Set-aside of a mutual will ordered by the High Court on the basis of presumed undue influence

Summary

In Naidoo v Barton [2023] EWHC 500 Ch, the High Court ordered that a 25 year old mutual will be set-aside on the basis of undue influence. The Court determined that the testatrix was unduly influenced by her son as she was in a vulnerable position and had relied on him rather than through improper pressure or coercion.

Hussein Mithani, an associate in our disputes and private wealth team, considers the decision in more detail below.

Background

The case concerns the mutual wills of Dr Govindarajaloo Ramamurthie Naidoo (the "Testator") and Mrs Nirmalathevie Naidoo (the "Testatrix"). They had seven children, for this case the relevant children are David Barton (the "Defendant") and Charan Naidoo (the "Claimant"). The family owned a nursing home business.

In November 1998, the Testator was in poor health and the Defendant organised wills for the Testator and Testatrix. The wills were mutual wills and appointed the other spouse and the Defendant as executors. The wills provided that the estate of the first to die should pass to the surviving spouse, and then on the death of the surviving spouse to the Defendant absolutely. Less than two months later, the Testator passed away.

In July 2015, the Testatrix made a new will nominating the Claimant as executor and sole beneficiary (the "2015 Will") and in February 2016 and the Claimant obtained a grant of probate for this will in July 2017. The Defendant sought to dispute this on the basis the mutual will was valid.

The Claimant sought an order pronouncing for the validity of the 2015 will and requested the mutual will be rescinded one of two grounds: (i) mistake on the part of the Testatrix; and (ii) undue influence on the part of the Defendant. The Claimant also made various claims to rescind transfers of shares in the family business. These claims are not covered in this post.

In brief, the Claimant's claim for mistake was that the explanation of mutual wills to the Testatrix was misleading and she thought she was able to change who the beneficiaries of the will were in future. The Claimant's claim for undue influence was that the Testator and Testatrix were in a vulnerable position, relied on the Defendant, and the mutual wills for the benefit of the Defendant was a transaction that called for explanation.

The Defendant denied that the mutual wills agreement should be set aside on the grounds of mistake or undue influence and stated that the mutual wills were drawn up on the advice of the solicitors. It should be noted that the Defendant defended this claim from prison, it is worth noting that the Defendant was serving a 17-year prison sentence for dishonesty and fraud offences.

Judgment

The High Court rejected the mistake claim but upheld the undue influence claim.

In respect of mistake, the Judge did not accept the argument that the Testatrix was mistaken on the facts of the case and held that that the Testatrix knew that the effects of the mutual will.

In respect of undue influence, the Judge held that there was not actual undue influence. This test represents a stringent test and requires there to be improper pressure or coercion and is considered to be the traditional undue influence test for setting aside a will. However, the Judge held there was presumed undue influence (i.e. there was a transaction which called for explanation).

Crucially the Judge held that the presumed undue influence test could be applied where there was a mutual will. The Judge noted that a "mutual wills agreement was a contract first, before there is any basis for equity to intervene. Such a contract may be found explicitly in the wills, or explicitly or implicitly outside it. But either way, it is not a testamentary provision, and it lies outside the wills." The Judge went on to note that when considering whether a mutual wills agreement is void or voidable, there seemed to be "no possible reason in principle why a distinction should be drawn between agreements expressed in the will, and those not so expressed."

In coming to their conclusion that there was presumed undue influence, the Judge found that the Defendant had been operating the business of his parents, they gave him full power of attorney to deal with their affairs, they were prepared to leave the estate of the survivor of them to him alone, out of all their children, in the “implicit faith that he would provide for parents and youngest sons”. In making these findings of fact, the Judge held that this level of trust and dependency meant there was a relationship of trust and confidence between the Defendant and his parents. The Judge then noted that the making of the mutual wills in the Defendant's favour was "certainly a transaction which calls for an explanation". The Judge went on to say that the only person to benefit from that arrangement was the Defendant and this "left the rest of the family at his mercy". In terms of rebutting this presumption, the Judge held that there was no evidence that the Testator and Testatrix were independently advised such that they entered into the mutual wills as an exercise of their own free will, The Judge stated that "I find that they received no such advice, and accordingly that the mutual wills agreement falls to be set aside as the result of that undue influence".

Comment

Of particular note is that the Judge applied the presumed undue influence test to a wills situation. When setting aside a will on the basis of undue influence, trusts and probate practitioners have to rely on the actual undue influence test which is extremely difficult to prove. However, in this case, the Judge was clear that the Claimant was able to rely on presumed undue influence due to the fact the mutual will agreement is a contract first. It will be interesting to see whether this judgment opens the door to litigants arguing presumed undue influence in respect of wills more generally. It seems there was not much argument on this point and the Judge pointed out that this actual and presumed undue influence argument "was not argued with force". It is worth keeping an eye out on this point in future decisions.

Another interesting aspect in this case is that the Judge was critical of when it would be appropriate for mutual wills to be used and stated that it "is notorious to lawyers practising in the field that a decision to make mutual wills needs to be considered with great care, and will not usually be the appropriate decision, precisely because of its inflexibility, when much may change during the life of the survivor."

It perhaps goes without saying that the Defendant's dishonesty offences were very relevant to this decision and the factors on undue influence. This case does show that there may be various ways to attack a mutual will on the basis they may not always be a sensible decision for testators.

As a final point, we have previously posted about mutual wills on this site in McLean v Mclean (see our post here here). When commenting on that case we noted the importance of detailing a legally binding agreement to form a mutual will. In this case the Judge found that there was an agreement applying usual contractual principles and the Defendant satisfied the burden of proof on the basis that the wills were mirror wills, they were drafted by the same solicitors, they refer to each other, they contain the same provisions, they were formally executed by the respective testators, and they expressly state that they are mutual. This case goes to show the importance of drafting a mutual will properly and evidencing the agreement between the parties.