De Wind v Wedge

In a claim challenging a substantial gift on grounds of undue influence, a relationship of trust and confidence does not by itself raise an operative presumption. The transaction must also be one which calls for an explanation because it cannot readily be accounted for by ordinary motives. Once those matters are established, the evidential burden shifts, but the claimant retains the overall burden of proving undue influence. The court must assess all the circumstances, including the parties’ relationship, the donor’s personality and vulnerability, the size and effect of the gift, its explanation, and any independent advice. Legal advice is relevant but is not conclusive. A power of attorney may create fiduciary duties concerning the transaction, but it does not itself establish undue influence. On the evidence, the gift was the donor’s voluntary decision and the claim for an account therefore failed.

The claimant, the administratrix of Mrs Elsie Wedge’s estate, sought an account from her brother of the net proceeds of sale of their mother’s former home. The defendant accepted that he had received the proceeds as his mother’s attorney, but contended that she had made an outright gift of them before her death.

The claimant alleged that any gift resulted from actual or presumed undue influence. The central issues were whether Mrs Wedge intended an outright gift and, if so, whether the relationship between mother and son, the defendant’s fiduciary position, the size of the gift and the surrounding circumstances justified an inference of undue influence.

1. The claim was dismissed. The court found that Mrs Wedge intended to give the proceeds of sale to the defendant. Unless the gift was procured by undue influence, he owed no continuing duty to account for them.
2. The relationship between mother and son involved trust and confidence, but it was not a relationship in which influence was irrebuttably presumed. The power of attorney imposed fiduciary duties in handling the sale and proceeds, but was merely a tool for managing the transaction and did not itself increase the likelihood of undue influence.
3. The applicable approach was that identified in Royal Bank of Scotland plc v Etridge [2002] 2 AC 773. The claimant had to establish trust and confidence, or ascendancy, together with a transaction which called for explanation. The evidential burden could then shift to the defendant, although the ultimate burden of proving undue influence remained with the claimant.
4. A gift of almost the whole of a person’s property at the age of 72 was sufficiently substantial and disadvantageous to call for an explanation. The presumption was therefore engaged. The defendant had to show that the gift resulted from a genuine exercise of free will.
5. The court considered all the evidence, including Mrs Wedge’s character, her relationship with the defendant, her financial circumstances, the explanation for the gift, her conduct afterwards and the evidence of the solicitor who confirmed her instructions. Independent legal advice is relevant but not conclusive. The limited advice given by Mr Hirst would not, by itself, have emancipated Mrs Wedge if she had been subject to undue influence.
6. The evidence showed that the idea of the gift came from Mrs Wedge and that she wished to compensate the defendant for financial losses caused by money advanced to the claimant. The court was satisfied that she acted voluntarily and was not influenced or persuaded by the defendant. The defendant therefore had no duty to account for the proceeds.