Challenging Transactions As A Result Of Undue Influence

If a person enters into a transaction only as a result of undue influence, that transaction may later be set aside.

What is undue influence?

Undue influence is where a person influences another to take action, more often than not in the influencer’s favour, where the person would not have otherwise made that decision. Undue Influence most commonly arises due to a relationship of trust and confidence between the person entering the transaction and the influencer and the influencer seeking to abuse that trust or another’s vulnerability.

When considering whether a person was unduly influenced to enter into a transaction the Court will consider whether a person placed trust and confidence in the alleged influencer and if the transaction questioned would have called for an explanation. Where there is no explanation for a transaction that would call for one, the alleged influencer is required to show there was no undue influence, and in the absence of such evidence, the Court will infer the transaction was entered into as a result of undue influence.

Ramji v Harvey & Ors [2023] EWHC 1664

Case background

The case of Ramji v Harvey demonstrates the Court’s application of this when considering whether a transaction should be set aside for undue influence. The backdrop to this claim concerned an Inheritance Act claim being brought by the Deceased’s wife, the Claimant, and involved a preliminary issue regarding one of the Deceased’s properties. Prior to the Deceased’s death, the Deceased had transferred a property he held jointly with the Claimant into the names of himself, the Claimant, and a grandchild, the Defendant. The transfer was done at no value and was challenged by the other grandchildren with a view to setting aside the transaction as a result of undue influence.

The Court heard evidence surrounding the transfer and concluded the transfer documents had been properly executed. The transaction, being for no value, was one that called for an explanation. The Defendant provided oral evidence to explain the reason behind the transfer however and the Court felt this evidence was untrue as it had not been included within the Defendant’s witness statements. The Defendant suggested the Deceased made the transfer due to the help she provided and the Court felt the value of the transfer was unjustified for the level of help provided.

The Court further found that the relationship between the Deceased and Claimant was one of trust and confidence and the Deceased was vulnerable and reliant on the Claimant. The transfer appears to have arisen at the Claimant’s suggestion and the Claimant was again unable to provide a coherent explanation for the transfer.

Based on the evidence, the Court held that the transfer would be set aside. In reaching that decision, the Court held that the Claimant’s relationship of trust and confidence caused a presumption of undue influence which had not been rebutted by way of explanation to the transaction. It was, therefore, likely that the Deceased entered into the transaction as a result of the Claimant’s and Defendant’s undue influence.