Undue influence absent in woman’s transfer of property to daughter and her husband

Adeline Margaret Wilson raised the action in the Outer House of the Court of Session against Peter Watkins and another, the latter being the pursuer’s daughter. The case was heard by Lord Brodie.

The sole issue of the case was whether the pursuer was able to establish sufficient proof to have the disposition reduced on the ground of undue influence.

‘Good relationship’

The court heard that the pursuer invited the defenders to live with her in her property in Kirriemuir in 2012 after the first defender lost his job. They accepted the invitation and sold their own property. In 2013, the pursuer executed a disposition of the property in favour of the defenders, leaving herself a liferent, which was registered in the Land Register of Scotland. There was also a related Minute of Agreement.

The relationship between the pursuer and the defenders broke down in 2015, and the pursuer moved out to live with her other daughter. The pursuer then raised an action seeking to reduce the disposition and the Minute of Agreement on the ground of undue influence. She also sought an order that the defenders remove themselves from the property.

In support of her claim of undue influence, the pursuer averred that she particularly trusted the defenders in respect of financial matters. The defenders instructed a solicitor, who acted for both parties, to prepare a disposition and Minute of Agreement, and took the pursuer to their office where she was advised to sign documents in respect of her future care. She contended that she did not know what she was signing.

Following an incident in 2015 in which the second defender damage the pursuer’s wrist, she moved out of the property and found herself without recourse to her own funds. After instructing new legal advice, she discovered that the Minute of Agreement incorrectly stated that she was incapable of living independently and that the defenders had moved into the property to enable her to continue living there.

In addition, large volumes of money had been moved from the pursuer’s bank account to the first defender’s bank account between 2004 and 2015. However, she had no idea what those payments were for, with the utilities, insurance and council tax still coming out of the pursuer’s account. As such, she submitted that the defenders abused their close personal relationship with her to unduly influence her into entering into a transaction prejudicial to her and favourable to them.

In turn, the defenders submitted that the pursuer’s averments did not establish a sufficiently specific case of undue influence to effect a reduction of the disposition. The four-part test established by Lord Shand in Gray v Binny (1879) 7 R 332, namely that there was a relationship which created a dominant and ascendant influence, that the relationship was one of confidence and trust, that a material and gratuitous benefit had been given to the prejudice of the granter, and that the granter had been without the benefit of any independent advice at the material time, had not been met.

It was accepted by the defenders that the confidence and trust element of this test was met by the pursuer granting power of attorney to the second defender. However, the other three elements of the test were not sufficiently present in this case. Counsel for the pursuers argued that it was not appropriate to describe this as a ‘test,’ with the criteria being looser than what the defenders described.

‘Abuse of trust’

In his opinion, Lord Brodie said that he found the formulation of a Gray v Binny test to be “if not exactly inaccurate, at least awkward and, in its dissociation of the concept of a relationship which creates a dominant or ascendant influence and the concept of what he describes as a relationship of confidence and trust, potentially confusing.” Instead, he gave “a more manageable re-statement” that framed the matter more concisely as “abuse of trust, as demonstrated by the taking of a gratuitous benefit in the absence of appropriate independent advice.”

Continuing, he said that a key component of undue influence was “an imbalance of power, or knowledge, or experience, or moral or physical strength as between the parties to the relationship.” In Scotland, there was no presumption of imbalance based on the identity of the parties, such as mother and daughter.

Examining the pleadings, Lord Brodie said that there was force in the submissions for the defenders. There was nothing to suggest that the pursuer was anything “other than an adult of full capacity and of at least ordinary intelligence and experience of life.” He found the submission that the pursuer did not understand the document she signed to be unsatisfactory, with little to explain why it would be so.

He went on to say: “As a matter of generality it may not be very extraordinary for an adult of ordinary intelligence and competence to sign binding legal documents without having read them or, if having read them, not having fully understood them, but[…] in such circumstances an adult of ordinary competence will usually be held bound by what she has chosen to add her signature to as an indication of agreement.”

Returning to Gray, Lord Brodie could not find the averments to support a relationship where the defenders were dominant over the pursuer, and there were no “specific averments of the defenders misleading or putting pressure on the pursuer.” Furthermore, she had access to a solicitor who, whilst she was instructed by both parties, had not been criticised in performance of her duties. As such, the action was dismissed.

The defenders also brought a counter-claim in case undue influence was found. Lord Brodie believed that this would likely now be dismissed, but allowed it to be brought out by order should the parties wish to address him on it.