Naidoo v Barton & Anor (Undue influence - mutual wills - fraudulent misrepresentation - mistake - laches)

Factual and Procedural Background

The deceased, Mrs Naidoo, died on 10 February 2016. Her husband, Dr Naidoo, died earlier in 1999. They had seven children, including the claimant, the sixth eldest child, and the first defendant, the second eldest son. The claimant initiated proceedings on 30 September 2021 seeking a formal declaration of the validity of Mrs Naidoo’s 2015 will, rescission of any mutual wills agreement affecting the estate, and rescission of certain transactions undertaken during Mrs Naidoo’s lifetime and that of her husband.

The trial occurred from 28 November to 2 December 2022, with the first defendant attending remotely due to imprisonment, except on two days when he gave evidence in person. The court considered extensive documentary bundles, skeleton arguments, and witness evidence, including testimony from the claimant, several witnesses connected to Mrs Naidoo, and the defendants themselves.

The claimant’s case was divided into four categories: validity of the 2015 will and mutual wills agreement; rescission of share transfers in a family company; rescission of a 2000 agreement between Mrs Naidoo and the defendants; and rescission of three insurance policy trusts. The defendants denied the validity of the 2015 will, asserted the validity of the policy trusts, denied undue influence, and raised laches as a defence.

The claimant acted both as executor of the 2015 will and in a personal capacity. A restraint order from 2016 remains in place, restricting the defendants’ dealings with certain assets, which may affect the implementation of any relief granted in these proceedings.

Legal Issues Presented

1. Whether the 2015 will of Mrs Naidoo is valid and the mutual wills agreement should be rescinded.
2. Whether the transfer of shares in Choiceclassic Ltd should be rescinded.
3. Whether the 2000 Agreement between Mrs Naidoo and the defendants should be rescinded for fraudulent misrepresentation or undue influence.
4. Whether the insurance policy trusts executed in 2000 should be rescinded or the trustees removed.
5. The applicability and scope of the doctrine of undue influence in relation to mutual wills and the other transactions.
6. Whether the defence of laches bars the claimant’s claims.

Arguments of the Parties

Claimant's Arguments

• The mutual wills agreement was vitiated by a common mistake that the survivor could freely alter their will, which was incorrect.
• The 2000 Agreement was procured by fraudulent misrepresentation and undue influence by the first defendant.
• All transactions including the mutual wills agreement, share transfers, 2000 Agreement, and policy trusts were procured by undue influence.
• The policy trusts were improperly executed and should be rescinded or the trustees removed.

Defendants' Arguments

• They denied the validity of the 2015 Will and claimant’s appointment as executor.
• Asserted the validity of the policy trusts and that the first defendant was the sole beneficiary.
• Denied undue influence and relied on independent legal advice received from solicitors.
• Raised laches, arguing delay prejudiced their defence.
• Contended that the test for undue influence applicable to mutual wills should be the more stringent probate test.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Royal Bank of Scotland Plc v Etridge (No.2) [2002] 2 AC 773	Defines undue influence in equity, including presumptive undue influence arising from relationships of trust and confidence.	Applied to assess whether transactions were procured by undue influence, including the mutual wills agreement and 2000 Agreement.
Great Peace Shipping Ltd and Tsavliris Salvage (International) Ltd [2002] EWCA Civ 1407	Principles on common mistake in contract law.	Used to analyse the claimant’s claim that the mutual wills agreement was vitiated by common mistake.
In re Cleaver [1981] 1 WLR 939	Explains the nature and effect of mutual wills and the imposition of constructive trusts.	Supported the court’s finding of the existence of a mutual wills agreement.
Birmingham v Renfrew (1937) 57 C.L.R. 666	Describes the purpose and effect of mutual wills agreements.	Used in interpreting the effect of the mutual wills agreement in this case.
Charles v Fraser [2010] EWHC 2154 (Ch)	On the burden of proof and improbability of testators giving up testamentary freedom.	Considered in evaluating the likelihood and effect of the mutual wills agreement.
Fry v Densham-Smith [2010] EWCA Civ 1410	Features making mutual wills agreements more likely.	Referenced in construing the mutual wills agreement.
Pesticcio v Huet [2004] EWCA Civ 372	Requirements for independent advice to rebut undue influence presumption.	Applied to assess the sufficiency and effect of legal advice received by Mrs Naidoo.
Wright v Hodgkinson [2004] EWHC 3091 (Ch)	Legal advice alone does not necessarily free a person from undue influence.	Supported the conclusion that independent advice may not have freed Mrs Naidoo from undue influence.
Thompson v Foy [2009] EWHC 1076	Trust and confidence need not relate specifically to financial affairs for undue influence.	Considered in the context of the relationship between Mrs Naidoo and the first defendant.
Sheikh v Malik [2018] EWHC 973 (Ch)	Undue influence may be established by vulnerability or dependence without proof of trust and confidence.	Relevant to the claimant’s case on undue influence.
Hammond v Osborne [2002] EWCA Civ 885	Undue influence claim may succeed even without wrongdoing by the influencer.	Supported the equitable approach to undue influence.
Allcard v Skinner (1887) 36 Ch D 145	Foundational case on undue influence.	Referenced in discussion of undue influence principles.
Barclays Bank plc v O’Brien [1994] 1 AC 180	Requirement of actual or constructive notice of undue influence for setting aside contracts.	Considered in relation to the 2000 Agreement claim.
Snell on Equity, 33rd and 34th editions	Explains the doctrine of undue influence and the role of independent advice.	Guided the court’s analysis of undue influence and advice.
Walsh v Greystone Financial Services Ltd [2019] EWHC 1719 (Ch)	Admissibility and evidential weight of criminal convictions in civil proceedings.	Supported the admission and weight of the first defendant’s criminal convictions.
NT1 v Google LLC [2018] EWHC 799 (QB)	Use of criminal convictions as evidence in civil cases.	Referenced in relation to the first defendant’s convictions.
Hourani v Thomson [2017] EWHC 432 (QB)	Consideration of weight of criminal conviction evidence.	Applied in evaluating the first defendant’s credibility.
Hatch v Hatch (1804) 9 Ves 292	Delay does not bar relief if undue influence continued during the delay.	Applied in rejecting the defence of laches during the deceased’s lifetime.

Court's Reasoning and Analysis

The court first found that the mutual wills agreement existed as a contract based on the terms of the 1998 wills and related correspondence. The claimant’s argument that the agreement was vitiated by a common mistake was rejected because evidence showed Mrs Naidoo understood the restrictive effect of the agreement. The court concluded that the mutual wills agreement was made under a profound relationship of trust and dependency on the first defendant, who was the sole beneficiary under the agreement.

The court found that this relationship of trust and confidence, combined with the disproportionate benefit to the first defendant and absence of satisfactory explanation, gave rise to a presumption of undue influence. The defendants failed to show that Mrs Naidoo acted freely of undue influence, particularly as there was no evidence that she received advice capable of ensuring her free will in entering the mutual wills agreement. Accordingly, the mutual wills agreement was set aside for undue influence.

Regarding the Choiceclassic share transfers, the court found no sufficient evidence of undue influence or coercion. The transfers were explained by the first defendant’s assumption of certain liabilities and debts on behalf of the family members, with no established relationship of trust or ascendancy at that time. The claim for rescission of these transfers was dismissed.

As to the 2000 Agreement, the court rejected the claim of fraudulent misrepresentation due to unreliable and uncorroborated evidence. However, the court found that by the time of this agreement Mrs Naidoo was vulnerable and heavily dependent upon the first defendant, who had a controlling influence. The agreement called for explanation given its effect of transferring all assets to the first defendant and his wife, leaving Mrs Naidoo with only a terminable licence to occupy her home and a modest allowance. The defendants relied on independent legal advice from Cobbetts Solicitors, which the court accepted was competent and independent in form, but concluded that competent advice was insufficient to free Mrs Naidoo from undue influence given her vulnerability and dependency. The 2000 Agreement was therefore set aside for undue influence.

The policy trusts executed in 2000 were found to have been created pursuant to the 2000 Agreement and thus also procured by undue influence. No independent advice was given regarding the trusts, and the defendants failed to prove proper execution or amendments. The court ordered that the policy trusts be rescinded or, alternatively, that the defendants be removed as trustees due to their conflict of interest and improper benefit.

The defence of laches was rejected as there was no evidence that the delay caused prejudice to the defendants’ ability to defend, and any delay during Mrs Naidoo’s lifetime was attributable to her continuing vulnerability and fear of the first defendant.

The court gave significant weight to the first defendant’s criminal convictions for serious dishonesty and exploitation, finding that these were relevant to his character, propensity, and credibility. The court accepted that these convictions demonstrated a pattern of exploiting vulnerable persons, which was highly relevant to the undue influence claims.

Holding and Implications

The court’s final decision is as follows:

• The mutual wills agreement is set aside for undue influence.
• The 2015 Will is declared valid and to be administered according to its terms, confirming the claimant’s entitlement as sole executor and beneficiary.
• No relief is granted regarding the Choiceclassic share transfers; these claims are dismissed.
• The 2000 Agreement and the Policy Trusts are rescinded for undue influence.
• The defendants are to be removed as trustees of the second and third policy trusts.

The court noted practical difficulties in implementing rescission of the 2000 Agreement and Policy Trusts, including the need to assess the extent of transactions and whether any credit should be given to the defendants for expenditures, as well as complications arising from the first defendant’s criminal convictions and the existing restraint order. The court invited further submissions on how to proceed with these matters.

No new legal precedent was established; the decision applies the principles of undue influence, mutual wills, and rescission in the context of the facts of this case. The direct effect is to affirm the claimant’s rights under the 2015 Will and to set aside the challenged agreements and trusts procured by undue influence.