03 Apr 2017
Undue Influence - the Key Principles
The recent case of Edkins v Hopkins  EWHC 2542 (Ch) demonstrates some of the challenges of succeeding in proving undue influence in relation to a will.
The main beneficiary under a will brought a claim to prove its validity.
The main beneficiary had been employed by the testator's company in 1990 and became close friends with him. The testator had three sons from his first marriage and had hoped they would join him in the business, but he became estranged from them owing to their drug addictions. He began a relationship with his second wife in 1998. From 2007 they spent a significant time living abroad while the main beneficiary ran the company. The testator developed an alcohol addiction and separated from his wife in January 2013. She visited him regularly but his health deteriorated and the main beneficiary began helping him with his financial affairs. In September 2013 the testator transferred 20 shares in the company to the wife and indicated to his accountant that he wanted to leave the main beneficiary with a controlling interest. He was admitted to hospital a number of times in 2014 with alcoholic liver disease and sometimes displayed confusion. In June 2014 he decided to change his existing will. The main beneficiary arranged a solicitor's visit. The solicitor noted that the testator looked unwell but believed he had a clear understanding of what he was instructing and signing. The testator died in September 2014, leaving his principal asset, being his company shares, to the main beneficiary, along with 75% of his residuary estate. The remaining 25% went to his wife and sons.
The wife and sons submitted that the 2014 will was invalid because (1) the testator had lacked capacity; (2) he had not known or approved of the will's contents; (3) the main beneficiary had used undue influence.
In terms of undue influence, the testator had been very vulnerable physically and mentally in the weeks leading up to his signing the will. He had left hospital in May 2014 still dependent on alcohol, and both the main beneficiary and the wife had provided it. In addition, the main beneficiary had a striking level of control over the testator, running the business and taking care of his personal financial affairs. However, that control had to be assessed in the context that it was clear that the testator had placed a great deal of trust in the main beneficiary, as acknowledged to his solicitor and others. A significant level of that control was given by the testator, not taken by the main beneficiary. The will's instructions were consistent with the testator's continuing desire to leave the bulk of his estate to a friend and colleague who had kept the business going in his absence for some time. He might have been encouraged or even persuaded by the main beneficiary but that had not crossed the line so as to deprive him of his judgement.
The rest of this article about the principles of undue influence deals mainly with where a challenge has been made to someone seeking probate of a will.
The law distinguishes between actual and presumed undue influence. The difference between the two types of undue influence was captured in Daniel v Drew  EWCA Civ 507 :
"In the broadest possible way, the difference between the two classes is that in the case of actual undue influence something has to be done to twist the mind of a donor whereas in cases of presumed undue influence it is more a case of what has not been done namely ensuring that independent advice is available to the donor."
The separate categories of undue influence has been criticised in RBS v Etridge (No.2)  1 AC 773 :
"Correspondingly the attempt to build up classes or categories may lead to confusion. The confusion is aggravated if the names used to identify the classes do not bear their actual meaning. Thus on the face of it a division in to cases of “actual” and “presumed” undue influence is illogical. It appears to confuse definition and proof. There is also room for uncertainty whether the presumption is of the existence of an influence or of its quality as being undue..... English law has identified certain relationships where the conclusion can prima facie be drawn so easily as to establish a presumption of undue influence. But this is simply a matter of evidence and proof. In other cases the grantor of the deed will require to fortify the case by evidence, for example, of the pressure which was unfairly applied by the stronger party to the relationship, or the abuse of a trusting and confidential relationship resulting in for the one party a disadvantage and for the other a collateral benefit beyond what might be expected from the relationship of the parties. At the end of the day, after trial, there will either be proof of undue influence or that proof will fail and it will be found that there was no undue influence. In the former case, whatever the relationship of the parties and however the influence was exerted, there will be found to have been an actual case of undue influence. In the latter there will be none." (Lord Clyde)
We shall look at actual undue influence first.
The person alleging that a will was made as a result of actual undue influence must prove it. This can be a difficult task as the main witness is dead and acts amounting to undue influence take place secretively or with very few people present.
Undue influence involves overpowering another's judgment as opposed to lesser acts such as persuasion. Where actual undue influence is concerned, the claimant will need to show evidence of the actual relationship between the testator and the person accused as the vantage point from which the accused was able to exercise the influence.
For actual undue influence coercion needs to be shown : Wingrove v Wingrove (1885) 11 P.D. 81). This case speaks of someone being coerced into doing something they would not otherwise do.
The distinction between legitimate persuasion and coercion was described in Daniel v Drew :
"the critical question is not whether or not the persuasion or the advice, in other words, the influence, has invaded the free volition of the donor to accept or reject the persuasion or advice or withstand the influence. The donor may be led but she must not be driven and her will must be the offspring of her own volition, not a record of someone else’s. There is no undue influence unless the donor if she were free and informed could say ‘This is not my wish but I must do it’."
Consider also :
"Persuasion is not unlawful, but pressure of whatever character if so exerted as to overpower the volition without convincing the judgment ..., will constitute undue influence, though no force has been either used or threatened” : Hall v. Hall LR 1 P&D 481
"Overt acts of improper pressure or coercion, such as unlawful threats....
A relationship where one has acquired over another a measure of influence or ascendancy of which the ascendant person then takes unfair advantage... without any specific acts of coercion."
There must be clear proof and for pleading purposes there must be facts demonstrating what the reasonable grounds are for so believing it : Re Plant  P. 139. Pursuing unsubstantiated allegations will have costs consequences.
Allegations of undue influence centre on a relationship which involves trust and confidence (eg lawyer and client, doctor and patient, business advisor and client). It has been recognised that such relationships create an opportunity to influence the testator : Goldsworthy v Brickell  Ch. 378 at 401D) (see below).
Now to presumed undue influence. Please note, where wills are concerned there is no claim based on presumed undue influence - this applies only to lifetime gifts.
Relying on a presumption of undue influence may be seen as something of a fallback position. If one is struggling to demonstrate actual undue influence one could instead rely on the presumption which shifts the burden of proof to the defendant. This rule relies on demonstrating facts which call for an explanation, which if not rebutted by the defendant will mean the claimant will succeed.
Looked at another way, presumed undue influence is still actual undue influence but where the burden of proof has shifted to the defendant to rebut the presumption.
The presumption arises from showing the following :
(a) certain types of relationship involving a history of undue influence; and
(b) a transaction which requires explanation.
There are some relationships where there is a presumption of influence (be careful to distinguish from undue influence). For example, parents over children and future husband over future wife. The question becomes whether that influence was exercised to such a degree as to be unlawful. Surprisingly, the presumption does not apply to husband and wife but :
"It is now well established that husband and wife is not one of the relationships to which this latter principle applies. In Yerkey v Jones (1939) 63 CLR 649, 675 Dixon J explained the reason. The Court of Chancery was not blind to the opportunities of obtaining and unfairly using influence over a wife which a husband often possesses. But there is nothing unusual or strange in a wife, from motives of affection or for other reasons, conferring substantial financial benefits on her husband. Although there is no presumption, the court will nevertheless note, as a matter of fact, the opportunities for abuse which flow from a wife's confidence in her husband. The court will take this into account with all the other evidence in the case. Where there is evidence that a husband has taken unfair advantage of his influence over his wife, or her confidence in him, 'it is not difficult for the wife to establish her title to relief’" RBS v Etridge.
In RBS v Etridge the House of Lords summarised the types of relationships in which a presumption of influence would arise:
"certain types of relationship in which one party acquires influence over another who is vulnerable and dependent and where, moreover, substantial gifts are not normally to be expected. Examples of relationships within this special class are parent and child, guardian and ward, trustee and beneficiary, solicitor and client, and medical adviser and patient. In these cases the law presumes, irrebuttably, that one party has influence over the other."
The categories of relationship is not a closed list. Where a trusting relationship has been established between the relevant people a presumption can arise.
Assuming the presumption passes the burden of proof in the direction of the defendant, what must be shown is the independent judgment of the testator in doing what he/she did was overcome (which is more than showing the testator had understanding).
What about the transaction? There is confusion here and tests are inconsistent. Be wary about looking for a transaction which is disadvantageous to the donor, although in the right case it would undoubtedly help. Applying such a threshold can lead to injustice. What needs to be looked for is a transaction which looks inexplicable, irrational, or calls for an explanation in all the circumstances of the case. Consider this passage from Turkey v Awadh  EWCA Civ 382 :
"What a trial judge ought to be doing is trying to exercise his common sense and assuming the necessary relationship to consider whether, given the circumstances and nature of the transaction, it says to the unbiased observer that absent explanation it must represent the beneficiary taking advantage of his position."
The level of pressure which can be put upon a victim before the court will grant relief is much higher. Influence and persuasion which would cause the court to set aside a lifetime gift for undue influence has been held in probate cases to be perfectly acceptable so long as it does not cross the line into coercion. As explained by Lord Penzance in the old case of Parfitt v Lawless (1872) LR 2 P&D 462 :
“There is nothing illegal in the parent or husband pressing his claims on a child or wife, and obtaining a recognition of those claims in a legacy, provided that that persuasion stop sort of coercion and that the volition of the testator, though biased and impressed by the relation in which he stands to the legatee, is not overborne and subjected to the domination of another”
Inferences Can always be drawn from evidence. If the available evidence is strong enough then the court will conclude in an appropriate case that a testator was the victim of undue influence. The test is explained in a judgment of Lewison J in Re Edwards (deceased)  EWHC 1119 (Ch) :
“the burden of proving [probate undue influence] lies on the person who asserts it. It is not enough to prove that the facts are consistent with the hypothesis of undue influence. What must be shown is that the facts are inconsistent with any other hypothesis. In the modern law, that is, perhaps no more than a reminder of the high burden, even on the civil standard, that a claimant bears in proving undue influence as vitiating a testamentary disposition”.
In that case Lewison J held that “there is no other reasonable explanation” for the testatrix having changed her will than undue influence, although there was little evidence before the court other than the relationships between and the personalities of the parties and some highly uncharacteristic behaviour on the part of the testatrix before her death. Lewison J concluded that the only explanation for that uncharacteristic behaviour was lies told to the testatrix by one potential beneficiary against another potential beneficiary and that “in changing her will she was simply dong what she was told”.
The test in law is straightforward. Are there facts in this case that could lead a court to infer that there had been in due influence and nothing else?
The easiest way to rebut the suspicion is to prove that the testator received independent legal advice. One must remember that it is the frailty of the testator which is being protected. So, even where a testator has received independent advice before making a will, the negative influence of the undue influence can still have procured that outcome. This was emphasised in Wright v Hodgkinson  WTLR 435 :
“But unless it is shown, whether as a result of independent legal advice or otherwise, that his intention was the result of full, free and informed thought, it is no answer in a case such as the present to demonstrate that he intended to make the gift in question; nor is it a sufficient answer that he might have gone ahead, even if he had received full and proper advice.”
It is not necessary for the solicitor to advise the testator whether or not he should make the will. Nor can the testator be prevented from making a will which appears stupid if he or she wishes to do so – see Re Coomber  1 Ch. 723 at 730:
It is sometimes argued that a transaction would have proceeded in any event despite the undue influence. Such arguments are wrong. Consider Hewett v First Plus Financial Group  EWCA Civ 312 :
"It has never been part of the proof of undue influence that, but for the relevant abuse of trust, the impugned transaction would not have been entered into. The right to set aside the transaction arises not because, on a but for causation analysis, it would otherwise have been avoided, but because of the equitable wrong constituted by the abuse of confidence was part of the process by which the victim’s consent to it was obtained. In the present case that wrong is constituted by Mr Hewett’s breach of his duty of fairness and candour to his wife, when persuading her to agree to the remortgage."
Regency Barristers Chambers