Summary

The court was not satisfied that a mother was acting fully independently or was liberated from undue influence when she transferred over 90 per cent of her estate to her daughter, which had had the effect of adeeming gifts of property to her two other children.

Facts

In conjoined actions, the claimants claimed that the first defendant (S) had exerted actual and/or presumed undue influence on her deceased mother (M) in connection with a series of transactions shortly before her death.

M had transferred money to S and her husband to enable them to buy a property. M lived in the property briefly before her death, but it was registered in the names of S and her husband alone. The effect of M's transfer was to adeem two gifts of property made in her last will which were intended for S's brothers (B) and others. Before M's death, S acted as her sole attorney. B and the other claimants complained that S's undue influence caused them to lose their gifts and to take a smaller share of residue.

Held

(1) There was no evidence that S had poisoned M's affections by persuading her that she did the most for her and that B did nothing, or that M was coerced by S to justify a finding of actual undue influence (see paras 109-110 of judgment). (2) In accordance with Royal Bank of Scotland Plc v Etridge (No.2) [2001] UKHL 44, [2002] 2 A.C. 773, "trust and confidence, reliance and dependence" exactly described the nature of M and S's relationship. The extent to which M relied and depended on S was evident, Etridge applied. However, M had executed various transactions before her death in respect of which an explanation was called for. Coupled with the fact that the transactions were entered into by M when she reposed trust and confidence in S in respect of her financial affairs, and when she was increasingly dependent on S for her help in dealing with them, the consequence was that the burden shifted to S to rebut the presumption of undue influence thereby arising. No independent advice was given to M at the relevant time on: whether it was in her best interests or sensible to transfer to S over 90 per cent of her estate; how her interests could be protected; the fiscal consequences of her actions; the income she would be left with, or how she would cope if she found that she needed expensive medical or home care. It was also apparent that S had given little or no thought to those matters. Further, there was no coherent explanation from S for why M's name was not on the title to her newly acquired property. In those circumstances, there was a real concern as to whether M really understood the many letters that went out under her signature, what interest, if any, she would be acquiring in S's property, and generally what rights she should have to secure her interests in the monies she was transferring to S. Nor was it clear whether M intended by her actions to deprive B and the other claimants of the legacies given to them by her earlier will, and, if she did not, what she needed to do to provide them with equivalent or other gifts. The court was not satisfied that M was acting fully independently of undue influence when she entered into the impugned transactions, or that she was liberated from S's undue influence over her arising from their relationship of trust and confidence, reliance and dependence. It was not satisfied that S had discharged her burden, and was unwilling to give S the benefit of the doubt by accepting her protestation that the way the matter was structured, with M having no protection for her investment in the new property and with no steps being taken to amend her will to enable the gifts to B and the other claimants to be honoured, resulted from the exercise by M of an independent will in the full knowledge of what she was doing and why. Accordingly, a finding of presumed undue influence was justified (paras 111-112, 123, 126-127, 129-130, 132). (3) The fact that S was M's attorney did not mean that she owed M a fiduciary duty, or that she was under an obligation in respect of any monies deriving from the impugned transactions which came under her control. Nor was S under a common law duty of care as a result of her knowledge of the gifts contained in M's last will (paras 135-136). (4) As to relief, it was appropriate to put M's estate into the position in which it would have been if there had been no undue influence so that, even though it might not be possible to restore the two properties to the estate, B and the other claimants would receive the economic value of those properties in the amounts which would have represented their respective shares in them if they had been sold in the due course of administration, and the net sale proceeds shared between them as the will provided. Since S had been acquitted of any conscious wrongdoing in her dealings with M, it was appropriate to acquit S's husband of the same. However, he shared equally with S in the benefits which resulted from S's undue influence over M with full knowledge of the fact that the two of them were in a relationship of influence, and accordingly he was obliged to the same extent as S to restore M's estate to the position it would have been in if the impugned transactions had not occurred (paras 141, 146).

Judgment for claimants