A recent case, Round v Round [2017] NZHC 428, has examined the doctrine of undue influence. Generally that doctrine provides that where a contracting party has tainted the other’s consent through undue influence, the contract will not be enforced.
A blind, elderly man (E) had been living with his son (M), who was paid $300 per week to look after E. E then transferred ownership of his house to M under suspicious circumstances.
A solicitor was present to record and explain the deal, but apparently did not apprehend that E was blind, and that this prevented him from reading the documentation. The High Court endorsed the English position that a solicitor’s professional obligations include a duty to point out the seriousness of risks involved in such transactions, which the solicitor in this case did not do.
The High Court found, on the balance of probabilities, that M had told E that unless E completed the transaction, M would cease caring for him. On the balance of probabilities, M’s undue influence over E led to the property transaction, and it was not the product of E’s independent resolve.
The High Court also considered that where a middle-aged person lives with and takes care of an elderly, blind parent, there is a presumption of trust and confidence. The circumstances of this transaction called for explanation, suggesting that trust and confidence had been abused. To prove it was valid, M would have had to rebut the presumption that it was the result of undue influence.
In the result, the transaction was an unconscionable bargain and was set aside.