Equity And Trusts Notes

BEFORE YOU START:

IS THE UNDUE INFLUENCE BEING EXERCISED BY A THIRD PARTY? IF SO, WRITE THIS INSTEAD OF THE INTRODUCTION BELOW.

IS IT A SPECIAL WIVES EQUITY? IF SO GO TO THE END OF PRESUMED UNDUE INFLUENCE

Introduction (third party)

From the facts it appears that [plaintiff] has been subjected to undue influence which has resulting in [property] being transferred to [defendant]. However, as [defendant] has received the benefit of the transaction but has not [him/herself] exerted the undue influence against [plaintiff], [plaintiff] will need to argue third party undue influence, that is to say [third party] exerted the undue influence which resulted in the transaction in question.

In the case of Bridgeman v Green, the court famously held: “...partitioning and counting [the subject matter of the transaction] out amongst his relatives and friends will not purify the gift and protect it against the equity of the person imposed upon.” Therefore, [plaintiff] can rely on the equitable doctrine of undue influence as [his/her] judgment may be regarded as impaired by the influence of [third party]. The intent of [defendant] is irrelevant in this enquiry as equitable fraud is a much broader concept than common law fraud.

[Plaintiff] must first prove that [third party] was exercising undue influence over [plaintiff].

SKIP STRAIGHT TO EITHER “PRESUMED” OR “ACTUAL” BELOW, REPLACING “[DEFENDANT]” WITH “[THIRD PARTY]”. IF PRESUMED IS UNCERTAIN, APPLY ACTUAL AS WELL.

Introduction (non-third party)

From the facts, it appears that [plaintiff] has been subjected to undue influence which has resulted in [property] being transferred to [defendant]. As [plaintiff] and [defendant] are known to one another (if it is a trustee and beneficiary they do not have to be known to each other), [plaintiff] may rely on the equitable doctrine of undue influence to argue that [his/her] judgment w as impaired by the influence of [defendant]. [Plaintiff] will claim that there has been unconscientious use by [defendant] of a special capacity or opportunity that exists by reason of their relationship of influence, and thus [plaintiff’s] act of entering into the transaction in question cannot be considered free or voluntary. The intent of [defendant] is irrelevant in this enquiry as equitable fraud is a much broader concept than common law fraud.

CHOOSE EITHER PRESUMED OR ACTUAL BELOW. IF PRESUMED IS UNCERTAIN, APPLY ACTUAL AS WELL.

Presumed undue influence

[Choose from the following]:

• Class 2a: The relationship between [plaintiff] and [defendant] falls into the recognised category of [parent and child/solicitor and client/trustee and beneficiary/doctor and patient/spiritual adviser and worshipper/man and fiancé], thus raising a presumption of undue influence.

• Class 2b: The relationship between [plaintiff] and [defendant] does not fall into a recognised category of undue influence. However, if [plaintiff] can prove that the relationship is one of undue influence, the presumption will apply. In the case of Johnson v Buttress a 67-year-old illiterate, low intelligence man was held to be devoid of capacity in business affairs. The man’s wife died and he moved in with family friends. He decided to transfer his house to Mrs Johnson, who at first refused, but then organised with her solicitor for the contract to be completed. The court held that wherever the relationship between donor and donee is such that the latter is in a position to exercise dominion over the former by reason of the trust and confidence reposed in the latter, the presumption of undue influence in raised. [Argue on facts whether there is such a relationship in the facts. If you cannot establish it or you are not sure, go to actual undue influence. If it is similar to Johnson v Buttress, continue on this path.]

As the presumption has been successfully raised by [plaintiff], the onus now shifts to [defendant] to prove that [plaintiff’s] act was the pure, voluntary, well-understood act of the mind of the donor: Johnson v Buttress. If [defendant] cannot prove this then [plaintiff] has the right to have the transaction set aside.

[Choose from the following]:

• Adequacy of consideration: [Defendant] can rebut the presumption by arguing that [he/she] provided [plaintiff] with adequate consideration in the form of [consideration]: Union Fidelity Trustee v Gibson). As there [is/is not] adequate consideration, it is likely [defendant] [will/will not] be able to rebut the presumption, and thus the transaction [may/may not] be set aside. [If not, go straight to remedies].

• Independent advice: [Defendant] can rebut the presumption by arguing that [plaintiff] received competent, professional and independent advice: Bester v Perpetual Trustee. It may be sufficient for [defendant] to prove that [he/she] recommended independent advice by sought by [plaintiff] and [plaintiff] does not have to have taken the advice: Inchenoria v Shaik Allie Bin Omar [1929]. As [plaintiff] [does/does not] appear to have obtained independent advice [from person/from anyone], is it likely [defendant] [will/will not] be able to rebut the presumption, and thus the transaction [may/may not] be set aside. [If not, go straight to remedies].

• Lack of improvidence: [Defendant] will be able to rebut the presumption by arguing that there was a lack of improvidence that accompanied the transaction. This enquiry will be based on the nature of the transaction in terms of its enormity in the context of [plaintiff’s] circumstances. As there [is/is not] a lack of improvidence on the part of [defendant] it is likely [defendant] [will/will not] be able to rebut the presumption, and thus the transaction [may/may not] be set aside. [If not, go straight to remedies].

[Compare/distinguish]:

• Parent and child (including guardians):

  • In the case of Bullock v Lloyds Bank Ltd [1955] Ch 317 a 21-year-old girl inherited money and settled the money in the name of the father and brothers without any independent legal...

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