18 Jun Cancellation of transfer of property made with undue influence
Cancellation of transfer of property made with undue influence
by George Coucounis
A person with poor health is usually cared for by a close relative, a situation which does not give the relative the right to acquire his property after the person lost his mental clarity. Such an act is considered unconscionable, since it is based on the relationship of dependence and the domination on the will of the ill person. The acquisition of property with the use of a power of attorney, either the transfer of immovable property or the withdrawal of money or the receipt of valuables, may be cancelled even after the death of that person. The donation that takes place under the aforesaid circumstances can be cancelled due to undue influence, since the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other, article 14 of Contract Law, Cap.149. The law of equity, as case law states, aims at preventing someone from keeping the benefits of his fraudulent or unlawful act and the donation, in order to be valid, must be a spontaneous act of the donor who must be a capable person and act independently with his free will, without undue influence.
The recognition by the relatives and the finding that the ill person would leave his property to the specific person who cared for him as a sign of gratitude is not an excuse for not considering that act as concluded under undue influence, as the Supreme Court pointed out in its judgment dated 16.6.2021. The Court stated that if the relatives’ opinion remains the same, their opinion and intention may be shown in the context of the administration of his estate and upheld the judgment of the court of first instance that ordered the cancellation of the donation of the deceased’s property and the return of the money to his estate. The deceased was not married and had no children and the heirs of his estate were the children of his siblings. His sister’s daughter cared for him for many years, as she did for her parents who lived essentially in the same house as her uncle. She cared for them to the extent they needed her, even for their health problems and she drove them to the hospital for treatment.
After the uncle’s death, an administrator of his estate was appointed, who filed an action claiming the cancellation of the donation of his property, including the money, and its return to the estate. In particular, the niece, while her uncle was alive, obtained two powers of attorney where his fingerprint was put and were certified by a certifying officer. Thereafter, she used them to transfer his whole immovable property to her name by donation and to withdraw his money from his bank accounts. The main difference between the parties, as identified by the court of first instance, focused on the legality of the powers of attorney and its finding was that the uncle at that time was not of sound mind and therefore, he acted without his free will.
The court of first instance held that because of his old age and his very poor health, he lost the clarity of spirit which had previously characterised him, having become essentially a person without a will. This situation indicates the circumstances under which the two powers of attorney were made; the court held that the powers of attorney were the product of undue influence exercised by the niece upon the uncle and consequently it issued orders for the cancellation of the donations.
The Supreme Court in its judgment added that admittedly, the niece was the one who offered continuously services, assistance and help to the deceased up to his death. However, it does not overlook that the doctrine of undue influence was introduced by the Courts of Equity to deal with those cases where, while the will of the affected person is externalised, there is such a relationship between the affected person and the beneficiary or such circumstances, that it is fair and just, as a matter of public policy and honest conduct, to call the beneficiary of the contract to prove that the person affected actually acted voluntarily and not merely ostensibly. The Court confirmed that the action of the niece was too unconscionable and dismissed her appeal.