Paull v Paull, Court of Appeal - Chancery Division, November 26, 2018, [2018] EWHC 2520 (Ch)

Resolution Date:November 26, 2018
Issuing Organization:Chancery Division
Actores:Paull v Paull
 
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Case No: HC-2017-002501

Neutral Citation Number: [2018] EWHC 2520 (Ch)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

PROPERTY TRUST AND PROBATE LIST (Ch)

Royal Courts of Justice

Rolls Building, Fetter Lane EC4A 1NL

Date: 26/11/2018

Before :

MASTER BOWLES

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Between :

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Marc Beaumont (instructed under Public Access) for the Claimant

Ewan Paton (instructed by Fleet Solicitors LLP) for the Defendant

Hearing dates: 3rd, 4th, 5th and 6th July 2018

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JudgmentMaster Bowles:

  1. By a Claim Form, dated 31st August 2017, the Claimant, Neville Robert John Paull, to whom I shall, without any disrespect, refer as Neville, seeks an order that a transfer, dated 17th March 2010, be set aside. The transfer was made without consideration. The transferee was the Defendant, who is Neville's son. Again, without any disrespect, I will refer to him as Bradley. The subject matter of the transfer was the house then and now occupied by Neville, together with his domestic partner, Linda Gibson (Linda), at 7a Sefton Close. St Albans, in Hertfordshire (the property). At the time of the transfer, Neville was sixty seven years of age; Bradley was forty three.

  2. The primary ground asserted for setting aside the transfer is that the transfer was executed, by Neville, under the presumed undue influence of Bradley. An alternative ground, namely that the transfer constituted, or implemented, an unconscionable bargain, was not, in the event, seriously pursued. An alternative argument, pleaded only in the Claimant's Reply, namely that the deed of transfer was void upon the basis of non est factum, was also not pursued.

  3. As an alternative to setting aside the transfer, a claim in proprietary estoppel was also advanced; the gravamen of that claim being that Bradley had given an assurance to Neville that he and Linda could occupy the property for their lifetimes, that it was pursuant to that assurance that the property had been transferred and that, in consequence, an equity arose to be satisfied by, at the least, an estoppel licence to occupy the property during Neville and Linda's lifetimes.

  4. Although Neville's written evidence supported the above contention, his oral evidence, which I will discuss later in this judgment, did not. In the event, therefore, his counsel, Mr Beaumont, who has acted throughout this case under Public Access and, unusually, has also had conduct of the litigation upon Neville's behalf, elected not to pursue the pleaded claim in estoppel but to advance, or seek to advance, in his closing argument, an alternative estoppel argument, said to be derived from Bradley's evidence, to the effect that Bradley had, at least implicitly, assured his father that he could remain, with Linda, at the property pending his purchase of a substitute home, that Neville had relied upon that assurance in entering into the transfer and that Bradley was, consequently, estopped from seeking, or procuring, possession of the property until such time as Neville had acquired a new home, in substitution for the property.

  5. It seemed to me that that new estoppel could only be raised if and to the extent that the pleadings were amended and that a late amendment, sought in closing argument and after all the evidence had been received, should only be allowed if the matter raised by the amendment did not significantly prejudice the ability of the party against whom the amendment was raised from dealing with the matters raised by the late amendment.

  6. On that footing, I refused permission to amend. It seemed to me that Mr Beaumont's new argument was not, simply, an argument in law but one which, had it been raised earlier, would, of necessity, have had to be explored, as it was not, in the evidence. There would have had to be an exploration as to the limitations, if any, upon the time within which Neville and Linda were expected to find new accommodation and, also, as to the correlation between the supposed assurance and Neville's decision, or agreement, to make the transfer.

  7. It seemed to me that to allow the argument to be advanced without Bradley having the opportunity to explain the limits of any assurance he may have made, or to challenge, if he so chose, the causative nature of any assurance he may have made, as motivating the transfer in his favour, was potentially unfair. In consequence, permission to amend was refused and I do not, therefore, in this judgment, deal any further with estoppel.

  8. The starting point in any case of presumed undue influence is the existence of an appropriate relationship between the party against whom the presumption of undue influence is said to arise and the party who is said to be presumed to have been unduly influenced. Essentially, the relationship in question must be, or have become, a relationship of trust and confidence. It may, also, as explained by Fancourt J in Malik v Shiekh [2018] EWHC 973 (Ch) and by Lord Nicholls, in Royal Bank of Scotland v Etridge (No2) [2002] 2 AC 773, at paragraph 11, arise where a vulnerable person acts under the domination, or control, of another. Certain relationships, usually of an overtly fiduciary nature, automatically and without more, are treated as relationships of trust and confidence. While the relationship of a parent to his, or her, child, is one such relationship, the converse relationship, that is to say the relationship of child to parent, such as in this case, does not automatically raise any presumption that the relationship is one of trust and confidence. That must be established in the evidence.

  9. In this case, therefore, before any presumption of undue influence arises, there must first be established the requisite relationship, whether of trust and confidence or of vulnerability and domination, or control, as between Bradley and his father. Additionally, to crystallise the presumption, even in a case where the relationship of trust and confidence is irrebuttably to be presumed, the transaction, or transactions, called into question must be such as to call for explanation and of a character, citing the seminal judgment of Lindley LJ, in Allcard v Skinner 36 Ch D 145, `as not to be reasonably accounted for on the ground of friendship, relationship, charity, or other ordinary motives on which ordinary men act'. In those circumstances and in the absence of such an explanation or account, the presumption of undue influence arises and the evidential burden shifts, as at common law in a case of res ipsa loquitur, to the beneficiary of the disputed transaction.

  10. To satisfy that burden, it is the task of the beneficiary to demonstrate that the transaction entered into was the freely made decision of the benefactor emancipated from the influence, or presumed influence, of the beneficiary. In this regard and as explained by Lloyd LJ, in Smith v Cooper [2010] EWCA Civ 722, at paragraph 61, full understanding is necessary but is by no means sufficient. The fundamental question, or concern, which has to be satisfactorily resolved in favour of the beneficiary, if the gift, or transaction, is to stand, is whether the benefactor entered into the transaction independently of and unconstrained by any actual, or presumed, influence. The fact, if it be a fact, that the benefactor intended what he did and understood what he did, is not the end of the matter. The question, as explained long ago, by Lord Eldon, in Huguenin v Baseley (1807) 14 Ves. Jr. 273, is not `whether she (the plaintiff) knew what she was doing, had done, or proposed to do, but how the intention (to do the thing in question) was produced'. If the intention has arisen independently of the exercise of any presumed, or actual, undue influence then the transaction will stand. If, however, it is not, as it was put by Mummery LJ, in Pesticcio v Huet [2004] EWCA Civ 372, citing Hammond v Osborn [2002] EWCA 885, `affirmatively established that the donor's trust and confidence in the donee has not been betrayed or abused' then the transaction, or gift, will fail.

  11. In many cases, including this one, the primary evidence advanced, in order to satisfy the court that the presumption of undue influence has been rebutted and that the court can be affirmatively satisfied that the donor was emancipated from any such influence at the time when the gift, or transaction, was entered into, is that of the solicitor who has acted in the transaction in question.

  12. As is clear from the authorities (see, in particular, Pesticcio v Huet, supra, at paragraph 23), while the presumption may be rebutted by evidence showing that the transaction was entered into only `after the nature and effect of the transaction had been fully explained to the donor by some independent qualified person', the participation of a solicitor is not a precaution which is guaranteed to work in every case.

  13. As explained, both by Mummery LJ, in Pesticcio, and Lewison J, as he then was, in Thompson v Foy [2010] P&CR 16, at paragraph 99 (x), for the advice, or involvement, of a solicitor to rebut the presumption it is necessary for the court to be satisfied that the advice, or explanation, emanating from the solicitor has been relevant and effective to free the donor from the impairment of the influence upon his free will and to give him the necessary independence of judgment. Proof of outside advice does not, necessarily and of itself, show that the subsequent completion of the relevant transaction was free from the exercise of undue influence. Whether it will be proper to infer, or conclude, that outside advice had an emancipating effect, so that the transaction was not brought about by the exercise of undue influence, is a matter of fact to be decided having regard to all the evidence.

  14. Put shortly, whether the intervention of a solicitor, or the advice given...

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