Property Transfer - Lack of Legal Advice Critical

One frequent area of dispute in the administration of estates is where an asset is gifted or sold at an undervalue by a person prior to their death. In such cases, if there is no benefit to the person making the transfer and there is no apparent reason for it, it is often argued that ‘undue influence’ has been exercised by the person who has benefited from the transfer.

In order to sustain an argument that undue influence has occurred, it is necessary that the transferor placed trust and confidence in the person who benefited from the transfer and that the transfer which occurred is not explicable by reference to their relationship.

Sometimes, however, a transfer is challenged while the person who made it is still living. Recently, the legal attorney of an elderly but needy man challenged the transfer of a piece of land, which represented a considerable proportion of the man’s total wealth, to his great-nephew. The attorney argued that the transfer was not carried out with the man’s ‘free and informed consent’. There was no apparent reason for the transfer, so it stood to be determined whether it was made as a result of undue influence.

The man gave evidence that he had not been put under pressure by his great- nephew to make the transfer and in court the judge ruled that it should stand on the ground that it could not have resulted from undue influence as no pressure was exerted.

The attorney appealed to the Court of Appeal. In the Court’s opinion, the lack of pressure of itself could not determine the presence or absence of undue influence. What the great-nephew needed to show was that the transfer had been made with the informed knowledge and consent of the transferor. In this case, the fact that his great-uncle had not taken legal advice was crucial in the Court of Appeal’s decision that undue influence did apply. It was not easy to explain why the man would deprive himself of such a large proportion of his total wealth.
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