Zamet v Hyman [1961]

Zamet v Hyman [1961] 3 All ER 933 addressed the issue of undue influence within the context of an engagement between a couple. The central dispute arose when, prior to marriage, the woman agreed to relinquish all claims to her husband's estate upon his death in exchange for £600. Subsequently, the husband's estate was valued at £10,000, leading the wife to seek the nullification of the agreement on the grounds of undue influence.

The court established key legal principles regarding fiduciary relationships and undue influence. It emphasised that the existence of a fiduciary relationship, which could give rise to undue influence, should not be presumed between engaged couples; instead, it must be proven. Furthermore, the court acknowledged that transactions that exhibit significant favouritism towards one party may serve as evidence of a fiduciary relationship, potentially leading to a presumption of undue influence. Additionally, the person benefiting from the agreement has the opportunity to rebut the presumption by demonstrating that the other party gave their full, free and informed consent to the arrangement.

The Court of Appeal, in dismissing the appeal and affirming the trial judge's decision in favour of the wife, underscored the presence of a presumption of undue influence that the appellants failed to disprove. The court referenced the extravagantly one-sided nature of the transaction, indicating a duty of full candour and protection owed by the husband to the wife within the engaged relationship.

Lord Evershed MR, in establishing a test for the presumption of undue influence, highlighted that in the context of engaged couples, the automatic assumption of a fiduciary relationship should be avoided. However, in cases where a transaction appears significantly favourable to one party, a fiduciary relationship may be inferred, placing a burden on the benefiting party to prove the voluntary and informed nature of the transaction.

Donovan LJ added to this perspective, suggesting that, in engagements, it should be proven rather than presumed that the disposition resulted from the abuse of confidence and trust. Nonetheless, affirmative evidence presented during the trial in Zamet v Hyman indicated the existence of a relationship of confidence between the parties.

The court, in assessing the current facts of the case, concluded that the wife's agreement to forgo a £10,000 estate in exchange for £600 was excessively one-sided, signifying a duty of protection owed by the husband. The presumption of undue influence remained unrebutted due to the lack of information provided to the wife and the absence of independent legal advice.

This case underscores that the presumption of undue influence hinges on the presence of a fiduciary relationship between the parties. For relationships like engaged couples, the existence of this relationship must be proven rather than assumed. The imbalance within the transaction itself can serve as evidence of such a fiduciary relationship.

The rationale for setting aside contracts for undue influence often revolves around the claimant's impaired consent to the agreement. The judgement of this case aligns with this rationale, asserting that the agreement stands if it can be proven that the claimant provided full, free and informed consent.