Liddle v Cree

  Undue influence – Partition of farm – Claimant and defendant dissolving farming partnership and partitioning farm into two separate titles following end of relationship – Significant disparity in value between defendant’s severed share of farm and that of claimant – Whether partition procured by defendant’s undue influence – Whether claimant entitled to have transaction set aside – Claim dismissed In 1993, the claimant entered into a relationship with the defendant. The two formed a partnership to run a farming business on the claimant’s mother’s farm, where he then lived, with the claimant conducting the farming side and the defendant dealing with the administration and finances. When the claimant’s mother died in 1998, leaving her estate equally between the claimant and his four sisters, the defendant provided the £132,000 needed to buy out the sisters’ share in the farm; the claimant and defendant were then registered as joint legal and beneficial owners of the farm and, from 2000 to 2008, lived in the farmhouse together. During that time, the farming business made losses and the defendant introduced substantial sums of her own money to fund both the partnership and the parties’ personal expenditure.By 2008, the parties’ relationship had broken down and the claimant moved out of the farmhouse into a touring caravan in the barn. The farming partnership was dissolved in 2009 and the livestock and equipment sold, with the proceeds divided equally between the parties. By that time, the claimant’s health was deteriorating. In March 2010, the parties executed transfers by which the farm was partitioned into two separate titles, with the defendant taking the farmhouse and an adjoining five acres of land and the claimant taking the barn, which had planning permission for conversion into a dwelling, and the remaining 13 acres of land. Those transfers were registered in August 2010.The claimant subsequently sought to have the transfers set aside on the ground that they had been procured by the undue influence of the defendant at a time when he was mentally debilitated. He relied on the admitted significant disparity in value in the defendant’s favour between the respective parts of the farm, and the fact that the defendant had the house while he was left to live in poor health in a small touring caravan in the barn. The defendant argued that the partition was the mutually agreed final stage of the parties’ disengagement and that the disparity in value was the natural result of her much greater financial contribution. Held: The claim was dismissed.   Undue influence arose out of the relationship between two people where one acquired a measure of influence or ascendancy over the other and took advantage of that. Such influence or ascendancy could typically occur where one person placed trust in another to look after his affairs and interest such that he was predisposed to agree to a course of action proposed by the other. That ascendancy might be abused if the other betrayed that trust by preferring her own interests. The principle extended to cases where a vulnerable person had been exploited; such vulnerability might arise from mental infirmity falling short of incapacity. Whether a transaction had been brought about by undue influence, either by the abuse of a relationship of trust and confidence or by the exploitation of vulnerability, was a question of fact. The burden lay with the claimant to establish undue influence, but he could do so by demonstrating both the requisite relationship of trust and confidence and a transaction calling for explanation, whereupon it fell to the defendant to rebut the evidential presumption of undue influence thereby created. The force of the presumption was be of variable weight depending on the degree of trust, confidence or vulnerability in the relevant relationship and the extent of the disadvantage to the claimant inherent in the impugned transaction: Royal Bank of Scotland v Etridge (No 2) [2001] UKHL 44; [2002] 2 AC 773; [2001] 43 EG 184 (CS) applied.   Although a limited relationship of trust and confidence had arisen between the parties during their cohabitation, the claimant had not depended on the defendant for the making of important decisions about their mutual affairs and she had not gained any significant ascendancy over him in that respect. Following their separation, the parties had negotiated at arm’s length in relation to the consequences for the partnership and their shared ownership of the farm and the claimant was no longer looking to the defendant for advice and guidance as to his best interests. At that time, there did not exist the type of confidential relationship between the parties that was necessary for any presumption of undue influence to arise. Nor was the partition a transaction calling for an explanation. Although it was unwise from the claimant’s point of view, as being an unrealistic means of providing him with residential accommodation at the farm, it was not unfair to him. He received a greater share of the farm in terms of value than his contribution to it and his severed part was readily realisable and of sufficient value, if sold, to enable him to buy comfortable accommodation. Despite the deterioration in his health, when the claimant signed the transfers he had remained fully aware of what he was doing and of the consequences in relation to ownership of the farm. The defendant had been entitled to assume in March 2010 that the transaction was concluded between herself and, although the claimant had subsequently become incapable of caring for himself and his vulnerability had increased, the defendant had committed no abuse of their relationship by continuing to supervise the progress towards registration. That course could not be characterised as taking unfair or unconscionable advantage of the claimant or as being morally reprehensible: Multiservice Bookbinding v Marden [1979] Ch 84 considered. Julia Beer (instructed by Makin Dixon Solicitors) appeared for the claimant; Stephen Glover (instructed by Hart Law LLP) appeared for the defendant. Sally Dobson, barrister