Introduction
- This is a sad, and unfortunate, dispute between two brothers. It concerns various gifts made by the late Madeleine Ada May Taylor ("the deceased") to the defendant ("Philip"). The claimant ("Geoffrey") is Philip's younger brother. Both are nephews of the deceased. By these proceedings Geoffrey seeks to have all the gifts made by the deceased to Philip set aside, primarily on the basis of presumed undue influence.
- The deceased was born on 17 July 1913. She died on 25 February 2001 at the age of 87. She had been married to a John Percy Taylor ("Uncle John") who had died intestate on 7 November 1991.
- The deceased had no children. She did, however, have two sisters. One, a younger sister, was Mrs Phyllis Isabelle Burns ("Mrs Burns"). Mrs Burns married a Mr Patrick Burns ("Mr Burns") in 1962. However, both Philip and Geoffrey are her only children (and by an earlier marriage). The deceased's other sister was Joyce Mabel Shorrock ("Mrs Shorrock"). Mrs Shorrock had emigrated to Australia many years ago (although, as Mrs Burns told me in evidence, she kept in touch and the deceased was fond of her). Mrs Shorrock had two children, both in Australia, namely Lynda Phelan and Glenn Shorrock. Both are of full age. A further person who features, briefly, is Eileen Farahar (who was the niece of Uncle John).
- The present action was commenced by claim form dated 15 August 2003. The primary relief sought thereby is to set aside the four gifts made by the deceased to Philip to which I shall refer below. In the alternative, it is claimed that Philip holds some, or all, of the land the subject matter of these gifts on certain trusts. I will deal with the trust claim at the end of this judgment. Suffice to say, at present, that the trust claim seems to me to be entirely without merit.
- This is the third action between Geoffrey and Philip. On 21 May 2003 Geoffrey issued proceedings seeking administration of the estate of the deceased. On 2 June 2003 Philip issued proceedings claiming similar relief. The circumstances in which both these two sets of proceedings came to be issued will be set out below. There is now a threat of a fourth action by Geoffrey against Philip (as executor of the deceased). In essence, in that fourth action it is likely to be suggested that Philip has misadministered the estate of the deceased. It is also possible that, in that fourth action, a claim will be made against Mr Addis, a solicitor acting for Philip as executor of the estate of the deceased. It seems to me to be important, therefore, that I should confine myself, as far as I am able to do so, to the issues which arise in this action. I am conscious that I have not heard full submissions as to the issues which arise in the first and second actions, nor as to the issues which might potentially arise in the fourth action. Even more so is this the case as Mr Addis gave evidence in respect of the issues which arise in this action. He was but a witness and, of course, not represented by counsel nor able to make submissions. It would be entirely unfair to him were I to trespass further than I should into issues which might arise in the fourth action.
- It goes without saying, from the above summary, that no love whatsoever is now lost as between Geoffrey and Philip. It was, however, not always this way. It is the issues which have arisen in this action, combined with what Philip is alleged to have done as executor of the deceased, which have caused these difficulties.
The deceased's landholding
- The starting point is to describe the deceased's landholding immediately after the death of Uncle John. All of Uncle John's interest in the land I shall now describe passed, on his death, to the deceased by survivorship.
- Following the death of Uncle John, the deceased was the freehold owner of a roughly rectangular area of land at Golden Hill, Whitstable, Kent. The area of land could more easily be understood by reference to a plan but a verbal description (which, of necessity, must contain certain inaccuracies not material to my decision) will have to suffice. The land lay to the east of a road, or lane, known as Golden Hill. On the northerly part of the land, running approximately half the length of the northern boundary, was the house and garden known as Homewood, 51 Golden Hill ("Homewood"). To the south of Homewood was the house and garden known as Drumfin, 53 Golden Hill, ("Drumfin"). To the south of "Drumfin" was a redundant chicken farm. The rear boundaries of all three properties ran in, roughly, a straight line aligned one to the other. To the rear, and east, of all three properties was a large field. This field (to which I will refer as "the brown land") abutted on to the Joseph Wilson Industrial estate to its east. The deceased lived in Homewood. Mr and Mr Burns lived in Drumfin, as tenants of the deceased. The redundant chicken farm (to which I shall refer as "the blue land") had previously been utilised by the deceased and Uncle John as a working chicken farm. But business had proved bad and they had given up that activity a number of years before Uncle John's death.
- The deceased had a considerable affection for animals, in particular her donkeys. Certainly the brown land, and perhaps also part of the garden of Drumfin and part of the blue land, was used for the stabling, and grazing, of her three donkeys.
- To the north of the deceased's property, running the whole length of its northern boundary, lay land owned by a Mr Stuart Simmons (No 49 Golden Hill). Mr Simmons's land abutted on Golden Hill to the west and the Joseph Wilson Industrial estate to the east.
- I have already referred to Drumfin as being occupied by Mr and Mrs Burns as tenants of the deceased. Initially, they had owned their own bungalow in Whitstable but, subsequently, the deceased had suggested that they should move into Drumfin as tenants. I was shown rent books showing that the tenancy commenced on the 23 May 1969 and that the rent was, initially, £14 per month. That was increased to £20 per month as from the end of July 1982. The rent books show the deceased signing to acknowledge receipt of the rent up to 16 August 1997. Thereafter, the rent book shows the payment of £20 per month until 27 December 1997 (but with no acknowledgment of receipt signed by the deceased). Quite what happened after that date is not clear to me but Mrs Burns's evidence to me, which I accept, was that after she moved from Drumfin to Homewood, in 2000, she did not pay any rent for Homewood because she did not know whom to pay.
Basic structure
- I must, now, set the scene by setting out the basic structure of what occurred after the death of Uncle John.
- The affairs of Uncle John were in considerable disarray on his death. For example, he had not submitted any income tax returns since the year 1983/84. It was thought that he had substantial assets, over and above his interest in the land at Golden Hill, but these were never traced. So, in addition to her natural distress at loosing her husband, the deceased was faced with major difficulties over his estate. Philip assisted the deceased over these matters. I shall have to come, in greater detail below, to the nature of the advice and assistance Philip offered and the nature of his relationship with the deceased.
- On 28 March 1992 the deceased made a will, utilising the services of a Mr Cook, a solicitor then with the firm of Wilkinson Cooper of Wadhurst. Briefly summarised, by this will ("the 1992 will") the deceased appointed Mr Cook and Philip to be her executors and Trustees. By clause 4 she provided that if she should not, prior to her death, already have gifted Drumfin to Mrs Burns then she gave the same to Mrs Burns absolutely (with a substitution gift over in the event of pre-decease to Philip and Geoffrey equally). The deceased gave Homewood and her personal chattels to Philip and Geoffrey in equal shares (with a substitution gift over in favour of their respective children in the event of predecease). The residue of her estate, subject to payment of her funeral testamentary and other expenses which included any tax payable on either Drumfin or Homewood the deceased gave to be divided into four shares with one-quarter going to Mrs Shorrock, one-quarter going to Lynda Phelan, one-quarter going to Glenn Shorrock and one-quarter going to Eileen Farahar.
- It was Mrs Burns's evidence before me, which I accept, that she enjoyed a close relationship with the deceased. That is not to say that they did not, on many occasions, argue. Indeed, I have no doubt but that the deceased frequently imposed upon Mrs Burns and her husband. They were required to help with the donkeys, and muck out. They were required to assist the deceased, eg with her shopping. It was Mrs Burns's evidence to me, which again I accept, that because of what was said to her, and her husband, by the deceased and Uncle John that she expected to inherit Drumfin on the deceased's death. The 1992 will reflects that fact.
- By a transfer dated 6 October 1995 the deceased transferred the blue land to herself and Philip as beneficial joint tenants by way of gift. This transfer was prepared by Mr Addis, a partner in the firm of Furley Page (formerly Furley Page Fielding & Barton) of Whitstable. This is the first transaction which Geoffrey seeks to have set aside by this action and I shall refer to it as "the first gift".
- By a transfer dated 24 February 1997 the deceased transferred to Philip absolutely by way of gift not merely the brown land but, also, a major part of the garden of Drumfin. I shall refer to that part of the garden of Drumfin which was so transferred as "the green land". Again, the transfer was prepared by Mr Addis. This is the second transaction which Geoffrey seeks to have set aside by this action and I shall refer to it as "the second gift".
- The net effect of the first and second gifts was that the deceased retained only Homewood and its garden, and Drumfin with a very small garden. Philip became the absolute owner of the green land and the brown land (amounting to between a third and a half of the total area originally owned by the deceased) and could expect to inherit the blue land by survivorship. He was always entitled, of course, to crystallise his interest in the blue land by severing the beneficial joint tenancy.
- On 5 March 1997 the deceased made a new will ("the 1997 will"). This, again, was prepared by Mr Addis. It was substantially different from the 1992 will. Philip was named as sole executor and trustee. The deceased gave Drumfin not to Mrs Bums but to Philip. She gave Homewood to Geoffrey. Both of these gifts were expressly stated to be free of tax. The residue of her estate she gave (subject to payment of funeral and testamentary expenses, debts and tax) as to one-quarter to Mrs Shorrock, one-quarter to Lynda Phelan, one-quarter to Glenn Shorrock and one-quarter to Eileen Farahar. There was, in fact, little to go into residue. The reality was that apart from Homewood, and the reduced Drumfin, the deceased had only about £30,000 in capital (and her severable share in the blue land). In fact, on Philip's evidence, which I accept on this point, he did not even know that the deceased had as much free capital as £30,000. He thought, at this time, that the deceased only had very modest capital indeed amounting to no more than a few thousand pounds. So the reality was that, in the events which had happened, and assuming that the deceased never severed the beneficial joint tenancy in the blue land, Philip would acquire the vast bulk of the deceased's land (namely the green land, the brown land and the blue land) under the first and second gifts and he would acquire the reduced Drumfin under the 1997 will. Geoffrey would be left with Homewood. The residual beneficiaries would be left with nothing and any Inheritance Tax payable on death would, whatever the 1997 will said, have to be borne, in part at least, by Homewood and the reduced Drumfin. On 23 May 2001 Philip obtained a grant of probate in respect of the 1997 will out of the Brighton District Probate Registry.
- On 24 June 1999 the deceased executed an enduring power of attorney in favour of Philip.
- By transfer dated 26 April 2000 Philip and the deceased transferred the blue land to Philip absolutely by way of gift. This is the third transaction in issue in this action and I shall refer to it as "the third gift". True it is that under the first gift the blue land would have passed to Philip anyway, by survivorship, on the death of the deceased. However, by the third gift the deceased gave up any interest she had in the blue land, an interest which she could have crystallised by severing the beneficial joint tenancy.
- Also, by transfer dated 26 April 2000, the deceased transferred what was left of Drumfin (that is the dwelling house and small garden) to Philip absolutely by way of gift. This it the fourth transaction in issue in this action and I shall refer to it as "the fourth gift". Again it is true. that this property had been devised to Philip by the 1997 will but, by this transfer, the deceased put it out of her power to change her 1997 will in respect of Drumfin and, also, ensured that the only asset left in her estate was Homewood. I am told that by acting in this way the deceased affected the amount, and incidence of, Inheritance Tax payable on her death. It is, certainly, Geoffrey's contention that by acting in this way the deceased devalued the ultimate gift to him of Homewood. The extent to which this is true is not a matter presently before me and is, more properly, the subject matter of the first and second actions.
- Both the transfers of 26 April 2000 were prepared by Mr Addis.
- Finally, doubts arose concerning the mental capacity of the deceased and on 2 June 2000 application was made on Philip's behalf, by Mr Addis, to register the enduring power of attorney.
- No challenge was made by Philip, in this action, to Geoffrey's legal standing to bring these proceedings to challenge the validity of the first to fourth gifts. The primary beneficiaries of a successful challenge are likely to be the residuary beneficiaries under the 1997 will. But there is substantial potential benefit, also, to Geoffrey. Not only will successful challenge to the first to fourth gifts potentially affect the amount, and incidence, of tax payable out of Homewood, but, also, for reasons which I shall develop below, major issues arose between Philip and Geoffrey as to the administration of the deceased's estate. There are issues as to what debts of the estate of the deceased ought to be borne by Homewood, indeed issues as to whether, or not, various of these items are debts of the estate of the deceased at all. Substantial costs have been incurred in disputes over this, and in and about the first and second actions. The answers to the questions raised in the first and second actions, indeed the answers to the questions which may be raised in the suggested fourth action, will depend, in part at least, on the validity of all, or any, of the first to fourth gifts.
- There are two other points I should deal with at this stage. first, it is suggested by Mrs Galley, counsel for Philip, that if the first and second gifts are set aside then issues must arise over the validity over the 1997 will. That, to my mind, does not follow at all. I shall deal, below, with the law relating to presumed undue influence. But it does not seem to me that if I set aside any of the first to fourth gifts on the basis of presumed undue influence that it automatically follows that the 1997 will is invalid. Different principles to those which apply to presumed undue influence would be relevant. I express no view, whatsoever, as to what effect this my judgment has on the question of the validity of the 1997 will. This was not an issue before me, not an issue raised in this action, and not an issue on which I heard detailed submissions.
- It was also suggested by Mrs Galley that if the second gift were set aside then Philip would take the green land, as part of Drumfin, under the specific devise of Drumfin to him in the 1997 will. That, to my mind, does not necessarily follow in the events which have actually happened. It is clear that the making of the 1997 will and the second gift were part of a composite transaction and, when referring to Drumfin in the 1997 will (even though it predated the second gift) the deceased may have been referring merely to the reduced Drumfin (ie without the green land). This, again, is not an issue before me, not an issue raised in this action and one upon which I have not heard detailed submissions. Save .to say that an issue may arise, I prefer to express no further view thereon.
Development value
- Neither the deceased, nor Uncle John, were rich or sophisticated people. Their chicken farm was a modest one and, ultimately, did not prosper, being unable to compete with modern "battery hen" mass farming. When the chicken farm closed, Uncle John went to work, part time, in a local newsagents. But they were both sitting on an asset of considerable value, namely their land and it is crystal clear that they both knew this. Whilst, I accept, they never knew that their land could, ultimately, be developed for residential purposes they certainly knew that part, at least, could be developed for light industrial use.
- The story starts before the death of Uncle John. The deceased and Uncle John contemplated selling their property and moving elsewhere. They instructed Strutt & Parker. Philip's evidence is that, through Strutt & Parker, he (Philip), the deceased and Uncle John were introduced to a Mr George Wilson. Mr Wilson, or more correctly certain of his companies, were in the course of developing, or had developed, the Joseph Wilson Industrial Estate. Mr Wilson was only interested in purchasing what Philip describes as "the lower fields" at first, which he planned to use for the building of small industrial units. Mr Wilson said that he could get these fields classified as "brownfield" sites with building permission for industrial use. However, in order to obtain these fields Mr Wilson was prepared to buy the whole of the property, including the two houses. Philip says that, at the request of the deceased and Uncle John, he attended several meetings with Mr Wilson. Philip emphasises, in his evidence, that he was party to these negotiations at the specific request of both Uncle John and the deceased. Ultimately, Mr Wilson made an offer of £500,000 for the whole property (Mrs Galley suggests that the offer was £450,000 but my note says £500,000. The disparity does not matter). Ultimately, however, the deceased and Uncle John decided not to accept Mr Wilson's offer.
- Mr Wilson returned to the scene on 24 March 1993. He wrote to the deceased a letter indicating that there could soon be an opportunity for an extension to the Joseph Wilson Industrial estate to take in some of the deceased's land. He offered to buy the hay field (which I take to mean the brown land), alternatively he offered to buy the whole of the property at "our originally agreed price of two years ago" (leaving the deceased to stay on for 18 months or so to find another property). Again, his offer was not accepted.
- Now it is fair to say that a number of contrary points can be made. As Mrs Galley submits, it may well be that, at this time and subsequently, the only land zoned for industrial use was the brown land. And it may well be that it was only the brown land that had value to Mr Wilson. And it may well be that the blue land was merely agricultural land. It also may well be that there were access issues arising both in respect of the property as a whole, and the brown land and the blue land individually. In particular, the continued development of the Joseph Wilson Industrial estate may have adversely affected the possibility of developing the brown land for access reasons. But the fact remains that each of Uncle John, the deceased and Philip knew that there was potentiality for substantial increased value in the deceased's property. They may not have known, or formulated, quite what that potentiality was and how it could be brought to fruition but none of them could have regarded the brown land, and probably the whole of the property, as having merely agricultural (or in the case of Homewood and Drumfin residential) value. Philip suggested, in evidence, that he at all material times regarded the brown land, the green land and the blue land as having no development value whatsoever. But, in re-examination, Philip accepted that when he acquired the brown land, although he had no immediate plans therefor, he did appreciate that at some time in the future he might, perhaps, be able to build one or two houses on it.
- Matters lay in abeyance until 1999. Out of the blue Strutt & Parker wrote to the deceased on 29 June 1999 indicating that, after progress of various planning matters, the council had confirmed the development allocation of "your" land and that Mr Wilson had recently come back to Strutt & Parker enquiring as to the situation. Philip says that the deceased gave him this letter and asked him to liaise with Strutt & Parker. Philip says that his discussions with Strutt & Parker indicated that the local planning authorities were very keen on developing "brownfield" sites and were now treating favourably planning applications in the area. At this time what was contemplated was industrial development but, following a site visit, Strutt & Parker wrote to Philip on 20 July 2000 indicating that, with correct management, there was further potential for residential development. By September 2000 offers were being received for residential development on the property. What was now being contemplated was the development of the property together with the adjoining property of Mr Simmons. By 22 September 2000 Strutt & Parker had been instructed to market the property and Mr Simmons's land. By 13 December 2000 heads of terms had been agreed, subject to contract and conditions, for the sale of Mr Simmons's land, and all of Homewood, Drumfin, the green land, the blue land and the brown land for the total sum of £5,125,000. But Philip had a problem. Whilst the participation of Mr Simmons in the scheme was not an issue, Philip had to have Homewood sold as part of the overall scheme. And that, still, belonged to the deceased. At this time, it was contemplated that if Homewood was not included as part of the scheme then the scheme would fail. Objection had already been made to registration of the enduring power of attorney. Before that matter was finally resolved, the deceased died. Hence the importance to Philip of his position as executor of the deceased. Thereby, in the course of administration of her estate, he hoped to sell Homewood (which had been specifically devised to Geoffrey), thereby enabling him (Philip) to make his development profit from Drumfin, the green land, the brown land and the blue land. As such executor; Philip appears to have been entirely ignorant of, and unconcerned about, the conflicts of interest which arose between himself personally and himself as executor of the deceased. His aim, at all times, was to get Homewood sold. The last thing he wanted was to see Homewood vested in Geoffrey. And he was assisted in this by reason of the fact that the gifts which had occurred had loaded the debts of the estate of the deceased, including inheritance tax, onto Homewood. As I have already said, I do not wish to trespass more than is necessary into issues which arise concerning the administration of the estate of the deceased (since these are matters for the first and second actions and the fourth action if it occurs) but the activities of Philip, following the death of the deceased, are deeply unattractive. It is crystal clear from the correspondence which was before me that Philip was seeking, manipulatively, to engineer a position whereby Homewood had to be sold as part of the winding up of the estate of the deceased. For these purposes, he was anxious to give Geoffrey as little information, as possible, about the true position in respect of the sale of the whole of the land. Mr Addis was acting not merely for Mr Simmons and Philip personally, on the sale of their lands but, also, for Philip as executor of the estate of the deceased (that is for and on behalf of the estate of the deceased). It is clear from the correspondence before me that Mr Addis was deeply uneasy. Indeed, in his evidence to me (after I had given him the opportunity of an adjournment to revisit his estate administration files) Mr Addis said that he was surprised, when he reviewed his probate files, how many occasions there were when he had wished to pursue a particular course of action but had met with resistance from Philip. That seems to me to be a fair assessment. During the whole course of the administration of the estate of the deceased Mr Addis was trying (whether or not he was successful is a matter on which I shall not comment) properly to administer the estate of the deceased, paying legitimate concerns to the rights of Geoffrey. Philip had an entirely different agenda. To him, the executorship was simply a tool which would enable him to release the development value of his own land. I could amplify the comments I make above by detailed reference to the correspondence which passed, and the instructions given by Philip but I do not think it necessary so to do. If the correspondence is examined, in any detail, no other objective analysis to the one I have set out above is possible. However, I am very conscious that the issues relating to the conduct of the administration of the estate of the deceased are matters for the first and second actions and, perhaps, the fourth action. In addition, I am very conscious that Mr Addis (who has not been represented by counsel before me and who has not had the opportunity of making submissions to me) may, perhaps, become a party to that litigation. I am anxious, therefore, not to address issues which are not before me any more than it is necessary so to do. The only reason why I address these issues now is because Philip's conduct of the executorship is one of the reasons which I give to support my view of the character of Philip (which I formed as he gave his evidence in the witness box). Accordingly, as this is the only way in which the conduct of the executorship is relevant for the purpose of the issues presently before me, I do not think it appropriate to make any further findings of fact, or law, in respect of the conduct of the executorship.
- To complete this part of the story, it is subsequently proved possible for the scheme to go ahead without including Homewood. This is what occurred and the whole area has now been developed or is being developed, by George Wimpey (with the exception of Homewood). As I understand the position, the purchase money paid by Wimpey has been placed on deposit, and its ultimate destination will be decided in the first or second actions. Obviously, however, the judge in those actions will need to know the validity of the first to fourth gifts. Hence, one of the purposes of the present action before me.
- I should, perhaps, add that there is no evidence whatsoever that the deceased was ever informed during the last seven months or so of her life of the wish to sell all her property for residential development. I have no doubt whatsoever that, had the deceased lived longer, and had he been able to achieve this, Philip would have sold all the land gifted to him and Homewood for residential development at substantial profit and during her lifetime.
Undue influence: the law
- I start with the decision of the House of Lords in Royal Bank of Scotland plc v Etridge (No 2) [2002] 2 AC 773 ("Etridge"). It was undoubtedly the speech of Lord Nicholls of Birkenhead which reflected the views of the House of Lords and it is not, therefore, necessary for me to analyse the extent to which, if at all, there were disparities of perception between Lord Nicholls on the one hand and Lord Hobhouse of Woodborough and, in particular, Lord Scott of Foscote on the other. I identify the following salient points from the speech of Lord Nicholls.
(1) Equity has identified broadly two forms of unacceptable conduct which fall within the reach of the law of undue influence. The first comprises overt acts of improper pressure or coercion such as unlawful threats. Today there is much overlap with the common law principle of duress as this principle has subsequently been developed. The second form arises out of a relationship between two persons where one has acquired over another a measure of influence, or ascendancy, of which the ascendant person then takes unfair advantage (para 8).
(2) In cases of this latter nature the influence one person has over another provides a scope for misuse without any specific overt acts of persuasion. The relationship between two individuals may be such that, without more, one of them is disposed to agree a course of action proposed by the other. Typically this occurs when one person places trust in another to look after his affairs and interests, and the latter betrays this trust by preferring his own interests. He abuses the influence he has acquired. In Allcard v Skinner (1887) 36 Ch D l45 Lindley LJ, at 181, described this class of cases as those in which it was the duty of one party to advise the other or to manage his property for him. In Zamet v Hyman [1961] 1WLR 1442 at 14441445 Lord Evershed MR referred to relationships where one party owed the other an obligation of candour and protection (para 9).
(3) The law has long recognised the need to prevent abuse of influence in these "relationship" cases despite the absence of evidence of overt acts of persuasive conduct. The types of relationship, such as parent and child, in which this principle falls to be applied cannot be listed exhaustively. Relationships are infinitely various. The question is whether one party has reposed sufficient trust and confidence in the other, rather than whether the relationship between the parties belongs to a particular type (para 10).
(4) Even this test is not comprehensive. The principle is not confined to cases of abuse of trust and confidence. It also includes, for instance, cases where a vulnerable person has been exploited. Indeed, there is no single touchstone for determining whether the principle is applicable. Several expressions have been used in an endeavour to encapsulate the essence: trust and confidence, reliance, dependence or vulnerability on the one hand and ascendancy, domination or control on the other. None of these descriptions is perfect. None is all embracing. Each has its proper place (para 11).
(5) Whether the transaction was brought about by the exercise of undue influence is a question of fact. Here, as elsewhere, the general principle is that he who asserts a wrong must prove it. The burden of proof in an allegation of undue influence rests upon the person who claims to have been wronged. The evidence required to discharge the burden of proof depends on the nature of the alleged undue influence, the personality of the parties, their relationship, the extent to which the transaction cannot readily be accounted for by the ordinary motives of ordinary persons in that relationship, and all the circumstances of the case (para 13).
(6) Proof that the complainant placed trust and confidence in the other party in relation to the management of the complainant's financial affairs, coupled with a transaction which calls for explanation, will normally be sufficient, failing satisfactory evidence to the contrary, to discharge the burden of proof. On proof of these two matters the stage is set for the court to infer that, in the absence of a satisfactory explanation, the transaction can only have been procured by undue influence. In other words, proof of these two facts is prima facie evidence that the defendant abused the influence he acquired in the parties' relationship. He preferred his own interests. He did not behave fairly to the other. So the evidential burden then shifts to him. It is for him to produce evidence to counter the inference which otherwise should be drawn (para 14).
(7) When the claimant succeeds by this route he does so because he has succeeded in establishing a case of undue influence. The court has drawn appropriate inferences of fact upon a balanced consideration of the whole of the evidence at the end of a trial in which the burden of proof rested upon the claimant. The use, in the course of the trial, of the forensic tool of a shift in the evidential burden of proof should not be permitted to obscure the overall position. These cases are the equitable counterpart of common law cases where the principle of res ipsa loquitur is invoked. There is a rebuttable evidential presumption of undue influence (para 16).
(8) The evidential presumption which arises needs to distinguished, sharply, from a different form of presumption which arises in some cases. The law has adopted a sternly protective attitude towards certain types of relationship in which one party acquires influence over another who is vulnerable and dependant and where, moreover, substantial gifts by the influenced or vulnerable person are not normally to be expected. Examples of relationships within this class are parent and child, guardian and ward, trustee and beneficiary, solicitor and client and medical adviser and patient. In these cases the law presumes, irrebuttably, that one party had influence over the other. The complainant need not prove he actually reposed trust and confidence in the other party. It is sufficient for him to prove the existence of the type of relationship (para 18).
(9) Proof that the complainant received advice from a third party before entering into the impugned transaction is one of the matters a court takes into account when weighing all the evidence. The weight, or importance, to be attached to such advice depends on all the circumstances. In the normal course, advice from a solicitor or other outside adviser can be expected to bring home to a complainant a proper understanding of what he or she is about to do. But a person may understand fully the implications of a proposed transaction, for instance a substantial gift, and yet still be acting under the influence of another. Proof of outside advice does not, of itself, necessarily show that the subsequent completion of the transaction was free from the exercise of undue influence. Whether it will be proper to infer that outside advice had an emancipating effect, so that the transaction was not brought about by the exercise of undue influence, is a question of fact to be decided having regard to all the evidence it the case (para 20).
(10) As to the second element required to invoke the rebuttable evidential presumption of undue influence (namely that there is a transaction which calls for explanation or, a slightly different formula as used by Lord Nicholls in paragraph 21, a transaction not readily explicable by the relationship of the parties) this must, again, be a matter of fact and degree, with much depending upon the nature and amount of the gift in question and the circumstances in which it is made. A small gift to a person standing in a confidential relationship, reasonably accountable for on the grounds of friendship, relationship, charity, or other ordinary motives on which ordinary men act, will not invoke the rebuttable evidential presumption. But if the rebuttable evidential presumption is invoked, the greater the disadvantage to the vulnerable person, the more cogent must be the explanation before the presumption will be regarded as rebutted (paras 21 to 31).
- In Hammond v Osborn [2002] EWCA Civ 885 ("Hammond") the Court of Appeal emphasised that in cases of presumed undue influence the court interferes, not on the ground that any wrongful act has in fact been committed by the donee, but on the ground of public policy and to prevent the relations which existed between the parties and the influence arising therefrom being abused (see per Cotton LJ in Allcard v Skinner (above) at 171). The Court of Appeal also considered what was required to rebut the presumption. The presumption is rebutted by proof that the gift was "the spontaneous act of the donor acting under circumstances which enabled him to exercise an independent will and which justifies the court in holding that the gift was the result of a free exercise of the donor's will" (per Cotton LJ, ibid), or, to put it more shortly, where it is proved that the gift was made by the donor "only after full, free and informed thought about it" (see Zamet v Hyman [1961] 1 WLR 1442 at 1446 per Lord Evershed MR) The two formulations have consistently been treated as expressing an identical test (see per Sir Martin Nourse in Hammond at para 26) and the addition of "informed" in the shorter test is fully justified. Indeed, it could hardly be suggested that a donor would act spontaneously under circumstances which enabled him fully to exercise an independent will if he were not fully informed not only of the nature of the gift but also of its effect. That such is required appears clearly from the judgment of the Privy Council delivered by Lord Hailsham LC in Inche Noria v Shaik Allie Bin Omar [1929] AC 129 (see Sir Martin Nourse in Hammond at para 26).
- The Court of Appeal, therefore, in Hammond stressed that the donor had to be fully informed not only of the nature of the gift but, also, of its effect. It axiomatically follows, therefore, that merely because the donor was fully informed of the nature of the gift (in the sense of having a full appreciation of what he was doing) this would not, of itself, be sufficient to rebut the presumption. The donor must also be fully informed of the effect of the gift. That effect may come in many guises, depending on the facts. However, clearly, the effect of the gift on what is left for the donor or possible fiscal consequences for the donor of the gift in taxation terms are obviously material requirements. A person who intends to make a gift without appreciating the value of what he is giving or without appreciating the value of what he will be left with after the gift or without appreciating the potential taxation consequences to him of making the gift cannot be "fully informed" about the effect of the gift.
- It is, I think, appropriate for me to set out the passage from Inche Noria to which Sir Martin Nourse referred in Hammond. Having made the point that it is not in every case necessary to show that the donor received independent legal advice Lord Hailsham went onto say:
"It is necessary for the donee to prove that the gift was a result of the free exercise of independent will. The most obvious way to prove this is by establishing that the gift was made after the nature and effect of the transaction had been fully explained to the donor by some independent and qualified person so completely to satisfy the court that the donor was acting independently of any influence from the donee and with the full appreciation of what he was doing; and in cases where there can there are no other circumstances this may be the only means by which the donee can rebut the presumption."
This passage must be read together with what Lord Nicholls had to say in paragraph 20 of his speech in Etridge. Independent advice is a factor, and an important factor, for the court to take into account when weighing all the evidence. However, the weight, or importance, to be attributed to such advice depends on all the circumstances. The circumstances in which the advice is given, or the quality of that advice, may not be sufficient to bring home to a complainant a proper understanding of what he is about to do. And even if a person understands fully the implications of the proposed transaction, yet the complainant may still remain under the undue influence of another. Proof of outside advice does not, of itself, necessarily show that the subsequent completion of the transaction was free from the exercise of undue influence. It is a question of fact whether the outside advice had the appropriate "emancipating" effect, and that question of fact has to be decided having regard to all the evidence in the case.
- Thus, in Pesticcio v Niersmans [2004] EWCA Civ 372 the advice given by a solicitor to the donor did not, on the facts of that case, have the necessary emancipating effect I shall return to this decision, below, but, again, the Court of Appeal emphasised that the submission that the donee had "done nothing wrong" was a further instance of the "continuing misconceptions" as to the law of undue influence mentioned by Sir Martin Nourse in Hammond. Further, the participation of a solicitor was not a precaution which was guaranteed to work in every case. It was necessary for the court to be satisfied that the advice and explanation by, for example, a solicitor was relevant and effective to free the donor from the impairment of the influence on his free will and to give him the necessary independence of judgment and freedom to make choices with the full appreciation of what he was doing (see per Mummery LJ at para 12). Questions such as what more could the donee have done, or insistence upon the donee having done nothing wrong, were matters which addressed the wrong issue (when the true public policy considerations underlying the law on presumed undue influence, as restated in Hammond, were addressed).
- Further, in Hammond the Court of Appeal rejected the submission that in order to raise the presumption of undue influence it was necessary to prove that the donee had preferred his own interests and had not behaved fairly to the donor. That was not at all what Lord Nicholls had said in Etridge. What Lord Nicholls had said, and what he had meant, was that once the presumption had been raised it was presumed, unless and until it was rebutted, that the donee had preferred his own interests and had not behaved fairly to the donor (see per Sir Martin Nourse at para 31).
- The other judgment given in Hammond was by Ward LJ (Keene LJ agreeing with both the judgments of Sir Martin Nourse and Ward LJ). I find no disparity, whatsoever, between what was said by Sir Martin Nourse and what was said by Ward LJ. In paragraph 44 Ward LJ indicated that "the problem is not lack of understanding but lack of independence". In paragraph 45 he made it clear that the absence of an actual exercise of power or influence over the donor by the donee does not amount to rebuttal of the presumption. He cites the following passage from the judgment of Lindley LJ in Allcard v Skinner at 183:
"They [the Courts of Equity] have not shrunk from setting aside gifts made to persons in a position to exercise undue influence over the donors, although there has been no proof of the actual exercise of such influence; and the courts have done this on the avowed ground of the necessity of going this length in order to protect persons from the exercise of such influence under circumstances which render proof of it impossible. The courts have required proof of its non-exercise, and failing that proof, have set aside gifts otherwise unimpeachable."
- The law of undue influence was addressed, again, by the Court of Appeal in Jennings v Cairns [2003] EWCA Civ 1935. The leading judgment was given by Arden LJ. Again, I find no disparity between that judgment and the speech of Lord Nicholls in Etridge or the earlier decision of the Court of Appeal in Hammond. In paragraph 31 of her judgment, Arden LJ emphasised the need, amongst other matters, for the court to make a balanced assessment of all the circumstances in order to decide whether undue influence was established. Again, it was emphasised that the fact that the conduct of the donee was unimpeachable was not, by itself, an answer to a claim in undue influence, though the presumption of undue influence could be rebutted in many ways (para 40). One interesting feature of this case is that the first instance Judge fairly recognised that the relationship between the donor and the donee could provide the motive for the gift but that such relationship, also, conversely gave the opportunity to take unfair advantage. So this is something of a two-edged sword. On one side, it helps to explain the gift. On the other, it provides the opportunity to take unfair advantage. The Court of Appeal did not comment adversely on this analysis, indeed, appeared to endorse it (see para 34).
- I return to the most recent decision of the Court of Appeal, Pesticcio v Niersmans. In paragraph 3 of his judgment, Mummery LJ said this:
"
The instant case is evidence of another social trend. With the increase in home ownership and the rising value of residential property more people have more property to dispose of in their lifetime and on death and more people expect to benefit substantially from inheritance. As people live longer, the inheritors have to wait longer. There is, however, the unwelcome prospect that the longer the wait, the greater the risk that even a modest estate will be seriously diminished by the high cost of care in the old age or infirmity of the home owner, and by the impact of inheritance tax on death. The elderly and infirm in need of full time residential care are vulnerable to suggestions that they should dispose of the home to which they are unlikely to return. In my view, these social trends are already leading to a renewed interest in the law governing the validity of lifetime disposition of houses, both in and outside the family circle, by the elderly and the infirm. The transfer of a house is a substantial transaction. A house is the most valuable asset that most people own. If a transfer is made by one person on the dependent side of a relationship of trust and confidence to a person in whom trust has been placed, it must be shown by the trusted party that the disposition was made in the independent exercise of free will after full and informed consideration. The court may grant relief to the transferor, even though the transfer was not made as a result of any specific reprehensible conduct on the part of the trusted transferee."
- In this action, no allegation of "actual" undue influence (the first limb in para 8 of Lord Nicholls's speech in Etridge) is made. That is hardly surprising as only two people know precisely what occurred and why the deceased acted as she did. One of those people is Philip, the other the deceased. But, for reasons already indicated, the absence of a claim of "actual" undue influence is immaterial. Nor does the absence of such a claim mean that Philip's conduct could, and should, necessarily be described as unimpeachable.
- The issue, then, is one of presumed undue influence. Mr Warner, on behalf of Geoffrey, urges on me that the nature of the relationship between Philip and the deceased was such that it should be presumed, irrebuttably, that Philip had influence over the deceased. In other words that this is one of those cases where it is not necessary to prove that the deceased reposed trust and confidence in Philip. It is sufficient, merely, to prove the existence of the type of relationship between the deceased and Philip. This was the presumption referred to in paragraph 18 of the speech of Lord Nicholls in Etridge (and clearly reflects Class 2(A) as identified by Lord Browne-Wilkinson in Barclays Bank v O'Brien [1994] 1 AC 180 at 189). Mr Warner's submission is, in my judgment, wrong as a matter of law. The relationship between the deceased and Philip was that of aunt and nephew. True, as I shall explain below, that Philip undoubtedly advised and assisted the deceased and took control of her affairs. True, also, that he had the benefit of the enduring power of attorney. But I know of no authority, and none was cited to me, to justify the proposition that this is a case where the presumption of undue influence automatically arises(subject to the possibility of subsequent rebuttal) because of the relationship which, in fact, existed between the deceased and Philip. Accordingly, the presumption referred to in paragraph 18 of Lord Nicholls's speech in Etridge is not relevant. What I must ask myself, therefore, are the following questions:
(1) Does the rebuttable evidential presumption of undue influence arise? This, of itself, involves my asking myself two sub-questions namely (a) did the deceased place trust and confidence in Philip in relation to the management of her financial affairs at the time when she made any of the gifts in issue in these proceedings and (b) are the gifts in issue in these proceedings such so as not to be reasonably accounted for on the grounds of friendship, relationship, charity or other ordinary motives on which ordinary people act? I remind myself, here, that the burden of proof is on Geoffrey.
(2) If the evidential presumption of undue influence has been raised, is it rebutted in respect of any of the gifts in these proceedings? In other words, did the deceased make each gift "only after full, free and informed thought about it". Here, I remind myself that the burden of proof is upon Philip.
In answering these questions, I must make a balanced assessment of all the circumstances of the case. In so doing, I must also be careful not to work from the wrong end of telescope. Thus, for example, if I were to find that the evidential presumption of undue influence arose and was not rebutted in respect of the two gifts made in 2000, it does not follow, either necessarily or at all, that I should take the same view in respect of the 1995 or 1997 gifts. Of course, what happened in respect of the 2000 gifts might be relevant if I were to find that the 2000 gifts were merely the culmination of a course of conduct decided upon and entered into, prior to the 1995 gift. But, even then, I should be careful. A scheme decided upon by Philip in 1995 (were I to find that there were such a scheme) may have been carried out far differently in 1995 from the way in which it was carried out in 2000.
The deceased personality
- Clearly, important factors in the balancing assessment which I must carry out are the personalities of both the deceased and Philip. I turn, first, to the deceased.
- Her personality was a matter of common ground between all witnesses. She was highly independent, motivated and difficult. She verged on, perhaps passed over the boundary into being, eccentric. One thing which is clear is that she loved her home and, also, her animals (in particular her donkeys. There were originally three donkeys but during the course of this story two died leaving only one Bambi). She regarded her donkeys as surrogate children. That was the evidence of all witnesses, and strange as it may seem, it is supported by the report of Dr de Bruin, a consultant psychiatrist, who saw the deceased in hospital on 10 April 2000. He expressly records that the deceased seemed to treat her animals as substitute children and was getting very anxious about caring for them whilst in hospital, expressing this by getting frustrated, throwing things and generally becoming difficult to manage.
- Something of the deceased's independent, and self-willed, personality can be seen from the demeanour of her younger sister, Mrs Burns. Mrs Burns gave evidence before me and, by the date of the hearing, she was roughly the age at which the deceased died. Mrs Burns rejected all attempts by me to ensure that she could give her evidence in a location more comfortable than the witness box and gave clear, and cogent, evidence. I was particularly impressed by Mrs Burns's evidence. I have not the slightest doubt that she was telling me the truth, as she recollected it. This is particularly so granted the fact that she had sided with Philip in this dispute but that much of her evidence seemed to me to favour, rather, Geoffrey. Mrs Burns was asked a question to the effect that the deceased had little love for the taxman. Mrs Burns answered that the deceased had no love for the taxman, nor for children or people. She only loved her animals.
- It is quite clear to me that the deceased was a person who was careful with money. For a large number of years she failed to disclose to the Benefits Agency a substantial amount of free capital which she had. Thereby, she received enhanced benefits and I am certain that she knew what she was doing in this. The deceased was more than capable of not paying bills. Thus, she refused to pay the bill of Nicholson Cooper, the solicitors who had sought to assist her in winding up the estate of Uncle John. The deceased was, towards the end of her life, provided with carers by social services. She refused to pay for such carers, primarily on the grounds that such carers would not "muck out" the donkeys. This incident is illustrative. The deceased was, on the evidence before me, a somewhat selfish, and self-centred, person who would make others work for her. Thus, others would be called upon to collect her pension and benefits, others would be called upon to look after the animals (in particular the donkeys). For many years, this task was borne by Mrs Burns and her husband, despite their advancing years. I accept, of course, that Philip also rendered substantial assistance in this. Mrs Burns's description of her relationship with the deceased made it quite clear that she was the junior sister expected to do what the deceased wanted. Thus, it is not surprising that the carers should have been told that they had to "muck out" the donkeys. It is not surprising that they refused and not surprising that, therefore, the deceased refused to pay the bills of the carers. The deceased was, quite clearly, a person who got frustrated, and difficult, when she did not get her own way.
- This is a picture of a person who would not be easily influenced. However, there is a converse side to this picture. This was a person who would not, readily, make a spontaneous gift. This was not a person full of charity. This is not a person whom I would have expected to see making any of the gifts in issue in this action. What she had, she held, and if she could supplement what she had by making a false claim to the Benefits Agency; or by not paying bills, so much the better.
- Mrs Burns's evidence was that the deceased thought highly of Philip and that she trusted him. I accept that evidence but only in the context of my overall description of the personality of the deceased as set out above. More correctly Mrs Burns's evidence could have been reformulated in this way, namely that to the extent that the deceased was capable of thinking highly of people, then she thought the world of Philip and, accordingly, trusted him. I have no doubt but that there was a close relationship between Philip and the deceased and that he did much for her. Until the last two years, or so, of the deceased's life Geoffrey lived in Wales and, accordingly, visited Whitstable only infrequently (perhaps once or twice a year). Over the last two years, or so, of the deceased's life Geoffrey did, however, visit her far more frequently. Philip was, undoubtedly, the more favoured of the two and the one with the closer connections to the deceased. However, I can find no evidence to suggest that the deceased did not, also, in her own way care for Geoffrey and wish, ultimately, to provide for him. Equally, the evidence before me, in particular that of Mrs Burns, was that the deceased, in her own way, still cared for Mrs Shorrock. Whilst the deceased never visited Australia, Mrs Shorrock did return to England on at least 10 occasions. Mrs Burns's evidence was that Mrs Shorrock and her husband thought the world of the deceased and that the deceased thought a lot of them.
- I must comment, also, on the mental state of the deceased. I have not the slightest doubt but that, until at least 1999, she was in full control of all her mental faculties. However, by 1999, she was becoming increasingly frail, physically, which resulted in a number of falls necessitating a number of admissions to hospital in 1999. A particular problem from which she suffered in late 1999/2000 (and probably earlier) was an ulcerated leg. This caused the deceased considerable physical pain which, naturally enough, affected her mental state. Before me is a report of Dr Hills of the Whitstable Medical Practice. He did not meet the deceased until October 1999 but based partly on his own observation, and partly on the medical records held, he summarises matters in this way. In June 1999, normal mental state. In October 1999, not confused but early signs of fading memory. In November 1999, not confused but failing memory. In March 2000 became aggressive, but very difficult to judge the degree of confusion due to the deceased's very eccentric personality. By April 2000 she had started to become obviously confused.
- I referred, above, to the report of Dr de Bruin. What had happened was that, in early 2000, the deceased's ulcerated leg had required her admission to hospital. She never returned home being transferred, following release, to the Lyndhurst Care Home. Dr de Bruin saw her on 10 April 2000. His report records that, according to the nursing staff, the deceased was confused at times, asking to go home and wanting to care for her animals. The report records that there might have been a minor problem with memory and the deceased was having difficulty mobilising. Her mood appeared fine, she was just frustrated. In summary, she was an 86 year old lady with some minor cognitive impairment, but nothing major worrying. She seemed very set in her ways and did not wish to give up her home or her animals who had become her children. By 16 May 2000 Philip had instructed Mr Addis that, he (Philip) thought that the deceased could not cope mentally and that, therefore, it was necessary to register the enduring power of attorney. Geoffrey had a different perception regarding her as still mentally capable on his visits to her in the hospital and Lyndhurst Nursing Home.
- No expert evidence was called before me as to the deceased's true mental state. A totally clear picture cannot, therefore, be drawn. However, the following comments can be made. There can be no doubt as to her mental capacity to make the first and second gifts. In 1995, and 1997, she was in full control of her mental faculties. As to the position when she made the third and fourth gifts the position is less clear. I shall come, below, to what was observed by Mr Addis and Mrs Burns when Mr Addis visited the deceased in hospital in relation to the third and fourth gifts. What is clear from that visit is that, at this time, the deceased was in considerable physical pain which, clearly, affected her mood and her concentration and that she was frustrated and, on occasions, aggressive. However, this seems to me to be part of the picture on the question of presumed undue influence in respect of the third and fourth gifts. I do not think, on the evidence before me, that it is established, on a balance of probabilities, that the deceased actually lacked the mental capacity to make the third and fourth gifts.
Philip
- Philip, naturally enough, was subjected to lengthy cross-examination. He gave evidence for a day and a half. I regret that he did not, in a number of respects, make a favourable impression on me. The picture of his personality, as it emerged in the witness box, was of a strong minded man, anxious to pursue his own ends, and brooking no interference with anyone who got in his way. He was self-justifying and self-righteous, seeing most things from the point of view only of his own personal interests. In short, he had all the hallmarks of a bully. I am, however, deeply conscious that the witness box is a difficult, lonely and tiring place especially when evidence is given for as long a period as a day and half. I am, therefore, conscious that a judge's appreciation of demeanour may be one of the more unreliable indicators. I therefore resolved, at the conclusion of Philip's evidence, that I would reserve my judgment in this matter so that I could reconsider my perception of Philip against the background facts and documents. That process of reconsideration has only confirmed to me the views which I, initially, formed of Philip when he gave his evidence. I draw attention, in particular, to the following factors.
(1) As a result of the various gifts which were made to him the deceased parted with all her property except Homewood. Indeed, under the original scheme for 2000, the deceased would have parted with Homewood, as well, to Geoffrey. Geoffrey was not involved in this scheme, and knew nothing about it.
(2) Philip never informed other members of the family as to what he was doing, or as to what gifts had been made to him. Certainly, the Australian relatives knew nothing, nor did Geoffrey. Mrs Burns's original evidence, in her witness statement, was that she knew nothing about the gifts of land made to Philip in 1995 and 1997. She may have known that the deceased was making a will in 1992 but could not remember. She certainly never knew anything about the 1997 will. She still thought that the deceased was leaving her Drumfin. In the witness box, Mrs Burns said that she was surprised at the terms of the 1997 will when it was first read, after the death of the deceased. She confirmed that Philip had never told her about the first gift or the second gift. But she then went onto say that she knew that the deceased was giving land to Philip and that she had known this for quite a while. Conversely, however, the deceased had always treated all the land as her own until she went into hospital for the final time. She said that she knew some land had been given to Philip, but not what. Mrs Burns's evidence on precisely what she knew, and when, was, not unnaturally granted her age, a little confused. However, it is clear that if Philip did give her information, it was limited information. She did not know the full picture. Philip kept the substance of what he was doing to himself.
(3) Philip's evidence is that he discovered that the deceased had been making false claims for benefits soon after the enduring power of attorney was granted to him. He discovered that there were not one, but two, accounts of the deceased with Lloyds/TSB in Whitstable. The first account held a modest balance of £2,724. The second account had a balance of £19,094. The second account would, clearly, have disentitled the deceased to various of the benefits which she was claiming and Philip's evidence is that he discovered that, since 1992, the only bank account which the deceased had declared to the Benefits Agency was the one which had always held around, or just under, £3,000. On 11 October 1999 Philip transferred the money from the larger second account into an account in his own name. His own evidence is to the effect that the reason for this was so as to "satisfy" the Benefits Agency. "Satisfy" is not the right word. The aim was to protect the deceased from any investigation by the Benefits Agency by hiding the second account. After this, Philip had an even greater shock when he discovered that there was a third account containing £10,000. This, too, was transferred into the account in Philip's name. Now there was no suggestion, whatsoever, that Philip mishandled any of this money. All was accounted for, or applied for the benefit of the deceased. However, the fact remains that disclosure to the Benefits Agency was not made for some substantial time. On 4 July 2000 Mr Addis, on instructions from Philip, made full disclosure to the Benefits Agency and it is quite clear that the trigger for this disclosure was the objections being raised to registration of the enduring power of attorney. As Philip said in a fax to Mr Addis, at this time:
"This cannot be said of my Aunty [ie the deceased]. I fear that this vendetta [ie the dispute over registration of the enduring power of attorney] will open up a whole new can of worms with regard to her benefit claims over the years. My brother, in his stupidity, and desperation for money, is going to harm [the deceased] greatly."
I have not the slightest doubt, from the evidence before me, that had it not been necessary to do so Philip would not have disclosed the false claims which had been made to the Benefits Agency. Indeed, on 19 December 2000 the Benefits Office made a repayment claim in the sum of £9,6l4. That disclosed that the deceased had been overpaid benefit in the sum of £2,860 from 15 April 1999 to 12 April 2000, with a further over payment of £175.50 from 13 April 2000 to 3 May 2000 and a further overpayment of £8.36 from 1 May 2000 to 4 May 2000. This discloses that, notwithstanding his knowledge of what has occurred, Philip, as attorney of the deceased, allowed benefits to be paid to the deceased when he knew that she was not entitled thereto. I accept that Philip was put in a difficult position over the false benefits claims. Disclosure might harm the deceased in her advanced old age and seeking to stop the benefits being paid on a false basis (ie seeking to ensure that the deceased was paid only what was properly due to her) might provoke enquiry from the Benefits Agency. However, Philip's answer to the problem nowhere, on the evidence before me, involved a balanced consideration of what he should, or should not, do. There is no evidence that he took proper advice from Mr Addis on this. His instinctive reaction was to transfer the offending money into an account in his own name and to keep it hidden.
(4) Furthermore, by April/May 2000 consideration was being given as to the future care of the deceased and it was clear that she would have to leave the hospital to go into a nursing home. I can find no evidence, before me, that in any discussions with social services (in particular with a Mr Scoones) Philip disclosed the additional monies (when consideration was being given as to how the deceased's care in the nursing home would be funded).
(5) I have already pointed out that the original scheme, as put to Mr Addis, in 2000 was that all the remainder of the deceased's property should be gifted away, including Homewood to Geoffrey. Geoffrey knew nothing of this. It is quite clear that it was Philip, not the deceased, who made the decision that the gift should not be made to Geoffrey. Philip says otherwise, but I entirely reject his evidence on this point. There were, in fact, valid reasons, apart from the interests of the deceased, for not making the gift to Geoffrey at this time. He was in the course of certain matrimonial difficulties and, clearly, not receiving Homewood might assist him in those matrimonial difficulties. That, certainly, was the view of Mr Addis. However, Geoffrey's views on this were never sought, or taken. Mr Addis wrote to the Public Trust Office on 28 September 2000 recording that Philip had told him (Mr Addis) that it was Philip who had suggested to the deceased that she delay the gift because of Geoffrey's divorce proceedings and that he, Philip, had felt that transferring the property to Geoffrey might not be in the best long term interests of Geoffrey at that time. It is quite clear to me that it was Philip, not the deceased, who made the decision that Homewood should not be given to Geoffrey.
(6) When objection was taken to registration of the enduring power of attorney, Philip's response was highly unattractive. He protested, quite correctly, that he could account, properly, for all the deceased's cash. But his correspondence, and instructions, at this time wholly ignored the fact that the other members of the family did not know the true position in respect of the first to fourth gifts or that what he had done had left the deceased only with Homewood. This was the underlying substance of the somewhat incoherent objections being made by Geoffrey, incoherent because Geoffrey did not know the true position. Philip's self-righteous indignation and his constant insistence that he could properly account for the deceased's cash did not address the more fundamental issue that the deceased, now, had been left only with Homewood and that the family did not, fully, appreciate the fact that this had occurred, or how it had occurred.
(7) Notice of the intention to register the enduring power of attorney was given to Mrs Shorrock and her children. Mrs Shorrock wrote to Mr Addis a perfectly sensible letter indicating that she was receiving conflicting information about the deceased and that she did not wish to side with one, or other, of her nephews. She suggested that the answer might be that as the deceased had a good relationship with both her nephews both should work together for her benefit. Thus, she objected to Philip having sole enduring power of attorney on the grounds that the application was premature because the deceased was not yet mentally incapable. However; should it become necessary for the enduring power of attorney to be registered then it was her wish that both Philip and Geoffrey should share this responsibility. Glenn Shorrock, on 23 June 2000, wrote an open letter to the same effect. Again, he said that he did not wish for himself, his mother or his sister to be solicited into taking sides and asked whether the idea of a joint enduring power of attorney had been discussed. Again, this letter was balanced and sensible and reflects the fact that the Australian family had no idea about the various gifts to Philip. Philip responded by letter of 29 June 2000. It is a disgraceful letter; aggressive, offensive, self-righteous. Philip describes Mrs Shorrock as a hypocrite and says that the Australian family and Geoffrey disgust him. The letter is a total over-reaction, and the over-reaction of a man who has lost his temper because his wishes have been questioned, or thwarted.
(8) Nor am I impressed by what Philip got Mrs Burns to do at this time. On 14 June 2000 Mrs Burns wrote a long letter to Geoffrey taking Philip's side in the dispute. Philip's evidence is that he merely typed this letter for his mother. I entirely reject that. I have not the slightly doubt but that Philip effectively dictated this letter for his mother, basing matters on his version of events. Indeed, there is before me a draft of this letters prepared by Philip. The draft is not saved by the words "Mother! Change as much or add as much as you like". Philip had already directed Mrs Burns's mind into his preferred direction, with his version of events Thereby, in pursuit of his own interests, Philip was quite happy to set his mother against her other son in her old age.
(9) On a date which I cannot precisely identify, but which was some time in late spring or early summer 2000, Mrs Burns and her husband moved from Drumfin to Homewood. There appear to have been good reasons for this, in the sense that Homewood may have been more suitable for them and in that it was hoped to raise income from letting out Drumfin (which was more easily letable). But the fact remains that, thereby, Philip obtained vacant possession of Drumfin and, as I understand the position, retained for himself the rent which was paid by the short-term tenant of Drumfin. Further, no rent was ever paid by Mrs Burns, and her husband, to the deceased for their occupation of Homewood. Thereby, Philip managed to transfer his mother and stepfather to the deceased's property, Homewood. Subsequent protestations, as occasionally appear from Philip about Geoffrey's actions showing little concern for the position of his mother and step-father, as occupiers of Homewood have to be seen in this context.
(10) It is but a small point but following the last entry into hospital of the deceased and her subsequent transfer to the nursing home, the last surviving donkey Bambi did not remain long at the property. Certainly by 16 May 2000 Bambi had been transferred to a local donkey sanctuary. There could have been good reasons for this. Bambi was old and may have needed specialist care. However, it is certainly not what the deceased had hoped for. Geoffrey took the deceased to see the donkey at the donkey sanctuary and this infuriated Philip.
(11) I am satisfied the deceased was told nothing of the attempts to sell her property for residential development prior to her death.
(12) As a result of the objections made to registration of the enduring power of attorney it was necessary for Philip to transfer the account in his own name back into the name of the deceased. This was the one concern that the Public Trust Office had raised. There was, as I have said, no question of Philip having misappropriated any of this money but the manner in which Philip chose to rectify the question of the account name is instructive. What he did was to get the deceased to sign a form of change of account title, changing the name of the account from his own to that of the deceased, on 29 November 2000. But this, of course, was long after Philip had sought to register the enduring power of attorney on the grounds that the deceased now lacked adequate mental capacity. It is strange that, believing the deceased to lack adequate mental capacity, Philip nevertheless thought it appropriate to get her to sign this document.
(13) I have dealt, above, with the manner in which Philip discharged his duties as executor. My summary, on this point above, therefore, only goes to underline the view I formed of Philip in the witness box.
Other witnesses
- In this judgment I indicate where I am unable to accept the evidence of Philip. I am satisfied that all the other witnesses were trying to tell me the truth, to the best of their recollections. Sometimes that recollection was not particularly good. Thus, for example, Mr Burns did not assist me greatly (save in confirming the general picture I have set out above) in that his recollection was now fading him and in that he seemed, to me, to elide one event into another. Notwithstanding submissions by Mrs Galley to the effect that Geoffrey's evidence was evasive and inconsistent in relation to the trust allegation, my view is that Geoffrey was an honest witness seeking to assist me to the best of his ability. His problem was that he had little relevant evidence to give because he had known so little about the first to fourth gifts, indeed about what Philip was doing.
- I must make specific reference to Mr Addis. He struck me as a thoroughly honest, proper and decent man. He answered questions carefully. Mr Addis seemed to me exactly what he claimed to be, namely a family solicitor dealing mostly with conveyancing and probate, often for the elderly. He did not strike me as being a "streetwise" litigator. Indeed, I doubt if he would claim to be one. So it is possible that he may have missed certain conflicts of interest which a more "streetwise" litigator would have seen. However, if he did so, it would have been out of naivety, not impropriety. Clearly, when instructed in respect of the first to fourth gifts, Mr Addis saw his role, primarily, as a mechanical one (in the sense that his job was to put into effect that which he was asked to do). When acting for the estate of the deceased, following her death, he clearly found himself increasingly uneasy about Philip's attitude. I, therefore, find Mr Addis to be a man of integrity who gave me answers which were all honest, according to the best of his recollection. This does not, of course, mean that his conduct cannot be criticised on a professional level but that is a different point.
Relationship between Philip and the deceased
- There was clearly a relationship of trust and confidence between Philip and the deceased. I have already, above, indicated how Philip was involved by Uncle John and the deceased in the negotiations for the sale of the property to Mr Wilson prior to the death of Uncle John. Following the death of Uncle John, his affairs were in disarray. It is clear that Philip assisted the deceased in seeking to sort out the mess. He was instrumental in instructing Mr Cook, then a solicitor with Wilkinson Cooper, to act in winding up the estate of Uncle John. He clearly put some order into the affairs of Uncle John and the deceased. Thus, on 23 February 1993, Mr Saunders who had taken over from Mr Cook, wrote to the deceased in the following terms:
"As you know, I did during the earlier part of the administration come down to Whitstable to see you with Philip and I know that he was meticulous in assisting you in connection with maintenance of records."
- Philip's own evidence, in his submissions to the Public Trust Office (when objection was taken to the registration of the enduring power of attorney), was that he had carried a "heavy burden" in looking after the affairs of the deceased since the death of Uncle John in 1991. Equally, in his letter of 29 June 2000 to the Australian family, he recorded that he had been managing the deceased's life and affairs for "many years now". Mrs Burns's evidence was that the deceased trusted Philip. Philip's own evidence was that to the extent that the deceased would take advice from anyone she would take it from him. I have no doubt but that the deceased placed trust and confidence in Philip in relation to her affairs, certainly from the death of Uncle John, perhaps from even before that time.
Mr Addis's letter
- After Geoffrey had commenced the present action Mr Addis wrote a letter of 20 August 2003 to Philip. That letter is instructive. He records that Geoffrey is presenting the case on the basis that, by Philip's own admission, Philip was helping the deceased with business matters from the time when Uncle John died. Mr Addis indicates that this scenario will not be easy to deny. Mr Addis then refers to the presumption of undue influence and points out that it will fall to Philip to show that the deceased made all her decisions of her own volition and on the basis of full advice given to her independently. Nowhere does Mr Addis expressly state that he gave that full advice to the deceased independently (as he might have been expected to record). Clearly, Mr Addis is concerned, in this letter, as to whether Philip can discharge the burden of showing that full independent advice was given to the deceased. Mr Addis also records that at no time did the Decease raise with him the fact that what was being gifted were highly valuable pieces of land. Mr Addis asks the question "why did the deceased chose to make gifts to you, and not to you and your brother?" The fact that Mr Addis raises this question as late as August 2003 suggests, strongly, that he never addressed the deceased's motivations for the gifts at any earlier time.
The first gift detailed consideration
- Against the above background I now turn to consider each of the gifts individually. As to the first gift, the story starts in June 1995. Philip had been abroad for two years until January 1995 when he returned to discover that the affairs of the deceased, and residual questions over the estate of Uncle John, were not in the order for which he had hoped. He again took control of matters. Sometime prior to 21 June 1995 Philip consulted solicitors whom he knew, Grant Saw & Sons of Greenwich, on behalf of the deceased. The purpose was to advise the deceased on the Inheritance Tax which would be payable on her death and how the same might be reduced or mitigated. I cannot imagine the deceased, of her own volition, seeking such advice and, in my view, the provision of this advice must have been suggested to her, and orchestrated, by Philip.
- On 21 June 1995 Grant Saw & Sons wrote to the deceased with their advice. The letter begins by recording that they had been consulted, recently, on the deceased's behalf by Philip. Detailed advice was been given about inheritance tax and capital gains tax. As to capital gains tax, Grant Saw & Sons correctly pointed out that a lifetime gift could attract capital gains tax which would be payable by the deceased. The letter expressly points out that the last thing that the deceased would wish for would be for a large capital gains tax bill during her lifetime. The letter suggests various tax mitigating schemes, including the placing of certain of the deceased's property into joint names. it is suggested that the share to be taken by the donee in the jointly owned property could be increased, from year to year, to use up the various capital gains tax allowances. But the one point which the letter makes, crystal clearly, is that the starting point must be a valuation of the properties at the present time and an assessment of base costs of the properties for the purposes of capital gains tax calculations.
- In Philip's evidence, which I accept on this point, he said that the deceased did not wish to utilise a solicitor in London. Rather, she suggested Mr Addis's firm. So the deceased went to solicitors of her own choice.
- Mr Addis's evidence to me was that certainly in respect of the 1995 and 1997 gifts, these were hardly memorable transactions and his recollection had largely been reconstituted from analysis of the relevant documents and attendance notes. His evidence, also, was that unless alarm bells were rung he would not, normally, enquire into the motive for a gift and that, when he saw a client, he would primarily take instructions at that meeting, giving and recording his advice thereafter by way of letter.
- Mr Addis produced two attendance notes of the original contact with him. The first he believes is the record of a telephone conversation which he had with the deceased whereby she indicated that she wished to transfer certain land into the joint names of herself and Philip (the requirement for joint names being that she wished to keep "some control" over the land). The second attendance note is of a meeting on 29 August 1995. It would seem from Mr Addis's letter of 6 September 1995 that both Philip and the deceased were present at this meeting. Whatever happened, the meeting was a very short one since only two time units are recorded (12 minutes). As a result of this meeting Mr Addis prepared the transfer which constituted the first gift and forwarded it to the deceased by letter of 6 September 1995. In that letter he described what the effect of holding land as beneficial joint tenants would be. He refers, correctly, to the effect of survivorship and refers, also, to inheritance tax. He points out that either party can always seek a court order that the land should be sold and points out that if this were a matter which troubled the deceased then a further discussion would be necessary. In this letter Mr Addis does not refer either to capital gains tax (perhaps because he believed that the value of the land being transferred was minimal) nor to the fact that Philip could immediately take a guaranteed half share in the blue land by severing the joint tenancy.
- Following a reminder letter on the 25 September 1995, the deceased attended Mr Addis's offices to execute the deed. She was not seen by Mr Addis and it is clear that no advice, whatsoever, was given to her on the occasion when she actually executed the first gift.
- So any advice given by Mr Addis to the deceased, at this time, was either given at the meeting on 29 August 1995 (when Philip was present) or by the letter of 6 September 1995. Mr Addis nowhere suggests that he gave any advice to the deceased about the wisdom, or implications, of this transaction, other than such advice as is contained in the letter of 6 September 1995.
- Philip's case as to why the deceased made this gift to him was because, now that he had stopped travelling aboard, the deceased wanted him to have a share in this property so that Philip could guarantee that, whatever happened, the deceased's animals would be well provided for in the event of her death. In return, he promised to upkeep the fields, fences, paddock and donkey accommodation. He also promised to take care of the donkeys, even if they outlived the deceased.
- I must say that I find this analysis of the deceased's motivation for the first gift difficult to understand. Much more pertinent, I think, is the earlier letter from Grant Saw & Sons (which had suggested the transfer of some of the land into joint names to avoid potential inheritance tax). But Grant Saw & Sons had never suggested anything as unstructured as the first gift. They had suggested that there be a valuation of all the properties as a starting point. That valuation was never sought. Nor can Philip have been unaware of the capital gains tax consequences referred to in Grant Saw & Sons's letter. Valuation, and capital gains tax, were never addressed with Mr Addis at the time of the first gift.
The first gift decision
- I readily confess to having found the question of the validity of the first gift as being the most difficult issue before me. Although the blue land was a substantial area of land, it was not the land in which Mr Wilson had been interested and, in any event, the deceased was retaining an equitable interest therein. So it might be argued that the first gift was merely a spontaneous act of generosity of such a size that it was readily explicable by the close relationship between the parties, (so that the rebuttable evidential presumption of undue influence does not arise at all). Further, it might be argued that even allowing for the limited advice given by Mr Addis, the deceased fully appreciated the true nature, and effect, of what she was doing and, hence, the first gift was made by the deceased only after full, free and informed thought about it. After all, the blue land was valued, by agreement with the Revenue, in the total sum of £25,000 as at 6 October 1995 (see the letter of Strutt & Parker of 7 December 2001). Geoffrey, of course, was not party to that valuation, or agreement with the Revenue, but it does afford some indication. So a half share would have been worth only some £12,500 as at 6 October 1995.
- However, on balance (and it is a balancing exercise taking into account the whole of the evidence), I cannot accept such analysis. The deceased was undoubtedly a strong-willed and independent person. However, equally, she was not the sort of person to engage in spontaneous acts of charity or generosity at all. She was faced with a strong-willed, and domineering, confidant and adviser in the shape of Philip. Philip had taken a major role in her affairs on his return to England in January 1995. He had already caused the deceased to take detailed tax advice. The deceased would not, in my judgment, have made any gift to Philip at this time unless Philip had persuaded her into it. And he persuaded the deceased into it against the background of the tax advice received from Grant Saw & Sons. In my judgment, the transferring of the blue land into the joint names of Philip and the deceased as beneficial joint tenants was the most that Philip was able to persuade the deceased to do at this time. Even then she had reservations because she wanted to retain "some control" over the land. It is, I think, significant that the detailed, and sensible, tax mitigation exercises suggested by Grant Saw & Sons were not entered into. Nor was the question of whether the first gift would attract adverse capital gains tax consequences for the deceased ever addressed. The one thing which must be certain is that the deceased would never, voluntarily, have assumed any liability to pay any capital gains tax. In fact, as with the second gift, the capital gains tax consequences were ignored and no return made in respect of the first or second gifts. The deceased loved her home, loved her property and loved her donkeys. She would have required substantial persuasion to give away any of her property and the most considerable persuasion to do anything that would prejudice the position of the donkeys. In this context, I do not understand the deceased's motivation for the first gift as identified by Philip. As Mr Addis informed the deceased, what she had done was to create a set of circumstances where it was possible that the blue land could be sold against her wishes, That did not reflect the retention of "some control" over the blue land.
- In my view it is undoubtedly the case that, at the time of the first gift, the deceased placed trust and confidence in Philip in relation to the management of her affairs. I think it is also undoubtedly the case that Philip utilised that relationship of trust and confidence to persuade the deceased to make the first gift to him. In other words, he abused the influence he had acquired; he preferred his own interests. He did not behave fairly to the deceased. On one analysis of what Lord Nicholls has to say in paragraph 14 of his speech in Etridge that would be enough to raise the rebuttable evidential presumption of undue influence. But, on another analysis, reference by Lord Nicholls to the donee abusing the influence he acquired in the parties' relationship, by furthering his own interests and not behaving fairly to the other, is only descriptive on the situation which pertains if the transaction be one which calls for explanation. In other words, absent a transaction which calls for explanation, the rebuttable evidential presumption of undue influence does not arise. Lest my first analysis of what Lord Nicholls had to say be incorrect, I must consider whether the first gift is, indeed, a transaction which calls for explanation. In my view, on the facts of this case taken as a whole and properly balanced, the first gift was made in circumstances where, and was of a sufficient size that, it cannot be reasonably accounted for on the grounds of relationship, charity or other ordinary motives on which ordinary men act. Particularly is this so granted the characters of the deceased and Philip, which I have described above.
- I turn, therefore, to the question whether Philip has rebutted the evidential presumption of undue influence. In my view, he has not. Clearly, the most important factor he can point to is the involvement of Mr Addis. However, the advice which Mr Addis gave was limited in the extreme. Indeed, it might well be suggested that Mr Addis was not entirely clear as to whom he was acting for. There are strong indications that Mr Addis regarded himself as serving the interests of both the deceased and Philip. Nowhere did Mr Addis consider the motivation of the deceased in respect of the first gift and whether such motivation was justified or wise. Nowhere did Mr Addis consider with the deceased the possibility of alternative courses of conduct. The Grant Saw & Sons letter was never produced to Mr Addis. Nor did he consider the true value of the blue land or any questions of liability for capital gains tax. Nor was he asked to do so. Never did Mr Addis advise the deceased that Philip could immediately crystallise his interest in the blue land by severing the beneficial joint tenancy. Never did Mr Addis ask the deceased what she was seeking to achieve by the first gift or consider with her whether there were better ways of achieving that purpose (if, indeed, the purpose be as Philip suggests the provision for her animals following her death). Mr Addis appears to have regarded his function as a mechanical one, namely one where his purpose was to carry the transaction into effect (not to advise about its true nature, effect, and wisdom). On the facts of this case, therefore, balancing all relevant matters, I do not regard such advice as Mr Addis gave as having the appropriate emancipating effect. Nothing else goes to rebut the presumption. On the contrary, Philip throughout was using his position as confidant and adviser of the deceased to obtain a personal benefit for himself, namely the first gift. The deceased was never emancipated from this.
Second gift detailed consideration
- By the second gift the deceased transferred to Philip, absolutely, the brown land and the green land. Certain important points emerge. first, this was a valuable land. The brown land was the land in which Mr Wilson had been interested. I refer, again, to the valuation of 7 December 2001. The valuation, as at 24 February 1997, of the brown land (and perhaps also the green land, the position is not crystal clear) was £110,000. Even more importantly, in my view, is the fact that as a result of the second gift the deceased retained absolute ownership only of Homewood and the much reduced Drumfin. So, she had transferred away her absolute ownership of the donkey grazing land and stables and the field for making hay for the donkeys.
- Philip identifies the deceased's motivation for making this gift as being the wish of the deceased to keep the land in the family so as to ensure all the donkeys would live in their natural environment to the end of their days. If the deceased's motivation was, indeed, the donkeys, it is beyond my comprehension how transferring the donkey land away from her ownership to Philip preserved the donkey land. Once Philip owned the donkey land he would be entirely free to sell it (as he chose to attempt to do in 2000 following the entry of the deceased into a nursing home).
- Again, there is no attempt to follow through the tax advice of Grant Saw & Sons, to obtain valuations or to consider any capital gains tax liability for the deceased. Mr Addis clearly believed that the land the subject matter of the second gift was of little value. Philip, for the reasons which I have given, knew differently.
- Matters start with Philip's letter of 11 November 1996 to Mr Addis. He indicates that there are two reasons for his letter. First, the deceased wished to make an appointment to discuss a new will. Secondly, the deceased wished to transfer the brown and green land into his name. In this letter Philip expressly says that the purposes of the second gift is to "keep the whole grass area complete for the donkeys in the future". Philip asked Mr Addis to telephone the deceased to arrange a meeting. Philip asked Mr Addis to send him all bills.
- It is clear that Mr Addis did, indeed, have a meeting with the deceased. There are two attendance notes, one dated l8 November 1996 and one dated the 19 November 1996 but Mr Addis was clear, in his evidence, that there was but one meeting and Philip was not present. In any event, both attendance notes reflect only short meetings (two time units on each attendance note). The first attendance note relates solely to the provisions of the intended will. The second contains a very brief reference to what appears to be the green land. No indication, whatsoever, is given in these attendance notes that Mr Addis offered any advice to the deceased about the true nature, effect and wisdom of the second gift.
- On 29 November 1996 Mr Addis sent to the deceased a copy of her new will. On 23 November 1996 Philip forwarded to Mr Addis certain documents of title necessary to effect the second gift. There is no indication, from the documents before me, that Mr Addis wrote to either the deceased or Philip asking for these documents. That might tend to suggest that they were asked for at the meeting recorded in the two attendance notes which might, again, suggest that Philip had, indeed, been present at that meeting. In fairness to Mr Addis, although he indicated that this was not his recollection, he did subsequently accept that it was possible that Philip might have been present at the meeting to which the two attendance notes refer. From here on, all correspondence in respect of the second gift is not between Mr Addis and the deceased but between Mr Addis and Philip. Initially, questions of a right of way to be reserved over the retained part of Drumfin arose and these questions Mr Addis addresses, entirely, to Philip. The deed effecting the second gift, when prepared, is sent not to the deceased but to Philip (by letter of 24 December 1996). Mr Addis left it to Philip to obtain execution by the deceased of the deed effecting the second gift. There was, then, some considerable delay in obtaining the deceased's execution of the second gift. It was not until 17 February 1997 that Philip returned the executed Deed effecting the second gift to Mr Addis. The deceased's execution had been witnessed by Mr Newberry, the part-time gardener retained by the deceased. In his letter of the 17 February 1997 Philip says that he was not present when this deed was executed. Philip repeats the contention that he was not present in paragraph 31 of his witness statement. And, yet, in other documents Philip claims he was present when the deed effecting the second gift was executed by the deceased. Thus, in letters of 20 August 2003 and 4 October 2003 to Grant Saw & Sons, he states that he was, indeed, present when the deceased executed this deed in the presence of Mr Newberry. Again, in a letter of 2 September 2003 to his counsel, he again claims that he was present. Nothing turns on this point, and it may well be explicable by a subsequent failure of recollection. However, the point is not a small one and the subsequent failure of recollection is, at least, somewhat surprising. It is illustrative of the care which has to be taken with Philip's evidence.
- The above resumι shows that the only opportunity which Mr Addis had to give any independent advice to the deceased was at the meeting, the subject of the two attendance notes, where Mr Addis was taking Instructions, also, for the will, Granted Mr Addis's evidence to me that he would set out the substance of his advice in a letter, and normally give it in a letter rather than at a meeting when he was taking instructions, it is striking that Mr Addis never wrote any letter to the deceased advising her about the true nature, and effect, of the second gift. In addition, at the meeting referred to in the two attendance notes Mr Addis was, primarily, taking instructions (in particular for the will) and did not, then, have before him all relevant documents of title necessary to enable him to consider, fully, the second gift. I have no difficulty, therefore, in reaching the clear conclusion that Mr Addis never gave any form of independent advice to the deceased about the true nature, and effect, of the second gift.
Second gift decision
- The issues before me become progressively easier to answer as one moves from the first gift to the second gift and, then, to the third and fourth gifts.
- I do not need to repeat what I have said in respect of the first gift It is clear that, at the time of the second gift, deceased placed trust and confidence in Philip in relation to the management of her affairs The second gift was clearly a transaction which called for explanation, not merely because of its size and value but, also, because it did nothing to secure the position of the donkeys. On the contrary, it prejudiced the position of the donkeys. The second gift was of sufficient size, and made in such circumstances, as not to be reasonably accounted for on the grounds of friendship, relationship, charity or other ordinary motives. Indeed, as with the first gift, I go further. I have not the slightest doubt but that Philip utilised the influence he had over the deceased to prefer his own interests by persuading her to make the second gift to him. He did not behave fairly to the deceased. There can be no doubt, therefore, in my judgment, but that the rebuttable evidential presumption of undue influence arises.
- Nor is there any doubt but that Philip has failed to rebut that evidential presumption. Here, I have already found as a fact that Mr Addis did not give any independent advice to the deceased as to the nature, and extent, of the second gift. No consideration was given as to the value of the second gift. No consideration was given as to the capital gains tax implications for the deceased of the second gift. No consideration was given as to why it was that Philip should be the sole object of the deceased's bounty in respect of the second gift. No consideration was given as to the how the second gift impacted upon the position of the donkeys or, indeed, how the second gift failed to protect the position of the donkeys. No consideration was given to the fact that, by the second gift, the deceased, in her advancing old age, was leaving herself simply with Homewood and a reduced Drumfin. No consideration was given to the fact that, as a result of the second gift, there was effectively nothing left in residue (as Philip and Mr Addis must have perceived it, had they thought about the issue, on the then information available to them as to the amount of the deceased's free capital which was then modest). No consideration was given, notwithstanding the preparation of the 1997 will at this time, that there would, effectively, be little to nothing in residue. No consideration was given to the fact that, thereby, inheritance tax would be shifted onto Homewood and the remainder of Drumfin (notwithstanding the fact that the will purported to devise these two assets free of tax). Nothing which Mr Addis did, or which anybody else did, was sufficient to emancipate the mind and will of the deceased. The deceased never understood the true nature, and effect, of the second gift. There is no question, whatsoever, of her having made the second gift "after full, free and informed thought about it".
Third and fourth gifts detailed consideration
- Following the grant to him of the enduring power of attorney, Philip was seeking to deal with the debts of the deceased, in particular those to social services for provision of her carers. It must, also, have been increasing clear to Philip that, in due course, the deceased would be unable to continue to live at Homewood and so, nursing home care was likely to become necessary and would have to be paid for. In this context, I refer to the comments of Mummery LJ in Pesticcio to which I referred above.
- It seems to me that the third and fourth gifts can only be characterised as a "smash and grab raid" on the deceased's assets. Here was the deceased, in the twilight of her life, increasingly frail, increasingly physically dependent on others. And yet, under the scheme as originally postulated, she would have been left with nothing (apart from the £30,000 which Philip had discovered and which he was not, at this stage, disclosing to the Benefits Agency or, indeed, to social services). Where was the money to come from, under the original scheme, to pay for the deceased's care in her old age? Was she not entitled to have her assets utilised for the best possible care available to her and for little extra luxuries? She should, surely, not have been confined to such minimum standard of care as the State would provide for her. Was she not entitled, over however many years might remain to her, to have her assets utilised to ensure that she entered a more luxurious (and hence more costly) nursing home (than the bare minimum provided by the state)? I find Philip's conduct in seeking to push through the original scheme, and then in pushing through the second and third gifts, as nothing short of morally reprehensible. In addition, even under the modified scheme, whereby the deceased was left with Homewood, Philip was, again, protecting his own interests (because the continuing costs of care for the deceased, and inheritance tax payable on her death, would have to come out of Homewood and not the properties which Philip had acquired).
- The matter starts on 18 February 2000. By letter of that date, signed by the deceased, the deceased asked Mr Addis to effect the third and fourth gifts and, also, a gift of Homewood to Geoffrey. The letter was quite clearly prepared by Philip. It is written in detailed terms, and in a manner, which the deceased could never have utilised. Having obtained the deceased's signature to this letter, Philip sent it to Mr Addis on 22 February 2000. This covering letter of 22 February 2000 contains precise details of the, by now, somewhat complex registered title which applied. Again, Mr Addis never wrote to the deceased. He did, however, indicate by his letter of 28 February 2000 that he would need to see the deceased "alone". An appointment was made for Mr Addis to visit the deceased at Homewood but that had to be postponed because of the admission of the deceased to the local hospital with her ulcerated leg. Mr Addis, accordingly, visited the deceased in the local hospital on 15 March 2000. Again, the meeting was a short one (only five time units being recorded). Mr Addis turned up with the three deeds ready to sign (that is the deeds for the third and fourth gifts and the deed of gift to Geoffrey). However, at this time, the deceased had received no independent advice, whatsoever, from Mr Addis about the third and fourth gifts and the gift to Geoffrey. This was particularly surprising granted the fact that Mr Addis was being instructed to dispose of all of the deceased's remaining land. This Mr Addis must have realised was of some considerable value. Further, on 8 March2000, he had had a discussion with Philip during the course of which Philip had confirmed that there had been several approaches on behalf Mr Wilson in respect of the brown land and that the brown land was now zoned for development. Further, access problems to the brown land no longer existed. So Mr Addis also knew, as from 8 March 2000, that the brown land, which he had previously thought to be valueless, did, indeed, have a substantial value. Further, Mr Addis also admitted, in cross-examination, that it was obvious to him that the letter of 18 February 2000 had been written by Philip. Major alarm bells should have been ringing in Mr Addis's mind. Sadly, it appears that they were not.
- It was Mr Addis's recollection that Mrs Burns was present throughout his meeting, at the hospital, with the deceased. Mr Addis said that he could remember the meeting, and the room in which it was held but that he could not remember word for word what, in fact, was said. He could not directly recall whether he told the deceased of the documents he had brought with him and what their purpose was. He said that he could not remember giving the deceased any advice at all about the transaction. His main recollection was of the deceased's physical discomfort. Her ulcerated leg was causing her a lot of distress, as was her frustration. Mr Addis, therefore, said, quite properly, that he was not going any further. He was not happy with the way things were going; indeed, he was relieved that the documents were not signed at this meeting. The deceased, he said, was clearly in a lot of physical pain and this was making her very distressed.
- Mrs Burns's recollection of this meeting was broadly similar to that of Mr Addis. The deceased, she said, was not too good at this meeting. Her ulcerated leg was very painful. Mr Addis talked, but the deceased was too tired to sign. Mrs Burns did not remember if Mr Addis explained all the transactions to the deceased. Mrs Burns was more concerned with her sister's health, because she was in such pain from her ulcerated leg. But Mrs Burns said that if one of the effects of the deeds was to give Drumfin to Philip then she would have remembered this being mentioned. Her recollection was that the giving of Drumfin to Philip was never mentioned but she also said that Mr Addis was talking primarily to the deceased, rather than to her. That said, it was her recollection that no one explained to the deceased that she was giving all her land to Philip and Geoffrey. If that had happened, she (Mrs Burns) said she would have remembered.
- It is worthy of note, as recorded by Dr de Bruin, that after this meeting, namely on 10 April 2000, the deceased was anxious to return home and was frustrated because she could not go home and care for her animals. The deceased's attitude, as recorded by Dr de Bruin, is entirely inconsistent with her wishing to give away all her remaining property and, hence, losing her home.
- The clear conclusion from the above, and I so find as a fact, is that Mr Addis gave the deceased no independent advice at the meeting on 15 March 2000. To the extent that he gave the deceased any advice at all, she was in no physical position to take in or understand it.
- It appears that there was then contact between Philip and Mr Addis. On 12 April 2000 Mr Addis wrote to Philip enclosing three transfer Deeds (ie the deeds effecting the third and fourth gifts and the deed transferring Homewood to Geoffrey). The letter records that the deceased had confirmed that she wished these transfers to go through. That is in accord with the attendance note of the meeting of 15 March 2000 prepared by Mr Addis, and which is before me, but is not in accord with the evidence which Mr Addis gave me in the witness box. Mr Addis left it to Philip to procure the deceased's execution of these deeds. On 17 April 2000 Philip returned the deeds effecting the third and fourth gifts to Mr Addis, duly executed by the deceased in the presence of Mrs Bums. Philip indicated that the third deed would be given to Geoffrey on his return from Australia. Geoffrey would then get the deceased to sign it. As I have already said, Geoffrey knew nothing, at all, about any of this. Thereafter, as I have indicated above, Philip made the decision that the gift to Geoffrey would not got through. The ostensible reason was problems which Geoffrey was facing over his divorce.
Third and fourth gifts - decision
- There can be no doubt but that Philip was in a position of trust and confidence in relation to the management of the deceased's affairs at the time of the third and fourth gifts. In respect of the third and fourth gifts there is the additional factor that, by now, Philip was acting as the deceased's attorney under the enduring power of attorney. He was actively managing her affairs, to her exclusion. The nature of the third and fourth gifts was such as not to be reasonably accounted for on the grounds of friendship, relationship, charity or other ordinary motives. The third and fourth gifts were entered into by the deceased at a time when it was intended, by Philip, that she should be divested of all her property (by subsequent completion of the intended gift of Homewood to Geoffrey). In my judgment, it is no answer to say that the third and fourth gifts merely anticipated what would occur under the 1997 will (in respect of Drumfin) and what would occur by survivorship (in respect of the blue land). A will could always be revoked and, in any event, operates only on property which the testator owns at the date of his death. The scheme, in its original form, was to take all of the deceased's property away from her. Even in its modified form, the scheme took the reduced Drumfin away from the deceased and, also, her severable share in the blue land.
- The evidential presumption of undue influence, therefore, arises in respect of the third and fourth gifts. Nor, on the facts which I have found, can there be any question whatsoever of Philip having rebutted that evidential presumption. Here, I have found that the deceased received no independent advice at all. And even if I were wrong on that, she received such little advice as she did in circumstances where she was in no physical condition to understand, and appreciate, the same. She had been asked, under the original scheme, to give her consent to the disposal of all her remaining assets (apart from the £30,000 cash). It is impossible to see how this was in her best interests. Nothing which Mr Addis did had the appropriate emancipating effect. It is crystal clear tome that the deceased never engaged in "full, free and informed thought" about the third and fourth gifts.
Unconscionable bargain
- Geoffrey advances an alternative claim on the grounds of "unconscionable bargain". Granted the conclusion to which I have already come, it is unnecessary for me to address this alternative claim. However, this claim would have courted substantial difficulties granted the decision in Langton v Langton [1995] 2 FLR 890 (where it was held that the doctrine of unconscionable bargain did not extend to gifts). For my part, if I may be allowed to say so, I see no reason, despite Mr Warner's submissions to the contrary, to question the reasoning in Langton v Langton. However, the point does not arise for decision.
Trust
- Geoffrey's evidence referred to various conversations with the deceased which, he said, showed that Philip must have taken various of his gifts subject to an express trust. I am wholly unpersuaded. Whilst accepting that Geoffrey, in his evidence, accurately recounted his now recollection of what the deceased then said to him, those comments of the deceased are wholly insufficient to enable any court to find, on a balance of probabilities, that the deceased did, indeed, make her gifts to Philip subject to any form of trust. Indeed, my findings of fact, above, are to the direct contrary. What, in fact, happened in this case is that Philip persuaded the deceased to make the first to fourth gifts (inclusive) to him absolutely, not subject to any trust.
Conclusion
- In my judgment, therefore, Geoffrey has established that the evidential presumption of undue influence arises in respect of each of the first to fourth gifts (inclusive). Philip has failed to rebut that evidential presumption of undue influence in respect of each of the first to fourth gifts (inclusive). Each of the first to fourth gifts (inclusive) is, therefore, set aside.
