Johnson (the appellant), had for many years looked after the deceased, Buttress. Buttress was illiterate, unsophisticated in business affairs and reliant upon Johnson. Buttress transferred ownership of a piece of land to Johnson without receiving independent legal advice. After Buttress' death, this transfer was challenged by his son.
Buttress (the deceased) transferred land to Johnson (the appellant). At the time of the transfer Buttress was 67 years old and illiterate. He had a son (the respondent), two sisters and a niece (the niece was the sole beneficiary under Buttress' will). Johnson was a relative of Buttress' wife (she was a daughter of a step-sister of the wife; she referred to Buttress' wife as 'aunt') and cared for him and allowed him to live on her land following the death of his wife. Chief Justice Latham observed that Johnson had been kind to Buttress and his wife 'and there was ample reason for gratitude to her' (page 122).
Buttress had made several wills to different beneficiaries in a few short years, including a will in favour of Johnson in 1931. Shortly after making that will Buttress transferred his land (with cottage) to Johnson. The transfer took place at the office of Johnson's solicitor and Buttress did not receive independent legal advice. It was suggested that the purpose of the transfer was to make the gift of property contained in the will 'irrevocable'; in particular, there was evidence that Buttress did not want his son to receive the property. However, Justice Dixon observed that the reason for the transaction 'is not stated by [the Johnsons' in a satisfactory manner' (page 131)
Buttress was of less than average intelligence, virtually illiterate and had no business skills. Following his death, his son, as executor of his estate, challenged the transfer of land to Johnson.
Background to High Court proceedings
The suit was original brought by John Spencer Raymond Buttress (the respondent), son of John Spencer Buttress (deceased) and administrator of his father's estate, against Mary Eliza Johnson. The respondent sought to set aside a document purporting to transfer to Johnson a piece of land near Sydney where Buttress had lived. The claim was based on undue influence.
The trial judge held that Buttress ' less than average intelligence and that he had little or no experience of or capacity for business' (as described by Chief Justice Latham). He further held that, at the time if transfer, Buttress had not understood that he was transferring his property irrevocably. He considered that Buttress was in a fiduciary relationship with Johnson, in whom he placed trust and confidence, and that the transfer should be set aside because it was made as a result of undue influence.
Johnson appealed this decision to the High Court.
Held (High Court)
Chief Justice Latham
On the law of undue influence
Latham CJ observed that gifts may be set aside where procured by undue influence when:
- undue influence is proved as fact; or
- undue influence is presumed from the relations existing between the parties and this has not been rebutted.
Presumed undue influence
His Honour observed that there is no exhaustive list of relations giving rise to a presumption of undue influence. It includes parent and child, guardian and ward, trustee and cestui que trust, solicitor and client, physician and patient and cases of religious influence. More broadly, the presumption of undue influence will arise whenever 'the relation between donor and donee is such that the latter is in a position to exercise dominion over the former by reason of the trust and confidence reposed in the latter' (page 119).
Overcoming the presumption of undue influence
Where such a relationship exists it 'must be affirmatively shown by the donee that the gift was ... "the pure, voluntary, well-understood act of the mind" of the donor' (footnote omitted) (at page 119). In doing this, Latham CJ observed that it was not essential to show that the donor received independent legal advice, but this would be a clear and obvious mechanism for overcoming the presumption:
It may not be necessary in all cases to show that the donor received competent independent advice … But evidence that such advice has been given is one means, and the most obvious means, of helping to establish that the gift was the result of the free exercise of independent will; and the absence of such advice, even if not sufficient in itself to invalidate the transaction, would plainly be a most important factor in determining whether the gift was in fact the result of a free and genuine exercise of the will of the donor. (pages 119-120)
On the strength of the presumption in individual cases his Honour observed:
In the case of an illiterate or weak-minded person it will be more difficult for the donee to discharge the prescribed onus of proof than in other cases. The burden will be still heavier upon the donee where the donor has given him all or practically all of his property … (page 120)
Applied to this case
Latham CJ noted that Buttress was unable to read or write (even his own name) and 'dependent for his living upon the rent which he received from the cottage' that was the subject of the transfer and was dependent upon others in relation to 'almost any business matter'. (page 120). His Honour also referred to evidence of other witnesses suggesting the 'deceased was highly excitable, very stupid and mentally unstable' (page 122).
In relation to the transfer his Honour observed that 'the absolute transfer to the defendant of the property which was his sole source of income was highly improvident' (p 121)
Latham CJ agreed with the trial judge that a 'relation of trust and confidence obtained between the [Buttress] and [Johnson] of such a character that he relied upon her for advice on any matter of business' (page 123). In those circumstances, 'in order to maintain the transaction, it was necessary for [Johnson] to show affirmatively that [Buttress] knew what he was doing when he made the transfer, in the sense that he understood its effect and significance in relation to himself, and further to show that the transfer was the result of his own will.' (page 123). This she failed to do:
'... though it has not been affirmatively proved against [Johnson] that she exercised undue influence, yet she has not displaced the presumption of undue influence which arises in the circumstances of this case.' (p 123)
The transfer was set aside.
Justice Starke had some difficulty inferring 'presumed undue influence' in this case; however, he concluded there was actual undue influence in this case such that the transfer must be set aside:
'... I feel some difficulty in assenting to the learned judge's view that the facts disclose a peculiar relationship of trust and confidence between the deceased and the appellant which brings him within the "protected class" in respect of which there is a presumption of undue influence. But the age and capacity of the deceased, the improvident and unfair nature of the transaction, the want of proper advice, the retention of the rents of the property transferred, the various testamentary dispositions, and the other circumstances mentioned, afford evidence from which the learned judge might justly infer that the transfer was not the result of the free and deliberate judgment of the deceased, but the result of unfair and undue pressure on the part of the appellant. ... (at page 126)
Justice Dixon referred to Buttress as 'a man peculiarly dependent on others ... quite unable to do anything but the roughest work ... excitable and would give rein to his emotions, whether of anger, grief, or dejection' (at 127). He was 'easily moved to  gesticulation and shouting ... had a tendency to loud and disconnected talk. Many ... found him trying and he seems to have been regarded as an oddity. He was called by a nickname, "Rocker" ...' (pp 127-128)
His Honour then set out the background/facts in some detail.
The law of undue influence
On the doctrine generally, his Honour observed:
The basis of the equitable jurisdiction to set aside an alienation of property on the ground of undue influence is the prevention of an unconscientious use of any special capacity or opportunity that may exist or arise of affecting the alienor's will or freedom of judgment in reference to such a matter. The source of power to practise such a domination may be found in no antecedent relation but in a particular situation, or in the deliberate contrivance of the party. If this be so, facts must be proved showing that the transaction was the outcome of such an actual influence over the mind of the alienor that it cannot be considered his free act. But the parties may antecedently stand in a relation that gives to one an authority or influence over the other from the abuse of which it is proper that he should be protected. When they stand in such a relation, the party in the position of influence cannot maintain his beneficial title to property of substantial value made over to him by the other as a gift, unless he satisfies the court that he took no advantage of the donor, but that the gift was the independent and well-understood act of a man in a position to exercise a free judgment based on information as full as that of the donee. This burden is imposed upon one of the parties to certain well-known relations as soon as it appears that the relation existed and that he has obtained a substantial benefit from the other. A solicitor must thus justify the receipt of such a benefit from his client, a physician from his patient, a parent from his child, a guardian from his ward, and a man from the woman he has engaged to marry. ... the doctrine which throws upon the recipient the burden of justifying the transaction is confined to no fixed category. It rests upon a principle. It applies whenever one party occupies or assumes  towards another a position naturally involving an ascendancy or influence over that other, or a dependence or trust on his part. (pages 134-135)
Applied to this case
His Honour did not believe that actual undue influence could be established, but that if the presumption of undue influence arose, Johnson would be unable to rebut that presumption on the evidence:
'If the circumstances of the transaction are such as to throw upon the donee the burden of justifying it as an independent act resolved upon by a free and understanding mind, the burden could not be discharged unless such a view of the origin and purpose of the transfer were negatived by satisfactory evidence. But, on the other hand, if positive proof is required that the transfer was procured by the improper exercise of an actual ascendancy or domination gained over the donee, and the case cannot rest on presumption, then, in my opinion, that requirement is not satisfied.' (pages 133-134)
It did not matter that the 'suggested relation' in this case has no 'exact counterpart in any decided case' (page 136). In this
'peculiar case it is the man's illiteracy, his ignorance of affairs, and his strangeness in disposition and manner that provide the foundation for the suggested relation. ... he began to place increasing reliance upon Mrs Johnson and the members of her family .... Little doubt can be felt that ultimately he came so to depend upon Mrs Johnson that a full relation of influence over him subsisted. (page 137)
'... the fact that Buttress was prepared to make over to her his sole property shows how far his trust in her had advanced. ... the condition in which his ignorance and illiteracy placed Buttress must be kept in view. That condition coupled with his temperament, his odd behaviour and his inferior mental faculties made the habitual guidance and support of some one almost essential to him. ... such matters of business as he had occasion to transact were managed by, or under the supervision of, Mrs Johnson ... he was constantly in her company and ... he relied upon her advice and depended on her kindness.' (page 138)
From this his Honour concluded that
'an antecedent relation of influence existed which throws upon Mrs. Johnson the burden of justifying the transfer by showing that it was the result of the free exercise of the donor's independent will. This, in my opinion, she has quite failed to do.' (page 138)
Justice Evatt agreed with the judgment of Justice Dixon.
Justice McTiernan set out the facts consistent with the other judgments. On the relationship between parties at the time of the gift his Honour noted that it was clear:
'... there was great inequality between donor and donee, due principally to the illiteracy and incompetence of the donor and his incapability of depending on himself or acting for himself in any transaction. They could not stand at arm's length in any dealing. Mrs Johnson stood in a relation to him the essence of which was his trust and confidence in and his dependence on her to look after his affairs ... in his interest. There can be no doubt that when the transfer was made the relationship in which she stood to Buttress would enable her to acquire great influence over him. It is unreasonable to suppose that very considerable influence was not in fact acquired by her over Buttress'. (page 142)
His Honour concluded that the relationship between the parties brought it within the scope of 'presumed undue influence' (page 142) and that Mrs Johnson had failed to demonstrate that, notwithstanding the presumption of influence, 'the gift was the result of the free exercise of the donor's will'. (page 143).