Unconscionable Conduct and Undue Influence: When transactions are coerced

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Accredited Specialist,
Wills & Estates

Accredited Specialist,
Commercial Litigation

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The recent decision of the NSW Supreme Court in Bosschieter v Howitt (2024) is a useful reminder of the legal principles around unconscionable conduct and undue influence and how they can affect deceased estates.

In Bosschieter, Mrs Howitt transferred $200,000 to her granddaughter Justine shortly before her death. Mrs Howitt was living with Justine at the time and was dependent on her for care and transport. The transfer was inconsistent with Mrs Howitt’s will, which had been prepared by a solicitor less than a year earlier. Justine was aware of the solicitor’s identity and had driven Mrs Howitt to the appointments but Justine took no action to ensure Mrs Howitt had independent legal advice before making the transfer. Justine drove Mrs Howitt to the bank to make the transfer.

After Mrs Howitt’s death, her beneficiaries challenged the transfer on the basis that Justine had acted unconscionably or had exercised undue influence on Mrs Howitt.

Unconscionable conduct occurs when a victim is subject to a special disadvantage which seriously affects their ability to make a judgment as to their own best interests, the perpetrator is aware of that disadvantage and the perpetrator unconscientiously takes advantage of it. Unconscionable conduct has been described as requiring “victimisation”, “unconscientious conduct”, or “exploitation”, but can also include bullying, undue pressure, trickery, or misleading conduct. Once a court is satisfied of those elements, it is up to the perpetrator to prove that the transaction was fair, just and reasonable.

Undue Influence is similar but different to unconscionable conduct. Undue influence exists where one person occupies a position of practical ascendency, power or dominion over the other. If that relationship exists and the relevant transaction is not readily explained by ordinary motives then the law presumes that the weaker person was subject to undue influence unless the stronger person can prove otherwise.

In Bosschieter, the court was satisfied that Justine had acted unconscionably in causing the transfer to herself. The court ordered Justine to return the funds to Mrs Howitt’s estate.

The decision serves as a critical reminder of the principles that apply when vulnerable people enter into transactions that are seemingly against their interests. If there are good reasons for the transaction and the vulnerable person wishes the transaction to proceed, independent legal advice will give added validity to the transaction and make it harder to challenge.

If you have any questions in relation to a deceased estate, unconscionable conduct or undue influence, please give us call.

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