Elder abuse is any act done by a trusted person which causes harm or distress to an older person.

Financial abuse is the most common form of elder abuse in Australia. Some common examples of financial elder abuse can include:

  • Family arrangements, where an elderly person’s home or assets are transferred to a family member in exchange for a promise of long-term care, but that care is not provided.
  • Coercion into signing paperwork regarding wills, powers of attorney or other financial documents.
  • Misusing powers of attorney to appropriate an elderly person’s finances.

Unconscionable conduct is a legal principle which is often relevant to elder abuse. A contract or exchange between two parties is unconscionable if the exchange is extremely unfair or overwhelmingly favours the party in a stronger bargaining position. An exchange which involves unconscionable conduct is legally unenforceable because it defies good conscience.

The three legal elements to prove unconscionable conduct are:[1]

  1. One party is at a special disadvantage, so their ability to make a decision in their best interests is seriously affected;
  2. The stronger party has knowledge of the other party’s disadvantage, and actively exploits this disadvantage for their own benefit in the transaction; and
  3. The transaction was not fair, just and reasonable. A fair transaction generally involves the weaker party receiving independent legal/ financial advice.

Elderly people might be at a special disadvantage in a contract or exchange if they are extremely frail or unwell, or struggle to understand the nature of the exchange.

Mentink v Olsen[2]

The case of Mentink v Olsen discusses unconscionable conduct and elder abuse. In this case, Ms Olsen died of terminal illness at age 75. She was survived by her husband, Mr Olsen, and her daughter from a previous marriage, Ms Mentink.

Ms Mentink had lived at the deceased’s home and had been her primary carer for 5 months before her death. Ms Mentink was also present at the medical appointment in which the deceased was informed that her condition was terminal.

A few days before her death, Ms Olsen had withdrawn $2.2 million from a term deposit account and gifted it to her daughter. Mr Olsen commenced proceedings against his stepdaughter, claiming she had obtained the money by unconscionable conduct or undue influence over her mother and was liable to repay the amount to the estate.

The court found that Ms Mentink had acted unconscionably and was liable to repay the $2.2 million to her mother’s estate.

Ms Olsen had suffered from a special disadvantage because she was extremely elderly, unwell, exhausted and confused at the time. The court also found that Ms Mentink was aware of her mother’s condition and had taken advantage of her. Even if Ms Mentink had not actively encouraged the gift, acceptance of such a substantial amount of money would still be unconscionable as Ms Mentink had witnessed at close range her mother’s indecisive and compulsive behaviour.

The transaction could not be considered fair or reasonable since the money was pulled from a term deposit which involved shared funds between the deceased and Mr Olsen. The deceased would have needed to receive independent legal or financial advice to even understand if she could gift the money to her daughter in the first place.

Elder abuse is a serious issue to be considered with Australia’s aging population. If you have concerns of elder abuse or would like advice regarding legal arrangements between family members, we recommend that you speak to our Private Wealth team. Our lawyers will be able to assist in determining the legal capacity of any elderly person and any dangers of undue influence or unconscionable conduct.

[1] Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447.

[2] [2020] NSWCA 182.