Hart & Anor v Burbidge & Ors

Presumed undue influence arises where the claimant proves a relationship involving trust, confidence, reliance, dependence or ascendancy, together with a transaction that calls for explanation. The evidential burden then shifts to the recipient to show that the transaction resulted from the transferor’s independent will and full, free and informed thought. Independent legal advice is relevant but neither essential nor automatically conclusive. The doctrine protects against transactions that compromise a person’s freedom of decision, even where the recipient acted honestly. Relief may include monetary compensation restoring the estate and beneficiaries to the position they would have occupied absent the influence.

The claims concerned transactions by which Phyllis Hart transferred approximately £700,000 to her daughter Susan Burbidge and Susan’s husband, Brian, to fund the purchase of Little Manor. The transactions included a £290,000 transfer, the sales of two properties given by Phyllis’s 2007 Will to other family members, and the application of the sale proceeds towards the purchase. The claimants alleged actual and presumed undue influence, and some also alleged fiduciary and common-law duties arising from Susan’s enduring power of attorney and knowledge of the will.

The central issues were whether the transactions resulted from undue influence, whether Susan owed the additional duties alleged, and what relief was appropriate.

1. Presumed undue influence. The claims succeeded. Phyllis had reposed trust and confidence in Susan and had become dependent on her in financial and personal matters. The transactions transferred almost all of Phyllis’s remaining assets, deprived her of security and income, and frustrated testamentary gifts. They therefore called for an explanation and shifted the evidential burden to Susan.
2. Susan failed to prove that Phyllis acted independently and after full, free and informed thought. Phyllis received no independent advice before the £290,000 transfer or before the sales and purchase were completed. The safeguards proposed by Mr Pick were ignored, and the transaction left Phyllis without an interest or security in Little Manor. A person may understand a transaction and intend it, yet still lack the independence required to rebut the presumption.
3. Independent advice is a relevant evidential factor, but it is neither essential nor necessarily sufficient. The question is whether the transferor was liberated from the influence and acted independently in all the circumstances. The recipient’s honesty is likewise not decisive, since the doctrine operates as a matter of public policy.
4. The existence of the enduring power of attorney did not itself impose fiduciary duties on Susan. She had not purported to act under it. Her knowledge of the 2007 Will also imposed no common-law duty to ensure that Phyllis obtained legal advice or that the testamentary beneficiaries were protected.
5. The sales to third parties could not be rescinded. Relief would instead restore the economic position that would have existed absent the undue influence. The estate was to receive sufficient sums to compensate the beneficiaries for the testamentary gifts and to restore, after tax, the effect of the £290,000 transfer. Susan and Brian were credited with the £410,000 already repaid from the resale of Little Manor. Brian’s liability arose from unjust enrichment, not as a constructive trustee.