Papouis v Gibson-West

Undue influence is concerned with whether one person’s influence over another has been abused. Disadvantage is not an essential ingredient, although it may provide evidential support. The legal burden rests on the person alleging undue influence. An evidential presumption may arise where the donor placed trust and confidence in the donee and the transaction calls for explanation. The effect of independent advice is a question of fact. Advice should explain the nature and consequences of the transaction, but need not recommend it. A person of competent mind may enter into a financially unwise transaction. The special principles concerning a bank’s notice of undue influence have no application where no third party is involved.

The claimant, a beneficiary of the estate of Florence Bennett, challenged a deed of trust under which the defendant, his sister and the deceased’s executrix, claimed the beneficial interest in a flat purchased partly with her funds. He alleged that the deed had been procured by undue influence. He also disputed the defendant’s claim to the balance of a joint bank account, contending that the money remained beneficially the deceased’s.

The central issues were whether the relationship gave rise to an evidential presumption of undue influence, whether the deceased understood the deed after receiving legal advice, and who was beneficially entitled to the bank-account balance.

1. Undue influence. The relationship between the deceased and the defendant did not establish the trust and confidence required to raise an evidential presumption. Assistance with collecting pensions and other practical help did not amount to evidence of a special trust or confidence in financial decision-making.
2. The claimant therefore bore the legal burden of proving undue influence and failed to discharge it. The deceased was mentally robust, and the evidence did not establish dependency or an abuse of influence. Generosity in recognition of past kindness was capable of being an expression of free will.
3. The solicitor had explained that the deceased would have no rights in the property or its sale proceeds. She understood the transaction and decided to enter into it. Independent advice did not have to recommend the transaction. It was sufficient that its nature and consequences were explained. The fact that the transaction was financially unwise did not establish undue influence.
4. The defendant was beneficially entitled to the flat under the deed of trust.
5. Bank account. The defendant’s name had been added to the account for convenience. That did not make her beneficially entitled to the existing balance. The regular payments were derived from the deceased’s pensions, with any modest additions treated as gifts or insignificant. The balance at death formed part of the deceased’s estate, requiring an account and inquiry as to its subsequent expenditure.
6. The detailed principles in Royal Bank of Scotland plc v Etridge (No 2) concerning a bank’s notice of undue influence did not apply because no third party was involved.