DAVID, a successful businessman, has accumulated a multi-million dollar estate.

Unfortunately, at the age of 65, David is diagnosed as suffering from dementia.

Shortly thereafter, David appoints his daughter Robin as his financial manager, under an enduring power of attorney.

During the course of a year, David also makes a number of substantial gifts, totalling $1 million, to his son Adam.

Another family member successfully challenges David’s mental capacity to make the power of attorney and the Tribunal rules the documents invalid.

When David passes away, the gifts to Adam are the subject of a dispute.

It is argued that David lacked a sufficient level of memory to recall the various gifts that he made to Adam and that he lacked the sufficient degree of independence to voluntarily agree to Adam’s requests.

It is also argued that in circumstances where Adam was on notice as to David’s mental state and was aware of David’s vulnerability, that Adam exerted a degree of moral pressure when David suffered from a “special disability”.

The Court investigates the various gifts to determine whether Adam had sufficient knowledge of David’s condition to give rise to an “unconscionable dealing” and whether Adam had, in a “predatory fashion”, exploited David’s position of disadvantage.

The Court states that if it can be proved that Adam was aware of David’s “special disability”, Adam needed to prove that the transactions were fair and reasonable.

The Court carefully considers the circumstances surrounding each transaction and finds, for the most part, that at the times in question, Adam did not have knowledge of David’s “special disability” and also finds that there was insufficient evidence to establish that Adam had engaged in conduct that amounted to “victimisation or exploitation”.

The Court also accepts Adam’s submission, that in the circumstances the gifts from a parent to child were reasonable.

However, the Court rules that David’s final gift to Adam of $100,000, which occurred after the Tribunal’s decision, was invalid because Adam was at that stage, aware of David’s vulnerability.

Email Manny Wood, principal solicitor at TB Law at manny@tblaw.net.au or call him on (02) 66 487 487.