CONTESTING A WILL – UNDUE INFLUENCE IN RELATION TO LIFE TIME GIFTS (AND OTHER TRANSACTIONS)
Will claim Solicitors, specialist no win no fee will dispute and will contest Solicitors, consider the question of undue influence in relation to life time gifts or other transactions
Can a lifetime gift or other transactions be set aside?
We have previously considered how a substantial lifetime gift can be found to have been made instead of as a legacy under a Will on death (https://www.willclaim.com/successfully-challenging-a-will-can-a-substantial-lifetime-gift-defeat-a-legacy/ ) so that the legacy in a Will is defeated. In that instance, where evidence is available the lifetime gift was meant as a lifetime gift, usually for a particular purpose, such as the provision of care, it will be held the legacy is unaffected.
What we are considering here is something more suspicious; where there is a real question mark over whether consent to the lifetime transaction was properly given and made. Different rules apply to gifts under Wills (following death – see our earlier blog at https://www.willclaim.com/trouble-undue-influence/)
Royal Bank of Scotland v Etridge 11 October 2001 UKHL 44 (https://www.bailii.org/uk/cases/UKHL/2001/44.html)
In this decision the House of Lords (now “the Supreme Court”) found that certain lifetime transactions are capable of being set aside. In essence those excite the suspicion of the Court because of the relationship between the parties to that transaction and its nature. The basis of so-doing is part of the inherent jurisdiction of the Court. As per Lord Nicholls who gave the leading Judgment:
Undue influence is one of the grounds of relief developed by the courts of equity as a court of conscience. The objective is to ensure that the influence of one person over another is not abused. In everyday life people constantly seek to influence the decisions of others. They seek to persuade those with whom they are dealing to enter into transactions, whether great or small. The law has set limits to the means properly employable for this purpose. To this end the common law developed a principle of duress. Originally this was narrow in its scope, restricted to the more blatant forms of physical coercion, such as personal violence.
Here, as elsewhere in the law, equity supplemented the common law. Equity extended the reach of the law to other unacceptable forms of persuasion. The law will investigate the manner in which the intention to enter into the transaction was secured: ‘how the intention was produced’, in the oft repeated words of Lord Eldon LC, from as long ago as 1807 (Huguenin v Baseley 14 Ves 273, 300). If the intention was produced by an unacceptable means, the law will not permit the transaction to stand. The means used is regarded as an exercise of improper or ‘undue’ influence, and hence unacceptable, whenever the consent thus procured ought not fairly to be treated as the expression of a person’s free will. It is impossible to be more precise or definitive. The circumstances in which one person acquires influence over another, and the manner in which influence may be exercised, vary too widely to permit of any more specific criterion.
Equity identified broadly two forms of unacceptable conduct. The first comprises overt acts of improper pressure or coercion such as unlawful threats. Today there is much overlap with the principle of duress as this principle has subsequently developed. The second form arises out of a relationship between two persons where one has acquired over another a measure of influence, or ascendancy, of which the ascendant person then takes unfair advantage. An example from the 19th century, when much of this law developed, is a case where an impoverished father prevailed upon his inexperienced children to charge their reversionary interests under their parents’ marriage settlement with payment of his mortgage debts: see Bainbrigge v Browne (1881) 18 Ch D 188.
A shift in the burden of proof
Lord Nicholls went on to suggest that where there was evidence the complainant had placed trust and confidence in the other party (benefitting from the transaction) and the nature of the transaction itself called for an explanation, the court would infer absent a satisfactory explanation that the transaction can only have been procured by undue influence.
Proof that the complainant placed trust and confidence in the other party in relation to the management of the complainant’s financial affairs, coupled with transactions which calls for explanation, will normally be sufficient, failing satisfactory evidence to the contrary, to discharge the burden of proof. On proof of these two matters the stage is set for the court to infer that, in the absence of a satisfactory explanation, the transaction can only have been procured by undue influence. In other words, proof of these two facts is prima facie evidence that the defendant abused the influence he acquired in the parties’ relationship. He preferred his own interests. He did not behave fairly to the other. So the evidential burden then shifts to him. It is for him to produce evidence to counter the inference which otherwise should be drawn.
He went on to define these circumstances which can generate an evidential shift in more precise terms as follows:
- The complainant relied on the other party or that party had some control over him/her;
- The transaction was not readily explicable by the relationship between them.
In relation to the second part, he made it clear he was referring to a gift so large that it would “not be reasonably accounted for on the ground of friendship, relationship, charity or other ordinary motives”.
The effect of these circumstances was to “presume undue” influence on the part of the person benefitting. As it is almost impossible to prove an opposite (that there was no undue influence) an allegation based on these facts is particularly powerful.
If you consider any of these facts and matters are likely to apply to you, or you would like to ask us for more information about contesting a will, or you simply want us to assess your claim, then please do not hesitate to contact us for a confidential no strings chat.