Undue influence?

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A recent case in the Outer House of the Court of Session dealt with the issue of undue influence between a mother and her daughter, but don’t jump to conclusions – yet.

We often think of parents exercising a huge amount of influence over their children – especially when they are younger. This is a necessary condition of life. We trust and hope that our parents and guardians will use this influence for our benefit.

As the years go by, children naturally enough want to take control and make their own decisions – good or bad – in spite of parental opinions. Making your own decisions can be an example of youthful rebellion or a sign of growing maturity and confidence – depending on the type of relationship that we have with our parents.

I want to flip this discussion around and change focus. What if the influence in the relationship is going in a different direction? What if it is the child rather than the parent who is the influencer (to use a fashionable term)?

This is not a particularly unusual situation: many people with older parents (and we do live in what seems to be a rapidly ageing society in Scotland and the rest of the UK) will be acting in a very sound legal fashion if they set up a power of attorney to make decisions on behalf of their parents.

We all hope that our parents will remain healthy in old age and will continue to enjoy their independence, but what if the day comes when parents can no longer exercise their autonomy in decision making. The power of attorney facility in Scots Law allows children (or other relatives) to make vital decisions on behalf of their ailing parents. In short order, the power of attorney is something most of us would rather not use; it’s an insurance policy when the worst happens allowing us to make those vital decisions about parental healthcare and the management of family assets.

The case in question was Adeline Margaret Wilson v Peter Watkins & Another [2019] CSOH 44 where Lord Brodie concluded in his Opinion that there was no evidence of undue influence which would have rendered the course of dealings (the transfer of ownership of the parental home) between mother and daughter suspect or dubious in any meaningful way.

In this case, the mother (Mrs Wilson) had invited her daughter and her son-in-law (Mr Watkins) in 2012 to come and live with her. Mrs Wilson had gained title to her home following the death of her husband some years before. The Watkins sold their property in order to move in with Mrs Wilson.  The trio enjoyed a good relationship at first and, some time later (2013), Mrs Wilson transferred the ownership of the property to her daughter by way of a disposition (although she reserved a liferent to herself permitting her to remain living in the house). There appears to have been a falling out in 2015 and Mrs Wilson left the home to move in with her other daughter.

A legal challenge was lodged by Mrs Wilson at the Court of Session in order to have the disposition (the conveyance of title) set aside i.e. made voidable on the grounds that Mrs Watkins (and her husband) had exercised undue influence by persuading her to transfer the ownership of the property to them.

As Lord Brodie emphasised, the relevant judicial precedent in Scotland is Gray v Binny (1879) 7 R 332 which contains Lord Shand’s four part  test addressing the issue of undue influence.

In the essence, the key elements of this test are as follows:

(1) that there was a relationship which created a dominant and ascendant influence,

(2) that the relationship was one of confidence and trust,

(3) that a material and gratuitous benefit had been given to the
prejudice of the granter, and

(4) that the granter had been without the benefit of any independent advice at the material time.

Critically, Lord Brodie was of the view that Mrs Wilson’s case failed to satisfy elements 2-4 of the Shand criteria. Put simply, the mere existence of the relationship of parent and child did not of itself prove that undue influence had affected the transaction or legal dealings between the parties to the dispute. Mrs Wilson’s case was therefore without merit and was not permitted to proceed to trial or proof.

As a point of interest, the Watkins had submitted a counter-claim of £45,000 in respect of an allegation of unjust enrichment against Mrs Wilson had the issue of undue influence been permitted to proceed to proof. This figure represented the sum which the Watkins had used from the sale of their own house to make improvements to Mrs Wilson’s home prior to the falling out of the trio.

A link to Lord Brodie’s Opinion can be found below:

https://www.scotcourts.gov.uk/docs/default-source/cos-general-docs/pdf-docs-for-opinions/2019csoh44.pdf?sfvrsn=0

The effect of undue influence

Undue influence potentially renders a contract or legal transaction voidable so that it may be rescinded or cancelled. It is therefore a factor which can undermine the validity of contracts or legal transactions.

If rescission, however, is being sought as a remedy by one of the parties to the contract as a remedy, there must be no delay in claiming relief after the influence has ceased to have an effect. Delay in claiming relief in these circumstances may bar the claim since delay can be used as evidence of affirmation or agreement.

Undue influence can perhaps occur particularly in the following types of relationship: parent and child; and husband and wife.

There will, of course, be other relationships where a stronger party may exert a particularly negative influence on the weaker party, for example, members of a religious cult who unquestionably obey the orders of their spiritual leader (see both the English decision of Allcard v Skinner (1887) 36 Ch D 145 and the Scottish decision of Anderson v The Beacon Fellowship (1992) S.L.T. 111 which I discuss in Chapter 2 of Introductory Scots Law: Theory & Practice )(3rd Edition)).

During the 1990s, the issue of undue influence in connection with the relationship of husband and wife was given much needed judicial clarity Several cases were brought before the Scottish and English courts regarding the issue of undue influence in the marital relationship and all of these cases had remarkably similar facts, whereby the pursuers, a number of wives, alleged that they had agreed to re-mortgage the marital home so that a bank would lend money to their husbands (usually, but not always, for business purposes).

These wives claimed that they had not been given sufficient information by their husbands when they had agreed to approve what later turned out to be very risky transactions. Some of the pursuers had not sought independent legal advice before agreeing to take out the second mortgage.

Initially, the House of Lords, in Barclays Bank plc v O’Brien [1993] UKHL 6, stated that a married woman (or cohabitee) must be regarded as a special, protected class of guarantor when agreeing to guarantee her husband’s (or partner’s) debts because of the nature of the relationship. The bank should be on alert for signs of undue influence which would undermine the validity of the transaction. Their Lordships were of the opinion that the bank should be placed under a duty of care to ensure that the wife or the cohabitee had had the benefit of independent advice.

Their Lordships, however, rowed backed slightly from this position in a subsequent English case: CIBC Mortgages v Pitt [1994] 1 AC 200. In other words, the legal position on undue influence as factor which might undermine a legal transaction was evolving. In Pitt, a wife was not allowed to succeed in her claim of undue influence because the mortgage was in the names of both husband and wife and, therefore, she was benefiting from the transaction.

The decision of their Lordships in Barclays Bank plc v O’Brien was, however, not followed by the Inner House of the Court of Session in Mumford v Bank of Scotland 1996 SLT 392 where it was held that banks are not under a general duty to explain all the material circumstances of a loan to someone who has guaranteed it.

In Smith v Bank of Scotland [1997] UKHL 26, the House of Lords attempted to bring Scots law into line with English law. Lord Clyde stated that there were a number of sound reasons for attempting to harmonise the laws of Scotland and England:

“I am not persuaded that there are any social or economic considerations which would justify a difference in the law between the two jurisdictions in the particular point here under consideration. Indeed when similar transactions with similar institutions or indeed branches of the same institutions may be taking place in both countries there is a clear practical advantage in the preservation of corresponding legal provisions.”

In a further English case, Royal Bank of Scotland PLC v Ettridge (No. 2) [2001] UKHL 44 the House of Lords appeared to retreat from the position that it had originally laid out in Barclays Bank v O’Brien (1993) whereby that married women or cohabitees should be regarded as a special, protected class of guarantor. The House of Lords in Ettridge has stated that undue influence will not be automatically presumed merely because the parties to a transaction are husband and wife.

In a series of of subsequent cases (Forsyth v Royal Bank of Scotland PLC (2000) SLT 1295, Clydesdale Bank Ltd v Black (2002) SLT 764 and Royal Bank of Scotland PLC v Wilson & Ors (2003) ScotCS 396), the Inner House of the Court of Session refused to accept the automatic presumption that wives were unduly influenced by their husbands. Misrepresentations by the husband were more likely to have induced the wives to agree to become guarantors rather than any hint of undue influence. Misrepresentation, of course, a completely separate factor which can potentially render a legal transaction voidable.

In Mumford v Bank of Scotland (1996), Lord Hope made the following statement which (I think) sensibly sums up the approach taken by the Scottish courts in these types of cases between husbands and wives:

There is no indication in this passage that a presumption of undue influence can arise merely from the nature of the transaction and the fact of the relationship. What is important is the effect of that relationship in the particular case, with the result that each case must be examined upon its own facts.” [my emphasis].

In conclusion, I think that Lord Hope hit the nail on the head: the mere existence of a relationship where influence could be abused does not of itself mean that anything underhand has occurred and, therefore, each case will have to be approached on its own merits.

Copyright Seán J Crossan, 26 October 2019

Blond ambition? (or the prorogation game)

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Well, its official: as of the morning of Tuesday 24 September 2019, the UK Supreme Court has ruled against the Prime Minister’s prorogation of the Westminster Parliament for 5 weeks.

In a unanimous decision, the 11 Justices of the Supreme Court have declared that the suspension of Parliament was unlawful.

The decision of the Court of Session (in the Petition of Joanna Cherry MP and Others) has been approved by the Supreme Court.

The decision of the English High Court to rule against Gina Miller has also been overturned.

As Baroness Hale succinctly stated:

It is impossible for us to conclude, on the evidence which has been put before us, that there was any reason – let alone a good reason – to advise Her Majesty to prorogue Parliament for five weeks, from 9th or 12th September until 14th October. We cannot speculate, in the absence of further evidence, upon what such reasons might have been. It follows that the decision was unlawful.

Video footage of the decision of the Court, delivered by Baroness Hale of Richmond (its President), can be found below:

The House of Commons will now reconvene on Wednesday 25 September 2019.

Links to the full judgements (and summaries of these decisions) can be found below:

R (on the application of Miller) (Appellant) v The Prime Minister (Respondent) Cherry and others (Respondents) v Advocate General for Scotland (Appellant) (Scotland) [2019] UKSC 41 (On appeals from: [2019] EWHC 2381 (QB) and [2019] CSIH 49)

https://www.supremecourt.uk/cases/docs/uksc-2019-0192-judgment.pdf

https://www.supremecourt.uk/cases/docs/uksc-2019-0192-summary.pdf

https://www.supremecourt.uk/cases/docs/uksc-2019-0192-judgment.pdf

https://www.supremecourt.uk/cases/docs/uksc-2019-0192-summary.pdf

Copyright Seán J Crossan, 24 September 2019

To prorogue or not to prorogue? (That indeed is the question)

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It was all meant to be so different from Theresa May’s chaotic time in Downing Street, but the last few weeks have not been kind to current UK Prime Minister, Boris Johnson.

He has been attacked for seeking the prorogation (suspension) of Parliament for 5 weeks; he has lost several (critical) parliamentary votes; he also lost his majority in the Commons; and he has been denied the General Election (which many of his critics believe that he secretly craves – despite official statements to the contrary). This last problem having arisen as a result of the restrictions imposed by the Fixed Term Parliaments Act 2011 – passed ironically with the votes of Conservative MPs in the more peaceful days of the UK Coalition Government (2010-15). The law of unintended consequences many of the Prime Minister’s supporters will no doubt lament.

The Prime Minister might have felt some relief last week when both the Queen’s Bench Division of the English High Court and the Outer House of the Court of Session ruled in two separate, but connected, cases that his decision to advise the Queen to prorogue Parliament (by using the Royal Prerogative) was not unlawful (see Gina Miller v the Prime Minister & Others; and Joanna Cherry MP and Others, Petition for Judicial Review both 2019).

That was until 11 September 2019), when the Inner House of the Court of Session (Scotland’s Supreme Civil Court) landed nothing less than a bombshell on the UK Government. Lords Carloway, Brodie and Drummond Young issued an opinion that the circumstances which surrounded the proroguing of Parliament was unlawful:

All three First Division judges have decided that the PM’s advice to the HM the Queen is justiciable, that it was motivated by the improper purpose of stymying Parliament and that it, and what has followed from it, is unlawful. …

The Court will accordingly make an Order declaring that the Prime Minister’s advice to HM the Queen and the prorogation which followed thereon was unlawful and is thus null and of no effect.

This decision clearly reverses Lord Doherty’s Opinion in the Outer House of the Court of Session which was issued on 4 September 2019.

Professor Stephen Tierney of Edinburgh University’s Law School referred to the judgement as “remarkable”.

In essence, the prorogation of Parliament was a tactical (underhand?) manoeuvre by the UK Government to make it more difficult for the UK Parliament to scrutinise and block it’s attempt to pursue a no deal Brexit by 31 October 2019. For now, the objective of the Government in this regard have been stopped in tracks.

The UK Government has been given leave to appeal against the decision of the Inner House and the matter will be now be determined by the UK Supreme Court at Guildhall, London.

A link to the full Opinion of the Inner House can be found below:

https://www.scotcourts.gov.uk/docs/default-source/cos-general-docs/pdf-docs-for-opinions/2019csih49.pdf?sfvrsn=0

Copyright Seán J Crossan, 11 & 13 September 2019

Scottish Civil Court Statistics

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Scottish Legal News reports today that the Scottish Civil Courts have seen a 10% increase in the volume of business in the year 2017/18, according to official statistics published on behalf of the Scottish Government.

Over 81,000 civil cases were commenced in either the Court of Session or the Sheriff Court. The Sheriff Personal Injury Court now dealing with approximately 33% of personal injury cases.

Interestingly, the figures show that, since 2015/16, the volume of cases handled by the Court of Session have seen a decrease of 48%. More cases are now being commenced in the Sheriff Court. This may seem staggering at first glance, but it was always the intention of the Gill Review (discussed in Chapter 1 of Introductory Scots Law) to reduce the workload of the Court of Session in this way.

The Courts Reform (Scotland) Act 2014 implemented many of the recommendations that Lord Gill promoted and this has led to a profound reorganisation of the jurisdiction of both the Court of Session and the Sheriff Court (also discussed in Chapter 1 of Introductory Scots Law).

The official statistics demonstrate that the following three types of civil action are the most common:

  • Debt recovery (bankruptcy and diligence)
  • Family actions
  • Evictions

The Scottish Legal News article can be viewed by clicking on the link below:

https://www.scottishlegal.com/article/10-per-cent-increase-in-civil-court-cases-in-2017-18

Copyright Seán J Crossan, 2 April 2019