It’s important to remember unconscionable conduct is not limited to the world of consumers and business. It also features regularly in proceedings involving wills, testamentary capacity and failure to make proper allowance for family members – particular when disgruntled family members think someone has potentially ‘schemed’ their way into a will and take a benefit upon their death.
As an example, in the recent case of Re: Winter-Cooke [2020] VSC 588 McMillan J applied the first 2 limbs of the Amadio test for equitable unconscionable conduct as a kind of threshold ‘qualifying criteria’ for a summary judgment application in a testator’s family maintenance claim.
As adverted to by McMillan J, the first 2 limbs of the Amadio test were summarised in detail by the Victorian Court of Appeal in Mackintosh v Johnson [2013] VSCA 10 as establishing a basis to consider an unconscionable conduct claim (before then deciding if the alleged act was in fact unconscionable - and therefore worthy of sanction by the court):
the need for the alleged disability or disadvantage to affect the subject individual’s ability to make a judgment in his or her best interests; and
the need to demonstrate that special disability was sufficiently evident to the other party.
Common law unconscionable conduct test
Once satisfied there is a sound basis to consider an allegation of unconscionable conduct, the proper test to apply to the facts of the case (noting of course that every unconscionable conduct claim must be considered in the context of all the facts of the case) is the third limb set down by the High Court of Australia in Commercial Bank of Australia Ltd v Amadio [1983] HCA 14 as:
Having a special disability or disadvantage – including, illness, ignorance, inexperience, impairment, financial needs or other circumstances;
Knowledge of the special disability or disadvantage; and
Whether the other party acted unconscionably so as to be deprived in equity of the transaction in issue – the threshold test.
To summarise:
Limb 1: have a special disability:
Mason J said:
"The circumstances adversely affecting a party which may induce a court of equity either to refuse its aid or to set a transaction aside are of great variety and can hardly be satisfactorily classified. Among them are poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary. The common characteristic seems to be that they have the effect of placing one party at a serious disadvantage vis à vis the other."
Limb 2: Wrongdoer have knowledge of that special disadvantage
Mason J said:
"As we have seen, if A having actual knowledge that B occupies a situation of special disadvantage in relation to an intended transaction, so that B cannot make a judgment as to what is in his own interests, takes unfair advantage of his (A’s) superior bargaining power or position by entering into that transaction, his conduct in so doing is unconscionable. And if, instead of having actual knowledge of that situation, A is aware of the possibility that the situation may exist or is aware of facts which would raise that possibility in the mind of any reasonable person, the result will be the same."
Or, as Deane J explained:
"The jurisdiction is long established as extending generally to circumstances in which (i) a party to a transaction was under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them and (ii) that disability was sufficiently evident to the stronger party to make it prima facie unfair or ‘unconscientious’ that he procure, or accept, the weaker parties’ assent to the impugned transaction in the circumstances in which he procured or accepted it. Where such circumstances are shown to have existed, an onus is cast upon the stronger party to show that the transaction was fair, just and reasonable... It would, at least by that stage, have been plain to any reasonable person, who was prepared to see and to learn, that he was put on enquiry."
Limb 3: Acting unconscionably
The threshold test - This test was not considered in the matter of Mackintosh v Johnson as the Court of Appeal held Mackintosh did not suffer a special disadvantage.
By Rob Norton and Louise Gehrig