Malik (Deceased) v Shiekh
Citations:  EWHC 973 (Ch);  4 WLR 86.
The claimant agreed to grant the defendant’s sons an interest-free loan. The defendant then transferred her properties into the joint names of herself and the claimant as tenants in common in equal shares.
The defendant later disputed the validity of the transaction, arguing that it was voidable for undue influence on the part of her sons. Because she had succumbed to dementia by the time of trial, she was unable to present much evidence of this influence. However, the defence relies on her advanced age, infirmity, vulnerability, and the fact that her English was limited.
At trial, the judge held that the defendant had failed to prove a relationships of trust and confidence in her sons. Accordingly, he held that there was no presumption of influence. He also held that the transaction did not call for explanation, because there was a long history of the defendant using family property to secure loan interests.
- Could the defendant establish undue influence?
The High Court held that the defendant could establish undue influence. The trial judge should have held that there was a presumption of influence due to the combination of:
- The defendant’s vulnerability to her sons; and
- The disadvantageous nature of the transaction which solely benefited the sons and not the defendant. The extent of the disadvantage raised an inference that there had been some abuse or trust or confidence, or exertion of influence, to secure the transaction. The disadvantageous nature of the transaction also called for explanation.
The claimant had not rebutted this presumption. The court also held that the judge was wrong to treat the property as ‘family’ property. While the defendant had been willing to use her property to secure her sons’ loans in the past, her sons had no beneficial interest in the property. They also did not act as if they were entitled to use the property for business purposes.
This Case is Authority For…
The presumption of undue influence is not limited to cases where the individual reposed trust and confidence in a third-party. It can also apply where the individual was in a position of vulnerability and dependency in relation to the third-party. Alternatively, it can apply where the third-party exercises ‘control’ or ‘domination’ over the individual.
The nature of the transaction is relevant to whether a presumption of undue influence arises:
‘A transaction that is seriously and inexplicably detrimental to a disponor is plainly likely to lead to a conclusion that it can only have been the result of a relationship of trust and confidence on the one
side and influence on the other side.’
This case also discusses the scope of the power under rule 6(3)(n) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 to transfer proceedings.