McLennan by his tutor Kennedy v McLennan

1. [1]

   LEEMING JA: I agree with Ball JA.

2. [2]

   PAYNE JA: I agree with Ball JA.

3. [3]

   BALL JA: The appellant, Mr Malcolm John McLennan (John), by his tutor Martyn Xavier Kennedy, appeals against a decision of Parker J (the primary judge) in which the primary judge (1) refused to set aside a deed of appointment made between John, the first respondent, his son, Mr Ruskin McLennan (Ruskin), and the second respondent, Lakshmi Pty Ltd (Lakshmi), by which John nominated Ruskin in his place as the appointor of a discretionary trust referred to in the relevant trust deed as “the McLennan Family Trust” (the Lakshmi Trust); (2) refused to set aside a transfer to Ruskin of John’s interest in a property at Bombi Road, Macmasters Beach, NSW, which John had owned as joint tenants with his late wife, Susan Karen Jeannine McLennan (Karen), who died in 2022; (3) rejected a claim for provision out of Karen’s estate in John’s favour under Part 3 of the Succession Act 2006 (NSW) (Succession Act): see McLennan v McLennan [2025] NSWSC 1603 (PJ). John had sought the first two orders from the court below on several grounds. Ultimately, the only one he pursued was that the transactions should be set aside because he had entered into them as a consequence of Ruskin’s unconscionable conduct.

Background

1. [4]

   The primary judge undertook a comprehensive and careful review of the evidence in this case. What follows is a summary taken largely from his Honour’s judgment.

2. [5]

   John was born in March 1939. After he left school, he obtained qualifications as a pharmacist and worked in that capacity until he retired in 1991. He married Karen, who worked as a nurse, in 1963. They have two children, Ruskin, and a younger daughter, Susannah. Ruskin is married to Jodie. He and Jodie have two daughters. Susannah has one son, Rory.

3. [6]

   Over the course of their marriage, John and Karen built up a substantial portfolio of assets in the form of real property and shares, which included the marital home at Bombi Road, a commercial property in West Street, Gosford, NSW, which is owned by Convulon Pty Ltd as trustee of a discretionary trust which is also referred to in the relevant trust deed as the “McLennan Family Trust” (the Convulon Trust) and a commercial property at Manns Road, Gosford, which is owned by Lakshmi as trustee for the Lakshmi Trust. The beneficiaries of both trusts include Ruskin and Susannah, who are named as the “primary beneficiaries” of the Convulon Trust and together with John as the “first corpus beneficiaries” of the Lakshmi Trust. John and Karen also established a 1993 self-managed superannuation fund (SMSF), the trustee of which until recently was McLennan Holdings Pty Limited (MHPL), which held a substantial share portfolio. John was plainly an experienced businessman and investor.

4. [7]

   In 2005, Susannah, who at the time moved into a house that John and Karen had bought for her in The Scenic Road, Macmasters Beach, NSW was appointed a director of Convulon and Lakshmi to assist her parents to manage the affairs of those companies. However, she ceased to be a director of Convulon in 2008 and of Lakshmi in 2009 following her move in 2007 to Bellingen on the North Coast of New South Wales to be closer to her then partner. In 2010, she was replaced by Ruskin, who also became a director of MHPL.

5. [8]

   In 2014, John and Karen made new wills which mirrored each other. They also resigned as directors of Convulon and Lakshmi and transferred their shares in those companies to Ruskin. At about the same time, John and Karen gave Ruskin access to their bank and credit card accounts. The new wills and changes to the directorships of Convulon and Lakshmi had their genesis in requests Ruskin made in March 2011 of Mr Steve Walker, an accountant who had acted for John and Karen for many years, and subsequently, Mr Heath Adams, a solicitor recommended by Mr Walker, for advice on the best way for John and Karen to restructure their affairs so that Ruskin controlled the two companies and advice on whether in the event of both John’s and Karen’s death or incapacity Susannah could cause any issues with respect to the operation of the current trust arrangements. Those requests were made following discussions between Ruskin and his father the results of which were that Ruskin, who at the time was living and working at a ski resort in Niseko, Japan, and where he owned a share of a real estate business, sold his interest in that business and at his father’s request returned to Australia to manage the family assets, although Ruskin continued to hold property in Japan and to have some business interests there.

6. [9]

   One reason for the changes was that John wished to retire from active management of the assets of the trusts. He and Karen were obviously getting older, and he had had a moderate stroke in December 2012, which had required a period of hospitalisation. Despite John’s denials in his affidavit evidence, the primary judge also concluded that “Mr Adams’ unchallenged evidence, and the documentary record, demonstrate clearly that [Susannah’s past problems with alcohol] was one of the factors which underpinned the McLennans’ desire to put as many as possible of their assets beyond Susannah’s reach”: PJ[438]. That finding is not challenged on appeal.

7. [10]

   Mr Adams had originally been retained by Ruskin, but in 2014 he opened a new file entitled “estate planning” with John and Karen as his clients, although he continued on occasion to correspond by email with Ruskin alone in relation to his instructions. Throughout the time Mr Adams acted for John and Karen, most of his formal correspondence was addressed to the three of them at John and Karen’s post office box at Ettalong Beach, NSW and to Ruskin’s email address. It remains unclear whether Mr Adams’ original client letters were ever actually sent to the post office box address. The primary judge said that he was “not affirmatively satisfied” that the letters sent in 2014 were posted to the post office box address (PJ[434]), and he made no findings in relation to correspondence in later years, although he did say (in relation to the 2014 correspondence) that “I consider that John’s evidence falls far short of proving to the contrary”: PJ[434]. The appeal proceeded on the basis that John and Karen had received copies of the main correspondence, and it is hard to believe that they did not, given their meetings with Mr Adams and what was discussed at those meetings. That conclusion is consistent with evidence given by Mr Adams in cross‑examination that “our practice at the time [2013] was to send correspondence via email, and most correspondence by mail”.

8. [11]

   Under the terms of their new wills, John and Karen appointed Ruskin as their executor and trustee. They each left the whole of their estate to the other if the other survived the testator for 30 days. Otherwise, they left their interests in the Bombi Road property and its contents to Ruskin. They left Susannah a bequest of $300,000. The balance of their estate (consisting largely of the assets held in the SMSF) was to be divided between two testamentary trusts. One, which was to have assets of $1,000,000, was a discretionary trust that named Susannah and her children as the beneficiaries. The other, comprising the balance of their estate, was a discretionary trust naming their grandchildren as the beneficiaries.

9. [12]

   Mr Adams was contacted again by Ruskin on 4 April 2019. In an email Ruskin sent Mr Adams on that day, Ruskin explained that “[i]n the past 2 years we have been reviewing my parents’ estate with the family financial planner Joe Jutrisa” and that Mr Jutrisa had made “a number of suggestions in the management of the existing will to ensure that the wishes of my parents are carried out”. That email is consistent with a file note prepared by Mr Jutrisa of a meeting he had with John Karen and Ruskin on 8 May 2018, which records the following:

10. [13]

    Ruskin also explained in his email to Mr Adams that his parents had invested $500,000 in a property in Japan and had lent him $500,000 to invest in the same property. Together, they owned 60% of that property.

11. [14]

    Ruskin, John and Karen met with Mr Adams on 12 April 2019. At that meeting, there was discussion of the need to “protect” the family assets from a claim by Susannah and the need to ensure that Rory was properly looked after. The meeting concluded on the basis that Mr Adams would provide written advice on the next steps. Mr Adams’ retainer letter shows Ruskin, John and Karen as his clients.

12. [15]

    On the following Monday (15 April 2019), Ruskin emailed Mr Adams a copy of a “letter of intent” signed by Karen and John. The letter (which was handwritten by Karen and dated 11 April 2019) states:

13. [16]

    John, who was not available for cross-examination because of a serious stroke he had shortly before the hearing and whose evidence the primary judge largely rejected, gave the following evidence in relation to the letter:

14. [17]

    Ruskin said in his affidavit evidence that he was not involved in the drafting of the letter. It was put to him in cross-examination that the letter came about “because you had a discussion with your mother before its writing”, which Ruskin denied. But irrespective of whether Ruskin’s denial is accepted, it was not put to him that he influenced the contents of the letter; and there is no reason to think, or finding of the primary judge, that he did.

15. [18]

    Mr Adams’ advice was finally sent to Ruskin by email dated 14 August 2019. It was addressed to Ruskin, John and Karen, although it is unclear whether it was posted to John and Karen.

16. [19]

    The letter of advice identified the issues on which Mr Adams had been asked to advise as:

17. [20]

    Mr Adams summarised his advice on those issues in these terms:

18. [21]

    Consistently with Mr Adams’ suggestion, on 27 August 2019, on instructions from Ruskin, Mr Adams retained Mr David Jay to provide advice. In connection with that retainer, Mr Adams provided Mr Jay with the following summary of the assets of John, Karen and the trusts (which is not disputed):

19. [22]

    On 3 September 2019, Mr Jay sent Mr Adams an email enclosing a draft of his opinion. The email summarised his advice in the following terms:

20. [23]

    As Mr Jay explained in his draft opinion, the trust deed establishing the Lakshmi Trust nominated John as the appointor and on his death Karen and gave the appointor power to remove the trustee and appoint a new trustee in its place. Mr Jay explained in his opinion that:

21. [24]

    Mr Jay explained that a similar change did not need to be made to the trust deed establishing the Convulon Trust, since that trust deed named Convulon as adviser and trustee of the trust. Under the trust deed, the power to remove the trustee and appoint a new trustee was given to the “Advisor” – that is, Convulon itself, which was controlled by Ruskin.

22. [25]

    Although not apparent from the summary, Mr Jay also said in his draft opinion that “I do not recommend the principal place of residence be transferred”.

23. [26]

    None of Ruskin, John nor Karen was provided with a copy of Mr Jay’s email or draft opinion. However, the day after it was received, on 4 September 2019, Ruskin sent Mr Adams the following email:

24. [27]

    Mr Adams replied that he had received a draft opinion from Mr Jay and discussed it with him. He said that he would update Mr Jay on Ruskin’s proposal and suggested that they meet with him “to discuss his advice and next steps”.

25. [28]

    Mr Jay sent Mr Adams a copy of his final advice on 11 September 2019. Relevantly, the advice was amended to include the following paragraph:

26. [29]

    On the same day, Mr Adams distributed a copy of the advice under cover of a letter dated 11 September 2019 which was addressed to Ruskin, John and Karen. John said in his affidavit evidence that he did not at any time give instructions for Mr Jay to be retained and that the first time he saw Mr Jay’s advice was after Karen’s death. Ruskin said that he recalls seeing a hardcopy of the letter at his parents’ house (although he does not say when). In his affidavit evidence, Mr Adams says that he sent the letter to John and Karen “(via Ruskin’s email address)”. Mr Adams was not cross‑examined on that evidence. It remains unclear whether John and Karen ever saw the advice.

27. [30]

    Ruskin and Mr Adams met on 8 November 2019 to discuss Mr Jay’s advice. Following that meeting, on 11 November 2019, Mr Adams sent a letter addressed in the same way as the previous ones. Relevantly, the letter said:

28. [31]

    Ruskin replied by email on 25 November 2019. He asked Mr Adams to proceed with the proposed changes to the Lakshmi Trust and said in relation to the other issues:

29. [32]

    Ruskin, John, Karen and Jodie met with Mr Jutrisa on 2 December 2019. Following that meeting, Mr Jutrisa sent an email addressed to each of John, Karen, Ruskin and Jodie. In relation to the possible transfer of the Bombi Road property the email said:

30. [33]

    On 13 December 2019, Mr Adams sent a letter to Ruskin by email addressed in the same way as his previous letters attaching relevantly a draft deed of variation of the Lakshmi Trust deed permitting the appointor (John) to appoint a new appointor in his place (the Variation Deed) and a deed by which John as the current appointor nominated Ruskin as the new appointor and recording Ruskin’s acceptance of that appointment (the Nomination Deed). The covering email explained the effect of those two deeds. The email also enclosed two other deeds amending the trust deed of each trust to take account of changes to the law in relation to foreign beneficiaries. Nothing more needs to be said about those deeds.

31. [34]

    On 28 February 2020, Ruskin sent an email to Mr Adams saying:

32. [35]

    The circumstances in which John executed the two deeds are not clear from the evidence and are not the subject of any findings by the primary judge. As the primary judge observed, John did not deny having signed the deeds although he said that he did not recall doing so and suggested that he did not sign them on 6 March 2020, the date which they bear. He said that to the best of his recollection, Ruskin and Jodie were on their way back from a ski trip in Canada on that date: PJ[269]. Ruskin did not give any evidence concerning the circumstances in which the documents were executed.

33. [36]

    On 4 March 2020, Ruskin sent an email to Mr Adams, which he copied to Karen and John saying:

34. [37]

    Mr Adams replied the following day by email with copies to Karen and John undertaking to prepare the requested amendments to the McLennans’ wills.

35. [38]

    Ruskin obtained a valuation of the Bombi Road property for the purposes of the proposed transfer which he emailed to Mr Adams on 18 March 2020. On 26 March 2020, Karen collected the original certificate of title of the property from a firm of solicitors at Woy Woy, where it had been kept in safe custody.

36. [39]

    It is unclear what happened then. However, on 4 June 2020, Ruskin emailed Mr Adams in which he said:

37. [40]

    It appears from an email sent by Mr Adams to Ruskin on 29 July 2020 that by that date he was holding the originals of both the Variation Deed and Appointment Deed. Neither of them had been dated at that stage. Mr Adams asked for the dates on which they were signed and said that he would insert the date in hand.

38. [41]

    On 30 July 2020, Ruskin replied to that email saying:

39. [42]

    John’s signature on the Variation Deed was witnessed by Karen. John and Ruskin’s signatures on the Appointment Deed were witnessed by Jodie.

40. [43]

    On 4 August 2020, Ruskin sent Mr Adams a further email in which he said:

41. [44]

    Mr Adams did not respond to that email until 8 September 2020. Following further correspondence between them, it was arranged for John, Karen and Ruskin to meet with Mr Adams on 22 September 2020 at Ruskin’s home in Bronte for John and Karen to execute new wills giving effect to the instructions Ruskin had provided on 4 August 2020 together with documents in relation to the Bombi Road property. Mr Adams prepared a detailed file note of the meeting. According to that file note, he met separately with each of John, Karen and Ruskin. The note records that Mr Adams met with John between 9.10am and 9.30am. He described John as “well presented” and “comfortable in speaking with me”. It also records that he did not observe any “visible signs of illness or other impairment” and that John was “conversational and capable of understanding the questions that I asked of him and he gave coherent answers to the questions that I asked him”. The note also records the following:

42. [45]

    The note ends with the following:

43. [46]

    Mr Adams also met separately with Ruskin and explained to him the effect of the deed he signed granting a life tenancy of the Bombi Road property to John and Karen.

44. [47]

    Following those events, Ruskin continued to manage the Lakshmi and Convulon Trusts and to assist his parents with the SMSF and with their personal finances. From 2017, it seems, he paid Rory’s school fees, which the primary judge found “may, at least to some extent, have been funded out of distributions made from the discretionary trusts”: PJ[57]. The primary judge also held that Ruskin or the McLennans paid rent on an apartment where Rory, who had initially boarded, lived, presumably with Susannah: PJ[58]. Again, it is reasonable to infer that at least part of that rent was funded by distributions from the trusts.

45. [48]

    Karen died unexpectedly from a fall in March 2022. Following her death, her share of the SMSF ($4.703 million) was paid out to John pursuant to a death benefit nomination she had made previously. John also received under her will the assets remaining in Karen’s name, including her interest in the property in Japan.

46. [49]

    Shortly after Karen’s death, Susannah (and later, Rory) moved in with John following which relations between John and Ruskin deteriorated. As the primary judge explained (at PJ[23]):

47. [50]

    The proceedings below were commenced in John’s name in March 2023. At some stage, John transferred his own share of the SMSF to another trustee. MHPL was put into members voluntary liquidation in September 2023. As the primary judge observed, it is to be inferred that Ruskin’s and Jodie’s shares in the SMSF were also transferred to another trustee.

48. [51]

    In May 2025, John suffered a severe stroke. As at the date of the trial, he remained in hospital. According to a neurologist’s report dated 6 June 2025, his prognosis is uncertain. A rehabilitation report dated 22 August 2025 recorded “Mr McLennan is non-ambulant, requires assistance with most activities of daily living, has cognitive and communication impairments, and is at high risk of falls”. It stated that John was “deemed suitable for discharge” but could not return to Bombi Road until various home renovations and other arrangements had been made, including arrangements for round-the-clock supervision and care: PJ[368].

49. [52]

    According to an affidavit sworn by John on 12 March 2024 he had just over $4,000,000 in cash and a superannuation balance of $2,800,000. He also owns a 30% interest in the property in Japan, although there is no current valuation of that asset. At the time he swore his affidavit, he was drawing $180,000 per annum by way of pension from his superannuation fund and receiving $150,000 in interest. As the primary judge observed, some of that would be taxable, but there was no evidence concerning the amount of tax John had or was liable to pay.

The unconscionable conduct claim

1. [53]

   The principles on which equity intervenes to set aside transactions because of unconscionable conduct are well established. As explained by Mason J in Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 461; [1983] HCA 14 (Amadio), unconscionable conduct occurs where “a party makes unconscientious use of his superior position or bargaining power to the detriment of a party who suffers from some special disability or is placed in some special situation of disadvantage”.

2. [54]

   Unconscionability in this context involves (1) the existence of a special disability or disadvantage affecting the weaker party’s ability to make a judgment as to their best interests, (2) knowledge of that disadvantage by the stronger party, and (3) the stronger party unconscientiously taking advantage of that disadvantage: Amadio at 461 (Mason J) and 474 (Deane J); see also Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49 (Thorne) at [38] (Kiefel CJ, Bell, Gageler, Keane and Edelmann JJ). Identification of these elements ought not occur separately or in a mechanical manner, but rather as part of “a precise examination of the particular facts” and “a scrutiny of the exact relations established between the parties”: Jenyns v Public Curator (Qld) (1953) 90 CLR 113 at 118‑119 (Dixon CJ, McTiernan and Kitto JJ); [1953] HCA 2.

3. [55]

   The special disadvantage must be such that it “seriously affects the ability of the innocent party to make a judgment as to his own best interests”: Amadio at 462 (Mason J). It is neither possible nor desirable to list exhaustively the factors relevant to an assessment of special disadvantage. However, in Blomley v Ryan (1956) 99 CLR 362 at 405; [1956] HCA 81 (Blomley) (a case where intoxication was the main element relied on) Fullagar J observed by way of illustration:

4. [56]

   As Gordon J observed in Thorne at [113], “a special disadvantage may also be discerned from the relationship between parties to a transaction”, for example where there is a “strong emotional dependence or attachment”: Bridgewater v Leahy (1998) 194 CLR 457; [1998] HCA 66 at [115] (Bridgewater); see also Louth v Diprose (1992) 175 CLR 621 at 626; [1992] HCA 61 (Louth). No particular factor is decisive, and it may be a combination of circumstances that establishes an entitlement to equitable relief: Stubbings v Jams 2 Pty Ltd (2022) 276 CLR 1; [2022] HCA 6 at [40] (Kiefel CJ, Keane and Gleeson JJ).

5. [57]

   In a case of unconscionable dealing, the absence of the opportunity on the part of the weaker party to obtain independent legal advice can be an element of unconscientious conduct: see Bridgewater at 485-486 (Gaudron, Gummow and Kirby JJ). The emphasis is on the opportunity to obtain independent advice, not the effect that that advice might have produced.

6. [58]

   The absence of independent legal advice may also be a relevant factor in the identification of a special disadvantage, but not one which will be determinative by itself. In Bridgewater, Gleeson CJ and Callinan J observed at [40]:

7. [59]

   It is necessary to establish knowledge, on the part of the stronger party, of the existence and effect of the special disadvantage. That knowledge can be actual or constructive, in the sense that the stronger party is aware of the possibility that the special disadvantage may exist or is aware of facts that would raise that possibility in the mind of any reasonable person: Amadio at 467 (Mason J). However, 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, will not suffice: Nitopi v Nitopi (2022) 109 NSWLR 390; [2022] NSWCA 162 (Nitopi) at [10] (Bell CJ).

8. [60]

   Related to the necessity to prove actual or constructive knowledge on the part of the stronger party is the requirement to show that the stronger party unconscientiously took advantage of the special disadvantage experienced by the weaker party. As was observed in Thorne at [38], various labels have been employed to describe the unconscientious nature of this conduct, including “victimisation”, which has a long history in this field of discourse: see Allcard v Skinner (1887) 36 Ch D 145 at 182; Blomley at 386 (McTiernan J); Louth at 638 (Deane J).

9. [61]

   These labels reflect the aim of the principle, which, as Lord Hardwicke LC explained in Earl of Chesterfield v Janssen (1751) 2 Ves Sen 125 at 155–156; 28 ER 82 at 100, is to address a species of equitable fraud which can be “presumed from the circumstances and condition of the parties contracting” and to “prevent taking surreptitious advantage of the weakness or necessity of another”. Some 122 years later, Lord Selborne LC went on to explain that the fraud Lord Hardwicke spoke of was not “deceit or circumvention” but rather “an unconscientious use of the power arising out of these circumstances and conditions”: Earl of Aylesford v Morris (1873) LR 8 Ch App 484 at 490-491.

10. [62]

    In view of the diversity of situations in which relief may be granted on the ground of unconscionable conduct, it is not appropriate to interpret these concepts narrowly: Wu v Ling [2016] NSWCA 322 at [14] (Leeming JA); Nitopi at [30]. For that reason, victimisation is not limited to those cases, of which Louth is a prime example, where the defendant actively sought to procure the assent of the other party. In Bridgewater at [76], the majority referred with approval to the observation by the Privy Council in Hart v O'Connor [1985] AC 1000 at 1024 that “victimisation … can consist either of the active extortion of a benefit or the passive acceptance of a benefit in unconscionable circumstances”.

11. [63]

    By his amended statement of claim, John gave the following particulars of the special disadvantage it was said he laboured under at the time that he executed the Nomination Deed:

12. [64]

    Similar particulars were given of the special disadvantage John was said to labour under when he signed the transfer of the Bombi Road property.

13. [65]

    As the primary judge observed (at PJ[473]), the particulars given by John “combine a number of different factors which have been recognised in the case law as contributing to a finding of unconscionability”. His Honour chose to deal with those particulars under three headings: improvidence, vulnerability and exploitation by Ruskin.

14. [66]

    In relation to the improvidence of the Deed of Appointment, John had argued that the deed had no utility in achieving the stated goal of avoiding the risk of Susannah dissipating the assets of the trust because Mr Jay had advised that the only successful way to deal with the risk of a successful family provision claim was to increase the provision in her favour to a level which the court would find was adequate. The primary judge rejected that argument. The advice to increase the provision in the will was given in relation to John and Karen’s residual assets, not in relation to the trust. There was a rational basis for the advice that the right to appoint a new appointor be transferred because “[i]t was seen as a means of ensuring that Ruskin had ‘full control and discretion in’ the discretionary trust” and if John survived for more than three years “the Lakshmi Trust would be, as the Convulon Trust already was, definitively beyond Susannah’s reach”: PJ[482]. Moreover, what was being transferred was not the assets of the trust but the right to control those assets subject of the terms of the trust deed: PJ[485]ff.

15. [67]

    In relation to the improvidence of the transfer of the Bombi Road property, the transfer could not be seen purely as a gift because at the same time Ruskin executed the Deed of Life Tenancy, the McLennans’ wills already provided for Ruskin to inherit it: PJ[535], [536]. Moreover, the transfer “would help to advance the McLennans’ principal estate planning objective, namely a desire to remove assets from the reach of any potential claim by Susannah”: PJ[537].

16. [68]

    In relation to vulnerability, neither party contended that John was suffering from any serious cognitive difficulties in 2019-2020: PJ[498]. Although John (and Karen) trusted Ruskin and relied on him to manage their banking and other financial affairs and dealings with Mr Adams, Mr Jutrisa and Mr Walker, “[t]he advice John and Karen received remained advice of their professional advisors” and “[t]here is no proof that Ruskin used his role to shape that advice for his own purposes”: PJ[499]. Moreover, John had failed to prove that “Ruskin went beyond discussing the issues with his parents and tried to impose his own point of view on them, let alone that he succeeded”: PJ[500]. It was not necessary for Mr Adams to have drawn John’s attention to the fact that the relevant decisions once taken could not be undone. According to the primary judge, “that was obvious. It was the whole point of the transfer in the first place. It is difficult to see how referring to the specific possibilities of relationship breakdown, divorce or bankruptcy would have made any difference, and they were not put to Mr Adams in cross-examination”: PJ[502]. The primary judge also rejected the suggestion that Mr Adams lacked independence because Ruskin was also his client. Mr Adams saw himself as acting for John and Karen, and only them. Moreover, any technical conflict was irrelevant unless it actually made a difference to the advice Mr Adams gave: PJ[504], [505].

17. [69]

    In relation to the transfer of the Bombi Road property, the primary judge was prepared to accept that John and Karen were “objectively vulnerable” to the extent that Mr Adams had failed to advise them to obtain a life estate rather than a life tenancy. However, it was unclear what practical consequences that had, particularly when Ruskin continued to comply with his obligations under the deed: PJ[542].

18. [70]

    In relation to exploitation by Ruskin, the primary judge rejected the suggestion that “Ruskin relevantly encouraged some sort of relationship of dependence by his parents on him” and that he “poisoned his parents against Susannah”: PJ[517]. The primary judge also rejected the suggestion that Ruskin “initiated the transfer idea in 2019 or (which is more important) persuaded his parents to make the decision to accept the advice from Mr Jay and Mr Adams to proceed”: PJ[519], [544]. Lastly, the primary judge rejected the submission that all John had to prove was that Ruskin knew that Mr Adams was “not independent”: PJ[521]. What John had to prove is that to Ruskin’s knowledge Mr Adams had failed to give full and frank advice. But that was a legal question the answer to which Ruskin could not be expected to know. So far as the transfer of the Bombi Road property is concerned, Ruskin could not be expected to have appreciated that John and Karen should have been given a life estate rather than a life tenancy when that did not occur to Mr Adams: PJ[545].

19. [71]

    The primary judge’s conclusions that neither the Deed of Appointment nor the transfer of the Bombi Road property was an unconscionable transaction are challenged by grounds 1 and 2 of the notice of appeal. Ground 1 relates to the first transaction. Ground 2 relates to the second. The grounds are essentially the same. What is said is that the primary judge ought to have found that both transactions were unconscionable because (1) the purpose of both transactions was to ensure that Susannah would be unable to make a claim on the estates of John and Karen; (2) given the value of the estates, neither transaction was necessary to achieve that purpose; (3) both transactions involved the loss of control over substantial assets for little or no consideration; (4) John did not receive any independent “evaluative advice” on the merits of the transactions; the advice he received was confined to their legal effect; (5) the instructions to proceed with the transactions emanated from Ruskin, who had an interest in obtaining control and ownership of the assets to the exclusion of Susannah; (6) contrary to the findings of the primary judge, it should be inferred that John was emotionally dependent on Ruskin because of their relationship.

20. [72]

    Although not squarely raised by the grounds of appeal, Mr Loofs SC, who appeared for John, sought to put Ruskin’s knowledge of the special disability or situation of special disadvantage John was labouring under in various ways ranging from actual knowledge through constructive knowledge to a submission that it was sufficient that Ruskin knew some of the relevant facts and a submission that it was sufficient that Ruskin became aware of the relevant facts at a later point of time (at least by when John commenced proceedings) and acted unconscionably by maintaining that he was entitled to retain the benefits of the transactions knowing that they had been obtained as a result of the disability or disadvantage under which John was labouring.

21. [73]

    John’s case on appeal has at its heart the submission that John was essentially labouring under two disabilities or disadvantages which had a serious effect on his ability to make judgments about the relevant transactions in his own best interests. The first was his close personal relationship with Ruskin and his dependence on Ruskin to assist him in managing his financial affairs. The second was his mistaken belief that it was desirable to enter into the two transactions in order to resist a claim by Susannah on his and Karen’s estates. Ruskin was obviously aware of his father’s dependence on him, and he was aware that his parents believed that it was necessary or desirable to avoid a claim by Susannah on their estates. It must have been obvious to him from Mr Jay’s advice that the possibility of a successful claim could be eliminated provided an adequate bequest was made to Susannah in their wills. Nonetheless, Ruskin either encouraged or at least assisted his parents to provide him with the benefits they did, knowing of the disabilities they, and John in particular, laboured under. In doing so, he acted unconscionably.

22. [74]

    Although put, and analysed by the primary judge, somewhat differently in the court below, the primary judge was correct to conclude that neither transaction involved unconscionable conduct on the part of Ruskin.

23. [75]

    A close personal relationship accompanied as it often is by a degree of dependence by one on the other together with an uncommercial transaction in favour of the stronger party may be strong evidence that the transaction is an unconscionable one. However, such a relationship may itself explain why the transaction is an uncommercial one. Frequently, for example, parents make gifts to their children or assist them in other ways as a sign of affection or gratitude. Consequently, in the case of transactions of that sort, it is necessary to analyse the nature of the relationship and the transaction carefully before concluding that it is the result of unconscionable conduct.

24. [76]

    In the present case, John and Karen had decided in 2014 that Ruskin should take control of the two trusts and that, following the death of both, he should inherit their marital home. That was in a context where Ruskin had returned from Japan to assist them in managing their financial affairs. There is no suggestion that John and Karen’s decision to leave their marital home to Ruskin or to give Ruskin control of the two trusts was irrational or not the result of considered reflection by both of them. By 2019, Ruskin had been assisting his parents for eight years. As the primary judge found (a finding that is not challenged on appeal) there is no evidence that Ruskin sought to persuade his parents to take any specific course of action and, in particular, to enter into the transactions that are sought to be impugned. Nor is there any challenge to the primary judge’s conclusion that in the intervening years there had not been a significant decline in John’s (or for that matter, Karen’s) cognitive functions so as to prevent him from acting rationally consistently with his own wishes. As the primary judge pointed out, John and Karen’s changes of heart about whether to transfer the Bombi Road property to Ruskin immediately and Ruskin’s faithful reporting of those changes to Mr Adams tell strongly against any suggestion that their views on what should be done were not their own that were formed independently with the assistance of legal and financial advice.

25. [77]

    John and Karen were not unsophisticated. As the primary judge found, John must have appreciated that the effect of the Deed of Appointment was to remove permanently from him the ability to control the Lakshmi Trust. Both he and Karen must have appreciated that the effect of the transfer was to give the Bombi Road property to Ruskin, subject to their right to remain in it during their lives. That was the very purpose of the two transactions.

26. [78]

    John’s principal argument is that he was labouring under a special disadvantage because of the alleged inadequacy of the legal advice that he received and in particular the absence of evaluative advice on the merits of the two transactions to achieve his and Karen’s stated goal, which was said to be to avoid a successful claim on their estates by Susannah.

27. [79]

    There are several difficulties with that argument. First, it is not accurate to characterise John and Karen’s goal as avoiding a successful claim by Susannah on their estates. There was little evidence before the primary judge on precisely what John and Karen’s goals were. Their decision to seek further legal advice appears to have emerged out of discussions that they had with Mr Jutrisa over a period of two or so years before 2019. However, John gave no evidence of those discussions. Mr Jutrisa was not called to give evidence; and Ruskin was not cross-examined about their contents.

28. [80]

    The trial judge characterised John and Karen’s principal goal as putting as many of their assets as possible outside the reach of Susannah. That finding is not challenged. The question is not whether that goal was rational or not. By their nature, many goals and desires are non-rational. The question is whether the decision to pursue that goal was formed by them freely and in the absence of any serious disability or disadvantage. In any event, John and Karen’s goal was not an irrational one. The size of their estates was relevant to the question of the quantum of any provision to which Susannah might be entitled and to the question whether Susannah would make a claim in the first place. On John’s death, Ruskin and Susannah (assuming they both survived John) would become the joint appointors under the Lakshmi Trust which itself may have been the source of litigation, although it is unclear whether that point was ever mentioned to John. There is a degree of irony in the fact that John contends he should have been advised that the transfers he signed were unnecessary because there was no realistic possibility that Susannah would be able to get her hands on the Bombi Road property or the assets of the Lakshmi Trust when, as will become apparent, John sought an order that Karen’s interest in the Bombi Road property be designated as part of her notional estate and that an order be made transferring that interest to him notwithstanding that he had inherited the whole of her estate including her interest in the SMSF, which had a value of $4.703 million.

29. [81]

    Second, it is a mischaracterisation of events to say that the special disadvantage from which John suffered was the absence of evaluative legal advice on the merits of the two transactions, which Ruskin took advantage of.

30. [82]

    Normally, when considering the role of legal advice, the special disadvantage is best seen as ignorance of the consequences of a legal transaction, which itself is often the product of a lack of sophistication concerning legal matters, or some form of cognitive impairment, which the legal advice is designed to ameliorate. What is important in cases of that type is not the contents of the legal advice. Generally, the stronger party will not know the contents of the advice; and it will be a matter for the person giving the legal advice to determine what advice is necessary or appropriate. However, whatever the contents of the advice, it will be difficult to say that the stronger party unconscientiously took advantage of the weaker party’s ignorance or disability when the weaker party is given the opportunity to obtain and does obtain legal advice about the transaction. In some cases, the nature of the transaction and the disability from which the weaker party suffers may mean that what is important is that the weaker party obtain advice on the commerciality of the transaction. For example, if the weaker party is being asked to invest in a business, or lend money to a business, owned by the stronger party, what may be important is whether the weaker party has had the opportunity to obtain and does obtain commercial advice about the transaction. But again, what is important is not the contents of the advice but the fact that the weaker person has had an opportunity and does obtain advice of the required type from someone capable of giving it. That will not necessarily always be a lawyer.

31. [83]

    In some cases, the stronger party may be aware of the contents of the advice given to the weaker party. In cases such as those, the question will be whether it can still be said that the stronger party unconscientiously took advantage of the weaker party knowing the advice the weaker party received. The answer to that question will depend on a variety of matters, including the nature of the disability suffered by the weaker party, the nature of the transaction, the contents of the advice and the extent to which the stronger party appreciated that the advice was inadequate (if it was) to address the disability from which the weaker party suffered. There is no rule or principle that any advice given must be “evaluative”.

32. [84]

    In the present case, it was for John to prove that at the time of the relevant transactions, he did not understand their legal effect or was incapable of forming an independent view on their merits. He did not seek to do so. In fact, John had the opportunity to obtain and did obtain extensive legal and financial advice about the transactions. Far from seeking to obtain an advantage from the absence of that advice, it seems clear that Ruskin sought to facilitate John and Karen obtaining it. John plainly obtained advice on the legal effect of the transactions. It is unclear what advice, if any, he obtained on the merits of the transactions, since it is unclear what advice he was given by his financial planner. However, Mr Adams did raise with John (and Karen) the merits of transferring their marital home to Ruskin immediately. John’s response was that he was comfortable to do so, which can only mean that he had considered the merits of the transaction and decided to proceed.

33. [85]

    More significantly, as the primary judge pointed out, the legal consequences of the two transactions were plain. Given John’s education, business experience and cognitive abilities, he was capable of assessing those merits without the need for advice. The true reason for obtaining legal advice was to obtain advice on whether there was any possibility that Susannah might have a claim on the assets of the Lakshmi Trust and the Bombi Road property and how those assets might be put beyond her reach and what that would involve.

34. [86]

    Third, the advice from Mr Jay was that the best way to avoid a successful family provision claim was to make adequate provision for Susannah in John and Karen’s wills, which Mr Jay suggested was in the order of $1.5 million to $1.7 million. However, at the time John entered into the transactions sought to be impugned, neither John nor Karen had amended their wills. And when they did amend their wills, they did not follow Mr Jay’s advice. Those facts support the view that John (and Karen) formed their own views on how best to deal with possible claims by Susannah.

35. [87]

    Fourth, both at trial and on appeal, John emphasised that he was not given advice that circumstances might change and that at some time in the future he might wish to reconsider whether to leave his interest in the Bombi Road property to Ruskin or to remove control of the Lakshmi Trust from him. However, as the primary judge found, it must have been obvious to John that he was giving up those rights by entering into the two transactions. He was in the best position to assess the likelihood that he might change his mind, taking account of his age and the assistance that Ruskin had provided him over the years. Moreover, it was also possible that John and Karen’s financial position might change in the future, making a claim on the assets of the Lakshmi Trust or a claim against the marital home more likely if John retained the right of appointor of the trust and he and Karen retained ownership of the property. John’s submissions assume that in 2019 and 2020 there was a realistic possibility that he might change his mind in the future, but there was no realistic possibility that his and Karen’s financial position might change. In fact, both were at least theoretic possibilities. There was no reason to think that John was incapable of making an assessment of how realistic those possibilities were and making decisions accordingly, or that his assessment on those matters had been influenced by Ruskin.

36. [88]

    In Nitopi, Bell CJ referred to the observations of Deane J in Louth at 637 and Rich J in Wilton v Farnworth (1948) 76 CLR 646 at 655; [1948] HCA 20 in support of the proposition 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”: at [28]. The Chief Justice later (at [31]) gave the example of:

37. [89]

    Relying on that passage, John submitted that it was sufficient that Ruskin discovered after the event the inadequacy of the advice that John received and that it was unconscionable for him to retain the benefits he received having become aware of that inadequacy.

38. [90]

    For the reasons I have given, I do not accept that the legal advice John received was inadequate. Even if it was, I doubt that it would be sufficient to establish a claim. Equity has long refused to set aside a transaction unaffected by fraud merely because, by reason of subsequent events, it turned out badly for one of the parties or was said to be “unfair”: see Willis v Jernegan (1741) 2 Atk 251; 26 ER 555 at 555 (Lord Hardwicke LC); Tremills v Benton (1892) 18 VLR 607. What matters is that a party has taken unconscientious advantage of another party’s special disadvantage in relation to the entry into a transaction, and for that to occur there must exist at the time the transaction was entered into some state of affairs or, to use the language adopted by Lord Hardwicke and Lord Selborne, some “circumstances and conditions”, of which the stronger party knew or ought to have known which would make their retention of the benefit of the transaction unconscionable. Having regard to the conclusions I have reached, it is unnecessary to pursue this issue further. I would prefer to leave the precise scope of the principle stated by Bell CJ in Nitopi to be determined in a case in which it clearly arises.

The family provision claim

1. [91]

   Section 59 of the Succession Act relevantly provides:

2. [92]

   The estate of a person includes property that is designated as notional estate of the deceased person by an order under Part 3.3: s 63.

3. [93]

   Section 80 of the Succession Act (which is in Part 3.3) relevantly provides:

4. [94]

   “Relevant property transaction” is defined to mean “a transaction or circumstance affecting property and described in section 75 or 76”: s 74. Section 75(1) provides:

5. [95]

   Section 88 of the Succession Act relevantly provides:

6. [96]

   At first instance, John sought leave to bring a claim on behalf of Karen’s estate against Ruskin alleging that Karen had transferred her interest in the Bombi Road property as a consequence of Ruskin’s unconscionable conduct. John also submitted that if the Court concluded that the transfer of his interest in the Bombi Road property was unconscionable but that the transfer of Karen’s interest was not, then the Court should make an order that Karen’s interest in the Bombi Road property formed part of her notional estate and that in order to make adequate provision for John out of Karen’s estate an order should be made transferring the interest Ruskin obtained in the property from Karen to John.

7. [97]

   The primary judge refused John leave to bring a claim on behalf of Karen’s estate. In his view, Karen’s claim was even weaker than John’s and must fail: PJ[551]. He concluded, therefore, that leave to bring the claim should be refused: PJ[553]. There is no appeal from that decision. Having regard to the conclusions the primary judge reached, it was strictly unnecessary for him to deal with the family provision claim. Nonetheless, he did so and concluded that the claim would have failed because the application for a notional estate order did not meet the requirement of s 88(b).

8. [98]

   John advanced two grounds of appeal in relation to the primary judge’s conclusion on this aspect of the case. First, by ground 3 he contended that the primary judge erred in failing to find that John had a “moral claim” to Karen’s interest in the Bombi Road property (however much he received from her estate and whatever his own resources were), with the result that the primary judge erred in concluding that the requirements of s 88(b) had not been satisfied. Second, by ground 4 he contends that the primary judge erred in dismissing John’s family provision claim on the basis that, even if it had succeeded, he had transferred his own share in the Bombi Road property to Ruskin, with the result that whatever moral claim he had to the property was already lost. That was because John was entitled to set aside the transfer of his interest in the property to Ruskin.

9. [99]

   Since I have concluded that John’s unconscionability claim must fail, neither ground 3 nor 4 arises. In any event, by its terms ground 4 could only succeed if John succeeded on ground 2. Since he has failed on the latter ground he must fail on the former.

10. [100]

    It is sufficient to say in relation to ground 3 that I do not accept that a claimant is entitled to bring a “moral claim” in respect of some asset of the deceased over and above what is necessary to provide adequate provision for the proper maintenance, education or advancement in life of the claimant, or that Part 3 of the Succession Act is concerned with “moral claims” other than those arising from the financial circumstances of the claimant, the size of the deceased’s estate and the nature of the relationship between the deceased and the claimant. The cases relied on by John, such as Chan v Chan [2016] NSWCA 222, do not suggest otherwise.

Conclusion

1. [101]

   The orders I propose is that the appeal be dismissed with costs.