Johnson v Smith

This matter concerned an appeal from a decision concerning allegations of undue influence and unconscionable conduct. The dispute involved cheques for substantial sums drawn by an elderly mother in favour of her son and his late husband. The son contended that he held these funds as an absolute gift. The appeal was heard by Allsop P, Hodgson and Young JJA.

The central legal issues before the court were whether the son had exercised undue influence over his mother, and whether the transactions constituted unconscionable conduct. Specifically, the court was required to consider the nature of the relationship between the mother and son, the mother's mental and physical state, and whether the son was in a position of influence and ascendancy, particularly in the absence of independent legal or financial advice for the mother. The court also had to determine if the son's subjective motivation, even if intending to act for the mother's benefit, could negate the unconscionability of retaining the benefit obtained from a person suffering from a special disadvantage.

The court found that the mother suffered from a progressive dementia and was in a relationship of dependency and affection with her son, who was her principal carer. This created a situation of special mental and physical disadvantage. The court reasoned that the son was closely involved in the transactions and received a significant benefit. The absence of independent advice was a critical factor. The court held that even if the son subjectively intended to act for his mother's benefit, this did not render the retention of the benefit obtained from a person with a special disadvantage fair, just, and reasonable. The court concluded that there was no error in granting relief in these circumstances.

The appeal was dismissed with costs.