Property & Real Estate Barristers
Vulnerable Gifts from Vulnerable People – STEP Guernsey
8th July 2019
Gwyn Evans was invited to speak to the Society of Trusts and Estate Practitioners in St Peter Port in Guernsey on 20 June. He spoke about how to ‘undo’ gifts which had been made under dubious circumstances. This divided into three broad areas – testamentary provision, inter-vivos gifts and gifts where the Court of Protection either is or could be involved. He has written a summary of his talk here. Gwyn is very grateful to STEP Guernsey and to GTA in St Peter Port for the invitation and for their superb hospitality.
Gwyn spoke about how to ‘undo’ gifts which had been made under dubious circumstances. This divided into three broad areas – testamentary provision, inter-vivos gifts and gifts where the Court of Protection either is or could be involved.
Testamentary gifts
He whizzed through the challenges that can be made to testamentary provision – capacity, want of knowledge and approval, undue influence and fraud.
Lifetime gifts
Turning to inter-vivos gifts, Gwyn discussed capacity, mistake (including the shift in the law following the decision in Pitt v Holt & Anr [2013] 2 AC 108), undue influence (which can be presumed for certain inter-vivos gifts) and unconscionable bargains.
The role of the Court of Protection
In the last third of his talk Gwyn looked at the utility of statutory wills, at attorneys and deputies, the limits on the gifts that they may respectively authorise, the kinds of gifts for which court authorisation is necessary and at settlements of property.
The Guernsey courts are heavily influenced by the law of England and Wales but, as with the courts in Jersey (which criticised the reasoning of the Court of Appeal in Pitt v Holt in the case of Re S Trust [2011] JRC 117), they do not always reach the same conclusions as the higher courts in England, whose decisions are not binding upon them.
A Lacuna in the law?
Gwyn discussed Clare Stanley QC’s view that there is a lacuna in the law. Imagine a donor has capacity, has not been unduly influenced (actually or presumptively), has limited mental acuity and so cannot be said to be mistaken – there is no parallel for inter-vivos gifts to want of knowledge and approval in testamentary provision (Clare Stanley QC, “Vulnerable Gifts made by Vulnerable People”, Trusts and Trustees (2017) 23 (5): 542). At her para 57, she argued for a further legal basis to challenge a lifetime gift on the basis of failure to understand.
Secondly, a grave mistake as to the legal effect of a liftime gift is caught by the saving test in Pitt v Holt & Anr, but it is not caught in the context of testamentary provision because there is no “want of knowledge and approval” just because a testator did not understand the legal effect (see Theobald on Wills at 3-018). The editors of Theobald on Wills by their 1 September 2018 update were of the view, however, that the many of the principles being applied in the testamentary scenarios pre-date the statutory power for rectification of wills and the resulting ‘system of rules’ should be treated with ‘considerable circumspection’. So, the law may be shifting in this respect.
Third, Clare Stanley QC had pointed out that the absence of “presumed undue influence” for wills was problematic. This is a very frequent ground of challenge to inter-vivos gifts, so why not testamentary gifts too? If undue influence can be presumed, then the hurdle is lower, the whole matter is simpler and the litigation less expensive.