Scottish Court of Session Decisions

LORD MAXWELL'S OPINION.—The pursuers in this action are the executors nominate of the late Mrs Margaret Christine Honeyman (hereinafter referred to as "the deceased"). The defender is by profession a fine art valuer in the employment of a firm carrying on business of that kind. The action concludes for declarator that a purported gift by the deceased to the defender of four valuable paintings by the French artist Boudin falls to be reduced and for certain consequential relief. Though the word "undue" is not used in the pursuers' pleas-in-law, the action is in substance laid on the principle usually described as "undue influence."

The defender seeks to have the action dismissed as irrelevant and I have had the advantage of a very full debate with copious citation of authority.

[His Lordship then gave the narrative quoted above, and continued.] Counsel for the defender attacked the relevancy of the pursuers' averments on two grounds. First he said that the relationship between the defender and deceased was not of the class in respect of which our law admits the application of the principle of undue influence. Second, he said that the averments did not disclose any influence exercised by the defender on the deceased, still less any influence of a kind which the defender had a duty not to exert, and in any event they did not disclose ground for holding that the gifts resulted from the exercise of any such influence.

I shall consider each of these contentions in turn.

On the first question, the category of relationships, counsel for the defender started in effect from the opinion of Lord Cowan in Johnson v. Goodlet (1868) 6 M. 1067, which speaks of the principle being applicable only where persons are in a "position of trust," a view which is repeated in later authorities by such expressions as "a fiduciary or quasi fiduciary position" (Forbes v. Forbes' Trustees 1957 S.C. 325). Counsel then cited the reference in Munro v. Strain (1874) 1 R. 522 to legal, medical and spiritual advisers. He conceded that to this class of relationship there must also be added (despite certain dicta in M'Kechnie v. M'Kechnie's Trustees 1908 S.C. 93) certain close natural relationships such as parent and child (Gray v. Binny (1879) 7 R 332). More important for present purposes he conceded that, leaving aside natural relationships, the class cannot be a closed class confined to lawyers, doctors and clergymen. In my opinion this is plainly correct. Though reference is made to lawyers, doctors and clergymen from time to time in the authorities, I find it nowhere said that they are the only relationships to which the principle applies and there are dicta which imply that they are not. Thus in Ross v. Gosselin's Executors 1926 SC 325, a case relating to a law agent, Lord President Clyde said:

"So far as averment goes, the pursuer accordingly makes out a good case for attributing to the defender a position of influence over his aunt which, like all similar positions, might easily be abused."

Gloag on Contract (2nd ed.), at p. 526 refers to "persons such as doctors and clergymen who are in a position to exercise influence." It would in my opinion be quite out of keeping with the general approach of our law to confine the principle to some artificial list of relationships and I see no reason why, nowadays, when so much work, which was in former times done by law agents as general "men of business," has been taken over by specialist advisers such as accountants, the principle should not be applied to them.

Having conceded that the class of relationship to which the principle applies is not closed, counsel for the defender was not unnaturally in some difficulty in defining the essential characteristics of the class. He said by reference to an observation by the Lord Chancellor in Weir v. Grace (1899) 2 F. (H.L.) 30 that the principle could never apply where the relationship was one of mere friendship however dominant a position one of the friends had obtained over the other and, borrowing the word from the opinion of the Lord Justice-Clerk in M'Kechnie v. M'Kechnie's Trustees 1908 S.C. 93, he said that undue influence can only be pled against a person who has acquired influence over another by reason of an "official" position.

Counsel for the pursuers on the other hand maintained that the principle is applicable in any case where, at the date of the contract or act sought to be reduced, there is in fact a relationship between the parties whereby one has relied on and trusted the other for advice and assistance in matters of which the subject matter of the contract forms part. He relied for this proposition mainly on the opinion of Lord Shand in Gray v. Binny, sup. cit., who certainly states the matter in very general terms, and on a large number of English authorities, which appear to demonstrate that his proposition is in accordance with English law as it has now developed (see e.g. In re Craig, Decd. [1971] Ch. 95, In re The Estate of Brocklehurst, Decd [1977] 3 W.L.R. 696).

In my opinion it is unnecessary to decide at this stage whether our law on this matter has developed on the same lines and to the same extent as the law of England (Forbes v. Forbes' Trustees, sup. cit. ), or whether counsel for the pursuers' broad proposition is correct. An examination of two cases on which counsel for the defender particularly relied, M'Kechnie v. M'Kechnie's Trustees, sup cit., and Ross v. Gosselin's Executor, sup. cit., persuades me that even if the proposition of the pursuers' counsel is too broad, the facts of the present case as ascertained after proof may well reveal a relationship of a kind to which our law would in any event apply the principle. M'Kechnie was a case in which the Court refused to recognise the relationship between a man and his mistress as one to which the principle applies, although there was strong evidence that the mistress in fact exerted a dominant influence over the man. The Lord Justice-Clerk said, referring to earlier cases, "These are cases of persons who having from an official position towards another person some capacity for influence over him, misuse that position for the purposes of inducing him to do or to abstain from doing something that he has a right to do or abstain from doing in the exercise of his rights as regards his own property. The essence of the matter is that persons in that official position, such as a clergyman, or doctor or lawyer, are persons who have not only a duty but a right to advise and urge those with whom they deal to act in certain directions and it is natural and right that a person who is so dealt with should give effect to or at least be greatly influenced by the advice of those persons and what is urged upon them by those persons. Therefore the person who has that influence and ought to have it, in dealing with a person who ought to be influenced by it, must take the greatest possible care that he does not outstep the bounds of his official position and endeavour to get other things done under the influence which he has, with which he has no right whatever to interfere." In Ross v. Gosselin's Executors, a law agent case, Lord President Clyde analysed the matter as follows:—

"The essence of undue influence is that a person, who has assumed or undertaken a position of quasi fiduciary responsibility in relation to the affairs of another, allows his own self interest to deflect the advice or guidance he gives in his own favour."

I think it can at least be taken from these dicta and from a passage in Gloag on Contract, (2nd ed.), p. 528 that where a person, in pursuance of his profession or calling, undertakes the giving of advice to another and where, as a result, there develops a relationship between the adviser and the advised in which, as matter of fact, the latter places trust and confidence in the former then the law recognises a moral duty on the adviser not to take advantage of the advised at least in relation to matters connected with the area to which the advice relates, and gives legal effect to that moral duty by applying the principle of "undue influence" in appropriate cases. I see no reason why this principle should not apply when the "professional" adviser is a fine art dealer rather than, say, a solicitor though I accept that grounds of public policy may have made the rules of its application stricter in the case of solicitors than in the case of others professing special skill or knowledge. It may be, as counsel for the pursuers contends, that the principle applies to a wider class of relationship than that which I have mentioned. It is enough, however, for present purposes that, in my opinion, the averments in this case are wide enough to enable the pursuers to prove if they can that the relationship here in question fell within the class which I have endeavoured to describe.

Turning to the second branch of the case, the lack of averment of the use of any act or conduct amounting to undue influence, I find this more difficult especially as the pursuers' pleadings do not in terms appear to go even as far as saying that the use of "undue" influence is to be inferred from the facts averred.

Counsel for the defender contended that the pursuers in such a case must aver and prove some form of deceit or coercion causing the gift to be made. In any event he said that it is quite insufficient merely to aver a gift and a list of facts and circumstances, each one of which, as he argued on analysis of the pleadings, might be consistent with perfect propriety and a complete absence of pressure or abuse of influence on the part of the donee. Per contra the pursuers' counsel contended, relying again mainly on the opinion of Lord Shand in Gray v. Binny and a number of English cases (e.g. In re Craig deceased, sup. cit.), that where there is a relationship of a kind apt to admit the principle, where the person having influence takes from the other a gift of large value or a large benefit for a grossly inadequate consideration there is a presumption that the gift or benefit results from the use of undue influence. I do not need to decide whether the proposition so broadly stated is in accordance with our law. As at present advised I think there are risks in applying broad general statements of this kind to this problem, except perhaps in the case of solicitors with regard to which fairly hard and fast rules have been laid down (Gloag on Contract, sup. cit., 525). Lord Guthrie gave a warning in Forbes v. Forbes' Trustees, sup. cit., against taking general propositions out of context and, as stated, I have reservations as to whether our law on this matter is the same as that of England as it has now developed. This case in particular demonstrates the danger of such broad propositions. Counsel for the defender argued the case on the footing that the gift was inter vivos, which strictly, of course, it was. But underlying the proposition stated by Lord Shand is the obvious fact that, generally a person in life does not denude himself of his own property in favour of another for nothing. The force of this, however, would be greatly reduced if the facts in this case showed that, at the time of the gift, the deceased knew she was dying so that it was not for her a question of whether to give away the paintings or keep them herself, but of who should have them when they were no longer of benefit to her. At this stage at least I think it safer not to try to apply any general proposition but to treat the matter as a question of considering facts and the presumptions of fact which can arise in the particular circumstances of the case as revealed by evidence (Forrests v. Lows' Trustees 1907 S.C. 1240 per Lord Kinnear at 1256, Carmichael v. Baird (1899) 6 S.L.T. 369).

I consider, however, that counsel for the defender's contentions went too far. There are two related questions here. First what kind of conduct amounts to ‘undue influence’ and second, how is it proved and where does the onus lie?. As to the first, counsel founded strongly on the opinion of Lord President Inglis in Gray v. Binny where he says that a pursuer must prove "deceit or unfair dealings" and the well-known passage in the speech of the Lord Chancellor in Weir v. Grace, sup. cit., where, quoting from Lord Cranworth in an earlier case, he appears to say that, to make a case of undue influence, it is necessary to prove "coercion or fraud." It is to be noted that in Gray v. Binny Lord Shand expressly rejected, for reasons which seem to me convincing, the notion that undue influence necessarily involves fraud. Weir v. Grace was decided in the Inner House on the ground that the defender's solicitor had discharged the onus on him of showing no improper dealings and Lord Robertson in the House of Lords appears to adopt the same approach. I find it difficult to reconcile numerous dicta in both earlier and later authorities (e.g. Johnson v. Goodlet, Munro v. Strain, M'Kechnie v. M'Kechnie's Trustees, Ross v. Gosselin's Executors, Gloag, op. cit., p. 526) with the idea that proof of "fraud", "coercion" or "deceit" are essential unless those words are given a strained and unnatural meaning. In Forbes v. Forbes' Trustees Lord Guthrie referring to the judgment of Lindley L.J. in Allcard v. Skinner (1887) 36 Ch D 145, said:

"I do not think that it is desirable or indeed possible to frame a comprehensive statement of what does and what does not amount to undue influence."

I respectfully agree. What is involved is some kind of abuse of the position of trust for the benefit of the person in whom the trust is confided and it seems to me that whether there has been such an abuse to an extent which would justify the Court's interference is a matter which cannot readily be confined within stated rules or ascertained on the basis of written pleadings without enquiry into the facts.

This brings me to the question of presumptions and onus.Without at this stage going as far as suggested by counsel for the pursuer, in my opinion, there must be cases where the facts as proved raise a prima facie inference that a gift has been acquired by abuse of a position of trust and which at least cry out for an explanation even though the precise mode of abuse is not known and might indeed be too subtle to be readily capable of precise expression. In my opinion the averments in this case, if proved, in the light of the appearance these facts take on when developed in evidence, may (I put it no higher) raise such an inference. We have here averred not merely the relationship and the gift of large amount. There is a number of other allegations. There is, for example, the deceased's ill health, which may be relevant even though "facility" is not founded on (Munro v. Strain, sup. cit., per the Lord Justice-Clerk at 525, M'Callum v. Graham (1894) 21 R. 824). There is the fact that the defender apparently took a hand in the deceased's testamentary arrangements in relation to the matter of the codicil and perhaps more important the admitted fact that he himself drafted the letter of gift with the provisions apparently intended to have a bearing on the incidence of capital transfer tax. It might appear after proof that these actings suggest that the defender outstepped "the bounds of his official position and endeavoured to get other things done—with which he had no right to interfere," to quote from the words of the Lord Justice-Clerk in M'Kechnie v. M'Kechnie's Trustees, sup. cit. There is on averment a suspicion of secrecy and concealment on the part of the defender in relation to the gift both before and after the death of the deceased. There is apparently an absence of any independent advice or assistance or any suggestion that such advice or assistance should be obtained. I do not say that these facts, if proved, along with the whole other facts will establish undue influence or will even necessarily raise a rebuttable presumption of undue influence, but looking at the averments as a whole I am of the opinion that this is not a case which I could safely decide against the pursuer without enquiry. I shall accordingly allow a proof before answer.

Finally, I should add that I was referred to a number of other authorities, in addition to those which I have mentioned.