The complaint here made is that use of the expression “moral pressure” either failed sufficiently to recognise, or elided, the distinction between exploitation of natural parental affection on the one hand and exploitation of the deceased’s deficient memory or failing judgment on the other hand. Hence, it is said that there was an inadequate foundation in the facts as found by the primary judge for a conclusion of unconscionable conduct. In particular, the appellant points out that there was no pleading or finding to the effect that the deceased’s disability involved some susceptibility to the sort of moral pressure that she was found to have exerted.

The respondent says that the primary judge was entitled to find on the balance of probabilities that “before each of the payments [the appellant] had at least implicitly made it known to her father that she needed money for one purpose or another, and thereby imposed a degree of moral pressure on him to give her what she wanted” (see at [247]). It is noted that, in addition to the evidence of Mr Raftery, his Honour also had the appellant’s evidence that, in respect of several large transactions, the appellant knew in advance the money was going to be transferred (see at [137]).

As to ground 12, the respondent maintains that this ground is misconceived by reference to the test as formulated by Deane J (with whom the plurality – Dawson, Gaudron and McHugh JJ agreed) in Louth v Diprose.

The reference to moral pressure at [247] was clearly the primary judge’s description of circumstances in which the deceased was susceptible or vulnerable to requests (explicit or otherwise) from the appellant for money or financial assistance. I do not consider that the use of the label “moral pressure” in the primary judge’s description of the vulnerability of the deceased establishes error on the part of the primary judge. The complaint by the appellant seems to have been that moral pressure was not pleaded as such nor was it put to the appellant as such in cross-examination (hence it was suggested that a Browne v Dunn (1894) 6 R 67 issue arose). The only evidence of any pressure (moral or otherwise) on the part of the appellant seems to be the evidence of Mr Raftery to the effect that the deceased referred on a number of occasions to the appellant wanting or needing money. The appellant cannot be said not to have had an opportunity to respond to the matters raised in Mr Raftery’s affidavit (though I accept that at the relevant time all that the appellant was then being required to meet was a pleaded case of undue influence based on allegations that the deceased was dependent on her).

As to the complaint that it was necessary for there to be a finding that the appellant had a predatory state of mind (relying on the statement in Kakavas to the effect that the principle of unconscionable dealing requires this) I would read this as simply another way of saying that there needs to be unconscientious exploitation with the requisite knowledge. If that is established, then it can be said that there was a “predatory” state of mind in that there was a deliberate or intentional taking of advantage of the known special disadvantage or disability. That is consistent with the recognition that passive acceptance or retention of moneys may in some circumstances be sufficient to amount to unconscionable dealing.

In this regard, I note that in Thorne the High Court (Kiefel CJ, Bell, Gageler, Keane and Edelman JJ) affirmed the principles of unconscionable conduct in equity as restated by the High Court in Kakavas, saying (at [38]):

This statement by the High Court in Thorne recognises that a variety of descriptions may apply to the same conduct.

Thus, I do not consider that ground 10 is made good.

This brings me to ground 7, which goes to the question of reasonableness of, or justification for, the impugned payments.

The appellant contends that even if, at any point, an onus was borne by her to rebut a prima facie conclusion of unconscientious exploitation (by proving that the transfers to her were fair, just and reasonable), that onus was here discharged. In this regard, the appellant emphasises that the deceased was a man of substantial means, as reflected in the size of his estate. It is noted that none of the transfers that the primary judge found to be the product of unconscionable dealing was for an amount exceeding $360,000; and it is said that neither individually nor cumulatively were the transfers of such a magnitude as to result in the deceased becoming destitute (or to frustrate his testamentary wish that each of his children receive a generous bequest). It is thus submitted that on no view were the impugned transfers improvident transactions.

Further, the appellant contends that the favour that the deceased displayed towards her (over his other children) in making the impugned transfers was not suggestive of unconscientious exploitation by her or reflective of some want of fairness or reasonableness in those transactions. It is noted that the appellant was the deceased’s youngest child (by a significant extent); and that, while there was a two-year period commencing in about 1999 during which contact between the deceased and the appellant (then a minor) ceased (as a result of a restraining order obtained by Tina against the deceased) (see at [29]), there was no finding that their relationship was anything other than loving and affectionate at the time of the impugned payments. The appellant contrasts this with the relationship between the deceased and the respondent (there being a falling out between them in 2000; the two being found only to have reconciled in 2009 – see at [123] of the primary judgment); and between the deceased and Rosaria (which had suffered a rupture by September 2009). Thus, the appellant says that the fact that the deceased might have conferred greater material benefits upon her in those circumstances is neither surprising nor sinister.

The appellant also points out that, even if, as his Honour held, the deceased’s memory was failing, this did not prevent the deceased from being able to tell Mr Raftery that he had given large sums of money to the appellant. The appellant says that the deceased might not have been able to recall the fact and amount of each transfer to her, but it cannot plausibly be said that he lacked any understanding or recollection that he had made significant gifts of money to her.

Further, it is noted that the wisdom or otherwise of the gifts that the deceased gave to the appellant during her life is not here the issue (reference being made to the statement in Allcard v Skinner (1887) 36 Ch D 145 at 183 that “[c]ourts of Equity have never set aside gifts on the ground of the folly, imprudence, or want of foresight on the part of donors”). The appellant contends that in the present case the circumstances surrounding the impugned transfers serve to underscore that they were neither so contrary to the deceased’s interests, nor so capricious in the way that they favoured her over her siblings, that a conclusion of unconscientious exploitation could be said to flow merely from the fact that she had, on one occasion, seen her father in a depressed and confused state in June 2009.

The respondent says that the primary judge was entitled to find (at [285]) that there was no reliable evidence to rebut the presumption that the appellant’s retention of the moneys was unconscionable; and that therefore that retention of the moneys was unconscionable, notwithstanding the deceased was wealthy and had affection for the appellant.

Again, this ground is only now relevant in relation to the last of the impugned payments (having regard to the conclusion reached as to the issue of knowledge in relation to the earlier payments).

There is a need for caution in disturbing a trial judge’s finding of unconscionable conduct because it represents a judicial conclusion as to the application, to a mass of evidence, of a legal standard expressed in broad statutory language (see, albeit in a different context, Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (2003) 214 CLR 51; [2003] HCA 18 at [82]-[83] per Kirby J).

In that regard, I do not accept that his Honour erred in concluding that the appellant did not discharge an evidentiary onus to show that the transaction was fair, just and reasonable; or that it was not unconscientious for her to retain it. By then, the appellant knew that the deceased lacked capacity. True it is that the payment was for a relatively minor amount in the context of the deceased’s overall assets, but it cannot be said to have been a fair, just and reasonable transaction to take advantage of a transfer of moneys at a time when the deceased lacked capacity. Indeed, the proposition that this payment was explicable by reference to the natural parental desire to assist one’s children or in order to obtain the pleasure from benefiting a child during one’s lifetime cannot logically stand against the conclusion of lack of capacity.

Thus, in relation to the last of the impugned payments, I consider that there was no error established and ground 7 is not made good.

For the above reasons, I propose the following orders:

WHITE JA: I have had the advantage of reading in draft the reasons for judgment of Bell CJ and Ward P.

If there be any material differences in their Honours’ reasons it may be in their consideration of whether the High Court’s decisions in Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49, and Stubbings v Jams 2 Pty Ltd [2022] HCA 6; (2022) 96 ALJR 271 support the element of constructive notice, as distinct from constructive knowledge, of the weaker party’s position of special disadvantage, or the consequences of the transaction for him (per Bell CJ at [7]-[11], per Ward P at [118]-[121]), and their consideration of what conclusions should be drawn from the reasons of the High Court in Kakavas v Crown Melbourne Ltd (2013) 250 CLR 392; [2013] HCA 25 in relation to the presumption described by Austin J in Turner v Windever [2003] NSWSC 1147 at [106] (per Bell CJ at [38]-[42] and per Ward P at [145]-[147] and [153]).

As to the first matter, to my mind the most important point to arise from Stubbings is the plurality’s reminder (at [39]) that the “elements” to be satisfied to establish grounds for equity’s intervention where the defendant has unconscientiously exploited the plaintiff’s “known” position of special disadvantage are not to be addressed separately as if they were elements of a cause of action in tort.

The plurality found that the relevant question was whether the defendant’s solicitor’s “appreciation” of the plaintiff’s special disadvantage was such as to amount to exploitation (at [44]). The language used by the plurality does not address distinctions between constructive knowledge and constructive notice, but does not support the notion that constructive notice, in the sense that term is used in other areas of the law, such as priorities between the holders of legal and equitable estates, would suffice.

The High Court in Kakavas did not address the second matter. It is unnecessary to resolve that issue in order to decide the present appeal.

I prefer not to express opinions on these questions until it is necessary to do so.

Subject to these comments, I agree with the reasons of both Bell CJ and Ward P and with the orders proposed by the President.