By Gavin McLeod who practices in traditional Chancery and property litigation from St. Philip’s Chambers
Undue influence is a concept much recalled from law school, usually in the context of spouses standing as sureties. It is also commonly thought of when questions arise as to disputed transactions. For it is a regular contention of disappointed lay clients that unexpected or unwelcome generosity in favour of someone else had some form of nefarious origin. The allegation would then be that the beneficiary or recipient was up to no good in procuring the gift. In that sense, undue influence is a concept much recalled. It is also however one which can be misunderstood. Still further, it has different representations in the two separate contexts of will challenge (probate undue influence) as against challenges to gifts or other lifetime transactions (inter-vivos undue influence).
Dealing with the first, probate undue influence is a narrow thing. It is specifically a question of the proof of coercion over the testator. The case law recognises however that the testator’s susceptibility to that coercion will vary. In that sense, it may be easier to prove such coercive behaviour in the case of an elderly or very dependent will-maker.
The modern law of probate undue influence is summed up in Re: Edwards [2007] EWHC 1119 (Ch); [2007] WTLR 1387. There, Lewison J, as he then was, encapsulated the doctrine by references to how “the testator’s will must be overborne”, further to the exercise of “pressure that overpowers the volition without convincing the testator’s judgment. It is to be distinguished from mere persuasion, appeals to ties of affection or pity for future destitution, all of which are legitimate” (at [47]).
Allegations that a beneficiary has engaged in this behaviour are not to be made lightly. Of course, the very nature of such conduct is that it is unlikely to have been publicly demonstrated. As the authorities therefore recognise, it is possible for that reason to infer that coercion has occurred without there being any direct proof that it has: e.g. Schrader v. Schrader [2013] EWHC 466 (Ch); [2013] WTLR 701 (at [96]). Even so, the burden on any claimant to prove their case is high, notwithstanding that the standard of proof is still only balance of probability. This has been endorsed again recently in Rea v. Rea [2024] EWCA Civ. 169. There, the court affirmed what might be thought on its own terms to be unobjectionable, whilst also being of frustration to disappointed beneficiaries. As Newey LJ put it: “it seems to me that it will commonly be appropriate to proceed on the basis that undue influence is inherently improbable. As I have said, “undue influence” signifies coercion in this context, and potential beneficiaries are surely less likely to resort to coercion than to rely on affection, gratitude or even persuasion”. The court then went further, noting how: “the circumstances must be such that undue influence is more probable than any other hypothesis. If another possibility is just as likely, undue influence will not have been established” (at [27], [32]).
Given, in turn, the wide array of legitimate appeals to the generosity of the testator which may be attempted, it can be seen that undue influence in a probate case will only rarely be proven. The whole notion of undue influence in the context hence requires practitioners to exercise significant degrees of cautious judgement.
One further reason why this is so is because there is no possibility of relying on an evidential presumption for purposes of proving the undue influence. This is one significant way in which probate undue influence is different from the concept as it applies to lifetime transactions and gifts. In that sphere, undue influence may (by contrast) be proven either by direct evidence of its having occurred, or, alternatively, by proof of a ‘relationship of trust and confidence’ (being of presumed influence) together with a ‘transaction calling for an explanation’. In the latter scenario, the presumption that undue influence was exercised will then arise: per Royal Bank of Scotland (No. 2) v. Etridge [2001] UKHL 44; [2002] 2 AC 773. (There may then also be questions as to notice, in terms of whether a third-party lender will be burdened by the situation. That is beyond the scope of this discussion, but Etridge lays down the relevant guidelines).
Where a presumption of undue influence exists, a burden will be imposed upon the defendant to show how, in actual fact, the donor exercised a free and independent judgement without the risk of that being clouded by the donee’s impact upon them. Discharging that burden, typically (although not necessarily) by proof of the donor’s receipt of independent advice, is not however any easy task: see e.g. Smith v. Cooper [2010] EWCA Civ. 772; [2010] 2 FLR 1521. It follows in these situations that the claimant need only have proved the requirements of the presumption. It is precisely that which is different from a probate case: for there is no prospect of presuming the exercise of coercion upon the testator.
The distinction, in a lifetime case, between proof by direct evidence, versus proof by the operation of a presumption (unless then rebutted by the defendant), has given rise to what might be thought unhappy nomenclature of ‘actual’ versus ‘presumed’ undue influence – as though, somehow, these were separate things. It is important to remember that they are not separate things, as the leading authorities make clear. They represent, instead, different mean of proving what in substance is the same thing – being the exercise of undue influence. This point has significance because of a common view that ‘actual’ undue influence somehow requires direct proof of force or threats. That is misguided. For undue influence in a lifetime case does not necessarily require proof of coercive behaviour. It is not a synonym for the exercise of duress. That is the second big difference from probate undue influence: for undue influence in a lifetime case can be seen in a much wider variety of things.
Accordingly, ‘actual’ undue influence (or simply, undue influence proven directly) can exist in a number of different circumstances. The overbearing of free will by pressure is one example amongst others. It is admittedly probably the most obvious example, but that is all it is. Others might include misrepresentations and half-truths, as well as the withholding of material facts from the vulnerable party. In certain categories of relationship, therefore, the law will require the exercise of due candour and transparency, and will regard failure to meet these standards as undue influence. In Hewett v. First Plus Financial Group Plc [2010] EWCA Civ. 312; [2010] 2 P & CR 22, for example, the court found undue influence in a husband’s failure to disclose his extramarital affair before his wife agreed to a remortgage of their property. Similarly, and again in certain categories of relationship, the court will impose an obligation upon the influential party to take steps to bring about a form of dissociation between themselves and the other person, for example by requiring that they recommend the taking of independent advice. Failure by the influential party to take such steps has then been classified as undue influence: e.g. Lloyds Bank v. Bundy [1975] QB 326.
It is, therefore, particularly important to recognise that undue influence in a lifetime case is capable of various manifestations. In certain categories of relationship (being of “trust and confidence giving rise to a duty of candour and fairness” – per Libyan Investment Authority v. Goldman Sachs International [2016] EWHC 2530 (Ch) (at [278])) much more than the simple absence of dominating pressure is required, if a finding of undue influence is clearly to be avoided.
In that sense the position in a lifetime case was ably summed up in The Law of Contract (ed. R. Halson, R. Brownsword and others, Lexis Nexis 7th ed. 2022) as follows:
“The main point is that undue influence, the creature of equity, is not confined to threats or coercion … Equity is much more sensitive than the common law (the doctrine of duress) because the latter has only responded to instances of direct force or threatened harm. Undue influence extends to subtle forms of ‘persuasion’, notably self-regarding conduct by stronger parties within unequal relationships … The courts have consistently noted the wide and pliable nature of undue influence … Wrongdoing is always a feature, but need not amount to conscious abuse. Undue influence does not require wicked, cynical or conscious wrongdoing: it is enough that there has been some self-regarding failure of responsibility within the protected relationship of vulnerability … The dominant party might have acted in some cases in a morally upright and righteous way, but that party will nevertheless be castigated in equity for not having taken proper steps to ensure that the transaction or gift was the true product of the other party’s free consent”.
A wider understanding of this idea, being that “undue influence covers a spectrum”, and that it might be seen even where a “stronger party has [merely] omitted to ensure that the weaker party has been enabled to make a free and informed decision” (at [4.152]), would be very welcome. This is if a more genuine understanding of equity’s remit is to take hold.
Finally, practitioners could also usefully note the related, but distinct, doctrine of abuse of confidence. This is particular to fiduciary relationships and concerns the burden imposed upon fiduciaries to justify their receipt of benefits from their principals. This burden, complete with obligations to show (e.g.) the exercise of candour and the disclosure of information, is long recognised in the instance of bilateral transactions: Johnson v. EBS Pensioner Trustees Ltd [2002] EWCA Civ. 164, citing Moody v. Cox [1917] 2 Ch. 71 and Demerara Bauxcite Co. Ltd. v. Hubbard [1923] AC 673. This idea of equity imposing a burden upon the fiduciary to justify the receipt of the benefit, and notably by proof of the receipt of independent advice, has now been further extended to unilateral transactions and gifts: Hodson v. Hodson [2006] EWHC 2878 (Ch). This line of authority reveals the prospect of two separate causes of action being pleaded. For there may be an abuse of confidence as well as undue influence. Alternatively, there may be an abuse of confidence even without proof of undue influence. This too, therefore, is an area which is worthy of greater practitioner dissemination and understanding.
Gavin McLeod practices in traditional Chancery and property litigation from St. Philip’s Chambers