Jessica considers the recent decision of the Court of Appeal in Hart & Anor v Burbridge & Ors  EWCA Civ 992.
This dispute related to a gift of a large sum of money by a mother, Phyllis Hart, to her daughter and her son-in-law. Mrs Hart owned two properties, her marital home and a rented property that provided her with an income. Both of these properties were sold and the sale proceeds and an additional sum were then given to the her daughter and son-in-law and all of the money was used to purchase a new property. The property was registered in the sole names of the daughter and son-in-law. The intention was that they would all live at the property together but, sadly, Mrs Hart died after having lived at the property for only a few weeks.
Both of the properties sold had been left as specific gifts in Mrs Hart’s will. Because Mrs Hart did not own the properties when she died, the gifts in the will failed. The rest of the estate was also diminished as a result of the gifts made by Mrs Hart.
Mrs Hart’s two sons and other family members issued court proceedings claiming that they had lost out as a result of these transactions. It was alleged that the daughter had unduly influenced her mother to sell her properties and give the funds to her. The deceased’s son-in-law was also accused of becoming unjustly enriched as a result of the undue influence exerted by his wife.
The sons therefore sought to have the transactions set aside on this basis.
The defendants argued that there was an agreement between them and Mrs Hart that the sale proceeds of the other two properties were a loan to them to be repaid when the other property was sold.
Claims for undue influence are notoriously difficult to establish, especially those where the main witness, namely the person who made the will, has died.
Matthew Evans has successfully run one of the leading cases on undue influence in relation to wills; Re: Edwards EWHC 1119 (Ch). Such cases are usually more difficult to prove as it is necessary to prove “actual undue influence”. Conversely, in cases of undue influence in relation to lifetime gifts, where it can be shown that the person alleged to have exerted undue influence was in a position of trust and confidence, it may be possible to create a “presumption” of undue influence, such that it then falls on the recipient of the gift(s) to prove otherwise.
As the present case dealt with lifetime gifts, the judge held that it was the daughter’s duty to prove that there was no undue influence. A suspicion had arisen because, on the face of it, Mrs Hart had gifted the vast majority of her estate to her daughter and son-in-law. The sale of her properties had deprived her of her marital home, the income derived from the rental property and the security of having control over her own assets.
The judge at first instance held that the daughter could not prove that there was no undue influence and could not clearly explain why her mother had entered into this agreement, which was clearly disadvantageous to her.
The court was not satisfied that Mrs Hart had acted independently when making the gift to her daughter and son-in-law. There was no valid explanation about why the deceased had not sought independent advice regarding the gift and also why the property was not held in Mrs Hart’s name when she had provided all of the money for the purchase of the property.
The court ruled that the daughter and son-in-law had to put the other claimants back into the position that they would have been if the lifetime gifts had not been made and provide the other family members with the gifts that they should have received in the will.
The defendants appealed the decision and also questioned the judge’s approach to calculating the compensation to which the claimants were entitled. The Court of Appeal upheld the decision made by the judge at first instance that the transaction had called for an explanation and the presumption of undue influence had not been rebutted and dismissed the appeal. The Court of Appeal also held that the judge had made the correct decision regarding quantum, as Mrs Hart had not expressed any intention to change her will,.
Although it is difficult to establish a claim for undue influence, this decision makes it clear that when a suspicion is raised about a gift that, on the face of it, seems to be detrimental or contrary to previously expressed wishes, an explanation must be provided. The court will consider the size and nature of the gift and will also look for evidence that the person making the gift was acting independently.