Where a claimant seeks to have a will set aside on the grounds of fraudulent calumny, can a complimentary claim be brought for breach of fiduciary duty, e.g. where a residuary beneficiary in an attorney appointed under a LPA?
The underlying premise is that proof of a material non-disclosure e.g. by silence, demonstrates that the fiduciary does not have ‘clean hands’, in which case, on the wider application of general principles of equity, the fiduciary should not be permitted to gain from his dishonesty as a beneficiary under the LPA donor’s will.
In other words where there has been a parallel breach of fiduciary duty, the court should not uphold the disputed will.
As a matter of policy, this jurisdiction connects with undue influence, because fraudulent calumny is a specific type of fraudulent misrepresentation.
In my submission:
1. the basic concept of fraudulent calumny is that if A poisoned the mind of B against C, i.e. as a natural beneficiary of B’s bounty, by casting dishonest aspersions on C’s character, then the disputed will is liable to be set aside by the court;
2. the essence of fraudulent calumny is that A must either know that the aspersions are false or not care whether they are true or false; and
3. ‘[So] if some person raises prejudices in the mind of the testator against those who would be the natural objects of his bounty, and by contrivance keeps him from intercourse with his relatives to the end that these impressions thus formed to their disadvantage may never be removed, such contrivance may be equivalent to positive fraud and may render invalid any will executed under false impressions so kept alive.’ Williams, Mortimer And Sunnucks, Executors, Administrators and Probate (19th Edition), paragraph 13-58. (Please note that the 21st edition is due to be published in October 2018).
1. ‘[where] any money or property is concerned, [an attorney appointed to act under a lasting power of attorney] has a fiduciary duty to act as the donor’s agent and secure the proper management of the donor’s estate, for the benefit of the donor. The Mental Capacity Act 2005 furthermore takes the attorney into a new area of responsibility, requiring the attorney to make decisions where the donor lacks capacity, and which must be in accordance with the best interests criteria of the Act. The attorney must therefore take into account matters such as the donor’s past and present wishes and feelings, beliefs and values …’ (Paragraph 3.68 Court of Protection Practice 2017);
2. ‘[fraud] includes instances of deliberate misrepresentation. In Haygarth v Wearing [1871 12 L.R. Eq.320], the plaintiff…inherited a small estate worth at least £400. As she was not on very friendly terms with her brother she was not aware of this. The defendant, the brother’s friend … called on the plaintiff and informed her about the estate. But he deliberately misrepresented its value to her as £100 instead of £400) and offered to buy it at that price. The Plaintiff acting in ignorance agreed to sell it for £100. The conveyance was set aside as having been procured by fraud’, Duress, Undue Influence and Unconscionable Dealing (2006) by Nelson Enonchong, paragraph 17-023;
3. in Christodoulides v Marcou  the judge observed that because the party who made the fraudulent misrepresentations [‘A’] (which brought about the mistaken belief held by the deceased testator [‘B’] that resulted in the exclusion of her other daughter [‘C’] from her will), had failed ‘to correct what she [A] knew to be false when she [A] was a manager and trustee of [B’s] money [i.e. as a trustee of funds held in bank accounts where she was a joint account holder with the testator (i.e. her Mother [B]) – that in itself] was a [fraudulent] misrepresentation.’ As the judge put it, ‘A’ therefore had a duty to speak because ‘silence will not do for a fiduciary’;
4. it therefore appears that silence may constitute a breach of fiduciary duty which confers jurisdiction on the court to aside a will on the grounds of fraudulent misrepresentation;
5. on general principles of equity, ‘[fiduciary] doctrine serves a protective function vis-à-vis non-fiduciary duties… [It] seeks to avoid situations in which a fiduciary’s personal interest conflicts with his non-fiduciary duty because there is in such situations an inherent temptation not to perform the non-fiduciary duty properly. The remedies for breach of fiduciary duties attempts to deter fiduciaries from acting in such situations, predominantly by removing any benefits that a fiduciary might obtain by acting in contravention of the fiduciary conflict principle. In other words, the remedies are the means by which fiduciary doctrine gives practical effect to its subsidiary and prophylactic protective function… Thus as Lord Chelmsford LC observed in Tate v Williamson , a transaction between a fiduciary and his principal is liable to be set aside
“once it is established that there was a concealment of a material fact, which the [fiduciary] was bound to disclose”
If any material facts have not been disclosed, the principal’s consent is inadequate and the transaction can be avoided at the principal’s behest…’ Fiduciary Loyalty – Protecting the Due Performance of Non-Fiduciary Duties by Matthew Conaglen, pages 76 and 132; and
6. ‘[if] from whatever combination of factual conditions, the parties in their relationship are so circumstanced that one is reasonably entitled to expect that the other is acting or will act in his interests, then that person should be entitled, on bare grounds of public policy, to have that expectation protected… The critical matter in the end is the role that the alleged fiduciary has, or should be taken to have, in the relationship. It must so implicate that party in the other’s affairs or so align him with the protection or advancement of that other’s interests that foundation exists for the “fiduciary expectation.” Such a role may generate an actual expectation that the other’s interests are being served.’ Fiduciary Obligations by Paul Finn 40th Anniversary Republication 2016, paragraph 161, 734, and 736.
The degree to which a claimant must satisfy the requirements in order to prove fraudulent calumny is the civil standard (i.e. the balance of probabilities). However the cogency and strength of the evidence required to prove fraud is heightened by the nature and seriousness of the allegation (Re Boyes  EWHC 4027 (Ch) at paragraph 113). Therefore a high degree of proof is needed to meet that standard. The less likely an allegation is, the more convincing the evidence will have to be to prove it. Any allegation of dishonesty ought to be pleaded with the greatest particularity which is possible in the circumstances, and the court will be astute to ensure that any deficiency in the pleading does not cause prejudice to the opposite party in any fashion such as not having the opportunity to prepare or present his case as he may wish if he knew fairly what the allegation was against him.
CPR, r. 57.7(4)(c) states,
‘Any party who wishes to contend that –
(c) the execution of a will was obtained by undue influence or fraud, must set out the contention specifically and give particulars of the facts and matters relied on.’
Furthermore, any such contention should only be made where there are reasonable grounds to support it.
Paragraphs 10.1 and 10.2 of the Chancery Guide 2016 state:
‘10.1 In addition to the matters which PD 16 requires to be set out specifically in the particulars of claim, a party must set out in any statement of case:
· full particulars of any allegation of fraud, dishonesty, malice or illegality; and
· where any inference of fraud or dishonesty is alleged, the facts on the basis of which the inference is alleged.
10.2 A party should not set out allegations of fraud or dishonesty unless there is credible material to support the contentions made. Setting out such matters without such material being available may result in the particular allegations being struck out and may result in wasted costs orders being made against the legal advisers responsible.’
On a personal note, may I take this opportunity to wish all readers of my posts this year a joyous Christmastime and a happy, peaceful, and prosperous New Year.
Joyeux Noël et bonne année,
Frohe Weihnachten und neues Jahr, Glückliches
Buon Natale e felice anno nuovo,
Feliz Navidad, Próspero año y felicidad.