Turkey v Awadh & Anor

The evidential presumption of undue influence arises where a person who was able to influence another’s will enters into a transaction with that person which cannot be explained by the ordinary motives by which people are accustomed to act. A transaction does not satisfy that requirement merely because it is unusual, its value was not investigated, or it calls for an explanation in an ordinary sense.

The court must examine the transaction as a whole and in its factual and relational context. Only where that examination leaves the transaction explicable solely by an abuse of influence does the burden pass to the party seeking to uphold it. If the burden passes, that party must show that the other acted with a free and informed will, usually through evidence of informed and independent advice.

A father sought to enforce a family deed under which his daughter and son-in-law agreed to transfer a leasehold house to him after he paid 500,000 Saudi Riyals and discharged the mortgage and related liabilities. The Central London County Court rejected defences of misrepresentation and undue influence and declared that the daughter held the leasehold interest on trust for her father.

The defendants appealed only against the rejection of presumed undue influence. The trial judge’s findings that a relationship of trust and confidence existed and that any presumption, if raised, had not been rebutted were unchallenged. The central issue was whether the transaction was sufficiently inexplicable by ordinary motives to raise the evidential presumption and shift the burden of proof.

1. Appeal dismissed. Buxton LJ, with whom Chadwick LJ agreed, held that the trial judge had correctly concluded that the evidential presumption of undue influence did not arise.

2. Presumed undue influence is an evidential presumption which shifts the burden of proof. Its first condition is that the party seeking to uphold the transaction was in a position to influence the other party’s will in relation to a transaction of the relevant kind. This is commonly described as a relationship of trust and confidence. The judge’s finding that this condition was satisfied was unchallenged.

3. The second condition requires a transaction which cannot be explained by the ordinary motives by which people are accustomed to act. That formulation derived from Royal Bank of Scotland v Etridge (No 2) [2002] 2 AC 773. It is insufficient that the transaction is merely unusual or that, in an ordinary sense, it calls for an explanation. The required explanation must bear upon the possible abuse of the influence arising from the relationship.

4. The court must consider the transaction as a whole and in its factual and relational context. That exercise is not an impermissible balancing of advantage and disadvantage. It identifies the transaction’s general nature and what it sought to achieve for the parties. Neither misconduct by the benefiting party nor manifest disadvantage to the complainant is an element of the inquiry.

5. The family character of the arrangement, the continued use of the house, the delayed completion, the immediate substantial payment and the need to relieve the defendants of mortgage difficulties provided an ordinary explanation for the transaction. The absence of inquiries into market value did not itself establish that the transaction was at a serious undervalue or that it was explicable only through undue influence.

6. Because the second condition was not satisfied, the burden never passed to the claimant. Had it passed, the unchallenged finding was that it would not have been discharged because there was no evidence of separate professional advice. The county court’s declaration and operative orders therefore remained effective, and the respondent was awarded the costs of the appeal.

1. Court of Appeal (Civil Division): The appeal was dismissed. The court upheld the county court’s conclusion that the presumption of undue influence had not arisen and left its declaration and operative orders in effect.

2. Central London County Court: HHJ Cooke QC rejected the defences of misrepresentation and undue influence and declared that the appellant held the leasehold interest in the property on trust for the respondent.