Posts Tagged ‘presumptions’

Undue influence: meaning and policy: Allcard v Skinner

October 3, 2013

In Allcard v Skinner (1887)) 36 Ch.D. 145, CA (Eng)) A’s spiritual advisor introduced her to S (the superior of a religious community). Several years later, she became a member of the community. This entailed a vow of poverty. She could give her wealth away to anyone she chose. In fact, she gave it (cash and shares) to the community. The rules to be observed by the members of the community forbade them from seeking outside advice. There was no suggestion that any pressure was placed upon her to make the gift (beyond that which resulted from her own enthusiasm for the principles and work of the community). Nor had there been any improper misappropriation of the funds; they were used for the charitable work of the community. The Court of Appeal held that in principle the gift could be set aside on the grounds of undue influence. By a majority, it held that her right to recover her assets had been lost as a result of her delay in asking for the return of the money after she had left the community.

On the meaning of undue influence, Lindley LJ said that it arises in cases ‘in which there has been some unfair and improper conduct, some coercion from outside, some overreaching, some form of cheating, and generally, though not always, some personal advantage obtained by a donee placed in some close and confidential relation to the donor.’ (at 181).

There was no evidence of that here.

Then there is another class of cases:

‘in which the position of the donor to the donee has been such that it has been the duty of the donee to advise the donor, or even to manage his property for him. In such cases the Court throws upon the donee the burden of proving that he has not abused his position, and of proving that the gift made to him has not been brought about by any undue influence on his part. In this class of cases it has been considered necessary to shew that the donor had independent advice, and was removed from the influence of the donee when the gift to him was made.’  (at 181)

This case belonged to this second group. The rules of the community actively prevented S from seeking the advice which is necessary in such cases to rebut the presumption of undue influence.

Equity’s intervention in cases of undue influence is based on the policy that ‘it is right and expedient to save them from being victimised by other people’. (at 182)

The Courts of Equity ‘have not shrunk from setting aside gifts made to persons in a position to exercise undue influence over the donors, although there has been no proof of the actual exercise of such influence; and the Courts have done this on the avowed ground of the necessity of going this length in order to protect persons from the exercise of such influence under circumstances which render proof of it impossible. The Courts have required proof of its non-exercise, and, failing that proof, have set aside gifts otherwise unimpeachable.’ (at 183)

It seems that in the second class of case more is needed than just the relationship of trust and confidence. It seems that the transaction itself must be such as to call for an explanation:

‘Where a gift is made to a person standing in a confidential relation to the donor, the Court will not set aside the gift if of a small amount simply on the ground that the donor had no independent advice. In such a case, some proof of the exercise of the influence of the donee must be given. The mere existence of such influence is not enough in such a case; see the observations of Lord Justice Turner in Rhodes v. Bate. But if the gift is so large as not to be reasonably accounted for on the ground of friendship, relationship, charity, or other ordinary motives on which ordinary men act, the burden is upon the donee to support the gift.’ (at 185).

Michael Lower