Undue influence results in benefits to a beneficiary/donee which would not have occurred except for the undue influence imposed by the beneficiary/donee upon the testator/donor. Undue influence can be conceptualized into two distinct types: (1) “actual” undue influence and (2) “presumed” undue influence.
Actual undue influence is concerned with coercive or deceptive behaviour. As explained by Lord Justice Lindley in the seminal case of Allcard v. Skinner,[i] actual undue influence is the case 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.
Presumed undue influence, on the other hand, is a legal presumption designed to discourage those who act in another’s interests to exploit that trust for their own gain. Presumed undue influence exists where a “special” relationship exists between a “trusted” party and a “trusting” party, and a transaction occurs where the trusted party received a benefit at the trusting party’s expense. In such cases, there is a rebuttable presumption that the trusting party was unduly influenced and would not have given the trusted party a benefit, but for the presence of coercion. In defence, the trusted party may present evidence to show that the trusting party was fully informed and freely entered into the transaction, for example, where the trusting party received independent legal advice.[ii]
In my consulting practice, I have come across several examples where a “trusted” party (the beneficiary/donee) involves a seemingly neutral third party in order to advise or assist the elderly testator/donor convey a benefit to the beneficiary. The third party may or may not be known previously to the elderly testator/donor, does not receive the benefit of the transaction, is not a lawyer and is not paid to advise the elderly testator/donor in making the will or gift. The third party may or may not have a confidential relationship with the elderly testator/donor, but certainly does not have a dominating relationship.
By assisting the elderly testator/donor, the third party may adopt a fiduciary role that is likely not acknowledged but, by having nothing to gain from the testator/donor, the third party appears to have nullified any presumption of undue influence. Rather, the neutral third party, being unrelated to the beneficiary/donee, appears to be operating at arm’s length from the beneficiary/donee. The third party is only trying to assist the elderly testator/donor and reports with all sincerity to have acted in an altruistic fashion.
However, in a complex psycho-social environment, the third party may not recognize the bias placed on him by the beneficiary who has informed him only of the beneficiary’s side of the story of the conflicted circumstances surrounding the elderly testator/donor. The advice or assistance provided to the elderly testator/donor is thus under the influence of the beneficiary/donee. Under these circumstances, the third party has become an unwitting proxy acting for the beneficiary/donee.
For this reason, I suggest the role of the “unwitting proxy” be considered as a suspicious factor in evaluating an elderly testator/donor for vulnerability to undue influence.
[i] Allcard v Skinner (1887) 36 Ch D 145.