The Importance Of Independent Advice In A Claim Of Undue Influence

In a claim that is based on allegations of undue influence, the claimant is seeking an order which will in effect reverse a person’s actions on the basis those actions were only carried out as a result of influence or pressure from another. Typically this involves a gift of property to another party or a Will which substantially benefits a person (or persons) who have exerted considerable influence on the donor.

To succeed in bringing forward allegations of undue influence, the claimant must establish that a relationship of trust and confidence existed between the individual and the influencer, and that relationship was used to bring about a transaction which favours the influencer (or supports any agenda the influencer may have had). A common example of such a scenario is when a carer uses their relationship with the donor to change their Will or transfer money or property to them.

It can often be difficult to prove undue influence as there is sometimes nothing tangible a claimant can point to if they have not personally witnessed any examples of the behaviour complained of. Instead, a claimant will have to look for wider examples of conduct that point to possible undue influence and invite the Court to draw inferences from it. The burden of proof will vary depending on the nature of the deed executed or act undertaken by the donor and the detriment caused to the claimant and anybody else affected by it. The size of the transaction and its effect on others will be relevant factors.

For larger transactions, it is expected the donor will have obtained independent and professional advice. When the donor has had advice from a professional this will often provide a possible defence to a claim of undue influence – the defendant will be able to argue that the donor did not simply do what the influencer wanted and did seek the opinion and guidance of a professional. If the donor is seen alone then it will strengthen the value of that advice.

Gladstone and another v White and others

Background

The recent decision in Gladstone and another v White and others demonstrates the importance of obtaining independent legal advice prior to undertaking a large transaction which may be vulnerable to challenge. The donor in this matter assigned bonds of significant value to the Defendant, a long-term friend whom the donor trusted and relied on. It was argued that the bonds were transferred to allow the Defendant to maintain one of the donor’s properties which was occupied by the Defendant during the week.

The parties intended the property to be managed by the Defendant on the donor’s eventual death. The donor had obtained significant financial advice as to the transfer however failed to obtain independent legal advice as to the consequences of the transfer. The Defendant defended the claim of undue influence on the basis the donor was fully aware of the effects of the transaction. In support of the Defendant’s defence, the Court heard evidence that the donor declined to seek legal advice due to the cost of instructing a solicitor.

In light of this, however, the Court found that there had been undue influence and the donor’s transaction should be set aside. This decision was made on the basis that the relationship was one of ascendency and the Defendant had put the donor under pressure to transfer the bonds to him. The donor would have been aware that the arrangement was problematic if he had obtained legal advice, which was a key factor – the Defendant’s argument that the donor knew what he was doing was dismissed on the basis that the donor did not realise the full implications. For further details of the Court’s judgment, see our previous blog.

Comment

This case is an example of undue influence taking place in a more subtle sense and without significant pressure being applied – here the Defendant took advantage of the trust the donor had in him and benefited from the donor’s failure to obtain clear advice on the effect of the transaction. This decision might have been different had the donor gone to see a solicitor and yet still proceeded anyway.