Hart and another v Burbidge and another; Samways and others v Burbidge and others

Sale of land – Undue influence – Presumption – Appellants being daughter of deceased and daughter’s husband – Deceased selling two properties and transferring net sale proceeds to appellants – Deceased also transferring large sum from bank account – Those sums used by appellants to purchase new property in which deceased living with them for brief period before death – Appellants ordered to reimburse deceased’s estate on grounds that transfers procured by undue influence – Whether those transactions calling for explanation – Whether having reasonable explanation other than undue influence – Whether presumption of undue influence rebutted – Appeal dismissed By three transactions between February and October 2008, the deceased transferred to the appellants, namely her daughter and the daughter’s husband, the net proceeds from two properties that she had sold plus a further £290,000 from her bank account. Altogether, the appellants received £700,000, which they used to purchase a property for themselves and the deceased to live in. However, the deceased fell ill and died in November 2008, aged 86, after living at the new property for only a few days. In two actions which were tried together, various relatives of the deceased and beneficiaries under her will sought to set aside the three transactions on the grounds of undue influence. Allowing the claims, the judge found that the relationship between the deceased and the first appellant had been one of trust, confidence, reliance and dependence and that the impugned transactions were such as to call for an explanation, particularly where their effect was also to frustrate specific gifts in a very recently executed will and greatly to reduce the value of her residuary estate, and where the deceased had not been independently advised. He found that the first appellant had not rebutted the presumption of undue influence and he ordered the appellants to reimburse the deceased’s estate, so as to put the parties put back in the position that they would have been in had the impugned transactions not occurred. The appellants appealed. They contended that the judge had erred in finding that any presumption of undue influence arose. They argued that there was a reasonable explanation for the sales of the two properties, which were to the advantage of the deceased since they had enabled her to move in with the appellants as she wanted to do and had avoided a sale after her death for less in a falling market. As to the gift of £290,000, they argued that it did not call for an explanation but was readily explicable by the relationship of the parties. Held: The appeal was dismissed.(1) In deciding whether the impugned transactions called for an explanation, the judge had been entitled to treat all three transactions as part of a single process rather than considering each in turn. The gift of £290,000 was not to be regarded in isolation from the transfers of the sale proceeds from the properties. Disposing of almost the entirety of the deceased’s cash in that way seemed obviously to call for an explanation, since it deprived the deceased of security, an income, and the ability to live alone. As to the transfers of the sale proceeds from the two properties, these could not be described as advantageous to the deceased. It was only with the benefit of hindsight that the sales could be regarded as having been made at an advantageous time; nobody had known at the time that the market would fall further. Overall, the three transactions called for an explanation since the deceased was giving up almost the entirety of her income in return for a place to stay with the appellants that might or might not prove satisfactory. She would have had no money to pay for medical attention or care facilities should she have needed them in the future.  The fact that the deceased was not to take a share in the new property, and her interest in it was not secured in any way, made the whole arrangement even more disadvantageous to her. The transactions were not such as to be readily explicable by the relationship between the deceased and the first appellant. The judge had not erred in failing to consider whether there was a reasonable explanation for the impugned transactions, before proceeding to consider the rebuttal of the presumption. If a transaction called for an explanation and a reasonable explanation was available, which did not involve undue influence, then the court was justified in not proceeding to the stage of considering whether the presumption of undue influence which would otherwise arise had been rebutted. However, no reasonable explanation was available in the instant case and the judge had correctly gone on to consider whether the presumption had been rebutted. The judge had properly found that the presumption of undue influence had not been rebutted. No coherent explanation had been offered as to why the deceased was not given an interest in the new property, even though she had paid for it in its entirety, or why there was no formal loan agreement secured on the property and repayable on normal terms during her lifetime.  The judge had properly concluded that the deceased was not acting wholly independently of the first appellant’s influence in entering into those unnecessary and inappropriate transactions. He had been entitled to find that the deceased did not understand that she was in the process of giving away her entire wealth without any security, that she would be without income or capital if living with the appellants did not work out, and that she was deprived of proper legal advice by a dishonest device instigated and executed by the first appellant. He had correctly concluded that the presumption that the transactions were brought about by the influence of the first appellant was not rebutted: Royal Bank of Scotland plc v Etridge (No 2) [2001] UKHL 44; [2002] 2 AC 773; [2001] PLSCS 216 applied; Turkey v Awadh [2005] EWCA Civ 382; [2005] PLSCS 49 considered. The judge had been required to provide the proper relief for the undue influence that he had found to have occurred in respect of the impugned transactions. He had done so by making an order that sought to put the beneficiaries of the deceased’s will back into the position that they would have been in if the will had taken its natural course. Paul Emerson (instructed by Blanchards Bailey LLP, of Blandford) appeared for the appellants in the first action and the first two respondents in the second action; Charles Auld (instructed by Withy King LLP, of Bath) appeared for the other respondents. Sally Dobson, barrister