Undue influence can arise from a relationship where one party has influence or ascendancy over the other of which they take unfair advantage.
Proof of the relationship and a transaction which calls for explanation where there is no satisfactory one, is usually sufficient.
The court can set also aside a purchase at considerable undervalue where one party is at a serious disadvantage to the other through poverty, ignorance or lack of advice and, acting unconscionably, the other takes unfair advantage.
These issues were considered in Azam v Molazam [2023] EWHC 2202 (Ch).
The case concerned the transfer in October 2019 of a house owned by Molazam at Odessa Road, London E7 on the basis that Azam would repay a local authority charge on the property of around £41,000 and that Molazam would be entitled to remain living on the ground floor.
The charge was repaid prior to the transfer of the property which was worth at least £300,000. Azam carried out works to repair fire damage and subsequently gifted the property to one of her sons.
In January 2023, Molazam succeeded in setting aside the transfers in the Central London County Court on the ground that the transfer of October 2019 was the result of undue influence practiced on him by Azam. Azam appealed.
The transaction was very one sided and disadvantageous to Molazam whose case at trial – that Azam had agreed to loan him the £41,000 to repay the charge – was different from his initial instructions to his solicitors that he had agreed to transfer the property once Azam had repaid the sum due and, when he could repay her, she would transfer the property back to him.
The judge had rejected Molazam’s case on fraud and/or pressure by Azam but decided that Azam, a person of power and influence within the community to which both parties belonged, had exploited Molazam’s financial vulnerability and health difficulties. Undue influence was to be presumed.
The Chancery Division allowed the appeal. This was not a case where undue influence arose and Azam had not acted unconscionably.
The judge was entitled to find that Molazam was vulnerable due to his financial and health difficulties but vulnerability coupled with a disadvantageous transaction was insufficient to establish that Azam had achieved a position of ascendancy or influence over him.
The most that could be said was that Azam refused to lend Molazam the money he needed and accepted his proposal knowing that it was very advantageous to her.
Louise Clark is a property law consultant and mediator
